Home Blog Page 3

3 Strategies To Overcome the Fear of Success When Trading Forex

Is there anything like the fear of success? I know you are thinking that I am kidding or I am being sarcastic. No. I am not.

The fear of success is as real as the fear of failure. Never felt it? Count yourself among the few lucky forex traders in Kenya.

The fear of success is, in fact, more calamitous than the fear of failure because a lot of traders do not know that it exists.

We all say that we want to be successful. We want to make enough money to give our families the kind of lifestyle that they deserve, but subconsciously, we are freaking afraid of all the changes that come with success.

You see, success comes with new and higher expectations. I compare it to a soccer player who scores the most goals and skyrockets to become the top player in that football season. The chances are that the player will set his goals higher during the next season. He will want to score more goals and surpass what he scored the previous season.

And therein lies the problem.

The Pressure of Success

For a lot of people, the pressure that results from a one-time splendid performance may keep them from even trying.

In our case, the soccer player may be afraid that if he tries, he will fall short of how he performed in his excelling football season. He’d rather remain on the sidelines than try and make a fool of himself.

Have you ever felt something closer to this?

This situation is not uncommon. After all, a lot of us grew up being grilled about the importance of excelling in whatever we do.

This pressure to excel makes online forex trading more difficult because no matter how much you try to become better, you cannot avoid making losses. They are part and parcel of trading. You can’t win in all your trades.

Mostly, the fear of success in forex stems from being anxious that you could be on the wrong side of a trade setup.

Many traders identify an incredible entry signal. The pips are just right, and if the trade goes their way, they would walk away with a tidy profit, but the fear of success holds them back.

A few hours later, they are beating themselves up as they would indeed have walked away with a tidy sum of profit.

What can you do to banish the fear of success once and for all? Here are 7 tips:

i.             Focus on the process not the profits

The problem with many forex traders in Kenya (and around the world) is that they focus so much on the profits they stand to gain. If they lose on a trade, their confidence is instantly shattered. The one-time loss keeps them from jumping in on entry signals that they would normally take.

One plausible solution to this is to put the profits and losses out of your mind and focus only on your trading strategy. By doing this, you not only take away the pressure to perform but also get to understand what can be done to improve your forex trading strategy.

ii.           Have an open mind

The behavior of the forex market is constantly changing, which means that you also need to constantly change your trading strategies.

The problem with many forex traders is that they believe that they have to be right; that their strategies are right. They do not want to admit that they were wrong. They are afraid that the market will make them appear foolish.

To overcome this fear, you need to let of your need to always be correct. This will relieve you of the pressure of wanting to be right all the time. It will free your mind to concentrate on and better understand what is happening in the forex market at that particular moment.

iii.         Set realistic trading goals

Goals in forex trading help you bridge the gap between your hopes and reality. If you set unrealistic goals, you set yourself up for a tirade of disappointments. The disappointments affect your mental state and impair your decision making capabilities.

By setting realistic trading goals, you begin to see how far you are from achieving them. You get to a clear mental picture of what it will take to achieve your goals. If they seem far-fetched, you can always cut back on your expectations.

The Power of Beliefs and How They Affect Your Forex Trading Strategies and Outcomes

Trading in the short-term is more profitable that trading in the long term.

You can only predict the market correctly in the long term.

The stochastics is oversold so the market is bound to go downwards.

Forex trading is difficult.

Forex trading is easy.

Online forex trading is lucrative and worth every single shot.

Technical analysis is the best way to figure out the markets.

What do all the above statements have in common?

All of them are beliefs about the forex market. All of them shape what we call the trading psychology of the person who holds the belief.

Can you identify any belief that you subscribe to from the ones listed here?

I will let you into a secret about any kind of belief.

Beliefs are hard and painful to let go. Some of our beliefs are formed from traumatic experience that we’ve had. These beliefs and perceptions may not be necessarily bad, but how do they affect your forex trading career.

Online Forex Trading is all Beliefs

Online forex trading allows you maximum freedom to do as you wish.

There is no teacher to cajole you from taking a certain trade.

You have the freedom to decide which trading session you will use to place your trades.

You decide the currency pairs that you will trade, and

You choose the maximum or minimum lot size you will trade

So, if the forex market accords you all this freedom, what dictates your trading decisions?

The simple answer lies in beliefs.

You may think that your forex trading decisions are determined by a piece of news or a movement of a technical indicator on the charts, but it is not. It is your basest belief about the news or the technical indicator that influences you to make whichever trading decision that you make.

You can trace back the path to every trading decision you have ever made on your beliefs.

For instance, why do you prefer to trade a certain currency pair and not another one?

Or why do you use the particular trade setup that you use?

If you trace back the answer to the above questions, you will be shocked to realize that these decisions emanate from a strongly held belief.

Becoming aware of the beliefs that shape your trading decisions is the first powerful weapon you have in your trading arsenal.

What are your beliefs about online forex trading?

Let us do something practical here. Take a pen and paper and see if you can list at least 7 trading decisions that you have.

Here are mine:

  • I must always trade using a predetermined trade plan
  • Forex trading is as risky as any other investment you decide to make
  • I must have a risk/reward ratio charted out before I place any trade, and this must always be 3:1
  • Support and resistance levels are extremely crucial when it comes to predicting and analyzing the market
  • Trading the forex market is all about beliefs!
  • And these are not all…

Looking at the above, I can already see how each one of these beliefs shape my trading decisions. Can you see the same when you look at your 7 beliefs?

Where Do Your Beliefs Stem From?

I have already mentioned that most beliefs are formed after going through a traumatic encounter, but this is not the only source of your beliefs.

  1. Nature/Evolutionary

At the most basic level, beliefs are evolutionary. They are programmed into us as part of fight or flight that has evolved for over thousands of years. Beliefs, just like emotions, are hardwired into our DNA, our very fabric that makes us human.

  1. Environment

Most of your other beliefs are a byproduct of your upbringing. Would you have different beliefs if you grew up in the USA’s city of New York as opposed to some estate in Kenya? Definitely Yes.

  1. Indoctrination

Other beliefs are indoctrinated into us. To a certain degree, a lot of people (apart from the truly enlightened) accept commonly held beliefs. As we grow up, our subconscious collects, accepts and stores a set of beliefs without questioning them.

  1. Identity beliefs

Some beliefs are as a result of whom we believe ourselves to be. “I am technical trader” is an example of an identity belief.

Are Your Beliefs About the Forex Market Useful?

“We trade our beliefs about the market”~ Van K. Tharp

There are a lot of different approaches to the market as there are traders. This is because every trader has a different beliefs about the market.

In a nutshell, we all see what we want to see.

The good news is that we get to choose our own beliefs. No one can impose a belief on us. And this is where the real power of beliefs about the FX market is realized.

We also get to decide whether the belief is useful to our trading. We can safely disregard and discard the beliefs that are not helping our trades. For instance, I believe that when the %K and %D lines of the slow stochastics cross below the 20-level mark, it becomes a signal to go long on my favorite currency pairs.

Although I know that the two stochastics lines do not have any influence on the forex market, I still choose to believe them. Right now, it serves me to hold on to this belief. If a day comes when this belief no longer holds true, I will easily abandon it.

Here is the thing. If your current beliefs about the forex market do not serve your best interests, you need to let go.

What are the beliefs of top forex traders?

If you take one thing out of this article, let it be this: You can take beliefs on and off. You should take off the beliefs that are contributing NEGATIVELY to your career and put on the beliefs that will help you become the next successful forex trader in Kenya.

During my few years of trading the forex market, I have interacted, studied and analyzed the beliefs of many successful traders. Most of them tend to have a set of similar trade beliefs:

  1. They take full responsibility of their actions in the market
  2. They understand that position sizing is the key to scoring their FX trade goals
  • Although they might be wrong more times than they are right, they still make money on the forex market
  1. They take trading seriously. Their investment in the forex market is a business, not a hobby.
  2. They realize that losses are part of the business, and they are ready to face their losses, pick themselves up and look for the next trading signal
  3. They diligently record their results.
  • They are comfortable with taking carefully calculated risks
  • They understand the importance of risk-reward ratios
  1. They believe that they can make profits in the forex market
  2. They have full confidence in their forex trading strategies.

Do any of these beliefs compare to the ones that you already have? If none of them does, it is probably the high time that you started reevaluating your forex trading beliefs.

How to reorganize your beliefs about online forex trading

Have you ever observed that you can have conflicting beliefs at the same time? This is because you are a mixture of conflicting parts.

Inside you, there could be any of the following parts:

  • A trader part
  • A rebellious part
  • A caring parent part
  • A gambler part, and
  • A fun part, just to mention a few

Each of these parts form who you are. Each one of them can have a great impact on how you approach online forex trading. For instance, the fun part may dictate that you open a position in the market out of boredom, whilst the trader part warns you that you should wait until you see a clear entry signal.

Fortunately, the process of reorganizing your beliefs is a simple one.

Firstly, you need to realize that you want to acquire a certain belief. For instance, if you believe that position sizing is a significant part of your forex trading strategy (and if you were not calculating position size before), then you can learn about position sizing and apply it on the next trade you place.

If there is no negative charge impeding the adoption of the belief, and if you continue to consistently take action, you will easily acquire this new belief.

However, if there is a negative emotional charge that is impeding the adoption of this new belief, such as the gambler part tempting you to take exceedingly bigger positions in the market, then it will be difficult for you to acquire this belief.

