Intro To Forex Trading
It's often wondered if there are any differences between trading stocks or bonds and trading forex.
Systems successfully trading equities and other instruments besides forex are structured in a market and trading environment that neatly opens at such and such a time then promptly closes the same day.
Traders are then free to go on to the affairs of their busy life, play golf, go to the club, meet with trading friends to discuss the day's game, then it's off to peaceful Sandman Land to get their beauty sleep for 8 hours before then get up and begin their same routine the next day until, for instance, NASDAQ opens at 9:30AM.
Quite the wealthy gentleman's lifestyle.
It ain' t that way in forex.
Yes, there are notable opening/closing market times in the general fx trading environment throughout the globe, but trades fire off seamlessly 24 hours a day, round the clock, relentlessly. Price swings, often huge, never cease.
In addition, when the "market" does pause trading (5PM Friday NY time) your functions as a trader do not stop.
Why is that? Because, spending 24 hours a day from Sunday 5PM NY Time to Friday 5PM NY time, monitoring positions, entering/closing trades, managing money, etc., your primary attention and concern is only two-fold:
1) Making sure you stay alive.
2) Making sure you book profits.
Without decent effort and attention being given to both of these pursuits, a trader will be vaporized in this market that tends to eat its inhabitants.
And you must do both successfully, else you're cruising for catastrophic loss. And it's just a matter of time before the Grim Reaper of forex keeps his lunch date with you.
Therefore, because your attention is so immersed in this dual role you'll have the residue of all the required things to do mount up to be addressed by you during the time the market is "closed."
Among a number of other things, these items will consist of news research; continued study; entries in your trading log; continued planning/modification of your strategies; performing a checks and balances procedure on not only your system, but on your strategy to see if all is still on course or if modifications are needed to your game plan and even possibly to your system.
There's no one who will say, "Oh, wait a minute, guys, yeah, that's right, just STOP everything! Joey, here, need to figure out why he's suddenly getting creamed due to his cable (GBP/USD) position falling 100s of points into an abyss! Right, thanks, guys, we'll let you know when you can continue trading money again...!"
Nope. Even the stock markets can halt trading on a particular stock or on an entire trading session. Stop DEAD.
Not so in the global forex market. You have something wrong in your system, in your judgement, in your evaluation of any number of factors, the market will simply disregard you and keep running you over.
Think of it this way. You're standing at the edge of the ocean, up to your knees in the ebb and flow of the tide. Suddenly a 40-foot wall of wave water forms 1000 feet out and heads your way at 90mph.
But it was YOU who had positioned yourself to be at that location at that exact time.
Unless you know what to do, that wave containing millions of gallons of water will crush you and think nothing about it. So it is in the forex market.
The only time you have away from the market (and many times they are a desired haven away from the global money storms) is when you are sleeping.
When you are awake, and not having a fun-filled rendezvous with your significant other, your focus is on the market.
The only time when it is not is when you are on vacation. Positions flat, unless, for some reason you purposely have open trades. Vacation time is when you do all the other things in your life that you have left undone during your tour in the forex market, similar to a soldier who does an uninterrupted tour of duty in an ongoing war front.
Getting back to the original question of differences between the forex market and other markets...
Structurally you could have a great stock-trading system or a killer bond trading method(s); they simply won't realign to the forex trading environment.
Therefore, I suppose that is why so many guys who have done so well having spent so many years achieving success in trading other markets simply fail when trading forex.
Structurally it's an entirely different instrument. And that will have great impact on your otherwise non-forex trading system.
If you think you can even readapt your other systems to somehow fit into the required mastering of forex elements, you are on your way to being accurately measured and efficiently fitted into the next forex trader body bag.
My credentials are these: I trade the forex market successfully.
No other credentials matter if you end up getting smoked, that no attainment of degrees can buffer you from. What you are, who you are, the wisdom and depth of knowledge you possess as a human being will all come into play and be tested severely when you choose to enter the great seas, also known as the global foreign currency exchange market.
Next Edition: How To Trade The Forex Market And Not Get Bodybagged.