Profiles and Strategies of the World’s Best Forex Traders
Profiles and Strategies of the World’s Best Forex Traders
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This research paper aims to tell the stories of the world’s traders. Indeed, forex trading is essentially an individual business, and the purpose of trading is the profit of each participant. Accordingly, each trader chooses a strategy that suits him or her the best. The research was carried out based on interviews with the best forex traders in the world, as well as on the analysis of the traders’ trading strategies.
The essay is structured as follows: the first section discusses the concept of a forex trader as an individual. Then, the best forex traders are introduced. The third section presents the time and financial requirements needed to fulfill the strategy of forex trading. Two following sections have profiled the interviewed traders and the strategies of the traders who succeeded. The penultimate section discusses merchandise that can cater to the needs of the traders. Finally, the last section presents the conclusions.
The essay’s target readers are primarily professionals who are interested in the opportunities that the derivatives market provides. They are also going to benefit from meeting outstanding people who have managed to achieve really good results. This essay, however, targets primarily the general public interested in meeting extraordinary individuals. If the readers are these interviewed traders’ followers, the text is going to comfort them. If they are unfamiliar with the world of financial markets, the essay is going to take them on a rollercoaster ride.
2. Chapter 1: Understanding Forex Trading
What is forex trading? Believe it or not, this simple term often brings people a lot of trouble. But this is not the time to discover love, although it is valuable too. What we are looking at is forex trading. In the past, many people who did not have a strong financial background dared not invest in the forex market. Knowledge is power, especially in the finance field. Here, “locked” refers to this investment area. For this particular reason, earning money is not easy for many people. They choose to stay away from it without even trying to understand it. This fundamental misunderstanding is what has a significant impact on human beings. The original knowledge and expertise about foreign exchange trading can provide the expertise and preparation required for making profits in forex trading. Then, from the perspective of finance, everyone can reach the heights they want.
Why forex trade? How can someone choose to learn about the financial markets without even having a comprehensive understanding of what foreign exchange trading is? What is the goal of an organization? What is the vibrant effect of the forex market? They all involve basic foreign exchange trading. There is no clear understanding of the level of forex trading. This ultimately contributed to forex trading, which is not just part of a foreign concept. The general public is scared of the trading-teaching forex trading. When we see forex trading, we see someone and assume they are a member of the stock market. Many people believe that only in elite trading can companies enter the market and benefit more from buying. We have not yet reached analysis at this stage. Since 2004, the organic elements of forex trading have ceased to exist.
2.1. 1.1 What is Forex Trading?
Traders can use these factors to develop smart trading strategies. It’s important to learn about the major players in the Forex market because having an understanding of their interests and strategies will give the burgeoning currency trader a leg up in the market.
1.1 What is Forex Trading? Forex trading is the trading of currencies. “Forex” is an acronym for “foreign exchange,” and foreign exchange is the buying and selling of currencies. The rapidly growing Forex market is the largest investment market in the world and traditionally used by big banks and international corporations. In recent years, however, many individual traders have become active at the grassroots level of the Forex market. In the past, the Foreign Exchange market (forex) was a closed door. Only the big players could trade here. This was kept restricted to the governing body of an exchange. But the rise of the internet changed all that. Bulk trading is slowly moving to digital platforms.
The forex market is the largest financial market that is known to mankind. It is surely not a cakewalk. In fact, it is often termed as the most difficult and complex market to trade. The forex market is nothing but a network of banks that are interconnected. These banks offer to sell currencies at a determined rate. There is trading volume that aggregates to about 50 times the GDP of the USA. The trading is directly from the provider, and it is taken up by some of the biggest financial traders. Transactions are settled in 3 days.
