Forex Trader Mentor
Newsletter # 4
21st January 2005
Introduction to FOREX trading courses
Many of you have asked if there wasn’t something in ‘bulk’ that I could offer by way of training. It appears that many of you have been attracted to my site because you are thinking about trading.
With that in mind, I am offering a daily for the presentation and a 30 minute question and answer session.
It is important to know from the start that I tell it how it is. I am not trying to sell software or introduce you to a broker. Naturally if you think you are really interested in proceeding, I would very much like to sign you up as a client for mentoring, but there is absolutely no obligation to do so.
The course covers the definition of forex trading, comparisons to other markets, how it functions, choosing a broker, risk/rewards, systems, rules, forecasting, how to get started and alternatives to trading your own funds.
I try and avoid the hype and be as objective as possible, because if you are going to trade forex, you will need to make some serious decisions.
Visit www.forextradermentor.com/introcourse.html for more information
Cost? Just $30 (or the equivalent in your currency).
More than one way to kill a cat.... (Part One)
In the last newsletter, I mentioned there was another way of making it rich in forex without having capital. How? Read on…
In the world of fund management, there is a lot of interest in forex as an asset class. It comes under the heading of “alternative investments”. Because many of the managers are obliged to diversify the risk of their portfolios, they have to invest in assets that are not correlated to their current investments. Forex is such an asset class. Therefore, billions of dollars are being allocated to forex. Only, there is one problem – capacity.
There are simply not enough good currency managers to be found. Parker Global track the performance of forex fund mangers and they have, I believe, some 42. 42!!
In a world where in the coming years, forex fund assets under management is expected to grow from some $200 billion to $1-1.5 trillion!
Traditionally, managers have come from the banks. Only the banks do not trade forex as they once did, taking proprietary risk (today. they make too much money from punters such as you and I on turnover). Therefore, there is no source of up-coming forex fund managers. Where are they going to come from? People like YOU, if you are good enough!
Part 2 to follow next issue: Find out the steps to become a professional money manager.
The Glamour Life of a Forex Trader
Sitting in front of a screen watching every tic. Your system, that you have so much faith in, is going to the dogs so it seems. You are getting 'whipsawed' all over the place and the drawdown is looking fearsome. What to do? Persevere - after all, the system normally works, doesn't it? So this is the glamour life, huh?
What if I bend the rules here? What if, I took my profit while I have some? Yes, I know my target has not been reached, but, what the hell, I haven't been in profit for so long now.
Yes! a realized profit. It doesn't cover my losses but I have a right to feel good once in a while. True, it doesn't cover my losses, but is my luck changing?
Recognise any of the above? Been there, done that?
People, just like you, go into forex trading just dreaming that they are going to make it rich. They are not going to be the losers. "You ain't seen nothing-I'm going to be the most profitable trader ever." Without realizing how difficult it really is. It ought to be easy, you think; buy low, sell high. Cut your losses, run your profits. Unfortunately, nothing could be further from the truth.
Systems and emotions
In my opinion, you have to have a systematic approach to trading. Just buying and selling on whims will rarely make money in the long term. If you think you are just doing battle with other traders just like you, you are wrong. The forex market is massive and consists of all the trade finance of 3 huge trading blocks. How can you accurately predict that IBM just decided today to cover it's Euro receivables for the next three months? They buy 3 BILLION dollars. Maybe the manager got called to a meeting and could not do the order for a few hours. What effect did that have/not have? You see, it is fiendishly difficult to predict the market short term.
If you have developed a system, TEST IT! Look at the risk/reward ratios, profit/loss ratios, the probability factors and all the other measures. If it is showing a risk/reward ratio of over 4 to 1, you are either an absolute genius or there is something wrong. TEST IT on demo accounts.
Create your rules for trading built around your system and stick to them. Don't change the rules on the fly. If you are having a losing streak, your testing and the resulting probability table will tell you if your system has ceased to apply to the market conditions.
Cut those losses! Always set stops and don't lift legs, just because the price is just near the bottom/top now, and you don't want to get stopped out at the bottom/top.
Don't get carried away with the complexity of technical analysis system. I don't believe it is true that the more complex the system, the more chance of success. Simple systems work - if you know how to manage money.
Remember this - you have to earn the loss back and more to make a profit, therefore, limit your losses.
Find the trend and ride it!
Sounds easy, doesn't it?
Some people were impressed with the 42%+ Wallwood made in 2004 and have asked for a link to their site. It is: