How to Learn to Trade Independently?

Is it possible to Independently Learn to Trade

Many newby traders ask themselves this question- how to learn to trade?The vast majority of new traders entering the Forex market do not have any specialized education.

This is due to the fact that thanks to modern technologies, Forex trading has become available to almost everyone. (for this it is enough to have a computer connected to the Internet).

Is it possible to Independently Learn to Trade

Is it possible to Independently Learn to Trade

Newbies start to make their first deals and lose quite naturally.

At this moment they understand that a trader is a serious profession and, like any other profession, it requires some training (after all, it would never occur to anyone, for example, to fly an airplane without prior training in piloting skills).

Having felt the need to learn on a rapidly decreasing deposit, a trader sees two options for learning the basics of trading. The first option involves paid training in one of the many dealing centers providing market access services.

The second option is to master the basics of trading on your own. Can I learn to trade on my own?

Yes, it is possible, moreover, in my opinion, this path is more optimal. Optimal, firstly, in terms of the amount of costs. Why give some uncle a pretty tidy sum for the fact that he will voice to you information that is already freely available on the Internet. After all, this amount can be invested in trading (not immediately, of course, but after training on a demo account ).

Believe me, paid training courses will not provide you with any unique information for the simple reason that they do not have any unique information. There are no secrets, allegedly known only to the so-called trading gurus, and which they are willing to share with the elite, naturally, for a substantial monetary reward.

I repeat, all the information you need is freely available, you just need to skillfully pick it up and use it wisely.

I recently heard the argument in favor of paid training in trading. One student, who has already deposited money and is undergoing training, argued with foam at the mouth that the main advantage of this type of training is the systematic presentation of the material and the ability to ask questions during the training, getting answers to them. But here’s what I think about it.

Trading is a profession that requires a person who wants to master it, a certain level of intellectual development.

So, pay attention to the question: why should a person who is unable to systematically organize independent training and find on the Internet the answers to the questions that arise in the learning process to start trading? (and I can hardly believe that paid training courses will turn such a person into a stable earning trader).

For important tips for those who decided to master trading on their own, read the article: How to start trading Forex from scratch.

Step-by-step action plan.

Forex Diamond EA

Forex Dealers

Forex Dealers

The overwhelming majority of private traders work in the Forex market through the intermediary of dealers (or dealing centers (DC)), and not through brokers. What this can be fraught with and where the pitfalls of trading through a dealer are hidden, we will now discuss with you.

Fundamental differences between a dealer and a broker

We’ll start by finding out the main differences between the work of a forex dealers and a broker. So, in order:

  • The dealer trades in the foreign exchange market, and he must do this entirely at his own expense (and on his own behalf). The broker does not engage in trading as such, he only concludes transactions on behalf of the client, thus acting as a kind of intermediate link between the trader and the interbank FOREX market. The broker concludes all transactions on behalf of and at the expense of his client.
  • The dealer can set his own quotes, thus offering traders to act as counterparties for their deals (if the trader is satisfied with the terms of the deal, he concludes it). The broker does not generate its own quotes, but only broadcasts to its clients the prices of current orders in the market (the so-called Depth of Market).
  • Brokers earn through the commission they charge their clients for concluding deals on their behalf. At the same time, the broker is not interested in the result of the transaction, it does not matter to him whether the transaction brought profit or loss, he will still receive his commission (although indirectly, the broker is still interested in the client staying in the game and concluding more and more new transactions, because what the more transactions there will be, the more commissions there will be).
  • The dealer, in fact, acts as a counterparty to his client in the transaction. Accordingly, the client’s profit can turn into a loss for the dealer, and vice versa, the client’s loss, the dealer can put in his pocket. And although all 100% of Forex dealers declare the fact that their earnings are entirely formed due to the spread (the exchange rate difference between the purchase price and the sale price of the same financial instrument).Personally, I hardly believe that none of them succumb to the temptation to tear off a bigger piece for themselves (we will talk about how this can be done, and in a relatively legal way, just below).

Here are, perhaps, three fundamental differences between these two potential intermediaries between a trader and the foreign exchange market. Based on the knowledge gained, we smoothly move on to the next section of this article.

How Forex dealers profit from their clients

In no case do I want to denigrate all dealers providing access to the Forex market without exception. I will only tell you about how any Forex dealer can leave his client “without pants” in relatively legal ways, and draw your own conclusions from this.