2.2. 1.2 Importance of Forex Trading
Forex (foreign exchange) is by far the largest market in the world, offering enormous market depth and liquidity. It should be remembered, however, that forex trading can also be one of the most volatile, with certain news items such as central bank interest rate margins causing significant price movement in a matter of seconds. Central banks’ interest rates dictate the forex conditions within a certain country, as well as determining the domestic economic outlook for the 12 to 18 months that follow the decision. All major economies around the world have adopted a managed floating exchange rate within the present-day global financial market. Portfolio investors, multinational corporations, banks, insurance companies, and ordinary retail traders are the most predominant market participants. Central banks also engage in the forex market, intervening through monetary policy tools by using their foreign reserves to affect exchange rates.
As a result, if an economy can attract substantial hot money investments into its forex market, there is a general swelling of currency appreciation. The decrease in foreign transactions would lead to an economic slowdown and, in turn, depreciate the domestic currency. No other financial markets can be compared to the forex due to its 24-hour trading, allowing investors and governments to utilize news releases and economic events that occur in other nations to improve their investment strategy on a global basis. Although margins and repurchase agreements are sometimes used, which can bring the overall forex market to over 1.5 times the size of the world trade, in absolute terms, the forex is worth an estimated $3 trillion per day. In June 2010, GS had total equity capital of $72.416 billion and had a long-dated credit default risk at an interest rate of 47.512, along with a market capitalization of around $80 billion, placing it as the 22nd most valuable international brand names.
3. Chapter 2: Key Concepts in Forex Trading
We are now ready to introduce some key concepts that underpin the personal accounts we provide in the following. Included among these are basic characteristics of the foreign exchange (forex) market, such as the currencies that are traded most actively. If you are not familiar with the forex and currency trading, you will find these descriptions and explanations helpful since they form the basis for discussions in subsequent chapters.
The Foreign Exchange Market
The part of the foreign exchange market that attracts the most interest is the spot market. This is the market of the actual foreign exchange price. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement. Unlike the stock market, the spot market does not have a central place. Forex trading is done electronically and can be done with floating currencies, which are often known as the ‘majors’ all the time. The principles and strategies that apply to forex trading apply to these major currencies in particular.
3.1. 2.1 Currency Pairs
In forex, each pair of currencies is represented by two quotes separated by a slash. If the price increases, you buy the first currency while selling the second one. If the exchange rate goes down, you just do the reverse. A position on a specific currency says nothing about the trend, unless you pair it with another position. Typically, a short trade with EUR/USD says literally nothing; you must nonetheless add a long trade with the same currency pair to get the overall trend. Otherwise, your position could be influenced by some foreign policy events that are associated with another currency; this event could be bearish to only one of the two currencies.
Pairs are part of trading options, involving speculation by enthusiasts, central banks or companies. A trader enters the market by paying one currency; then, he purchases another and earns the differential interest.
The fundamental reason behind currency pairing is to trade, either actively or passively. An active trader who has a certain perception of the economy in another country may invest in just one currency in that nation. According to its analysis, that economy’s outcome is anticipated to gain the currency in the long-term, thereby increasing the purchasing power and adding to its assets. Alternatively, a passive investor who buys and retains may actively price in any variations in price.
Direct and Indirect Quotes On the forex market, the direct quote is when the price of another currency is expressed in terms of your country’s currency. For instance, EUR/USD = X or 1 EUR = X amount of U.S. dollars. The indirect quote is vice versa; it is when the price of the domestic currency is expressed in terms of another.
3.2. 2.2 Pips and Lots
Pips
Figuring out what a pip is, and what it stands for, is crucial in learning how profits are made in the forex market. We said that the price of a currency is quoted in units of currency 2 per currency. This means that USDJPY is quoted in yen (currency 2) per US dollar (currency 1). The most common denomination of currency 1 is one dollar, and in the early 21st century, the US dollar is fluidly traded against other countries’ currencies around the globe. Markets of currencies outside of the US dollar (such as the Euro or British pound) tend to lead to a bit more confusion when trying to think short-term trading, taking into account the added variable of all of the in-betweens that go on outside of the nation whose currency is being bought and sold. As such, we priced the cost or value of currency 1 above in the example at 118.1 yen. The price of currency 1 above is written as 1 USD per 118.1 JPY.
