Forex/Currency Trading is Not Hard After All… Just Avoid Your Emotions

There will always come a time in our lives when this thought bubble pops up: “I need to have another source of income – not just income from my day job, but something that will make money work for me as well.” I mean, who doesn’t think about this?

So there I was, looking for other investment opportunities on the net when I stumbled upon suspicious ADs on FOREX/Currency trading depicting stay at home moms and travel junkies who left their day job promising huge income while just working in the comforts of your ‘comforts’. 😛

I also saw some forums discussing the science of FOREX (Foreign Exchange) or currency trading and how they were able to ride the highs and lows and also comparing which online forex broker is the best.

I’ve always been curious about currency trading because you trade based on the fluctuation of currencies compared to the stock exchange wherein you trade based on the performance of a company where you decide to invest in (not that I’m against stock exchange, it’s just my own opinion and I’ve never tried the stock exchange so I cannot comment on that yet). I thought I already new the basics, and I though I just needed to learn more on the technical part of the trading.

I decided to research more on Forex/Online Currency trading to find out if this investment option suits me well. I had a few questions on my mind:
1. Since I am not a financial expert, where can I learn currency trading the best way and in a way I can easily understand?
2. I know that there are many bogus brokers out there, how do i find out which is the legitimate one?
3. If in case I did find out who the ‘legit’ brokers were, how do I know which is best?
4. How much do I need to invest in order to have a ‘live’ account?

As days of research went along and me talking to myself to have the courage to just give it a try, I did actually find out the answers to my questions:
1. With dedication and focus, I can easily learn the basics of currency trading (just enough to confidently execute live trades) by reading BabyPips.com’s ‘School of Pipsology’. Yeah I know, cute name but you’ll be obsessed about this website once you get the hang of it. 😉
2,3,4. I found a few legit online brokers, and after comparing the minimum investment options, company performance, and user reviews, I felt that it’s best if I try Oanda.com, a Singapore based online currency trading firm that is registered with the Monetary Authority of Singapore. I remember that the ‘good stuff’ that made me choose Oanda.com more was that it is legitimate and regulated by a government body, it has a minimum investment of US$25 (this is what I remember), and that you can try it out using a dummy account first to test the waters. Also, it has a mobile platform which you can download on your phone (be it Android or iOS) so you can start dummy trading or live trading right away.

At first, I read through BabyPips.com’s very informative yet fun and easy to understand School of Pipsology.

BabyPips

While reading through above site, I was also trying out my newly learned knowledge through Oanda’s dummy trading platform. I downloaded the app to my phone, registered, and voila! I instantly had US$100,000 worth of dummy dollars I can use for dummy trading. The best part of dummy trading is that you execute your dummy trades risk-free on a live environment/market, meaning that is what’ll actually happen in case you are using real money. I also tried using a dummy account for about two months before I actually invested real money because I wanted to know how I did and if I can really keep up with a live trading environment.

With the US$100,000 dummy credits I was given, I was very ambitious in my trades taking in huge risks by buying and selling money. Having taken huge risks with less emotions, I was able to earn about US$15,000 in two months.

Of course, even if this was in a live environment, I believed it would still feel more different and you’d be more cautious if you were trading in actual money. I was a bit cautious, but after two months of reading from BabyPips.com and dummy trading, I decided that I would take some risk and put actual money to see if things would work the same way it did when I was using a dummy account.

To test the waters again, I just invested a small amount – US$156.28 (it’s not rounded off due to currency exchange differences when I transferred Philippine money to their office in Singapore), that is big enough for me to buy currencies freely instead of being stuck with your moves by just investing $25, but still not huge enough for me to lose my mind if I lose my investment. Even if I lose my US$156.28, I’ll never fret ’cause it is such a small price to pay for a real-world training.

Charge it to experience

It has been roughly 2 years since I started currency trading using real money. It was really hard not to let your emotions take over whenever you are already losing yet your brain still tells you to keep going. You’ll know what I mean when you read BabyPips.com’s ‘School of Pipsology’. It was definitely easier with no emotions involved when I was still testing out the dummy account feature.

During this time, I’ve never added any additional amount to my initial investment (US$156.28). I mean, I never needed to (thankfully). After so many trades within 2 years, here are the statistics:

  • The highest amount I ever had in this ‘game’ was US$428.
  • The lowest amount I ever had in this ‘game’ is US15.62. Sadly, this is the amount I currently have in my account

Here’s what my mobile account looks like now. Nice, eh? Live trading at your fingertips! The interface is user friendly as well.

oanda

Whenever the value of my investment went waaay down, I take a break for a while to think things through. Once I did this, I resume trading and I was always so surprised to be back on my game, reaching high limits (US$428 being the highest I had). Now that I have only US#15.62, I am still thinking things through on how to establish my next strategy.

Things I learned:
1. Never let your emotions take over your decision.
2. Only put in money that you are willing to lose. Once you put in more money, the more likely your emotions are going to take over.
3. The more you know, the lesser the risk. I strongly recommend reading through BabyPips.com (not that I am connected to them or what).

To save you time and to get you straight to the good stuff:
1. Read the complete article here first
2. Test your acumen and skills using a dummy account
3. Once you’re ready, create your own live account

Useful tips when opening an Oanda.com account:
1. Once you put in your money, you can only withdraw your funds the way you put in your money. For example, if you use BPI Account # 1234 to transfer funds to Oanda, you can only receive payments via this account. What I did on my end is I created a separate account just for Oanda.com.
2. Prepare your government issued ID and copy of billing statement. If you do not have a scanner, you can just take a clear picture of your document using your smartphone and hit send!
3. Read everything before signing to make sure you understand clearly what you are signing up for.

I’ve created a three-part article, How to Trade Forex in Layman’s Term, to enlighten you on the step by step process and the basics (with tips) of Forex Trading. 🙂

UPDATE: For beginners like us, it’s cool that there are innovative forex brokers that introduced social trading, where you automatically copy the trades of master traders – a perfect tool for amateurs, who lack the time and rare skillset of market analysis. My blog post here shows us what Social Trading is, how it works, and how to make an informed decision in choosing who to copy in social trading.

I hope you guys learn from my experiences as much as I did from the experiences of others. 😉

Best,
FRUSTRATEDBILLIONAIRE

 

***Above explanation is for illustration purposes only. Please note that I do not endorse investing in this type as this will now be based on you, the decision-maker, to determine if investing in this type will be in your best interest. Please also read through BabyPips.com / Oanda.com for more relevant and accurate information regarding its products and services.

FrustratedBillionaire
FrustratedBillionaire
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