Forex Mentors

Many novice forex traders want to learn forex day trading online and scalp small regular profits to build into big consistent profits over the long term this is article is all about forex scalping and day trading success…

If you are considering learning forex day trading online then think again it will lose you money! Why?

Because you cannot judge where prices will go in the short term and will lose all your money over time.

The Myth of Forex Scalping and Day Trading Profits

Of course there are plenty of forex mentors and gurus who try and sell you forex systems all with great track records and they all have a problem – they all carry this warning, read it:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

If you have read the above you will see why these forex day trading strategies are unlikely to work for you.

- They haven’t been traded and are just made up!

- Anyone can make money knowing the closing prices but that’s not the real world

- You could ask yourself the question – why if the systems are so good why the sellers don’t trade them, shut up, keep quite and not bother you for a few hundred bucks!

Well you know the answer these systems are designed to be sold and rely on traders not reading the warning to closely and falling for clever marketing copy.

Try and find one without the above disclaimer and your in for a long hard search I have never seen one with a proper real time track record supported by account statements and neither will you and if you do let me know!

Forex day trading looks good in theory – but is doomed in practice ask yourself this question:

You have a huge number of traders who all contribute to the price and who have different motivations, skills and methods of trading and you have to decide what this unpredictable mass is going top do in a few hours.

Its impossible to do so don’t bother trying!

95% of forex day traders lose (100% in respect of day traders) and it’s hard to make money but it’s possible if you put the odds on your side and this means looking at longer term data where you can get the odds on your side.

If you want to win you must use valid data that can help you predict the odds – if you can’t play the odds you can’t win, it really is that simple.

Learn Forex Day Trading Online is a loser’s game so don’t even try it unless of course you want to lose all your money!

Many traders have heard the oft-quoted statistic that “Over 95% of beginning forex traders will lose, and only 5% will win.” Well even if you had a very intelligent and honest forex mentor, what he might not have mentioned is that this applies not just to forex trading but to all financial markets. And it is the same thing that causes that 95% of traders to lose every time: Lack of a proper risk management strategy.

Managing risk in a controlled manner, or rather taking calculated risks, is the best way to ensure your survival in a live competitive currency trading environment. When you open a mini-forex account with $500 and then trade two mini-lots where you are risking nearly a quarter of your account balance on a single trade, this is not real trading. This is gambling, and it’s no wonder so many traders lose their shirts doing this.

In order to reach a level where you can make a living from your currency trading, ensuring your survival and longevity in even the most unpredictable and irrational of market conditions is key. To do this it is important to never risk too much of your account balance on a single trade, no matter how confident you are that the market will move in your favor.

I have seen far too many novice traders enter into the market without an exit strategy because they are so sure that the market will move in their favor, and then when their position moves against them they are afraid to cut their losses because they fear the sting of making the P/L loss an actual loss. This can result in frustration, a quickly depleted account balance, and premature baldness. If you value your money and your full head of hair then you should consider integrating the Two-Percent Rule into your trading.

The two-percent rule is very simple to understand: No more than two percent of your account balance should ever be risked on a single trade. Note that this is not the same as allocating two percent of your trading equity to a single trade, which could result in a loss much greater than two percent of your account balance. Ideally, you would want to have this two percent also account for any spreads, commissions, or possible price slippage.

Confidence is the key to successful forex trading, and when you know exactly how much you can afford to lose on a single trade before you enter the market then this can allow you a sense of emotional detachment from any negative market movements. Paradoxically it is the traders who care the least about whether they win or lose that most often stand to gain the most and place the most winning trades.

If you are serious about turning your forex trading from a hobby into a profession, the two-percent rule can be an excellent augmentation to your existing forex strategy. Experience often comes from painful lessons of loss, but with this type of proper risk management principle a trader can prolong their lifespan even with a string of losing trades, allowing them the personal experience of seeing what it takes to succeed in a real life competitive trading environment.

As a new Forex trader, one of the most important things you will need to learn is how to figure out the value of a pip for any currency pair. A pip is the smallest measure of value in a currency pair in Forex, so it’s critical that you understand this concept.

When someone is saying “30 pips,” they’re talking about thirty units of value in a trade. Both profits and losses are measured in pips, though a pip for USD/JPY is not the same value as a pip for USD/CAD.

The simplest way to put it is this: one pip is one unit of the smallest measured decimal place. For example, if you are trading USD/JPY at 114.95, then one pip is .01 Yen, since that is the smallest decimal place of measurement used in this pair. The JPY is measured in two decimal spaces, although almost all other currencies are measured in four decimal places.

This does vary, which is why you always want to check on each individual currency to figure out what the pips actually are. For example, if the USD/CAD is trading at 1.0621 CAD than a pip for this transaction is .0001 CAD.

If you trade AUD/USD while it’s at 1.2433, then one pip for this trade is .0001 since that combination has four decimal places, as well. See how that works? Like many parts of Forex trading, it is pretty easy once you get used to it.

So if the USD/JPY is quoted to only two decimal places, so Yen .01 is the value of this pip. If this pair goes from 114.95 to 115.00, it gained 5 pips. Likewise, if the USD/CAD goes from 1.0621 to 1.0611, it lost 10 pips. That simple math is all that’s needed at that point. So if USD/JPY went from 88.25 to 88.29 that would be a 4 pip increase.

On the other hand, if it went from 88.25 to 87.90, that would be a 35 pip loss. The math might seem a little daunting at first, but it really is just ordinary math an easy enough to pick up on.

As a side note: many non-Yen currencies are figured out four places, making many pips involving USD in the currency pair .0001, but just remember that a pip is one unit of the furthest listed decimal point and you’ll do fine. This also means that for each currency pair the pip can be a different value. You will want to keep track of this.