So what is a pip? The smallest unit of currency, or the change in the quote price of a currency from currency 2 to currency 1, is the pip. Since we quoted the price as 1 USD for 118.1 JPY, only the third decimal is relevant to us (for thousands of USD) since it changes the image and the real interconnectedness of the evidenced amount since 1 USD is permanently purchased at any given time while the returns alter. So in the case of the quote price having a third decimal of 5, per that 5, 1 pip would move in units of 1 USD at being able to be purchased for 118,150 JPY. In result, the pips are an indicator of income or loss in terms of foreign exchange trading, so for example, a gain of 10 pips would show a gain of $10,000 worth of JPY when hundreds of thousands of USD are traded. Pips are therefore the increase or decrease in value of two currencies and are directly dependent on the number of lots and positions taken in a forex trade.
3.3. 2.3 Leverage and Margin
Leverage simply permits the forex trader to trade huge sums of money on less capital. This also creates potential profits, mostly money, but also may potentially produce significant losses. Many people wonder why they cannot trade since the Forex market is too big. All of the trading markets have gap limits between that’s the price at which a trading trader has to close a spot. Most Forex dealers only ask for the margin of about $1 to $100. Margin is actually determined by the risk or trade amount, while leverage typically ranges up to 100 times.
When a trader wants to exchange in the Forex markets with small capital, they require leverage rather than simply increasing the size of the contract trade. Traders apply the leverage or margin facility that makes Forex trading opportunity and trading volumes, and too much profitable. Here participants utilize the (typically) given opportunity to acquire money in the form of buying sales volume that is actually greater than the margin deposit of the real copper. With any little investor leverage that may create great potential. With no leverage, the Forex seller with a trader may only require the Forex trading actual proceeds of $125 whenever a USD deposit is $5,000. The leverage provided does not charge you anything. The leverage is given to improve Forex traders’ buying and selling potential and to minimize the risk in the currency trading. Because of the leveraging and the margin, if Forex loses transactions, trader losses would greatly enhance exploitation.
4. Chapter 3: Becoming a Successful Forex Trader
In this chapter, you are going to uncover some of the skillsets and presenting profiles of some of the characteristics of the top traders to inform and inspire you on your journey to becoming a successful Forex trader. They have discretion, they are hard-working and persistent, have the strength to weather the inevitable adverse times, and can see the ‘big picture’. These top traders have developed strategies that are ego-driven or analytical and have tailored a strategy designed for their psychology. They have price alerts and do their own market analysis and design their own systems. Above all, they are prepared to take the risk, even with small accounts. The best in this industry have a good charting system and follow taking small risks to begin with, and then increase over time. In this industry, you may need to fail many times before you succeed. Learn to develop some strategies and then maintain a good track record over time.
Factors That Will Determine Your Success If you haven’t already discovered, the main factors that will determine your success as a trader over time are not the first thing that you think of — knowledge, education, being systematic, and spot analysis. For sure, these are all important and need to be refined over time. But in the face of Forex trading with irregular price action and markets that are never going to be perfectly systematic, you also need to develop skills and psychological strengths that set you well apart from the vast majority of not much more than five per cent of people who will give it a go. You need to think and act like a millionaire to ever become one.
4.1. 3.1 Essential Skills and Qualities
Following the advice and observing the behavior of experienced FX traders with different professional backgrounds, some basic characteristics, skills, and attitudes seem to be advantageous, if not essential for success in speculative currency trading. Most traders with a twofold process in the markets have experience as brokers working for other market participants. Many of them made risky bets on their jobs or personal accounts before switching to full-time trading. We want to highlight some key skills and traits gathered from our discussions with professionals. Although they might seem to some extent obvious, it is worth explicitly pointing them out. In addition, we briefly highlight two personality types who, in all of our qualified interviewees’ opinions, should not consider engaging in speculative FX trading.