Van K. Tharp in his book, Trading Beyond the Matrix, gives 2 suggestions that you should try:

i.             Feelings Release:

The feelings release process involves completely changing the way we react to negative feelings and thoughts.

Instead of continuing to resist them, you embrace them fully. This serves to dissipate the power that that feeling has over you. After some time, the feeling fizzles out.

ii.           Parts integration:

Parts integration involves letting the different parts of yourself negotiate and make mutual decisions. For instance, the fun part of you may enter into discussion with the trader part of you. The fun part decides to give way to the trader part in exchange for the trader part stepping aside for the fun part during the weekend.

This may sound weird, but trust me, the moment I tried it with one of my nasty beliefs, I experienced transformational effect in my career.

iii.          Create a Self-Improvement Routine for your trading beliefs

Becoming a successful forex trader requires constant and consistent refinements.

The best athletes work on their mental part of performance as much as they work on their physical training and physique.

The same applies to successful forex traders. They work on their psychology as much as they work on refining their trading techniques.

As beliefs are a central part of your forex trading psychology, you should considering having a beliefs self-improvement routine.

Your beliefs improvement routine can include:

  1. Listing your current beliefs about forex trading in paper and pen
  2. Listing your current beliefs about your forex trading strategy

A powerful beliefs system will help to shape your trades for the better.

Did you enjoy reading this article? Kindly share it on Facebook, Twitter or LinkedIn.

Learning Online Forex Trading in Kenya

Online forex trading is something that you can do and make a lot of money. However, before you start banking the big money, you need to learn how to trade the forex market.

In this article, I want to steal you into one of the secrets about learning online forex trading in Kenya. I’ve had the privilege to train many beginner, intermediate and advanced forex traders in Kenya. In all of them I have realized one thing. Many think that their greatest hindrance to making profits in the forex market is because they have not learned a certain technique.

Nothing could be further from the truth.

Learning online forex trading has more to do with how you handle and deal with yourself. While it is true that there are a few technicalities you need to muster before you can begin to trade profitably, the biggest challenge is learning how to control yourself.

Fighting your perceptions

The first thing that beginner forex traders need to overcome is the perception that currency trading is a get-rich-quick kind-of-a-thing.

I don’t blame you if you are looking to venture into FX as a shortcut to immense riches. This perception is created by many websites that tout forex trading as a way to make money fast and get rich quickly. In real sense, these websites do not have your best interests at heart. They want to take advantage of your newbie vulnerability to steal money from you!

Forex trading is not a shortcut to infinite wealth. Don’t venture into it if you want to make a quick killing and retire within your first year of trading. You will be thoroughly frustrated.

It is important that you approach internet forex trading with the right attitude.

Getting Your Feet Wet

Once you have dispelled all the myths that tout FX trading as a get rich quick, it is time to get your feet wet. When you are learning to swim, you don’t dive into the water head first. You first get your feet wet, test the depth of the water, and slowly waddle towards the deep end. Anything short of that is a recipe for an untimely death by drowning.

The same thing applies to online currency exchange trade. Here is a list of things that you need to do as you prepare to venture into forex trading:

  • Start reading

The first step to venturing into forex is getting an education. There are a few ways you can use to learn online forex trading, but whichever you choose, make sure that you are learning. You will need to learn the terms and lingo used in the currency exchange market as well as the strategies used to trade.

If you cannot manage to learn forex on your own, you may consider hiring enrolling for online forex trading classes in your town. Having a mentor to hold your hand simplifies the learning process and is faster than trying to learn everything on your own.

  • Research online forex brokers

All retail forex traders trade the forex market through forex brokers. However, not all brokers are born equal. Some are nothing but scams that will disappear with your profits after you’ve been pouring out your heart and soul on trades.

Some brokers require high starting capitals while others allow you to start trading with a small deposit. You will need to spend some time reading forex broker reviews and visiting their websites to understand how they operate.

Some of the things that you should keep in mind when researching forex brokers include:

  1. Check whether the broker is registered with the requisite authorities in their country of jurisdiction. This is a crucial step that will help you differentiate  real serious brokers versus those who are out to get you.
  2. What is the minimum deposit allowed by the broker? Is it an amount that you can easily raise without investing money that you cannot afford to lose? If you have less than $2000 to invest, you should probably seek those brokers who will allow you to trade in micro lots.
  3. Ease of deposits and withdrawals: You do not want to be stuck with a broker that can’t let you withdraw your profits easily. Which deposit and withdrawal channels does the broker offer? Are you comfortable with at least one of them. Keep in mind that many brokers will only let you withdraw your profits into the same account you used to fund the account.

If you have ease of mind with your broker, you will manage to allocate more time to analysis and fine-tuning your strategy. Doing your due diligence before settling on a broker goes a long way and can greatly enhance your chances of becoming the next successful Kenyan forex trader.

