I am new to this site but I am an old forex trader. I have been trading
forex since 2004 and opened my first trading account with Alpari UK,
when I was in London.
I have absolutely no interest in attracting any newbie here to any particular broker or to call me for training. I JUST WANT TO LET PEOPLE KNOW WHAT IS FOREX TRADING. I don’t think trading forex is illegal in Pakistan, specially for individual or private traders, though I know opening a FOREX TRADING HOUSE is illegal in Pakistan because some dishonest brokers in Karachi and Lahore looted their clients' money and ran away. I guess one of them was ForexLinks in Karachi.
According to my experience, most of the forex brokers are considered to be bad guys, because most of them use unethical tactics help people lose their money, rather than help them win. There may be good brokers in other countries, but generally laws and regulations for brokerage houses in USA are very stringent and are controlled by NFA and CFTC, which are government bodies and are watchdogs to regulate the game and protect rights of investors/traders. They have recently lowered the leverage requirements from 1:400 to 1:50, which is very good. Because, brokers used to lure new traders which very high leverage because if you use a leverage of 1:400 you can use only $25 for your account equity to control a mini lot worth US$10,000. While doing so, whatever the profit/loss you get will be on the lot of US$10,000.
New traders find this a very attractive opportunity to earn extremely high amounts of money with very little investment, what they don't realize that LEVERAGE is a 2 sided sword, on one side it can give you large profits on small investment, whereas on the other side it can wipe out your small account must faster than you can imagine. That is why the allowed leverage in the US for equities/shares trading is I guess 1:20.
It is a well known fact that approx. 95% for forex trades fail and about 2-3% for the remaining successful traders earn very decent profits and most of them trade for living .... throughout their lives.
WHY DO PEOPLE FAIL IN FOREX TRADING?
Though reasons are simple but most of the new traders make simple mistakes repeatedly and those who start to learn and move in the right direction don't usually have account size large enough to support them until they finally become consistently profitable.
Reasons:
1. Selecting wrong broker
As said earlier, forex brokers based in US tend to be more reliable because they are controlled by very strict government agencies, which are NFA and CFTC. You can also check if your prospective broker is in litigation with their clients on the websites of these agencies. Recently these agencies have made rules and regulations to further protect small investors. In US, it is not at all a joke to become a forex broker, they have to go through very stringent process and deposit millions of dollars with government agencies as a guarantee.
2. Not undertaking due-diligence:
That is, they don't get proper training, which not only includes taking right trading decisions at the right time but also to control human emotions like FEAR, GREED and IMPATIENCE. In trading, controlling these human emotions is MUCH MORE IMPORTANT than just making the decisions to go long or short.
3. Under-Capital Accounts:
Most of the starters start with an account size b/w $300 to $500, which is very very small if you are not very expert in money management and risk management.
4. Lack of Money Management/Risk Management:
Money management means not risking too much account equity at any given time. Because as you start opening more and more buying/selling positions ... you are exposing your account to more and more risk. It is a rule for new traders to not risk more than 1% of their equity (their real money) at any given time. So that even if all your opened positions go against you and all your stoploss are hit, you lose only 1% of your account, this gives you the chance to sit again in front of your trading terminal tomorrow with fresh mind and without stress.
Risk management is to use an appropriate pre-defined stoploss on all your orders, so that if your position goes against your, your position will automatically be closed when the stoploss is hit and you will not loose more than that. There are many ways to calculate a good stoploss position, mostly they are based on technicals, that is, support/resistance.
Forex trading is a very risky business and takes a lot of time, work and patience to master.
My advise to anyone who is serious to trading forex my advises are:
1. Read a lot about forex trading on various websites, specially trading strategies.
2. Open a free demo account with any decent broker, better with a trader who uses MetaTrader as his trading platform. Metatrader is a very comprehensive, easy and great trading software.
3. Practice your learned strategies on a demo account for at least 3 months regularly on daily basis.
4. Once you think you have not more wins than losses and the size of your wins is much larger than your losses .... GO LIVE.
5. A Word Of Caution! Once you go live or start trading on a live account with your real money ........... things will not remain as they used to be on the demo account. Real money will bring real emotions into the game and your will start to feel excitement, stress, greed, fear and impatience. Once you master those emotions ........... you will definitely have lasting and prosperous forex trading career.
6 Open a live trading account with any good broker with at least US$500. I know it is very small account, but you can size your trade accordingly, that is, trade micro lots, instead of mini.
7. Use proper entry/exit strategy, don't be greedy or impatient and ALWAYS ALWAYS ALWAYS use proper money management and risk management ............... I am sure doing so will give a lasting and prosperous forex trading career.
ANOTHER ADVISE
Never try to trade with local forex brokers, there is no direct forex broker in Pakistan and there can't be any due to the requirements they will have to meet to become one. All those who advertise themselves as Forex Brokers in Pakistan are actually IBs (Introducing Brokers) of foreign brokers and they get a share from your account in one way or another from their main brokers.