1. Basic Financial Understanding Plus Interest in Macro. Knowing about previous results, profit and loss statements, the valuation model can help in evaluating the price of a given financial asset, but not much in forecasting short-term market movements. 2. Basic Skills in Economics. Although economists are not necessarily good market timers, a good understanding of economic developments is essential to successful speculation. 3. Professional Basis. Many systematic traders are experts in their field of trading. They may have spent professional lives with a broker or have a deep interest in developing models. 4. Interest in Trading Plus Fun of Working in Financial Markets. Someone who manages your own money or an interest in the financial markets and trading.
4.2. 3.2 Developing a Trading Plan
Retail trading in the forex market is now attracting an ever-growing number of amateurs, as well as those with hopes of making a quick fortune. However, due to the low margin requirements and a number of other facilities offered by forex brokers, this is not a very costly affair to maintain. A typical individual (retail) customer might withdraw $1000 from his or her bank account and act as a professional fund manager on the identical global network as the large corporations. Indeed, when retail trading began about a decade or so ago, the smallest acceptable size was a standard lot, which means that the minimum margin amount was around $1000. That has, theoretically at least, turned everyone into a fund manager. The heavy weapon (leverage) is now available and the retailers are quickly going crazy about the forex market. The forex market is also prone to market manipulations, especially since the market is not controlled and the trading volume cannot be determined exactly. It is up to the trader to use securities, commodities, and futures traders’ approaches. For a quick profit, the amateur trader also enters the market.
One of the most important components to become a successful forex trader is to develop a comprehensive trading plan. Rather than taking simple gambling, betting, and reactions to situations, a trader can approach the decisions in a more structured manner in his transactions. Ideally, many developing traders will probably develop a trading strategy on their short trips, rather than anything else, and this will require making decisions for about a couple of days or more. If that happens, you need to develop a very clear plan through your trading strategy. A trading plan, whether it is intraday, short term, or long term, enables traders to make informed choices for each issue. There should be clear instructions about what to do. It will help you save time as you can go to your trading plan when you are unsure about what should be done. This will save you much confusion and internal trouble.
4.3. 3.3 Risk Management Strategies
3.3. Risk Management Strategies
Risk management in forex trading is often seen as the most crucial, but at the same time also the most difficult part of trading. It refers to the practice of limiting trading risks. It helps prevent the total loss of trading capital and is ultimately a practice crucial to long-term success. Implementing an effective risk management strategy can be applied by limiting the amount of exposure to a particular trade and by employing the use of stop loss orders. This guide to FX risk management covers the fundamental risks that all traders are exposed to, as well as their solutions. By understanding and learning the issues, individuals can protect their capital and give themselves a better opportunity for steady returns.
With only 15% of forex traders predominantly making losses and contributing to the drastic reduction in the overall pool of forex trading resources, one of the easier decisions an FX trader can make is to implement an appropriate risk management technique practiced by the forex wizards of the current trading era. In most professions and business ventures, the principle of risk and reward often holds. However, Profit Forex mentor Joel Kruger explains that trading is an area in which failure to manage risk could prove quite costly, especially when one considers profit. Effective risk management practice can help limit an investor’s losses while ensuring that they trade for the long term. Such a strategy can be practiced through the efficient use of a stop loss, which, according to Investopedia, is an order to buy or sell a security once it has reached a certain profile point. Such a move diversifies a trader’s risk, in that they can trade during a given range, effectively risking less. Similarly, learning to impose restrictions and trade strictly within the limits of the system can aid in fueling long-term returns, as well as boosting a trader’s self-awareness and control.
5. Chapter 4: Analyzing the Strategies of Top Forex Traders
Chapter 4: Analyzing the Strategies of Top Forex Traders
Many beginning traders would like to find out which strategies are the most profitable and how to maximize their gains. This lesson will provide you with invaluable insight on the strategies used by some of the most powerful names in FX trading today. Professional traders with proven and consistent profit and the lowest possible drawdown will outline the preliminary requirements and plan that can maximize their profits in this section in order to help new traders learn how a professional trader thinks and operates.
