Forex Figures

Investing money online is a complicated business – if it were easy, everyone would be doing it, and retiring from their stressful day jobs to make millions from the comfort of their own homes.  Still, there are many ways in which you can invest online.  Forex trading, of course, is one of them, but it’s not the only way to invest money online.  In fact, for most people, Forex trading requires a lot of technical knowledge and skill, which many people don’t have (at least not initially).  If you’re tired of losing money in the Forex market or are looking for an alternate way to make money online, check out the options below, and consider trying some out to see if they’re right for you.

• Investing in the stock market – If you’re not looking for a quick profit, but are willing to wait things out over the long term, investing in stocks may be a good option for you.  While there are ways to identify stocks whose value may increase quickly, many people who invest in stocks prefer a long-term investment strategy.  Buying stocks online is easy and relatively affordable, with many brokerages allowing for some free trades or charging only a few dollars per investment.
• Pair options trading – If you’re interested in the stock market but don’t want to wait for a long-term investment to mature, you can consider pair option trading, which is a relatively new way to make money online, and quite an exciting one.  With this type of trading, brokers such as StockPair allow traders to predict which of two stocks will perform better in a given period of time.  If the trader predicts correctly, he earns the stated payout in a matter of minutes or hours.
• Binary options trading – Like pair options trading, this form of trading lets traders make predictions about how certain markets will fluctuate within a defined time period (usually a few minutes to a few hours in length).  Traders can choose from stocks, currencies, indices or commodities and make decisions based on their knowledge of the markets.  Binary options trading requires a much lower minimum deposit than Forex trading making it ideal for traders who are afraid of risking too much  money at the outset.
• CFD trading – The most similar to Forex trading, CFDs (or contracts for difference) are derivatives products that allow traders to profit on live market price movements without having to own the traded instrument.  CFDs, like Forex, require traders to have a keen knowledge of the market, and, to truly succeed, will likely require some understanding of technical indicators.

Have you tried any of these methods?  How did it go?

Neil Norton is a full-time trader and co-founder of the TheForexRoom.com. The room educates traders on Neil’s own divergence strategy and calls live trades during the London session from 7am GMT that aims to capture dozens of pips daily. DailyForex.com caught up with Neil and we discussed his journey into trading, his trading room and how he views the markets.

Questions about Yourself

[DF]  What’s your professional background outside of trading Forex?

[Neil Norton]  I’m an Entrepreneur: I have built many businesses from scratch; the last one was an online retail business for consumer electronics.

[DF]  Where did you grow up?

[Neil Norton]  South London, UK

[DF]  How did your journey into Forex trading begin?

[Neil Norton]  I was looking for my next venture when I saw something on line. It was a live trade where they guy bought GBPUSD at £1,000 per pip & set a target of 20 pips. Looking back on it, it was a very basic pivot pop trade that I used myself for a while. Anyway he took profits at +19 pips (i.e. GBP £19,000 profit less spread) a few minutes later and that’s good money in anybody’s book with what seemed very little effort. If someone can do something then anybody can do it (as a basic principle of NLP). Little did I realise how hard the journey would be. I took the normal route of reading all the books on trading I could find, went to various seminars, some costing thousands of pounds but eventually realised that the only way to learn properly is to trade live. This was a very costly education but worth every penny.

[DF]  What interests do you have outside of trading? Do the skills or mental requirements overlap with what you need to be a good trader?

[Neil Norton]  I practice various martial arts including Muay Thai and kickboxing amongst others. I believe this helps with self discipline which is obviously crucial to any Forex trader. I also enjoy extreme sports such as skydiving; again I think this helps in trading as some people may have a tendency to hesitate when a trade sets up. I have seen this in some of the people I have mentored. I am doing a Psychology degree in my spare time; I believe this will help with the understanding of how the mind works and emotions during the trading process, as well as other things. 

[DF]  What drew you to trading in the first place? And why Forex, and not say futures?

