Not specifically concerned with the forex market, but markets in general, here’s an analysis of money management that well worth checking out. There’s good information on drawdown and how it will affect the (smaller) trader, also some of the subtler points about risk/reward calculation that escape people at times.

Definitely a conservative, low-risk approach – and nothing wrong with that – as a treatise on what to avoid when starting out, definitely worth some careful reading.
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In the interests of completeness…
The first 2 letters of the code are the ISO 2-character country code and the third is (usually) the initial of the currency itself. so for example CH – for Confoederatio Helvetica, ie. Switzerland, and F for Franc gives CHF, the Swiss Franc.

It’s all there in ISO 4217, if you really need more information…
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There’s a distinct group of people in forex trading – they do ok, they probably make some money every week. They spend a lot of time comparing signals, calculating and working out their entries – and almost no time at all considering their exit signals.

We all can be guilty of it – decide to place a trade and then completely overlook the second part, deciding on the stops, take-profit or stop-loss – and this part is just as important in determining your profits (or limiting losses) at the end of the day.
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Instructive to look back a couple of years to an interview given by J Welles Wilder – in which he states the unpalatable facts about market-making – although it should be remembered he’s talking in regard to general investment, not specifically about the forex market.

From way back then, these sentiments didn’t seem quite so uncomfortable, and perhaps were even to be welcomed, in the general gung-ho spirit that pervaded…

I would probably qualify the second sentence with respect to forex, but here we go…
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The one thing about forex – provided you stay well away from proprietary systems and automated tools – you’re on your own…
With just a romance with your chosen broker to make or break.

Consider the situation if you’re dumb enough to think about letting someone else handle your investments. Yes, I’m thinking towards Bernard Madoff – crazy name, crazy guy – and Ponzi schemes. I had an interesting chat with a guy who knows about these things and his opinion was that these funds never started out as a Ponzi scheme, but due to structural weakness that’s exactly what they had to turn into in order to keep afloat.
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Noticed anything on the news recently? The coming recession has seriously affected financial markets worldwide. What has deepened the crisis is negative sentiment – a self-fulfilling prophecy, the majority of investors are pulling out of the stock, equity, futures markets and looking for suitable alternatives.

Forex doesn’t do negative sentiment – if you reckon one currency is going to go down against another – well – buy the other currency. And you won’t be waiting for 2-3 years for a stagnant equity market to pick up again.

Actually, instability can be positive, in that volatility in the fx market can provide increased opportunity for profit. The larger the swing, the larger the pip profit.

Volatility does make a trade riskier, no doubt about that – stop-loss orders are regularly used in forex, allowing a trader to limit their risk in terms of their total investment. This will allow a trader to protect against unpredictable movements while taking advantage of market volatility at the same time.

It’s also possible to practice forex using virtual money together with real market prices – a free practice account – so you’re not risking anything until you’re ready to have a go for real.

It’s never long when you’re starting out in forex before you come across a site offering an automatic forex trading tool. Their’s, of course, is the best ever…

It’s the ideal solution in the market that never sleeps (except at weekends).
All you need is a hundred bucks to make your first trade – then you’ll have the mega money to invest and make a serious pip profit…
You don’t need to know anything about boring things like the markets, technical analysis, your new forex friend will help you through.
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In retail forex, there’s no such thing as a forex broker, although often referred to as such. The sites we drop in on to get rid of our hard-earned cash are run by dealers, not brokers.

So what’s the difference?
In other markets, stocks, precious metals, futures etc., an investor uses the services of an agent acting on their behalf – a broker – who goes off to an exchange with their customers’ instructions and executes the trade. When the tradable instrument, to use a very posh term, is bought and/or sold, they take a commission, flat or percentage.
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How many times have we heard this one? A forex trade is not just a position.

It’s also:

• The reason(s) for taking that position
• A stop loss level.
• Profit taking levels.

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