Although the terms used in this lesson are principles for the professional trading plan, a new (or future) trader would have the right to draw their own conclusions and adjust their operations accordingly. According to traders, there are five characteristics that lead to the development of a profitable trading plan: in-depth knowledge of the basic principles of the currency market; mastery of an effective trading system; consistent application of this system; staying on top of the market by constantly learning and adapting; and completely identifying with all elements of your trading plan. Professionals believe that Forex attracts the attention of many individuals because it is the only liquid market that does not require a large initial capital to start trading. In its most basic state, a trading account and skills are all that’s required.
5.1. 4.1 Fundamental Analysis Techniques
Techniques used by fundamental analysts to interpret various economic statistics and news are important to both those who are beginning in the forex and also some of the more experienced traders. It gives a better insight into how the fundamental side of the market functions when we know how such information is used by professionals. The five fundamental and psychological driven factors influencing the foreign exchange market are discussed and taken apart before being analyzed and presented according to a top-down analysis strategy.
Fundamental analysis techniques are marginal indicators of the value of an investment. Economic theory starts from the de facto very much simplified hypothesis that people always behave as entrepreneurs, i.e. that they are everywhere motivated by the desire of bettering their economic condition and of gaining money. Simply put, fundamental analysis is methods to evaluate and objectively interpret economic factors and arrive at a judgment of the intrinsic value of a security, or in this specific case, the value of a currency. Economic factors include data derivable from matters such as population growth rates, natural disasters, and no less than interest rates, to mention a few.
The Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector within the economy. Because every action ultimately transacts through currency money, economic activity is reflected in the forex market. Larger economies will normally possess a currency which reflects a fairly large position compared to that of smaller economies. Size, however, is not the solitary factor that affects a currency’s value. In this chapter, a description of the importance as well as how either release affects exchange rates is given and should deliver a good understanding not only of the data release involved, but also pertinently, the main factors influencing the forex market as a whole.
5.2. 4.2 Technical Analysis Tools
This study provides evidence on the profile of the world’s best Forex traders in the twelve-month period from July 2017 to June 2018. Over this period, the ranking of the world’s best traders was based on the traders having the best win-loss ratio after trading a minimum of 200 trades, with consideration of the risk-reward ratio used in the individual trader’s account. It was found that 41% of the trades were in the EURUSD forex pair, and the main technical analysis tools applied by the elite traders were support, resistance, trend lines, and moving averages.
Technical highlights of the study evidence that 68% of the analysis conducted by the elite traders was for the purpose of identifying potential trading opportunities. The rest of the analysis was primarily concerned with developing a broader economic and political perspective of the currencies being traded, which will impact the medium to long-term outlook of the associated economy. Generally, complete swing trading strategies apply the same set of tools as other traders. However, the execution of swing strategies sometimes requires more complex tools to be used. For example, market depth (level 2) quotes and information on the availability of liquidity at each price are very important for some short-term Forex traders. Tools that may help better execute long-term or swing carry trades include interest rate expectations and interest rate futures. It is also likely that macroeconomic factors will play a larger part in one’s trading style the longer they stay in the trade. For example, some traders will look at interest rate differentials, trade balances, political stability, and any crisis potentials (notably military and natural disasters). The use of these will depend on one’s view of a trade.
5.3. 4.3 Sentiment Analysis in Forex
Forex is a highly speculative domain, and psychological elements play an important role in market developments. Traders usually anticipate future events and purchase or sell different currencies based on these events. They have strategies to determine in which direction the value of a currency will go and to what degree it will. Several cutting-edge strategies for evincing when to get into and exit trades have evolved over time, emphasizing the theoretical and fundamental study. Although some of these strategies work, few are 100% historically precise. Many traders, however, believe that forex could alter our lives since they are enthusiastic about it.
