Stay Small and Manage Leverage: Wisdom from 50PipsFX

50Pipsfx is actually a human who goes by the name 50Pips in order to remain anonymous and let people focus on the message and not on the person. He's been following the markets since he was in his early teens and fills his day with trading and mentoring.

Most people think you're a phantom trader because they don't know much about you. I can't place your accent. Where are you from?

I traveled around the world a lot from an early age so despite the fact that English is my mother tongue, it's a mixture of all sorts of different pronunciations. My roots are in Europe but I really consider myself a citizen of the world. I primarily operate out of Europe as I find that this is the most 'Forex-friendly' time-zone which offers me to comfortably follow both EU and US markets.

How did you get interested in trading Forex?

I started following the market when I was a teen. It started with an interest in stocks, value investing and the Buffett-School approach. From there it evolved into an interest in the business of Global Marco Hedge Funds and then more exclusively to Forex. Naturally I am still very interested in the global picture and in markets in general but in terms of trading, I feel that the available leverage/margin conditions and the liquidity in Forex offer the best opportunities for what I do.

There are many investors who are moving over to Forex trading these days. What do you think about that?

People are attracted to Forex for several reasons. First of all, the media makes Forex trading seem very easy. People think they can trade whenever they want, that the markets are always there for them and they can make money whenever they please. This just isn't the case. Like anything else in life, being profitable in currency trading does not happen overnight. You need experience, patience and a certain amount of knowledge to get ahead. People who rush head first into Forex are bound to lose their money.

Would you send a 14 year boy who has just started learning self-defense into the ring with a professional Judo master? Would a doctor fresh out of medical school agree to lead an emergency surgery? In the same vein, a novice trader should not consider jumping into the markets without some experience under his belt.

Trading is a job just like any other job. If you want to get ahead in any profession, you need to learn as much as you can and start at the bottom, moving up slowly until you have accumulated enough experience to start profiting. You have to do the homework and put in the time. There is no way around that. The problem is that, sadly, a majority of industry movers, brokers and social media, etc. seem to promote the dream that Forex is the best thing in the world for making money, that's it's easy and that it's quick. Naturally, this is very misleading and people need to understand the motives behind these business models... and let's just say that they rarely have the customer's best interests at heart. Sad but true.

There are no free lunches. You have to do it properly and have realistic expectations. Trade slow and steady, stay small, don't use leverage - it will get you in trouble, it kills.

Tell me about your blog and how you got started in mentoring.

I started the blog (http://50pipsfx.com/) shortly after I landed on Twitter as a way to try and pay it forwards and help newer traders out. I just saw a lot of misleading things out there and wanted to try and provide some unbiased free information and a more responsible view on trading and what were realistic expectations. More and more people started reading the blog and it just caught on. There is no advertising on the blog and no promotions. It is totally independent and everyone can take from it whatever they need.

In today's climate, if traders can make even just 1% a month on an account, that's 12% a year and that is great. The banks are offering 0 percent. People go into trading thinking they will make 40-100% right off the bat and that they can be successful by placing trades from anywhere they happen to be, even as they relax on the cool sandy beach. This is simply not true, at least not consistently over time. The natural response is 'I can't make a living off of even a 20% yearly return on my account. ' But then, the problem is not your returns. Be realistic; the problem is being under-capitalized for what you are trying to do. Again, people need to put themselves in a condition to succeed and understand the business, the profession. It's amazing how naive even the most educated person can be when it comes to trading and making money. Context is key and people often forget this.

In terms of the mentoring, I really enjoy working with students as it keeps me sharp and unbiased. I feel an enormous responsibility towards my students and this gives me additional drive to keep on evolving and fine-tuning my understanding of trading and the markets in general. I don't like to talk much about what I offer. My philosophy is that people who are interested in what I do, will make the effort to read the blog. My door is always open for serious people, even if I do not actively promote or advertise it. Furthermore, my main activity is my trading so time is a limited resource in 50's world.

What tips do you offer new traders?

In order to succeed in Forex, or in anything, you must be realistic. You have to put in the hard work and be patient. Most people fail at trading because they don't put themselves in a position to succeed.

There is no right or wrong way to trade. Make sure you understand the basics and then find out what works for you. Don't be in a hurry. If you are wired to trade, this is a great profession. If you are not, then there are a lot of other things to do in life. But remember that's it's a marathon, not a sprint. The markets aren't going anywhere, take your time and do things right. Remember that if you are thinking about the longer term, winning the wrong way is still wrong. This is not a game. Be solid. Be professional. Be realistic with your expectations.

Thank you for your time.

The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.