  • Open a demo trading account

After you have read many forex broker reviews and settled on a few that look promising, you will need to open a demo account to test how trading on their platforms looks like.

Many legitimate forex brokers (such as Easy Forex) will let you open a free demo account to pilot test their trading interface. They will even load the account with virtual money.

The free demo accounts allow you to learn more about the forex market and to practice trading with zero risk.

  • Test out some strategies

So far so good. Up to this point you should have some solid information about FX trading and a demo account. It is not time to put what you’ve been learning into practice. After you learned how to operate the demo account, it is time to test out some strategies.

I am assuming that you took step 1 very seriously and learned all that there is to learn in online forex trading. Which strategy did you think is the best to trade forex? Test it now.

I suggest that you spend a lot of time practicing trading strategies on the demo account. Devote time to your demo trades daily, and do not upgrade to a live account until you are making profits on the demo account. I repeat. Do not risk your ‘real’ money if you have not started making consistent profits on a demo account.

  • Open a live account

The final learning step is to open a live trading account. You will need a scanned copy of your original national ID card and a bank statement or utility bill.

Start by depositing a small amount into your real account and trade small lots. Better still, follow this link to get free $25.00 that you can use to start trading on your live account.

If you have gone up to this step without despairing, give yourself a pat on the back. To sum up what you’ve learned today, go slow when you are new to online forex trading. Take your time before you open a live account. Find a mentor to hold your hand. Practice on a demo account until you are sure of yourself, and once you open a live account, trade small.

Till next time. I am still yours trully. Patrick Mahinge.

Which is the Best Way to Learn Online Forex Trading in Kenya?

Online forex trading is a lucrative venture with a very low entry barrier. You only need to learn how to trade forex and you are on your way to making some good retirement money.

If you have heard about online FX trade (aka online currency exchange) and decided it is a venture you would like to pursue, you will need to spend some time (and money?) learning how the forex market operates. Before we go any further, let me say that I am a big advocate for learning online forex trading. With the high rate of unemployment in Kenya and salaries that never grow proportionally to your needs, you’ve every reason to want to invest in online currency trading.

The second thing that I’d like to mention is that nothing beats experience. If you want to learn how to trade forex, your best bet will be to start trading. When you are a beginner, you should open a demo account on Easy Forex. The demo account allows you to practice trading with virtual currency. You do not put any of your money at risk. And conversely, you do not take any profits to the bank. But you will gain a lot of experience from trading forex on the Easy Forex demo account.

The downside of trading on a demo account, however, is that you do not experience how it feels to have your hard earned money on the line. I’d therefore recommend that you open a micro-account, deposit a few hundred shillings in it and use it to learn how to trade. It is by far the best way to learn how to trade forex.

In today’s article, I am going to show you a few ways that you can use to study forex and become a pro in it in less than 4 weeks.

Free Online Courses and Forex Tutorials

The internet is a mine of information. Seriously. There is so much information online and all you need is to know how to use Google. Some good places to find free online forex courses and tutorials include:

  • Individual forex broker’s websites
  • BabyPips.com
  • Investopedia.com

Although there is all the information you need about FX trading in websites and blogs, you need to be wary of websites where you are getting your information. Some may contain outdated information while a majority publish information just for the sake of publishing.

Another downside with using online forex tutorials is that you may suffer from information overload. Every forex trader develops his or her own forex trading system. The information you get online is therefore very subjective.

To adequately utilize the information you get in online forex trade tutorials, you will need to sieve much of the information and only retain the one that you are going to use.

YouTube Videos and Tutorials

Don’t underestimate the power of YouTube when it comes to learning online forex. There are many informative video tutorials on YouTube. If you are keen, you will learn how to trade online forex in no time and be on your way to investing in this lucrative trade.

The best way to use YouTube Video tutorials is when you already have a demo account. This will allow you to practice what you learn.

If you have not registered for a demo account, click here to register and download the MT4 trading software from Easy Forex.

However, just like with the many forex training courses and tutorials that you will find on free blogs and websites, some YouTube videos can be misleading. Internet marketers will post crappy videos as they seek to make money from advertisements placed on their YouTube channels. You will therefore need to approach the training videos selectively.

Hiring a Forex Trainer or Mentor

If you have a few thousand shillings to spare, hiring a forex trainer or mentor is one of the best ways to learn the ins and outs of the forex market. A lot of forex traders who offer trading classes in Kenya will charge you an average of 50,000/= for a few days of training.

The best thing with hiring a trainer is that they give you concise and concrete information that you can put to use immediately and recoup your investment.

Keeping Your Emotions Out Of Your Trades

In a previous tutorial, I talked about the importance of developing a solid trading strategy and sticking to it. These two skills, developing a strategy and following it, will determine how profitable you become in forex trading.

