In the first part of this note, we explained the exponential growth of this market and we outlined a guide to find out if the Forex Market was an alternative for you.
We are now going to continue with a series of questions that you must answer honestly to help you know if you have the right profile to operate your own Forex account.
What Is My Goal To Invest In The Forex Market?
.Maintain my capital with gradual and constant growth.
.Double my investment in the shortest possible time.
.Earn a lot of money in a short time.
Do I Really Have The Capital To Make An Investment Like This?
.The capital that I am going to have is a part of my investment portfolio destined to risk.
.I invest the family savings so that it grows quickly.
.I use the money from a loan and with the proceeds, I will pay the interest and principal as soon as possible.
Am I Willing To Invest Time And Money In My Education?
.I am going to dedicate 2 to 4 hours a day to my education for 1 year, reading books, and attending face-to-face courses or webinars, before operating a real account.
.I believe more in practice, I am going to open a demo account and trade with it every day.
.I don’t like numbers or doing tedious tasks, I prefer to buy robots (expert advisors) that do the work for me.
Do I Have The Temperament To Trade Forex Markets?
.I am a highly disciplined person, and I follow my plans to the letter, I do not let myself be dominated by my emotions. If I lose I know it’s part of the game and I don’t get upset.
.I like adrenaline and I enjoy strong emotions. I like winning and losing puts me in a bad mood.
.I am spontaneous and temperamental, I act according to my state of mind, I don’t like to follow a plan, and I let things happen by themselves.
If you answered the majority with option 1, you are a person who can succeed in this market as long as you really take the time to learn and above all control your emotions when you are trading, you should always keep in mind that profits or losses they will be directly related to the correct analysis (backtesting) of your indicators, remember that there are no magic strategies, they are all good.
But they will be good as long as you try them personally and the results they give you are at least 65% winning trades against 35% losing ones and the profit pip target is equal to the loss one.
Well, many operators make the mistake of operating with strategies, which do have 65% of winning operations, but these are 40 pips (for example) against 50 pips stop which they lose if we discount the 40 of the profit commissions and/or additional charges, the final result will be negative even though the percentage seemed to be positive.
It is important to remember that this market is high risk and only a small percentage of traders make money from it.
You should also keep in mind that this investment is to maintain the value of your money and gradually increase it, if you follow your plan you can generate constant profits between 1 and 3% per month, which would give us between 12 and 36% profit annually. Pretty good right?
If you answered most of the questions with option 2, it is recommended that you do not operate your money in a real account for a while, it is better that you let professionals manage your investment in what you work on the personal aspects that you need to be successful in the FOREX market, not all people can operate in this market, a very specific profile is needed to do so.
Discipline and control of emotions are essential to be able to operate in it.
This market is not just sitting in front of the computer for hours looking at charts and doing operations, that is the final job, there has to be a whole preparation prior to that moment, and a good trader has to have his own plan.
Just because a certain strategy works for someone else does not mean that it will work for me too, in the years that I have been an operator and trainer of traders I have been able to try this, there are strategies that personally give me very good results and when another operator the ones you apply don’t work for you and vice versa.
Analyzing this, in many cases, the difference is in the personality, and I have realized from the backtesting when comparing the input data that my strategy produced with the input data of another operator, I have seen that they are different, as well as what They are the stops and the take profits, the interpretation of each operator is different and this is decisive for the strategy.
That is why in most cases my strategies do not work for others, you have to generate your own data and your own statistics with an extensive study (backtesting) of each one of them so that you feel sure of the numbers that throw you and when you apply them in the market they work positively for you.
For example, You did a backtesting of a moving average crossover and it shows that out of 200 operations, 65% of them win and 35% are losers, the average number of pips won is 40 against the 40 pips stopped recommended by that study.
That the number of maximum consecutive losses is 5 operations. You will agree with me that when you apply that strategy in real-time and lose 1 or 3 trades in a row with 40 pips, it will not affect you, because you know that it is part of your statistics and you know that if you continue applying the same criteria that you used in your backtesting the winning trades will arrive.
If you are faithful to YOUR STRATEGY, the results will be favorable, as long as you do not make the mistake of letting yourself be carried away by your emotions when you are winning, close the operation early and when you are losing, remove your stop loss thinking that the price will go back.
Once you control this aspect you can start operating your own account and you will see that the results will be different.
Now, if you answered most of the questions with option 3, this market is definitely not for you, the only way you can participate in it and have good results is to let a professional operate your account.
You have the typical profile of the bettor and if you enter this market you are going to have catastrophic losses and the worst case is that your story is going to be one more of the horrors in this market.
Most of the lost stories are precise with this type of bettor profile and once they have lost everything, they hardly accept their responsibility and the mistakes for which they lost, it is easier to blame the market and say that it does not work or that it is a scam.
And of course, it doesn’t work if you do it that way, when operators with this profile have touched me, I always recommend that they look for another market niche such as betting or casinos. At least if they lose money on a bet on a soccer match, they will enjoy the game for a few hours.