If I become a forex trader should I use other people’s forex trading strategies or develop my own one?
I am going to be 18 years old in a few days, old enough to invest money. I have had a practice forex trading account with FX Express and have discovered some interesting things and have found ways to make money consistently at 10% compounded daily by developing my own trading rules by using only 1:25 leverage and setting a stop-loss of the value of all my trading capital so I don’t keep on losing small amounts of money consistently. So far this has worked out fine at me winning every trade so far since I started doing this. What I’d like to know is if I should copy someone elses trading styles and strategies, or develop my own ones to suit my personality? Please advise.
you will be wiped out in a few days time. Forget about forex…
People with phd’s in mathematics trade billions of dollars for governments and so forth on forex. You will be eaten alive.
Well since the data show that close to 85% of individuals who start trading Forex use a “trading system” and lose most of their money over an average of six months before just giving up, you might want to avoid that!
And something is wrong with your math if you think you have been earning a compounded rate of 10% daily, that’s the equivalent of an APR of 1,166,641,436,648,530% (!)
You could have invested a penny on your first day, and have about $11 TRILLION after a year!
Check your math.
Trading on a demo account can be very different to trading on a real account.
The figures for retail forex traders losing their investment and then quitting in the Forex market are closer to 95%.
The ones I know including myself started off using some of the tried and tested trading systems and then as we got more experienced we tweaked these systems to match our trading styles or developed own systems.
If you are that confident in your forex trading system then open a micro account with a couple hundred dollars and trade at 0.01 lots which is like 10 cents a pip. Trading live will give you an idea if your system can make profits regularly, After three months of regular profits then you can increase the amount you are investing.
But you are on the right track by using small leverage but a stop loss equal to whole trading capital is not a great idea.
At the moment we are in the summer months and the forex market is doing a lot of ranging and consolidation rather than trending so your strategy will work in a ranging market but has some weakness in a strong trend market. If you get caught on the wrong side of a trend then it will eventually hit your stoploss before turning around.
Sometimes a trend can consist of 1000+ pips before swinging back. Can you account handle this is the question you need to ask you self.
Ideally you want to be a risking only 2-3% of your account on each trade.
I would suggest that you learn another trading system and compare it to you own, first on demo and then on a micro account.
Check out http://www.currency-exchange-reviews.com they have some good training guides for free and also http://www.babypips.com. Both of these are good resources.
If your trading strategy is working for you there is no reason to change it. You may decide to improve on it as you go along. Fixing leaks where you feel your strategy may be losing. Your strategy should be based on your trading style and ability and no two traders are alike.