So I am "sitting" doing something that all of you do, sometimes too often, and sometimes too little...well anyways lets not get into the details... So while sitting there thinking about life I grab the free Futures mag and start thumbing through it. There is an article...Forex Trading by Abe Cofnas. BUT NO! it was a thread straight out of ET!!!!! it starts off like this: The rigors of forex trading become very clear when the task is to capture PIPS on a day-to-day basis. Obtaining 20 PIPS per day may seem easy, but it is a solid accomplishment. If you can get about 20 PIPS per day for 20 trading day's that's about 400 PIPS. At $10.00 a PIP 400 pips is $4,000.00. If your account size is $10,000.00 that represents a 40% increase. For account size of less than $20,000.00, those who achieve 400 PIPS a month certainly gain a place on the leaderboard of Forex traders. Now after all the newbies read the first paragraph and the heart is pounding and their blood flowing they eagerly read on about converting from intraday trading to longer term trading with a catchy phrase "Multiple day Forex trading" .... What are your thoughts on this EliteTraders?
Everyone is interested in bringing new people/traders to the market, it is essential. P.S. The info mostly is true
The author of this article should have rather pointed out how hard it is to achieve a consistent 20 Pips gain per day in FX daytrading rather than show how much one would make achieving this with a small account.
There is just so much money to be made in the wonderful forex market. When I think about how amazingly easy it is to make 20 pips, it just brings tears to my eyes! NOT! Serious, making 20 pips a day sounds nice on paper, but the reality is that not everyday does a forex trader take home 20 pips. One day, he/she could make 20 pips and the next day, he/she could loose 20 pips just as well. In the worst case, he/she could get his/her account wiped out within a week. Forex market, compared to equity market, is definitely the harder market to trade in. Reason being is that when you take a position in the forex market, you are not just betting on how good the economy of one country will do, but on how much better the economy of one country will do relatively to the other in the currency pair. Secondly, there is no such a thing as a bull or a bear market in the forex market. Forex traders couldn't blindly take a long/short position and sit and ride the bull/bear market. Thirdly, the volatility is a lot higher in the forex market than in the equity market; combining that with margin, a forex trader's account could get wiped out even if the currency pair eventually goes to the trader's direction. So, to those are considering trading in the forex market, becareful and get to know all the risks associate with it.
You know the article did not rise up to the level of ET because, inexplicably, Mr. Cofnas did NOT automatically extrapolate / compound that hypothetical 20-day 40% gain over 1 year. Better make that 2 years. What a disappointing, glaring omission. Who's running the ship at Futures?
I was just reading an article that said the average retail forex account is open 45 days before blowout. The average guy doesn't know that leverage can work against you big time. I think some of the forex accounts soften the blow by automatically closing you position for you; I guess that saves one from sellling the house. The great thing about any of this is that you can choose your optimal heat whether stocks, futures, or forex. People don't understand risk! for $100.00 you can trade $10,000 worth of currency. This is kind of meaningless. That's like saying I bought a SPmini contract and am controlling $75,000 worth of stock. True but the $12.50 per tick is what I am winning or losing. Trading is easy, you just have to be right. Tuition is very expensive though!!
Reason could be that only $500.00 or less was deposited in the first place. Only when they run out of margin or if a stop is hit, which every comes first.