As a result, options are influenced by human psychology, which does not follow a set method or number since they may change. Sentiment analysis is used by traders to gauge market sentiment. It is used to determine what portion of traders is involved in a distinct market. If the sellers are in the minority, the sellers will normally adopt a positive approach since the market has to move upwards in the future. In a broader perspective, guarantees rely on the psychological and investment natures of the target audience. It suffices to discuss the basic cognitive approach to obtaining knowledge on the psychological and cognitive areas of trading. Moreover, in current economic literature, the trader can undergo numerous opinions and conjectures based on the actual state of the world, resulting in adverse effects in the market.
Until recently, sentiment studies focused largely on national stock indices. The FX market transformed the whispers and whistles of the market to prices due to the lack of a regulated market, a centralized regulatory body, technological improvements, and a complex and imperative global economy. Forex trading was noticeable. The media often attributed violent fluctuations in the prices to entirely surprising incidents, such as a terrorist attack or an attack by a public official; though these incidents undoubtedly have an impact on the marketplace, the media rarely cover unexpected fluctuations caused by evolving investment patterns.
6. Chapter 5: Case Studies of Successful Forex Traders
Artur’s trading strategies are based on weekly and daily charts. He analyzes commodity futures, but does not conduct any transactions in this market. Daily charts with a short time frame of 50 periods and 14, 5, and 3 periods are used. The first of these is used to determine the bottom and top of the next day’s session, to separate active trading sessions from slow market. The second oscillator provides additional trading signals when the daily session ends, and the third oscillator is used only for entering and exiting the market. All of these oscillators have a sensitivity equivalent to the sensitivity of 3, 8, and 14 daily periods measured with a standard deviation. Which means that the faster moving average shortens the temporal dimension.
Leverage is easier for him to handle on a short time frame. His number of transactions ranges from one per week to more than fifteen. He does not use a stop order, opting instead for a mental stop. Transactions are managed according to a set of rules. The maximum loss may be up to 5% per day or from the beginning of the month. Strategy number one is leveraged trading using different futures contracts, other commodities, e.g. lumber, row crop commodities like corn, currency futures contracts, T-bonds, stock index, (in 1988 — the Nikkei and S&P 500). Strategy number two is foreign exchange trading. He puts 1/3 of his equity into margin trading when opening a trading account, with a leverage of 1:3. He trades daily on spot and forward exchange rates with the following currencies: USD (majors), Italian lire, Austrian schillings, Swiss franc, German mark, Spanish peseta, UK pound, Swedish krone, Australian dollar (very volatile), and Canadian dollar. Trading volume is small in relation to the overall volume of these markets.
6.1. 5.1 Trader A: Profile and Strategy Analysis
The following section provides an analysis of three top forex traders, each of whom are currently active and successful in the forex market. The profile of the three traders includes an analysis of trading strategies employed, including trading style, leverage used, holding periods, drawdowns experienced, strategies for moving orders, margin requirements, and the maximum time spent in the market at the trading desk. In addition, feedback was obtained from the three FX traders about their research and the way they approach trading in the forex markets. Table 1 provides an overview of the trading styles employed.
