Forex trading education - Proper Capital Management
In order to set the amount of risk only to the amount of commissions that we will pay, one needs financial knowledge that will allow him to break the balance and carry out a few more profitable transactions in contrast to losing transactions.
What do you need to learn to know when the Euro will rise?
First thing - technical analysis. This is analysis of prices of a certain currency in order to identify trends, etc, And what is the first rule in economics? Go with the trend of the market. it's a science, and that has to be learned, it's not complicated. In our advanced lessons we will teach you how to look at the graph and learn how to identify a trend. Is it an exact science? Not always, otherwise everybody would be profiting. But, if you conduct all your transactions from today and onward in unison with the trend and not against it, eventually you will be able to have few more profitable transactions than losing ones. That is the whole game.
The second thing - that needs to be learned in analysis of economic data. One can explain that when the interest rate in a country rises, the value of the local currency rises, because the demand for deposits in this currency increases, people buy it then it strengthens.
Even a parsley merchant in the market, after 20 years, knows exactly what the quality of the parsley is. He looks at the leaves and immediately knows if it's a good product or not. He has no degree in advanced parsley studies but he lives and breathes parsley.
Experience worth more than education. Similarly for you, after a few years of trading the Euro, you will come to understand the Euro. You will be awaken in the middle of the night, and be able to say that the exchange of the Euro is 1.4266, that at 10 in the morning there is light trading and at night it's latent. One must be cautious around Christmas time, and that when the interest rate is lowered it flies upward.
So you have to go and learn technical analysis, know the economical data, experiment, practice and profit.
Now let's see what you can do if you acquire the minimal knowledge and experience when we break the balance.
Now I will show you a simple business template: I open a business, the name of the business is: Euro and sons Ltd. I deposit 10,000 USD, and i am the Euro king of the world.
There are those who sell Pizzas, those who sell tomatoes and my business is to buy and sell Euros. I work for ten minutes a day, make one deal on the way to school with my son, Jonathan, remember him from before? Either I earn 100 USD or lose 100 USD. In contrast to my son, I don't guess, I read a financial newspaper, i read analysis report, i do forecasting, put in my experience, and make a rational financial decision.
My son, out of 22 transactions in a month, loses 11 times and earn 11 times. How many pips does he lose each month on commissions? If we assume that the spread is 3 pips, then 66 pips, he loses 3 times 22 transactions.
The goal of the business plan: to be better than my son. Only once a month. Take the information that i have and translate it into victory. Instead of 11-11, I would be 12-10 in my favor. Is it possible?
Guys, if you didn't understand, we start the trade in the Forex market with 50% chance. I want to win against the market just once with knowledge. Is it certain that I would be able to complete one transaction better in my favor out of 22 transactions? No, there is no guarantee in business, but there is no chance without risk. And if I lose, I would only lose commission, I wouldn't get loans from my friends or from banks and I would never get in trouble in this market.
Most of the traders in the world know how to identify a trend. but their problem is money management. I personally, have been successful for years now working in this manner. Most of the traders who have learned this lesson and the coming lessons have succeeded in breaking the balance, but unfortunately, haven't been successful in abiding by instructions and rules which were set before them.
Whats Next?
* Simple mathematics
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