[Neil Norton]  Realizing that the online retail market was becoming saturated with costs increasing and profits decreasing, I looked for a venture that would return me to me the high income that I was used to. I was also looking for something I could do all over the world and that was not dependant on my age. Trading ticked all the boxes.  I traded US & UK stocks when I started out but they moved too slowly and price action was too random. Also, the market makers are the main winners in that game what with gap-ups & gap-downs, earnings etc. Because I trade from the charts (price action) and I am primarily a technical analyst, I found Forex respected the rules amazingly, i.e. support resistance, breakouts, candlestick patterns etc. Once I was trading forex and making money consistently, I didn’t try to trade anything else. As the old saying goes, “If it ain’t broke then don’t try to fix it.” 

[DF]  Would you say you’re a full-time trader?

[Neil Norton]  Yes I trade full-time; I start at 6.30am and I normally trade through to around 4.30pm working Monday to Fridays most weeks. I have been full-time for the last 4 years. (5 years in all as I spent a year part-time trading/learning.)

[DF]  How long have you been trading the way you have now?

[Neil Norton]  I developed my core system about 3 or 4 years ago.

Trading Questions

[DF]  Which currency thepairs do you focus on?

[Neil Norton]  EURUSD, EURJPY, GBPUSD & AUDUSD (I will trade most major pairs if there is nothing on the 4 main pairs but a setup develops on something else).

[DF]  Do you trade markets outside of Forex?

[Neil Norton]  Not any more, I traded UK & US stocks for a while about 4 years ago.

[DF]  What platform do you use for charting?

[Neil Norton]  Various but mainly MT4.

[DF]  What timeframes do you use?

[Neil Norton]  4h, 1h, 30m, 15m, 5m & 1m, most trades are taken from the 30m & 5m charts.

[DF]  How long do you hold a typical trade?

[Neil Norton]  The 30m trades can last from under 30m to a few hours. When scalping I may be in and out of trades in a few seconds to a few minutes.

[DF]  Do you ever hold a position overnight?

[Neil Norton]  Rarely but if a position is developing well, I will leave with the appropriate stop.

[DF]  What kind of stop-loss size do you keep in pips?

[Neil Norton]  Normal stop is around 30 pips, it can go up to 70 pips but it all depends on the price action at the time of the trade & the targets will be relative to the stop.

[DF]  What’s your typical target in pips?

[Neil Norton] 1:1 or 2:1 so if stop is 30 pips, then first target 30 pips and second target 60 pips.

[DF]  What hours do you keep for the London Session?

[Neil Norton]  I’m in front of screens at 6.30am GMT and I look for the big money going in at the open. I’m very unlikely to take a position after 10.30am due to the low lunchtime liquidity.

[DF]  Do you use market orders to enter, or stop/limit orders?

[Neil Norton]  I use stop orders mainly for entries and I always set the stop & targets when placing the order.

[DF]  How does news & fundamentals affect your trading?

[Neil Norton]  I check the calendar every day before the open and mark on the charts (in case I forget, which can easily happen when I’m in a trade) events that are likely to cause volatility. If I am still in a position when the risk event is due I will adjust my stops accordingly. 9.30am GMT is normally a risky time for GBPUSD and 1.30pm GMT for EURUSD. I stay away from trading big news such as non-farm payroll as it’s too risky and in my opinion more of a gamble.

[DF]  Over the years, have the markets changed in terms of how you can apply your methods?

[Neil Norton]  I developed my core method a few years ago and have just been refining it since.  The method I use can be traded in trending or range-bound markets so there are normally a few viable trades throughout the day.

[DF]  What are the most common errors you see traders make?

[Neil Norton]  Taking profits too early and not cutting losers soon enough; also bad money management.  Although I set my stops when placing the trades, I do not get married to the trade and if a reversal forms while I’m in the trade I will take some profits out and manage the stop to either breakeven or the first target. I may also look to trade the reversal or correction if all criteria are met.

[DF]  What mistakes, if any, do you still make yourself as a Forex trader?

[Neil Norton]  When I started trading I kept a journal and that helped me turn the corner. I made the same mistakes as everybody else but once recognized, I corrected them. I wish I could say that I was a robot and never made a mistake; however, saying that, if I am not 100% on form, for example, if I’m tired or not 100% focused, I have been known to take profits a little early.

Performance Questions

[DF]  What’s your win percentage like?

[Neil Norton] 60-80% wins depending on the day.