The dealing center undoubtedly possesses a greater amount of information than the trader who is his client, which means that he is actually playing against him. The conditions of this game are obviously unequal, the DC has full information about all concluded deals of its clients, and besides that, the dealer has the right to put up his quotes. The combination of these two factors already gives the dealer the opportunity to quite legally “tweak” the deposits of his clients.

You are probably already starting to understand how this is done. And this is done quite simply.

Let’s say a dealer looks at the positions of his clients and sees a significant overweight in sell positions open for the EUR/CHF pair. All sell positions will be closed sooner or later, and closing a sell is nothing more than a buy. That is, clients will start buying EUR/CHF, closing their sales, and the dealer just needs to move the quotes (or just the Ask price) up a little to close the position for traders at an unfavorable rate. Well, the dealer calmly puts the difference in the rate into his pocket, because, after all, this is his earnings.

The above method is the most harmless of what a Forex dealer can do with respect to the deposits of their clients. Greed often leads dealers to the point that they almost openly begin to manipulate quotes, knocking down Stop Loss orders. Just as they can see all the positions of traders, they perfectly see the places where their stop-losses accumulate. In this case, quotes manipulation is performed as follows:

  • Sharp price movement towards the accumulation of these orders; Orders are naturally closed and naturally at a loss for traders (after all, Stop Loss is an order limiting the trader’s loss on an open position, and therefore it is placed in the loss zone);
  • Sharp price movement towards the accumulation of these orders; Orders are naturally closed and naturally at a loss for traders (after all, Stop Loss is an order limiting the trader’s loss on an open position, and therefore it is placed in the loss zone);

In the same way, they can bring especially “fat” positions of their clients to the Margin Call.

In order for none of the traders to take advantage of such a price jump and make money on it, the dealer simply simulates the system overload, or in response to all attempts to open or close a position at the time of this manipulation, the terminal responds to the trader with requotes.

A requote is when you try to open or close a position, and the price at that moment moves too fast and the trading terminal constantly asks you if you agree to do this at a new price. As a result, you simply miss a strong price movement without making any money from it.

Well, then the price goes, as if nothing had happened. And only the hairpin drawn on the price chart reminds of the previous events. Yes, and that, soon the dealer simply paints over, thus covering up all the traces of his crime.

For the sake of fairness, it should be noted that not all requotes and not all interruptions in the operation of the trading terminal indicate that the dealer is stealing funds from his clients. The technique can always fail, and besides that, there are such periods of the highest price volatility, when one simply cannot do without requotes.

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Drawing conclusions

Why not just opt ??for brokers? It would seem that this is an ideal option to trade through an intermediary who is not only not interested in draining your deposit, but on the contrary, it is beneficial for him that you constantly remain in the game (that is, so that you at least do not drain, but as a maximum – earn).

Yes, the option is really ideal for a trader, but there is one big BUT here. The fact is that entering FOREX through a broker requires a trader to make a minimum deposit of several hundred thousand dollars. This is due to the minimum lot size in the interbank foreign exchange market.

Not every trader can afford to trade on Forex through a broker, so many people spit on everything and open accounts in numerous dealerships (choosing the most famous of them). Perhaps there is nothing wrong with this (I myself have several small accounts opened in DC), and not every dealer will deceive his clients. In any case, I would like to hope so.

What is the alternative to Forex dealers

Do not think that for a trader who does not have a deposit of several hundred thousand US dollars, there is no other alternative but to trade with a Forex broker.

There is an alternative, and it is called the exchange. Only there the currency market is represented by futures contracts, but do not be alarmed, the essence of trading remains the same, up to the fact that the futures chart for a currency pair is almost identical to the chart of the currency pair itself. And you can make money in the same way as on the growth of the value of a currency futures, and on its fall (by opening a long or short position, respectively).

Perhaps the only difference is that the futures contract has a limited duration, but this nuance is important only for long-term traders. And even then, the extension of a futures is a simple purchase (sale) of a new contract after the expiration of the old one, nothing complicated.

Most Forex traders keep their positions open for no more than a few days, or even trade within one day, so they don’t even have to bother with such an occupation as extending a futures contract.

Of course, one cannot enter this market with a hundred dollars, but hundreds of thousands of dollars are not required here either. You can start trading with a deposit of about one hundred thousand (however, everything here is individual and directly depends on your money management strategy).

I hope this article will help you make the right choice. Good luck in trading, more profits and fewer moose, dear friends!

New Science of Forex Traiding

Forex or stock exchange: what to choose?

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