Trader A makes a market, trading the bid-ask spread with a fixed notional and refuses to trade the 10-year bond on Tuesday and Thursday when the U.S. fixed income market is open. The primary method of trading is value trading for Trader A. Indicators used to determine the value entry or exit points include the Standard & Poor’s 500, Deutsche Marks v Yen, and U.S. interest rates. Order types are generally limit and stop based, with the price of the limit and stops used depending on the trade value, but generally a dollar nine figure or a ten figure. In addition, Trader A uses a “limit move” order, which simply moves the limit steadily upwards once the new low limit order of the old order is breached. Notional value traded is determined by measuring the range of support and resistance points: once one trade is done, a further two trades at trigger points will be carried out, and “no more trades unless the mid-point (3.5) is reached are done.” Trader A is leveraged 75:1 in trading the US fixed income and 20:1 during U.S. open hours for all other markets in the time period examined and is leveraged five times intra-day. Trader A has a black box that does system trading using ten-year fundamental risk-free settling monthly; there are no options available for trading. For Trader A, profits and losses are “you never know what Sunday is going to look like.” Trader A consistently keeps a short and is only in the market for an average intra-day holding period of 3 seconds, although they also continue to trade past U.S. open hours, with a consistent maximum time being 30 seconds. Position holding ranges for market making include running markets following U.S. fix and running out of market. To buy back out of the market, two Stochastics are used for confirmation. In the ten-year cash market, if between 107.25 and 108.05 long or short if outside this range, no position is held. Rollovers are always short as the spread is positive. The current drawdown is “not applicable”.
6.2. 5.2 Trader B: Profile and Strategy Analysis
As with trader A, the analysis of the applied strategies of the best forex trader B begins with the clue of the participant’s profile. Similarly, to digital values news providers, financial market news is certainly a priority of analytics, although not an aspiration of drop-making. In contrast to the first described trader, the second one demonstrates relatively higher knowledge about professional trading (in particular, expertise in algorithmic or technical trading). However, the question of the right time to open or close a trade is rather a matter of feeling or inspired guesses than a precise estimation of a trader. Trader B can be addressed as a participant adept at utilizing technical analysis. The applied strategy of the best forex trader B is very difficult if “difficult” refers to the development of a model, but quite simple if “simple” is referring to the execution of the strategy.
The performing of the trading decision-making process includes 3 main stages: (1) Definition of an hourly trend that is identifying a direction of a price trend in an upcoming hour. In order to estimate the trend, the best forex trader B uses graphic investigations. In particular, the trading participant applies the work with two main market indicators (such as Simple Moving Average and Exponential Moving Average). In case that estimations of these indicators are not confirmed, the best trader needs to open up a camera to go outside and look at the sky. Obviously, the latter sentence should not be interpreted as trade recommendations. Despite specifying calculation and indicating sources used interpreting particular technical indicators are involved for confidentiality purpose. (2) Identification of lower and upper barriers of a price level for the upcoming hour. In order to determine a lower and upper barrier, the trading participant uses Low and High values from the last hourly period. The barriers are calculated as K times of the absolute difference between the current price and the Low/High value, where K is a random 2 decimal number.
7. Chapter 6: Lessons Learned from the Best Forex Traders
‘This is a very insightful book that provides new perspectives on trading and investing. The authors are not only competent but also experts in the areas of forex and commodities based on their years of experience in the fields. The text presents a much-needed process and practical guide on these markets.’ — Aziakpono Loader, Professor of Financial Markets and Investment, Kent Business School, University of Kent, UK.
Introduction Also learn strategies for trading the US Treasury bond futures market by Speaker Group Inc. How can you become one of the best forex online traders? By listening to the advice and recommendations of experienced traders and learning from their real-life experiences. This chapter can help get you there, by exploring the profiles and strategies of the best forex traders.
Understanding the forex market and successful trading tools, traditional currencies supply and demand, including futures contracts lies between central banks, private exchange dealers, commercial banks, and business transactions, from local to international transactions. In this book, each successful and best trading profile in the forex market chapter has received a wealth of advice by Rize filed for forex brokers trading in addition to submitting the results of their methodology. Furthermore, it is possible to learn the actual Monday in-depth market analysis entered by the broker in the systems tested and forex market by the company.
7.1. 6.1 Common Traits and Habits
The world’s best forex traders share common traits and habits. Understanding what these behaviors are and what they look like can help a trader adopt them into their own routine and strategy. Here’s a few of the most common behaviors found among the world’s most successful forex traders:
1. Patience — waiting and knowing when to act is a valuable trait. 2. Relax and let the market come to you. 3. Never chase the market or trade simply because you have to. This can lead to reactive or unmeasured decision-making. 4. Simplicity — why overcomplicate things? 5. Focused on consistency and return on investment over making a quick dollar. 6. Keeping their emotions in check.