Unfortunately, very few forex traders in Kenya are able to practice this trading discipline.

But Why?

The answer lies in emotions.

Human beings have emotions that are hardwired into them. These emotions, which include fear, greed and pride, are strong beasts. You will need to understand how they influence your forex trading decisions and what you can do about them.

How Do You Keep Emotions out of Your Trades?

The short answer to this question is that you can’t get rid of your emotions.

As long as you are breathing and your nerves are alive, you are going to experience emotions. They are hardwired into you.

In fact, your decision to learn how to trade forex is driven by emotions. There is nothing as uplifting as entering into a trade and exiting with a tidy sum of profits. It makes you feel like you are high on steroids. Just accept that as long as you alive, you will be experiencing some pretty intense emotions when you are trading.

What’s the Secret?

You can’t block out emotions. The secret is to understand them, know where they are coming from, and device a plat to deal with them. Of course this is easier said than done, but I have a few tips that should help you:

  1. Put your eyes on pips, not dollars and pennies: Don’t let the exact amount of money you are making or losing on a trade distract you. The market does not know how much money you had put into a trade, but it knows where the current price lies.
  2. Swallow your pride: The forex market is not about who’s right when. It is all about making money. There is only one way to measure your success in forex trading. Are you making profits or losses? Nothing else matters.
  3. You are going to lose money in some trades: Take it to your head. No trader is immune to loses. Just like making profits, taking loses is part of the routine in the forex market. What you need is a solid risk-management strategy to ensure that you loses do not exceed your profits.

3 Pillars of a Highly Refined and Disciplined Trading Strategy

1

To be successful in forex trading, you must develop and refine a disciplined trading strategy.

Regardless of the type of trader you are, you will need to sculpt an organized forex trading strategy.

A solid trading strategy is what marks the difference between making money and consistently losing money in forex trading.

What is Your Plan?

A forex trading plan is an organized approach to entering, executing and exiting trades in the market. Do you have one drawn out?

Here are the 3 pillars that you should include in your forex trading strategy.

  1. Position sizing: Position sizing is something that you need to plan for before you enter into a trade. How large will your position be? By carefully planning your position size, you will always know how much money you have at stake.
  2. Where to enter the market: One of the biggest blunders that forex traders in Kenya (and around the world) is to enter trades blindly. The MT4, with its ease of use, is very tempting. However, if you love your money and sanity, you will not click on any of those buttons just anyhow. You need to determine exactly where you are going to enter the market and what you will do in case the market does not reach your predetermined entry point.
  3. Setting stop loss and take profit orders: The third pillar to developing a solid forex trading strategy is to understand how and when to exit your open positions, both when you are winning (take profit) and when you are losing (stop-loss).

That’s it!

If you muster these 3 things, you will consistently make profits in the market. You will minimize your losses and enjoy watching every trade that you make. The opposite is also true, ignore these 3 pillars of a solid trading strategy at your own peril.

These three pillars are what stands between you making profits or losing money on the forex market. It is unfortunate that many beginner and experienced forex traders in Kenya open positions on the market without paying heed to any of these.

Do you have a game plan? Is it written down? Can you explain to a 8-year old what signals you will use to enter a trade, what position you will hold and where you will place your stop loss and take profit orders? If you find yourself fumbling for the words, you need to go back to the drawing board. Refine your trading strategy.

Trading without a plan is like driving with a blindfold across your eyes. You might be able to fumble and start the ignition, but will you keep the vehicle straight on the road? Will you be able to park it?

Don’t break any of the forex trading rules, or the market will break you.

Following Your Forex Trading Strategy

[pro_ad_display_adzone id=”12455″] It is all good to have a solid trading strategy developed, but what ultimately determines your profitability is whether you follow the strategy. No matter how good you think your trading strategy is, it won’t work if you do not follow it.

Your emotions are one of the greatest threats to your trading strategies. At time, emotions will bubble, making you lose focus of your strategy. At other times an unexpected piece of market news will surface, making you want to abandon your trading strategy. Whenever you abandon your trading strategy, you become as good as the guy who entered into the forex market without any plan.

Developing a solid trading strategy, and then sticking to it, are two of the most important skills in forex trading. If I was to name one characteristic of a successful forex trader, it wouldn’t be killer technical analysis skills, aggressiveness or gut instincts. It would be a well-refined trading discipline.

Forex traders who lay down a solid trading strategy, and then follow it are the ones that survive on market from one season to another.

Before you do anything else today, make sure you have drawn out a trading strategy. In the next lesson, I will be showing you how to distance your emotions from your trades.

Beginner Tips and Tricks for Trading Forex on a Demo Account

0

The best way for beginner forex traders to become acquainted with the forex market is to trade on a demo account.

