Forex (fx) Trading Options - What Choices Do You Have?
Let Someone Trade for You
Managed accounts exist in forex just like they do in futures or stocks (mutual funds). Usually these traders don't advertise. If you're a great trader with a significant history of success, money just comes at you.
Because of that you need to be careful of anyone who is advertising managed forex accounts. Note that I did not say to write off anyone who is advertising, but just to be very careful. You see, managed forex accounts have very little regulation. Any one can figuratively hang their shingle out and claim to be a trader and ask for your money.
Itís very unlike the stock market. The stock market is quite regulated. In the USA, the New York attorney general Eliot Spitzer cracked down on mutual fund companies' fraud and even cause one to cease to exist through very stiff penalties (e.g. Strong Capital Management). No such shakedown will happen in the foreign currency arena, because itís unregulated.
So, the ball is in your court. Do your own homework. Take care of your own money.
Take Someone Else's Signals
This is related to the first choice, but has definite differences that make it unique. Instead of just handing your money over, someone calls trade signals and you enter them. It's much more transparent, because you see every trade called. However, it's also much more hands on. You enter trades and exit them.
The same concerns with finding a good signal service exist with finding a good fx trader to trade for you. Anyone can call themselves a good trader and post great backtesting results. You need more than that before you trust someone's signals. Also, the best signal providers don't seem to advertise a lot. Nor do they make themselves very visible. They donít need to.
In the currency market, this is the most popular choice (however, not necessarily the best). Buy a system, or create your own if you have some technical skill, and trade it. Or if you're the foolish type, you just start trading willy-nilly. People like me pocket your money.
Anyway, the retail currency market is being heavily advertised, and is rapidly gaining in popularity. Outside of the USA, it is already extremely popular.
To me, this begs a question. Why is it so popular? Is it because it's so easy and everyone is getting rich trading it? No. As in any of the other markets, there are many more losers than winners.
So what is it that's fueling the surge in popularity? The brokers advertising. They are relentlessly advertising. Why? Because being a forex broker is a cash cow. Most traders are loser. Simply take the opposite side of their trades and you are a winner. Let that sink in.
What To Do If You're A Beginner
Okay, youíre a newbie to forex (perhaps to any financial market.) What should you do?1. Get the idea of trading with real money out of your head.
2. Buy a ready-made system that is proven to do well.
3. Study everything you can on the internet and in books about money management.
4. Demo trade the system applying sound money management.
5. After six month (longer if your not profitable yet), start trading with real money. You want an account that lets you trade smaller than a mini account. You want to trade fractional pips. OandA is good for this.
6. If you cannot trade profitably with real money trading fractional pips, start looking for a reliable, good signal provider.
7. Trade with the signal provider while you continue to turn your trading profitable. Since you are trading fractional pips, any losses will be literally pocket change.
8. When you can trade profitably yourself, congratulations! You have made it.
What If you're A More Skilled Trader
If you're a more skilled trader (you are trading profitable yourself), your aim is to make yourself better. Experiment with making your system more profitable (obviously, you don't experiment with real money). Onward and upward. Become better and better.