You can find great deal of forex trading info and eBooks here: ForexTradersWorld.com
WISH YOU THE BEST!
I have absolutely no interest in attracting any newbie here to any particular broker or to call me for training. I JUST WANT TO LET PEOPLE KNOW WHAT IS FOREX TRADING. I don’t think trading forex is illegal in Pakistan, specially for individual or private traders, though I know opening a FOREX TRADING HOUSE is illegal in Pakistan because some dishonest brokers in Karachi and Lahore looted their clients' money and ran away. I guess one of them was ForexLinks in Karachi.
According to my experience, most of the forex brokers are considered to be bad guys, because most of them use unethical tactics help people lose their money, rather than help them win. There may be good brokers in other countries, but generally laws and regulations for brokerage houses in USA are very stringent and are controlled by NFA and CFTC, which are government bodies and are watchdogs to regulate the game and protect rights of investors/traders. They have recently lowered the leverage requirements from 1:400 to 1:50, which is very good. Because, brokers used to lure new traders which very high leverage because if you use a leverage of 1:400 you can use only $25 for your account equity to control a mini lot worth US$10,000. While doing so, whatever the profit/loss you get will be on the lot of US$10,000.
New traders find this a very attractive opportunity to earn extremely high amounts of money with very little investment, what they don't realize that LEVERAGE is a 2 sided sword, on one side it can give you large profits on small investment, whereas on the other side it can wipe out your small account must faster than you can imagine. That is why the allowed leverage in the US for equities/shares trading is I guess 1:20.
It is a well known fact that approx. 95% for forex trades fail and about 2-3% for the remaining successful traders earn very decent profits and most of them trade for living .... throughout their lives.
WHY DO PEOPLE FAIL IN FOREX TRADING?
Though reasons are simple but most of the new traders make simple mistakes repeatedly and those who start to learn and move in the right direction don't usually have account size large enough to support them until they finally become consistently profitable.
Reasons:
1. Selecting wrong broker
As said earlier, forex brokers based in US tend to be more reliable because they are controlled by very strict government agencies, which are NFA and CFTC. You can also check if your prospective broker is in litigation with their clients on the websites of these agencies. Recently these agencies have made rules and regulations to further protect small investors. In US, it is not at all a joke to become a forex broker, they have to go through very stringent process and deposit millions of dollars with government agencies as a guarantee.
2. Not undertaking due-diligence:
That is, they don't get proper training, which not only includes taking right trading decisions at the right time but also to control human emotions like FEAR, GREED and IMPATIENCE. In trading, controlling these human emotions is MUCH MORE IMPORTANT than just making the decisions to go long or short.
3. Under-Capital Accounts:
Most of the starters start with an account size b/w $300 to $500, which is very very small if you are not very expert in money management and risk management.
4. Lack of Money Management/Risk Management:
Money management means not risking too much account equity at any given time. Because as you start opening more and more buying/selling positions ... you are exposing your account to more and more risk. It is a rule for new traders to not risk more than 1% of their equity (their real money) at any given time. So that even if all your opened positions go against you and all your stoploss are hit, you lose only 1% of your account, this gives you the chance to sit again in front of your trading terminal tomorrow with fresh mind and without stress.
Risk management is to use an appropriate pre-defined stoploss on all your orders, so that if your position goes against your, your position will automatically be closed when the stoploss is hit and you will not loose more than that. There are many ways to calculate a good stoploss position, mostly they are based on technicals, that is, support/resistance.
Forex trading is a very risky business and takes a lot of time, work and patience to master.
My advise to anyone who is serious to trading forex my advises are:
1. Read a lot about forex trading on various websites, specially trading strategies.
2. Open a free demo account with any decent broker, better with a trader who uses MetaTrader as his trading platform. Metatrader is a very comprehensive, easy and great trading software.
3. Practice your learned strategies on a demo account for at least 3 months regularly on daily basis.
4. Once you think you have not more wins than losses and the size of your wins is much larger than your losses .... GO LIVE.
5. A Word Of Caution! Once you go live or start trading on a live account with your real money ........... things will not remain as they used to be on the demo account. Real money will bring real emotions into the game and your will start to feel excitement, stress, greed, fear and impatience. Once you master those emotions ........... you will definitely have lasting and prosperous forex trading career.
6 Open a live trading account with any good broker with at least US$500. I know it is very small account, but you can size your trade accordingly, that is, trade micro lots, instead of mini.
7. Use proper entry/exit strategy, don't be greedy or impatient and ALWAYS ALWAYS ALWAYS use proper money management and risk management ............... I am sure doing so will give a lasting and prosperous forex trading career.
ANOTHER ADVISE
Never try to trade with local forex brokers, there is no direct forex broker in Pakistan and there can't be any due to the requirements they will have to meet to become one. All those who advertise themselves as Forex Brokers in Pakistan are actually IBs (Introducing Brokers) of foreign brokers and they get a share from your account in one way or another from their main brokers.
You can find great deal of forex trading info and eBooks here: ForexTradersWorld.com
WISH YOU THE BEST!