But where do you get a free demo account to practice trading?

Don’t sweat the small stuff. Many forex brokers offer a free demo/practice account. To access the demo, you only need to sign up on the broker’s website for free, and you are good to go.

Practice or demo accounts are funded with ‘virtual money’. You are free to use the virtual money to place trades in the market. Any profits made on a forex demo account cannot be withdrawn, neither can loses be debited on your account.

Why Demo Accounts?

Practice accounts give you a great opportunity to experience the live forex markets without putting any of your money at risk.

  • You can analyze how prices change in different times of the day
  • You can see how the behavior of different currency pairs differ from each other
  • You can see how the forex markets reacts to different news releases
  • start analyzing charts and improve your understanding of how margin and leverage work
  • You can use a demo forex trade account to strengthen your strategy before putting it live

Using a demo account, you can start trading in real market conditions without the fear that you are going to lose money. If you are looking for experience in forex trading, a demo account is what you need.

Demo/practice accounts are also an excellent way of testing how a certain broker’s platform works. Unfortunately, there is one thing that you can’t simulate on a demo trading account: the emotions of trading. To get the best out of your trading account, you will have to treat it as if it contained your hard-earned money.

Getting Started With a Demo Account

I assume that you have already signed up with a forex broker of your choice. If you haven’t, I recommend you do so right now. Here are our recommended partners.

There are two broad ways that you can trade forex on the markets. You either place direct orders using a click-and-deal featured on the MT4 or you employ orders to be executed when the market meets certain conditions.

Placing Click-and-Deal Orders

Many forex traders love trading the market at its current positions (click-and-deal orders). They love the certainty of knowing they are in the action as opposed to placing an order that may or may not be placed. This ‘live activity’ is part of what makes the forex market so alluring. It is like sitting in a room full of stock brokers shouting their orders (think the Wolf of Wall Street!)

Most forex brokers provide trading platforms that give you the live stream of currency prices in the market. These platforms will allow you to place a trade with a single click of your mouse button.

To place a trade on such platforms,

  1. Specify what amount you want to trade
  2. Click buy or sell

The forex platform will respond instantly, mostly within a second or two. If the trade went through, you will receive a popup notification and your MT4 will update to show your open position. If the price changed in-between you placing the order, the platform will notify you that the trade did not go through.

The order might also fail to go through if your trade is larger than the margin allowed. In this case, you will need to reduce your trade size and try again.

One important thing to keep in mind when trading on a click-and-deal platform: Any action you take on the platform is your sole responsibility. You might have meant to click “Sell” instead of “Buy”, but no one knows for sure, except you.

Using Orders on a Demo Account

Orders are an important part of the forex market. They are trades waiting to happen. Savvy forex traders use orders to catch market entry points that would otherwise elude them when they are not in front of a trading screen.

Recall that the forex market is open for 24 hours a day, 5 days a week. A market move is as likely to happen when you are in front of your screen as when you are deep asleep. If you have a daytime job, market moves are also most likely to happen when you are deeply engrossed in your boss’s menial work.

Orders are how you are able to capture market moves and enter trades when you are not in front of your trading screen.

But orders are have more uses than simply capturing market movements when you are asleep. I can’t emphasis the importance of using orders strongly enough. In a highly volatile market, using orders can help you capitalize on quick market movements while limiting the impact of negative market moves on your account.

Common Forex Market Orders

There are many type of orders available in the forex market. However, all orders are not available with every online broker. Before you sign up for a forex account with your broker, you will need to verify whether they offer all orders that you might want to place during your trading career.

Take profit orders

Don’t you just love the name!

Take profit order are used to lock in the profits that you have already accumulated on a trade.

Limit orders

A limit order is an order that triggers a trade at a more favorable price than the prevailing market price. A classic example of a limit order would be “Buy low, sell high”

Stop loss order

This one doesn’t sound so good, does it? But don’t ignore it. Among all orders, the stop loss order carries more significance and is critical to your success as a forex trader in Kenya.

In their most conventional use, stop loss orders will close a trade that is losing money. In your case, you’ll be using stop loss orders to limit loses to an acceptable threshold. If you do not set stop loss orders, you are leaving your account at the mercies of the market, which is nothing short of financial suicide.

Trailing stop-loss orders

One of the keys to successful forex trading is limiting the size of your loses while exponentially maximizing your profits.

The best way to do this is to let your winning positions run and stopping your losing positions. A trailing stop-loss order does exactly that. It will adjust its order rate as the market move, but only in the direction of your trade. For instance, if you are long CHF/CAD at an entry of 1.5750, and you’ve set a trailing stop-loss order at 30 pips, the stop will first become at 1.5720.