[DF]  What drawdown do you tolerate?

[Neil Norton]  I will tolerate a maximum 2% drawdown per day (I risk about 1% of my equity per trade; if that is hit then I won’t trade for the rest of the day.

[DF]  Do you maintain a track record?

[Neil Norton]  I used to record every trade when I started but now only sporadically. The reason for this is that the set ups are the same and all the trades look very similar. I record some trades for my blog and YouTube but I prefer just to trade and walk away when I’m done these days.

[DF]  How many trades on average do you execute over the London session?

[Neil Norton]  Normally between 1-10, but more if I’m scalping.

[DF]  Do you aim for a weekly pip count as a goal?

[Neil Norton]  No, I find that with a pip goal there is too much pressure and it may force me to take trades that do not meet my criteria 100%. I just wait for the set ups and trade what’s there. Some weeks are obviously a lot higher in pip gain than others.

If you’re interested in the Forex market, you likely have a natural curiosity about countries dissimilar from yours – I know I do.  Though I hail from a developed country, I can’t help but root for the underdog, and I’ve recently taken a closer look at two under-developed nations that I think have significant potential for future growth – and profits.

South Sudan

The first country I’m particularly interested in is South Sudan. I’m interested because this is a nation with vast natural resources which is literally being built from the ground up. The country has no infrastructure, no economy and no way to tap their oil wealth. At first glance, this would seem to be a nation which simply doesn’t have the possibility of being able to make money – after all, you need to have money to hire people.

Donations and Future Wealth

However, I see that South Sudan has significant potential to make money for smart people now and in the future. First, let’s start with the now – in spite of the crisis in world financial markets, most wealthy nations still donate money to poor nations and South Sudan is definitely primed to receive investments of capital from these donor nations. At first, this money will be directed toward rebuilding the country – this means improving the roads, building up the national airport and in general doing infrastructure work.

Eventually however, I also see South Sudan developing and becoming a fairly wealthy African nation thanks to the oil it has under the ground. Therefore, expect that in a few years time the oil companies will be looking to invest in that nation as well. In short, for the medium and long term, looking for companies which will invest in South Sudan (or investing yourself if you have the money and connections to do it) can pay off handsomely.

Libya

Another country which I’m very interested in is Libya. While Libya actually has had a functioning economy, along with roads and other infrastructure, the country has been devastated by the recent civil war which was fought there. This means that Libya, like South Sudan has the potential to see massive investment in infrastructure improvement to repair all the damage from the war. While they have a much shorter distance to travel than South Sudan, I also see these kinds of companies making money there as well.

Bottom Line

Look for companies which do infrastructure work in order to find a way to make money in South Sudan and Libya. I expect the stocks of these companies to start going up in value, especially if they already have contracts or are in talks for contracts with the governments of these nations.

In the Forex market, I see potential in the long term for the national currencies of both nations to grow in value. However, this is a much riskier investment as mismanagement by either new government could send the value of the local currency plummeting (international infrastructure companies by comparison will generally require payments in hard currency).

What’s something that most people take for granted that it will always be there but which is actually finite and running out? If you answered oil, you’d be right; however, if you answered water, you’d also be right. Yes, that’s right – welcome to the world of peak water. Here’s what you need to know and how to profit from it:
What is Peak Water?

The odds are good that you’ve heard the term peak oil before. That’s the point at which demand for oil will begin to permanently outstrip the demand for the stuff. It is expected that we’ll hit peak oil in the next few years. In fact, some people actually believe we’re already there and that we just don’t realize it yet. Peak water is much the same thing – the point at which demand for water permanently outstrips supply.

But We Live On a Wet Planet!

I happen to be a science fiction buff and a common theme with many alien invasion stories is that the aliens show up hoping to drain the earth of water, which we happen to have plenty of. In fact, 2/3 of our planet is covered in water, so how could we possibly be on the verge of peak water? It doesn’t make sense, right?

It’s Fresh Water, Not Salt Water

The thing is, that 2/3 of our planet which is covered in water is almost all salt water, in the form of large oceans. In fact, according to most scientists, 99% of our planet’s water is undrinkable. If you’ve ever seen one of those movies where the guy is at sea and dying of thirst in spite of being surrounded by water, it’s because the ocean’s water isn’t drinkable without being treated. Get more than a few gulps of the stuff and it could destroy your internal organs and rot your brain – literally.