Below are some of the trading approaches of the world’s best traders and how they might be useful in creating your own trading strategy and routine. This has been curated from interviews and books with some of the best forex traders in the world… Here’s a few of the most common attitudes and beliefs found among the world’s most successful forex traders: Character — Desire, Vision, Character — How they think — How they work steer clear of all the get-rich-quick-break-the-bank-on-a-click-of-a-mouse schemes and understand the psychological components of trading. Consciously competence about what you aim to achieve. Avoid unnecessary risk… to be a leading currency trader, there are habits and the psychology of trading that you should know in order to apply them to your trading habits. Trading, any trading, requires a strong-willed approach. The forex game is a game of skill, as if a golfer is reaching for the green. To add to that mental adjustment, the more you fail, the better you become!
7.2. 6.2 Overcoming Challenges
Adversity is an unavoidable fact of life in the retail forex trading world. It may be tempting to fantasize about being a full-time trader who is paid millions and drives a Lamborghini, but in reality, the road to success involves surmounting a mountain of challenges. When serious traders were asked what the most significant challenges are, four main ones were pinpointed. It was the most common answer. However, retail traders encounter challenges that also need to be addressed. Here are professional traders’ difficulties and their preferred approaches for overcoming them.
Challenges: — Consistently losing traders — Impatience — Trading with every bit of discretionary cash — Time zones and our 24-hour market
Strategies: Even the world’s finest forex traders encounter challenges with a smile. While accepting risks is a natural part of trading forex, there are a few ways to safeguard your account from huge losses resulting from high-risk trading. Furthermore, the risk of loss is linked to this and many other forex trading profits. This is a piece of advice from professionals discussing the most significant challenges. Always trade with a sensible risk-reward framework. Trading with a proper risk-reward ratio is something that all successful forex traders excel at and do. If you wager $500, your profit goal will almost probably be $1,500. No one on the list of the best traders exemplifies the self-destructive habit of going “all in” with their funds. According to Mr. Choue, “most investors trade with every bit of their cash” in a particularly Asian phenomenon.” If you’re a successful business psyche, take a break and use your trading tools as a backup to increase your portfolio’s value over time. According to Ferguson, “Another of the most detrimental habits that cause traders to fail is impatience.” “The majority of traders are erratic and undisciplined,” Mr. LeBaron said disapprovingly. “Instead of re-evaluating the situation, they change their strategy based on momentary losses.” In the world of forex trading, this is a blunder. “Avoid the trap of trading every setup and searching the market for a trade,” says MethodologyX’s owner. Trade only when you get A+ trades.” Always keep an eye on the technical setup. We will be happy as long as there is a reasonable level of volatility.”
8. Conclusion and Future Trends
With the growth of forex trading and its spread alongside trading technologies, the importance of a new market actor — the retail forex trader — has increased. The ideal type of this new actor is supposed to be a short-term focused individual private investor who works with their own capital out of one or several different reasons and who looks for an average to supra average yield. Along with this new kind of market participants, new services emerged, especially with the appearance of the internet, and information distribution and insider marketing of expert advisors are an integral part of these service offerings. This is at least different from literature about classical investment psychology, where these topics are not discussed.
Behavioural finance and trading psychology identify several biases, heuristics, and errors committed by investors and traders. This gives insight to potential improvements in trading. Efficient market studies and chartist/technical trading/economical model/econometrical approaches help to find trading strategies that offer a systematical advantage in the markets. In this essay the world of retail forex traders, who supposedly only intend to trade one market, that is the currency market, is viewed. An attempt was made to present the state of the art in forex trader’s strategies, either by rank or by type. To begin with, sections on market psychology, learning and other lists of biases are presented to heighten the reader awareness.