If the CHF/CAD moves higher, the trailing stop adjusts itself, pip for pip. It will continue to adjust higher as the market moves higher. If the market reaches its peak, the trailing stop will be 30 pips below the top. If the market ever moves down by 30 pips, your trailing stop-loss will be triggered and your position will be closed.

To the savvy Kenya forex trader, a trailing stop is a powerful order.

One-Cancels-the-Other Market Orders

Also commonly referred as OCO’s, a one-cancels-the-other market order is a stop loss order paired with a take profit order.

An OCO is an incredible insurance to a savvy forex trader. All positions remain open until one of the order levels is hit. When one order level is triggered, the other one is simultaneously closed.

For instance, if you are short on USD/JPY at 117.00 and you believe that the currency will keep moving up once it hits 117.50, you’d place your stop loss order at that point. At you then place your take profit here.

The above scenario has clearly marked out your playing field. If the USD/JPY keeps playing between 117.49 and 116.26, your positions will remain open. Conversely, if the market hits 116.25, your take profit order is triggered and you walk away smiling. If 117.50 is hit first, you’ll suffer some clearly pre-demarcated loss, nothing to worry you so much.

OCO orders are highly recommended for every order you have open in the market.

Managing Trades on a Demo Account

At this stage, you have placed orders and placed all the requisite orders. Is it time to sit back, relax, and watch the market do its thing, right?

Not so fast, amigo.

The forex market is not some form of gamble where you roll the dice and wait for Lady Luck to smile upon you; it is a dynamic environment where variables that influence your trades are constantly cropping up. These variables alter the way prices develop and render previous price expectations null.

A lot can happen between the time you set up your trades and the time they hit their targets. Forex trading is not a set-it-and-forget it kind of a thing. You need to keep abreast with market developments.

Forex Trade Risks and Pitfalls: Part 3 (Poor Strategy)

This is a continuation of our free forex trade risks and pitfalls series. You can read the first and second part of this tutorial here and here.

If you would like to never miss a tutorial on our forex trading strategies consider joining our mailing list here. Alternatively, click CTRL+D on your keyboard to bookmark this page.

In today’s tutorial, I will not only show you how a poor trading strategy puts your account at risk but also give you some incredible tips on strengthening your forex trading strategy.

The fact that forex trading is a zero-sums game is clearly a liability. However, if you decide to look at your glass as half-full, this reality is actually a big plus. It means that you can make money regardless of the direction of the forex market (bearish or bullish). Failure to make money in the forex markets implies a poor strategy on your part.

One of the poorest trading strategies that I have seen is overtrading. The strategy brings to mind the image of an overzealous scalper who opens and closes multiple positions with careless abandon.

The other common mistake is trading too many positions at the same time.

If a friend asked me to name the ingredients to a disastrous trading strategy, the following 4 items would automatically go into the list:

  • Increasing your leverage
  • Increasing your lot size
  • Increasing the frequency of your trades
  • And diversifying your trades

While trading different currencies at the same time as part of a broad trading strategy is a show of savviness, it also implies a certain level of amateurish approach to forex trading.

When you first begin trading forex, stick to a handful of currency pairs and hold your positions till you meet your take profit or stop loss mark.

Second, there is no rule that states that you absolutely have to place a trade. As a forex trader, I understand the temptation to have a position open in the forex markets at all times. Try your level best not to fall for the temptation.

If the market is gyrating crazily or you cannot spot entry signals using your strategy, the best thing is to let the market be. Do not try to force your way into a position.

Trading with Someone Else’s Strategy

One of the biggest strategy blunders you can make when trading forex is relying on someone else’s trading signals. Forex beginners are especially prone to falling for advertised trading signals, forex robots and managed accounts. Trust me, all these are recipes for disaster.

The advertised systems promise hefty profits. However, you should view such promises with a skeptical attitude. Why would anyone with a clear winning strategy advertise it to the public instead of keeping the system to himself and continue reaping all the awesome profits.

In a nutshell, blindly using robots and software that trade for you or generate ideas is not a feasible approach to trading forex. To be a successful trader, you need to learn and practice how to trade.

The same goes for trading reports and technical analysis details published by major forex portals and forex brokers in an intraday basis. For novice forex traders, there is a risk of information overload. While most of these reports will contain a nugget or two of wisdom, they will also be mostly pampered with a lot of filler and blubber that is likely to steer you from your trading strategy.

Before you trade using ideas generated by anyone else, scrutinize them and backtest the strategies offered. To borrow from Albert Einstein, one of the world’s wisest men, “the clever thing is to never stop questioning.”

Market conditions are always changing and so should your strategy. I have followed and interviewed a lot of veteran forex traders. One common thing I got from all of them is the need to continuously educate yourself and practice with different strategies.

Key Takeways

Have a solid trading strategy. Avoid the temptation to overtrade. If there is no definite entry signal, do not force yourself into the market. Learn how to trade. Open a demo account today and keep practicing how to trade. It is the only way you get better and solidify your trading strategy.