Global Weirding Is Making It Worse

A few weeks ago, I wrote about the phenomenon of global weirding (more commonly known as global warming, though that term is really a misnomer), whereby weather was getting really strange all over the planet. One of the affects of global weirding is that parts of the world, especially areas which were already arid, such as most of the Middle East as well as parts of the southern United States are rapidly reaching peak water.

How This Works

In essence, as populations increase, we’re seeing an increase in the demand for fresh water for drinking and other purposes (flushing the toilet, doing the laundry, growing crops, etc.). Combine this with the fact that certain parts of the world are experiencing increasing droughts thanks to global weirding and you have the makings of a disaster.

In fact, some people believe that the next big war in the Middle East won’t be fought so much over land as over water resources, which have in large part have already hit peak water in that part of the world.

How to Profit

So let’s get to the bottom line here – how do we make money from peak water? Well, it’s really simple – you invest in the solutions. This means a number of types of investments are going to do really well.

Desalination plants and desalination technology companies (the rather expensive process of removing salt from sea water to make it drinkable) should see increasing demand for their services, thus pushing up their stock prices.

Conservation companies, especially those that manufacturer things like flushless toilets and technology for recycling sewage water should also see their fortunes improve as peak water takes effect in more and more places across the globe.

In the Forex Market

Finally, in the forex market, expect peak water to affect the currencies of countries which are inland and arid. These countries will have a tough time with desalination and will thus be forced to make purchases of expensive imported water and or improved conservation products to contend with peak water. This should make their currencies weaker, thus making them good medium term investments for the next few years as shorts. Certain African and Middle Eastern countries in particular should be good investments in the face of peak water for example.

Industry experts have long touted the value of gold bullion as a safe investment during times of war or recession. Even when global currency values become erratic, gold has always been upheld as the ideal choice for the wary investor. Recent events, however, have turned this notion on its head. With the ongoing US debt crisis and uncertainty about the stability of the US economy plaguing the world, it was only natural to see gold in high demand. Bloomberg reports that the year 2011 has seen an increase in gold investment of 33% with a record peak on August 22: gold futures for December delivery closed at almost $1.891.90 per ounce on New York’s Comex. Only two days later, however, investors decided to sell en masse, taking advantage of the record high and effectively dropping the value of gold to a level that has not been seen since December 2008.

Although this represents a successful trade for many investors who got in while the prices were low and sold at the record-breaking high rates, smaller investors who were in for the long haul, particularly with the threat of recession still present, may have failed to take advantage of the high selling price. Now, with the current low, that becomes a golden opportunity missed. On the other hand, if current efforts to stabilize the economy do fail and result in a global recession, in all likelihood, the value of gold should recover just as quickly as it fell.

A recession, however, is hardly an ideal situation. A Commerce Department report has acknowledged that US durable goods, particularly for aircraft and automotives, are now exceeding July forecasts. As Adam Klopfenstein, senior market strategist at MF Global Holdings Ltd., Chicago, noted, this increase (and the accompanying rise in US equities) is a good sign for a recovering economy but “doesn’t bode well for gold.” All in all, this raises a rather interesting dilemma: Should investors make use of the drop in bullion prices to buy even more bullion with the expectation that it will rise again at some point if not in the near future, or should they focus their money elsewhere for a stronger guarantee of returns in the short term, especially if a recession does hit? While the answer remains dependent on the individual’s perspective, it does call for a closer look at just how safe traditional haven assets really are.

Summer vacation is upon us, and if you’re anything like me, you probably feel conflicted between the call of the great outdoors and the desire to remain tethered to your computer as you search for a profitable trade.  Fortunately, one of the most popular advances in trading technology over the last couple of years has been the advent of mobile trading. The ability to check your positions and adjust them while on the go has made the market accessible in ways that were only dreamt of a few short years ago.

The real question is whether or not mobile Forex trading is actually beneficial for traders. The truth is that it really depends on the trader you ask. There are various types of traders, and each will need a different type of trading experience in order to be successful in their trading efforts.

