How to avoid scammers and have a proper money management

 In this profitable market are a lots of scams.

 You should be aware of them and recognize them before it's too late.

These kind of  firms offer you endless profits, claim to give you FX guidance or sell you signals. If it would be that easy, everyone would be winning like 90 % of trades, wouldn't we? You should be aware of these scams and ignore them every time. Don't fall into the trap!

There is a bold line between losing trades and losing money because of some stupid traps, into which you have fallen because you were naive and greedy. Losing trades is a part of reality. Regardless if you are Wall Street trader or a hobby trader, everyone will encounter losses. No one can be 100 % correct in this market. Even a person with 75% success ratio can lose 10 trades in a row. That's the reason why you have to stay grounded, be disciplined and emotionless as much as possible.

Losing big money is another story. Some traders lose confidence and doubt themselves from time to time. This encourages them to pay for stupid forex courses and forex services, which promise to give you holy grail and endless amounts of pips(profits). Don't be fooled under illusion of gloom and always ask this question.

If they would be that profitable, they wouldn't be offering over-priced course, would they?

Drive and inner motivation is everything what you need to succeed on this market.

The first thing you have to do is to filter out all this ridiculous amount of trading systems or trading systems and create a simple trading strategy that is not complicated and effective.  For beginners it is harder then it seems,to develop a strategy and is far easier for them to be lured by this scammers into various forex services, because they want to lessen their struggle and ease their path to success.

Many traders think that essential thing to be successful on Forex is to sit in front of the charts all day long, but in reality it's much worse, because you get mad or stressed out. It is only hurting you! Analyzing and spending money on new trade software, systems and holy grail is a waste of time and hard earned money. That's why proper trade plan is so essential if you want to be profitable and belong to 10% of traders who actually succeed on this market.


Furthermore the trader can become crazy or mental drain himself after over-analyzing the market.  This leads to doing a lots of careless mistakes, known as analysis paralysis. I will repeat myself, you have to have strategy. That's the first thing you will do after getting on this market.

Emotions are number one destroyer of accounts

Therefore it's absolutely crucial to control your emotions when you are trading, mainly the good emotions like fulfillment or over-excitement. Emotionless state of mind needs to be embraced and robotic like trading has to be carried out. You have to know what you are doing or better said know what you are looking for on the market before executing trade! 

So here is my personal guide

Protecting your deposited capital is one of the fundamentals of trading. You don't want to blow your account off in 2 trades and cry over your stupidity, do you?

If you have a proper money management you WON'T blow your account off sooner than one year after founding it. This is my personal money and risk management which I use in every trade. The main idea is to control your risk safely at a level that is tolerable for you. You have to keep in mind that you can lose every trade anytime, but if you have proper risk management you are okay with losing trades.

There are few things you should be aware of 

Chasing pips, not money concept

You shouldn't  be thinking about money, you are not irrational, addicted gambler . This will never help you to transform into professional trader. It shouldn't be about Ifs and Maybes. If  I will make 50 bucks on this trade I will be satisfied .. . if I would have cancelled this trade earlier and would have not lose so much money.  Always count your trade profits, losses in pips, this keeps detachment from your feeling. It should be all about PIP targets, PIP risk and PIP count. If you don't know what a pip is look at my article.

No trade plan

Attempting to trade  Forex without using proper trading plan is like jumping off the plane without a parachute. It's in my opinion the most common mistake which traders make. Many traders claim that they will make one later  or simply after making money say that they don't need one. Everyone needs a trading plan to solidify their strategy, their mistakes and to keep a track of their progress.

Demo account

A lots of traders underestimate the power of demo account, even though it can't be compared with a real one because of emotion handling. I understand the urge, which some of the traders have, because of trading successfully on demo, but if you haven't got a proven technique which works for at least 3 months on demo you shouldn't be even thinking about jumping on real account. Market will be there in 1, 2 years, you have got a time.

Over-confidence

Even if you are winning and having profitable months, you should stay humble and on the ground. No one can conquer the market or be invincible.  You could be at the top, but the market will always find a way to surprise you.

The rules of risk management 

There are few concepts or standards of proper risk and money management which you should remember: 

• you don't lose much money in short period of time
• over the long-term your winning trades outweigh your losses
• the moment when you will stop trading immediately by withdrawing your money from the account
• always evaluate whether the trade makes sense and fits into your trading plan, you are not missing an opportunity if you don't see any! 
• your risk and money management has to be up to standard

Stop loss is a must!

You will never make money without using a stop loss in longer period of time, especially if you are starting out. It doesn't work that way. Everyone makes mistakes or misinterprets the market. Stop loss is placed in your order and "kicks you out of the market" if the price action reaches specific price point, what helps you a lot to prevent large losses. Never ever listen to someone, who says that trading without stop loss is more profitable, it's a nonsense! You should find a reasonable places based on your risk management and never hesitate about placing it. At first you should measure the distance between your entry price and stop loss price. More about this problematic in this article.

Risk to reward ratio

The first and foremost step is to determine how much you are willing to lose in one trade it should be something about 1 - 3 % (mine is 1.5%). So if your account is 10 000 $, one trade should never exceed 300$.  Risk to reward ratio is the ratio between how much you gain and how much you will lose in particular trade. Your ratio should ALWAYS be at least 1:2, that means that if you are risking 300$ you should be able to make at least 600$ if things go the right way. Your stop loss should

always be determined before you are entering the trade. For this measurements you should know the pip and lot calculations which are discussed in this article.

    This is good risk to reward ratio 

Once you have set up your risk reward, never reduce the profit (green part). It is the worst feeling ever if you could have the whole profit but your stubbornness didn't let you.  Good habit which you should use altogether with risk to reward ratio is break even what is a price level at which your market price of security is equal to its original cost. It means that if you will move your stop loss to break even you won't have any losses, the most you can lose is just your profit. It really comes in handy, because you get relieved by the fact that this trade can't be losing one.

Example You should eradicate the thought that losing trades in a row is a bad thing

I reinforce that you must eradicate this kind of thought. You will have some good streaks, but bad streaks can come at anytime! ANY trade can be a losing trade and you are fine with that, because your risk is tolerable by limiting the amount of the loss. A great trader who has 75 % winning trades has to know that he can still get 25 losing trades out of 100. Stay cool headed when bad times come.

You are willing to lose money which you have deposited to your account

This is in my opinion the most important mindset. If you have for example 10k in your account and you completely fine with that then you can lose them all but don't give a damn if you will stop trading because of no money. I have a strategy  which prevents you from losing all money of you account. At first I have to determine how much money from 10k I am willing to lose. In my case it was 3k, but as the mindset of humans is almost always overestimating itself, it is a good idea to half this amount. So we have got 1.5k right now and if we will lose this equity we are out and will withdraw our money.  Emotional handling when you withdraw your money is crucial. don't forget about that.

Volatility of the market

You have to let the trade go and let the market stabilize in its direction. It's completely normal for market to flow up and down before finding its direction. Some beginners panic after they see that they are in minus and want to get out of the trade . But you shouldn't worry because you have already calculated your risk and have entered your stop loss. Let the market breathe a bit.