When trading the foreign exchange market, there are many tools, books and videos that any advanced or prospective trader can get their hands on.
Unfortunately these are not cheap. Some tools are well in the thousands and while they promise massive returns have never really been able to truly assist a beginner much less the advanced trader seasoned in using emotion to guide his or her trading habits. After month of combing the internet in online book stores, trading platforms and software websites, I have concluded that foreign exchange trading is best taught by utilizing free lessons taught both off line and online.
Now many might believe that if these services are free they might truly have little worth. However this is not the case. Most traders that have decided to impart their knowledge freely to others usually have been very successful in what they do.
A full time trader would not seek to supplement their income by taking on the burden of teaching others for profit while at the same time trying to develop a working strategy. While some of my fellow traders might disagree it is true that there is no pressure for results when you impart your knowledge on eager students free of charge on the basis of teaching them the fundamentals.
Simultaneously while there is no pressure on you the teacher, there is no pressure on the student to take notes, read quickly and absorb before the lesson is gone or their one month subscription runs out. Before I developed my own trading strategy I did fall victim too many of these played out scenarios, which usually come in the form of:
Daily Trading Alerts
Currency Trading Signals
How to Trade the Newsletters
Trading Platform Software
Automatic Trading Software (the worst kind)
While trying all of these from different providers since 2003, I realized that they delivered the same result with little or no help to truly understand the fundamentals of what we know as forex trading. While most individuals get caught up over the debate of fundamentals versus technicals as styles of trading, they simply forget that one guides the other. It is fundamentals that trigger movement and hence results in technical triggers.
One major example is the correlation of the European dollar and Japanese Yuan to the Dow Jones Stock Market Index. This positive correlation is triggered by shifts in the stock market which are heavily based on fundamental principles of positive earnings means ‘buy’ and losses means sell. However when forex traders see the movement they trade the currency pair based on the movement of the stock market index in the afternoon session of the New York Stock Exchange (NYSE).
While this in principle does make some traders a lot of money, the market can quickly shift if news comes out during the Asian session which can quickly make the pair move in the opposite direction.
Effectively wiping out traders leverage before the real correlated move begins. One notable problem with traders is that they believe trading the news is the holy grail of forex trading. This is as far from the truth as one can get; the dramatic shift in the demand and supply of currency during this time causes many trading platforms to freeze and results in the complete loss of trading leverage in less than a few seconds. My advice has always been never trade the news.
However to reiterate my point that free forex lessons have been the best teacher for me I can only use my personal experience to state that while trading with other ‘experts’ I lost much more than I made, without having any concrete trading strategy. In the last three years of my trading journey I have since doubled what I lost in the first six years and built a constant revenue stream, blended with options trading, news trading, day trading and various buy and hold strategies.
The knowledge that I have learnt has lent to my involvement with mutual funds and hedge funds as part of my overall investment portfolio. Having gained the knowledge free of cost, I have given back by having my own online source for traders who are just not making the grade and what to develop that complete strategy that will give them the financial freedom that I once craved and now have achieved. You can learn more about me and my plan to pay it forward in my author biography below this article.