One of the most common problems that many traders have with the mobile platforms is speed. Because of this, it is financial suicide to try and scalp the markets with large positions via your smartphone. The connections are reliable, but are simply not as fast as a desktop computer. The technology isn’t quite to that point. Because of this, a scalper simply won’t find the mobile platform that helpful.

However, not everyone needs massive amounts of speed in order to make money. A swing trader that holds onto positions for several days might find the platform perfectly acceptable as the slippage of a pip or two isn’t going to make much of a difference on the trade. When you are aiming for several hundred pips, losing one or two simply won’t matter that much in the end.

What I have found over time is that the mobile charting leaves a little bit to be desired. This makes sense as the screen is much smaller than my duel 21 inch monitors at home. The fact is that you will have some difficultly looking at the big picture because of it. However, not all is lost as I have found the mobile platform I use, MetaTrader 4 Mobile, to be quite useful for monitoring the market.

If I have already placed a trade at home, there is certainly nothing wrong with the platform. I can check my position for its P&L, whether or not I am in trouble or coming out ahead, or my favorite – whether or not I should move my stops up because I want to lock in profits! For these kinds of things, the platform is perfectly acceptable.

Notice how I didn’t mention placing a trade. This is because I generally know what levels matter in my existing trade when I am out and about. Because of this – the charting isn’t as important, and neither is speed. For example, I might know that when USD/CAD gets to 0.9900, I want to move my stop loss to 1.0020 in order to protect my profits. I check my mobile platform and make the decision whether or not it is time to lock in profits based upon price. For these types of things – these platforms are great. As far as taking the place of a desktop computer, we are quite a ways from that it appears. But then again, I remember when BetaMax video tapes were all the rage! It certainly is only a matter of time for this sector of trading to become the norm.

As we live in an ever increasingly connected world, it stands to reason that the average trader will find themselves interested in several different markets at one time. If you are a Forex trader, you may find that you have box yourself in to trading only currencies and have completely ignored other types of financial markets. But as you have learned to trade currencies, you have begun to understand that some of the other markets out there can be influential to your currency pairs.

So as you have learned about these correlations, you would be wise to figure out ways to take advantage of this. After all, you are in the business to make money trading. Does it really matter if it is Forex or another market? Once you free yourself of the chains of being a mono market trader, you will find that opportunity is around every corner.

For example, you know that the gold market has been in a bullish run and should continue to be that way. You can play the Australian dollar as the Aussies export massive amounts of gold to the rest of the world. You can also play the gold futures market, as it is a direct play on the price of gold. Or you can also play the GLD ETF as it tracks the futures price of gold, as well as the gold miners giving you a much more rounded play on the value of the precious metal. The same can be said for silver, which has its own ETF listed as SLV on the NYSE that is very similar to the GLD mentioned above as it follows the futures price, and the miners.

There are some other proxies that you can use for various markets around the world as well. Perhaps you are bullish of the price of crude oil. You know that Canada exports massive amounts of crude oil to the United States, and that the USD/CAD pair will often reflect that. However, there are also other ways to express your opinion on the price of oil as well. The futures contract is the most obvious one, but is a rather expensive contract to get involved in. This is where the ETF USO comes into play. The USO is simply the United States Oil ETF that follows the West Texas Intermediate price, or the light sweet crude as it is also known. It also follows the drillers and refiners as well, mimicking the type of exposure you get on the metals ETFs listed above.

Australia and Canada are both known for exporting various base metals as well. For example, copper is minded both countries as is iron and zinc. If you choose not to pick one of these currencies, as you are not sure which one is going to come out ahead – perhaps the DBB ETF is right for you. This ETF is based upon various base metals, both in spot price and in various steps of the refining and extraction of them.

As you open your mind to the possibilities of using other instruments along with your Forex trading, you can start to put a lot of that knowledge that Forex traders rely on to good use in various ways. Do yourself a favor, and broaden your horizons in order to profit off of the various situations you see on a day-to-day basis.

