Dear Fellow Trader,
For those thinking about starting off in the exciting world of FOREX trading please take note of the information below as it will drastically help you reduce your risk. Having said this, It is important to know that this does not mean you are guaranteed to start making money out the gate but will at least help you open your eyes to the pitfalls.
Just like anything in life, when entering into a new venture, education is paramount to your success. The more information you have, the more likely you are to succeed. FOREX is the largest market on earth surpassing 4.5 Trillion traded daily (according to the Bank of International Settlements). Therefore, it is an extremely liquid market that allow high amounts of leverage. However, over the recent years, the US has restricted leverage down to 50:1 (down from 200:1). This is a good thing as it is a terrible idea to use 200:1 leverage. One of the main reasons why Lehman Brothers collapsed is because they were 44:1 leveraged. Leverage is great when markets are in your favor but only takes ONE catastrophic event to wipe you out (even if you are a multi Billion dollar investment bank as Lehman Bros.).
Mason Dean Capital have a genuine passion and interest in educating their traders in order that their customers can stay alive in the market and trade a lot safer and smarter.
To get started with this educational series, Mason Dean Capital have compiled a few tips for you to get started. Please subscribe and follow the blog posts to keep updated with important news, tips and educational material. You can also check the educational portion of the Mason Dean Capital web site.
Forex Education Tips. Below
are five quick tips to get you started.
In the upcoming series, there will be plenty more of tips and tricks.
1. The FX market offers 50:1 in the US. Here at Mason Dean
Capital, we do not recommend exposure of more than 10:1 Maximum. In fact, we
recommend only using around 7 or 8:1 leverage. I.e. with a $10,000 account do
not trade more than $100,000 in currency at any one time.
2. Long Term Vs. Short Term.
There are multiple options for how long to hold a trade
from both spectrums of short term and long term, I,e, you have High Frequency
trading, Day trading, swing trading, long term trading etc etc. However, for
purposes of this tip, I have broken down into two main philosophies in trading –
Long term and short term. Some traders will swear that long term trading is the
way to go and others will promise you that short term is a much better
approach. I have personally spoke to ex-Goldman Sachs traders who have been
very successful with longer term trading as well as high profile hedge fund managers
who have had success short term trading. So do you trade long term or short
term? The best advice I like to give, is to first educate yourself in both
styles and then pick the method that best suits your personality. It is important
to not get confused which direction to go with but instead learn as much as
possible on the pros and cons and methodology behind each approach.
you trade and trade you plan!
No matter what, once you are ready to start
trading, you have to have a plan of action set in place. It is a cliché but very
true to say that if you fail to plan then you plan to fail. ALWAYS have a
strategy in place before executing a trade. This means an initial entry point,
take profit price as well as an idea of where you are looking to exit with a
loss. Once you have these parameters then you are in a position to act mechanically
and it helps to eliminate the emotional part of trading. I.e. entering the
market on a hunch or a whim and then using emotion to drive you decision. This is
a recipe for disaster! ALWAYS Plan your trade!
NOT execute a trade unless you have checked your news calendar. There is
nothing worse than entering a trade, seeing some profit to start building and
then all of a sudden seeing your position tank out of the blue due to a
significant news announcement relating to the currency pair you are trading. Therefore,
make sure you do not trade during any news event. A good site to go to would be
This will show you exactly what date and time the announcement is going to be
made. I recommend NOT trading during any “High” impact news event.
using a trailing stop whenever possible. For example, you have a target profit
price in mind and then shortly after you enter a trade, the market starts to
move significantly in your favor. Before you know it not only has the market now
on your profit target it has now passed it. This is a good time to set you
trailing stop right at the price you had originally had in mind to set. The
trailing stop pips could be set at say 10 pips. Therefore, the profit target
will move automatically in your favor as the market moves in your favor. This
method is an excellent way in capitalizing as much as possible for your profit.
For more information on trailing stops, please contact firstname.lastname@example.org
We hope these tips will at least give you a little nudge in the right direction.
Mason Dean Capital FX Markets