A quick search on Baby Pips led me to start this thread. Moderators you may want to sticky this thread.
With so many schools, websites, and books galore... I believe one of the most untold and yet critical mistakes many new and professional traders alike make can be avoided. On this thread I would like to have an ongoing discussion about what all traders alike should stay away from to help increase there Forex success. Some input from the honorary members would be greatly appreciated from everyone. I do this out of the kindness of my heart because just like you guys, I too would like to succeed in the most difficult market in the world... Foreign Exchange!
Please stay away from these for your own benefit, and thank your self as you increase your trading success!
1. I made $xxx,xxx money trading Forex, buy my system.
Assuming only the top 2% of all traders actually succeed in the FX market, do they need to sell you a system to succeed and make money? NO! They should already be rich, therefore money should not be necessary. If they are trying to make extra $ on the side that's one thing, but I know when I become rich, my system is going to be 100% free and available to anyone who is interested AFTER I establish my Trading Firm and have made enough money to care less about money period. With that in mind, Stay away from any system that must be purchased, odds are it is not worth the asking price and or the system overall just does not work in current market conditions.
2. Pay for Forex Education
I say this not because I think paying for an education is a bad idea, however just like #1 there are way to many scams out there... On this bullet point, I'm going to only focus mainly on trading schools. It would take a serious amount of time and research in order to validate any trading school worth attending... Not to mention the cost of attending, travel, time off of work etc. Besides there is no guarantee you will succeed after attending one of these costly schools. Time is money, invest your time in FREE education! There is so much free education on Forex its insane. After all baby pips is free is it not? I have yet to meet any person who has read every post on baby pips. Baby pips also has a free Forex school, check it out! Need help finding free education? Here is a short list to start with:
Local Library (Free), Baby pips (Free), Straightforex.com (haven't check it out, but a quick Google search and its number 1... it as well is... you guessed it, FREE) probably hundreds of other Forex sites online as well.
Now if you do want to pay for your education, I'm not holding you back. My advice is to purchase some inexpensive Currency Market books before you spend money on any trading school, or system.
3. Stay away from low capitalization Brokers
Most commonly discussed on any forum is which broker do I use? etc. Short answer based off my own research as well as reading forums before I opened my live account 2 years ago... The highest capitalized broker is the best choice assuming you are qualified to open an account with them. Why? What if the market crashes or whatever. You want your money out... It's your money, you should be able to get it whenever you want. By choosing the highest capitalized broker with the most Excess net capital is the safest and smartest choice. This means you have the highest odds to get all of your money out if the broker goes under because they have met and exceeded the CFTC minimum broker capitalization requirements. This is HUGELY overlooked by professional and noob traders alike. For this reason I chose Oanda Corporation when I opened my live account... at the time I hadn't heard of Interactive Brokers LLC which has higher capitalization than Oanda corporation, however they actualyl decreased in size since December of last year according to this
CFTC Releases FCM January Metrics, MoM Rise In FX Obligations | Forex Magnates
I do not work for oanda nor am I advertising for them, however... I think they are the best suited broker outside of ECN (another topic) due to the reasons posted above.
4. Excessive High Leverage
Like previously stated, I chose Oanda as my FX broker. Oanda offers a maximum of 50:1 leverage which meets USA regulatory requirements. After all Oanda is a US based company so it must meet USA CTFC requirements. Anything above 50:1 is deemed unsafe by the CFTC for good reason. Why? because no matter what kinda trader you are whether it be long term, short term, or a scalper, it is very very very very easy to loose your capital via margin call with anything above 50:1 leverage if you risk 100% of your capital in one trade (or even less than 100%), which I hate to say, but a lot of new and even experienced traders alike do quite too often. By doing so, many traders loose all there capital very quickly, never to trade again. Not going to lie, I still risk very heavily and in the past I was known to risk 100% of my account on any given day. I do not recommend you do so for your own benefit.
I will be back later to add to the list and after I get some good feedback, worthy posts will be edited into this first post. I will be sure to proof this post later and fix all the grammar etc.
For now... thanks for reading. Pat yourself on the back because if you follow these helpful hints, you have already increased your odds at becoming a successful trader with as little amount of upfront Forex costs.