When we all start out trading the FX markets, we believe that it is going to be some kind of easy journey to massive wealth. We might imagine that we are sitting on a beach with their toes in the sand, while clicking a few buttons on a laptop in order to make thousands of dollars. The truth is that Forex doesn’t work that way. While it doesn’t have to be the most difficult thing on the planet, it certainly seems that way at times. But the truth is that’s Forex trading doesn’t need to be any more difficult than you choose to make it.

Don’t get me wrong, trading Forex always takes work – but many traders tend to over complicate things and therefore make Forex trading much more stressful than is necessary. This is human nature as we have a fear of losing built in. That being said, it’s important to know that it is possible to have a somewhat easy Forex trading experience (and I don’t necessarily mean by using Easy Forex!).

From experience, about the best way to make Forex trading easy is to simply trade longer time frames. The idea that you can out scalp trading firms like Goldman Sachs, J.P. Morgan, or Deutsche Bank is absolutely ridiculous. If given the chance, you will find that the larger time frames are much less stressful. However, you should be warned that they are not exactly exciting.

When trading a longer timeframe, you have the ability to get up and walk away from the computer. Remember when you had those dreams of financial freedom and wealth? What were you thinking about at that point in time? I am sure that it wasn’t sitting at the computer, sweating bullets and hoping that a trade goes in your particular direction. It was about freedom in general. By trading longer time frames, you can place your trade and simply walk away. You might need to check your trades on a daily basis, or for some people on a weekly basis.

One of the best things that I have ever read on the Internet was from a woman who stated “Trade to live, not live to trade”. I believe that this is probably the best advice I have ever received, as it really puts things in perspective when it comes to trading any financial market. The idea is to make money, not punish yourself. By trading extreme a short time frames, you run the risk of doing just that – punishing yourself.

Is there any way to have an entirely easy Forex experience? Not really. But what you can do is alleviate a lot of the stress, by simply trying not to over complicate the whole thing. The other thing you can do is to simply focus on your life, not the markets. This is easily accomplished when you trade longer-term charts. By avoiding the high pressure and stress of shorter term trading, you will find that Forex is in fact easier – just not easy.

Switching Forex brokers is something that all traders do sooner or later. The reasons can be numerous, and varied to say the least. Perhaps you have gotten a bad deal at your present broker. It is also just as likely you are looking to trade a currency pair that your broker doesn’t offer. Maybe it is leverage. There are actually quite a number of valid reasons to switch Forex brokers.

I can honestly say that the answer to the question posed by the title of this article will vary. Sometimes it is a good idea to switch brokers, sometimes it isn’t. This can be because of well-defined variables that you are trying to manipulate in your favor, or it can be for psychological reasons as well. Both are just as common as the other reason.

One of the times that it is a good reason to switch is due to the spreads being charged. For example, there are still brokers out there that have a 3 pip spread on the EUR/USD. While this was the norm a few years ago, it is rapidly becoming considered an outrageous spread in this pair. Leaving for a broker that offers the EUR/USD at 2 pips or lower makes sense as the spread is a “cost of doing business”, and over time can really add up to lost revenue for the trader. Besides, in this day and age, it is the same thing as a broker coming out and saying they are going to take your money.

Another good reason to switch is the broker may have a shaky platform. If you find that the trading platform disconnects quite frequently, or takes a long time to perform a trade, you may want to find a broker that can handle both of those situations. While speed is a relative thing, and isn’t as important in normal markets, the fact is that during a meltdown you will want your trades closed as fast as possible.

There are other good reasons to switch a broker, such as a specific pair that you want to trade, margin requirements, regulation and other “concrete” things. The truth is that not every broker is the same, and some may work out better for you than others. It is like any other business, every company is going to have strengths and weaknesses.

However, one of the most common reasons that people leave a broker is actually a bad reason: shifting the blame. What is meant by this is that people tend to want to push the blame on others for their losses. I have seen many traders talk about how “crappy” another broker is, when in fact it was their trading that was the culprit! Many of these traders will talk about how the broker didn’t give them good fills and other such things. Unless there is a concrete case of the broker slipping you a few pips on your trades, the odds are that you only need to look in the mirror to see why you are losing, not at the broker.

What this means, of course, is that while you may not need to change Forex brokers, you may need to look for help, either via Forex signals or a Forex course.  Even better news, of course, is that with proper preparation and support, you can succeed!