Below you will find 10 Questions get them all right and you may have what it takes to be a successful forex trader - get ANY of them wrong and you need to re think your forex trading strategy as you will lose!
Try answering the questions correctly and see if you have what it takes to win at forex trading.
1. Human Nature is Constant - So Do Markets Move to a Scientific Law?
The correct answer is no - if you believe they do your going to lose. There are plenty of vendors selling courses based around the concept of regular profits each month or that markets move scientifically but they don't - trading is an odds game nothing more.
2. Buying into support and selling into resistance a good way to make money?
The correct answer is no - and its one of the critical errors made by novice forex traders.
Think about it - if you buy into support you're simply hoping the level will hold and if you hope in the forex markets you will lose. You should only trade after a turn up above support and a turn down below resistance and this means trading with price momentum indicators.
3. Does Listening and reading news stories help trader make money?
Again the answer is no. listening to news stories and trading off news will ensure you lose as you will simply let your emotions get involved. The people who tell these stories are convincing but their often dead wrong. They are very good at telling you why things have happened but not why they are going to happen!
4. Will a simple system with just a few indicators beat a complicated one?
The answer is generally yes it will. Quite simply a simple system is more robust in the face of brutal market conditions than a complicated one as it has fewer elements to break. Most of the worlds top trading systems tend to be simple with just a few variables or rules.
5. Is long term trend following is a better way to make money than day trading?
The answer is yes. You can win or lose at long term trend following but you are GUARANTEED to lose at day trading.
Why?
Because all short term volatility is random - therefore you can't use support and resistance in a short time frame as you have no data that can help you get the odds in your favour.
6. I have bought a system off the net with a track record so I should have good chance of winning?
The answer in the majority of cases is no. Most track records are hypothetical and this means they were made using past data and the vendor knew the closing price - the problem is we have to trade not knowing where prices are going!
If you find one with a real track record audited over 5 years you have a chance, but you will be hard pushed to find one.
7. The harder I work and the more knowledge I learn the more chance I have of winning?
The answer is no. You only have to learn the right knowledge and that doesn't take long. Just as important is you need to have the right mindset to succeed to and this doesn't come from studying.
8. My risk per trade is my stop divided by my profit objective?
No - of course it isn't. This is just an assumption and opinion of where prices may go and is NOT The risk of the trade.
9. My broker is experienced so I Will be more successful with a broker assisted account? In most cases no - if brokers could make money trading they wouldn't be brokers!
10. Are moving averages a great tool to give forex signals?
No of course not there a lagging NOT a leading indicator and cannot and should not be used to enter trades.
If you answered all correctly well done - if not do some more work on your forex trading strategy.