Finally, if you liked this article, kindly do me a favor. Share it on Facebook, Twitter, Google Plus or LinkedIn!

Forex Trade Risks and Pitfalls: Part 2 (Volatility)

This is the second part of our forex trade risks and pitfalls tutorials. You can read the first part of this series here. If you would like to continue receiving tips on how to trade forex in Kenya, consider joining our newsletter.

Understanding Volatility and How it Poses a Risk to Your Account

Just like human beings, the forex markets have certain traits and behaviors that can be observed and studied to better understand them.

Volatility is the measure of how much a currency fluctuates. If a currency shows high and erratic fluctuations, it is said to have a high volatility.

Volatility is one of the easiest ways to gauge exposure to risk. By looking at the recent volatility of a currency pair, you can gauge how much risk you will be exposed to if you decide to take a position.

However, volatility can also be a risk in and by itself.

Volatility spikes around news releases. If you understand that a major news release is due, and your account cannot afford a potential loss on the account, consider closing down your positions or scaling down the leverage.

Even if you are not a fundamental trade (i.e. you are not trading the news) it is important to be aware of the dates when major news releases come out and their potential impact on your portfolio.

How Does Volatility Affect your Account?

Swing forex traders view volatility as a negative as it represents risk and uncertainty. Contrariwise, high volatility makes the forex market more attractive to day traders.

Sudden and high volatility in a currency pair can make the price plummet below your stop-loss order. This leads to premature execution of stop loss orders.

For instance, if in a volatile market you placed your stop loss at 100 pips, and then the currency rebounds, it is possible that it will crash through your stop loss in no time at all.

Before you open a position in the forex markets, study the recent volatility history of the currency pair.

5 Cardinal Rules to Remember When Trading Online Forex

Over 90% of the people who start trading online forex in Kenya get their accounts wiped out in less than six months. However, you do not have to become part of this statistics. You can trade forex in Kenya and become as profitable as you wish to be.

However, for that to happen, there are some fundamentals of forex trading that you have to keep in mind:

#1 Currency Trading is not a get-rich-quick scheme

Sorry to break your heart, but if you are looking to get into forex so that you can retire at thirty, you couldn’t be more wrong.

Forex trading is a skill, and it takes a lot of training, time and persistence to be profitable in the trade. The truth of the matter is that if you are just getting into the trade, you will lose more trades that you will win. This is why I highly recommend that you trade on a demo account for as long as it takes you to return some profits.

If you do not have a forex demo account, click on this link to open one right now.

#2 Focus on only one or two currency pairs

Trying to be a jack-of-all-trades (pun intended) is the easiest way to wipe out all the capital you have invested in forex trading.

Pick one or two currency pairs, study them until you understand how they are affected by prevailing market conditions. Practice dealing them on your forex demo account.

It is overwhelming to keep tabs on all the major seven currencies that are commonly traded on the forex market.

If you are going to pick one of the major currencies, go with the EUR/USD. It offers the best spreads, which will cut down on the price you pay to get into a trade. However, since the currency is highly traded, it is very unstable and you will need to be more savvy when trading it.

#3 Follow Financial News

As a beginner in forex, you will mostly be using technical analysis to get into trades. This does not however mean that you shouldn’t keep tabs on the news affecting the forex market.

Trading forex in Kenya without a clear picture of what news is being released and how the news is affecting the market is a recipe for disaster.

Mostly, immediately, news is released, the market tends to be very volatile, and it is advised that you wait 15 minutes after the break of important news before you place a trade.

Now, assume that you are not aware of when news is released? Do you see why it is important to keep tabs on political and economic news from around the world?

#4 Follow the Analysis of Forex Trade Experts

There are guys there who have been trading forex since God-knows-when. They are experts in what they do, and they are generous with their opinions.

Do not shy away from following them on Social Media, Youtube, websites and forums.

While reading the analyses from forex trade experts, write down what direction they are predicting the market will go and the levels they have predicted to be the key resistance and support points for the day for the currency you are following.

Some of the best places to find daily expert opinion about the market include:

  • Fxstreet.com
  • Forexnews.com
  • Currencypro.com

#5 Always Have a Trade Strategy and Plan

By failing to plan, you are planning to fail.

That is some deep ancient wisdom right there. Forex trading is not gambling. There are indicators and signals that clearly point where the market is headed. Make use of these.

More importantly, however, never enter a trade without a strategy.

Before you make a decision to go long or short, you should clearly have an entry and exit strategy. How much profit do you want to make from the trade?

What loss can you tolerate on the trade?

Place your take profit and stop loss, and stick to them. Do not get greedy and do not let fear get the best of you.

If you do not know how to analyze forex charts, make a point of taking a training course.