Making money in forex trade like a pro

Making money in forex is easy if you know how the bankers trade!

How to make money in forex?

I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market. It all comes down to understanding how the traders at the banks execute and make trading decisions.

Why? Bank traders only make up 5% of the total number of forex traders with speculators accounting for the other 95%, but more importantly that 5% of bank traders account for 92% of all forex volumes. So if you don’t know how they trade, then you’re simply guessing. First let me bust the first myth about forex traders in institutions. They don’t sit there all day banging away making proprietary trading decisions. Most of the time they are simply transacting on behalf of the banks customers. It’s commonly referred to as ‘clearing the flow”. They may perform a few thousand trades a day but none of these are for their proprietary book.

How do banks trade forex?

They actually only perform 2-3 trades a week for their own trading account. These trades are the ones they are judged on at the end of the year to see whether they deserve an additional bonus or not.

So as you can see traders at the banks don’t sit there all day trading randomly ‘scalping’ trying to make their budgets. They are extremely methodical in their approach and make trading decisions when everything lines up, technically and fundamentally. That’s what you need to know!

As far as technical analysis goes it is extremely simple. I am often dumbfounded by our client’s charts when they first come to us. They are often littered with mathematical indicators which not only have significant 3-4 hour time lags but also often contradict each other. Trading with these indicators and this approach is the quickest way to rip through your trading capital.

Bank trader’s charts look nothing like this. In fact they are completely the opposite. All they want to know is where the key critical levels. Don’t forget these indicators were developed to try and predict where the market is going. The bank traders are the market . If you understand how they trade then you don’t need any indicators. They make split second decisions based on key technical and fundamental changes. Understanding their technical analysis is the first step to becoming a successful trader. You’ll be trading with the market not against it.

What it all comes down to is simple support and resistance. No clutter, nothing to alter their trading decisions. Simple, effective and highlighting the key levels. I’m not going to go into the ins and outs of where they actually enter the market, but let me say this: it’s not where you think. The trendlines are simply there to indicate key support and resistance. Entering the market is another discussion all together.

How to make money in forex?

The key aspect to their trading decisions is derived from the economic fundamentals. The fundamental backdrop of the market consists of three major areas and that’s why it’s hard to pin point currency direction sometimes.

When you have the political situation countering the central bank announcements currency direction is somewhat disjointed. But when there are no political issues and formulated central bank policy acting in accordance with the economic data, that’s when we get pure currency direction and the big trends emerge. This is what bank traders wait for.

The fundamental aspect of the market is extremely complex and it can take years to master them. This is a major area we concentrate on during our two day workshop to ensure traders have a complete understanding of each area. If you understand them you are set up for long term success as this is where currency direction comes from.

There is a lot of money to be made from trading the economic data releases . The key to trading the releases is twofold. First, having an excellent understanding of the fundamentals and how the various releases impact the market. Secondly, knowing how to execute the trades with precision and without hesitation. If you can get a control of this aspect of trading and have the confidence to trade the events then you’re truly set up to make huge capital advances. After all it is these economic releases which really direct the currencies. These are the same economic releases that central banks formulate policy around. So by following the releases and trading them you not only know what’s going on with regards central bank policy but you’ll also be building your capital at the same time.

Now to be truly successful you need an extremely comprehensive capital management system that not only protects you during periods of uncertainty but also pushes you forward to experience capital expansion. This is your entire business plan so it’s important you get this down pat first.

Our stringent capital management system perfectly encompasses your risk to rewards ratios, capital controls as well as our trade plan – entry and exits. This way when you’re trading, all your concerned about is finding entry levels. Having such a system in place will also alleviate the stresses of trading and allow you to go about your day without spending endless hours monitoring the market.

I can tell you most traders at banks spend most of the day wandering around the dealing room chatting to other traders or going to lunches with brokers. Rarely are they in front of the computer for more than a few hours. You should be taking the same approach. If you understand the technical and fundamental aspects of the market and have a comprehensive professional capital management system then you can.

From here it just takes a simple understanding of the key strategies to apply and where to apply them and away you go. Trust me you will experience more capital growth then you ever have before if you know how the bank traders trade. Many traders have tried to replicate their methods and I’ve seen numerous books on “how to beat the bankers”. But the point is you don’t want to be beating them but joining them. That way you will be trading with the market not against it.

So to conclude let me say this: There are no miraculous secrets to trading forex. There are no special indicators or robots that can mimic the dynamic forex market. You simply need to understand how the major players (bankers) trade and analyse the market. If you get these aspects right then your well on the way to success.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Making Money in Forex: Trade Like a Pro Without Giving Up Your Day Job (Wiley Trading)

Wiley (April 26, 2010) | ISBN: 0470487283 | 240 pages | File type: PDF | 3 mb.

A practical guide to trading around the commitments of career and family Making Money in Forex will help aspiring traders successfully enter this field while maintaining a job. With this book, author Ryan O'Keefe explains his own personal journey to becoming a trader and shows you how to follow a similar path.

* Reveals the author's quot;bargain huntingquot; style which can be used to reduce risk and maximize profit.

* Discusses how common trade management techniques may impact overall performance.

* Provides insights into structuring trading to minimize stress.

This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and us, we'll remove relevant links or contents immediately.

Making Money in Forex, Trade Like a Pro Without Giving Up Your Day Job.

John Wiley & Sons, Inc.

CHAPTER 1 Exploring the Currency Market.

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Why Professional Traders Make Money & You Don’t.

I’m sure you’ve wondered what professional traders do to succeed over the long-run. It’s easy to hit a few winners, but how do you parlay that into more consistent, longer-term trading success that you can turn into a full-time income? What are professional traders doing differently from you?

The typical day in the life of a pro trader is probably very different from yours. From what they think about to what they do, there’s a lot you can learn from the daily habits of a professional. The novice trader is racing to look at the charts, desperate to find a trade, whereas the professional is calmly going about his or her routine because he knows there’s no rush. The novice trader is constantly thinking about the live trades they have on, whereas the professional trusts the process and the trading plan so there is no need for them to worry.

The mind of a pro trader and how they think.

Professional traders understand their own minds and how their own personalities may interfere with their trading success. They have identified and worked on solving these mental issues, becoming a better trader and person as a result. Some of these issues are over-trading / gambling in the market, being afraid to enter a trade, being greedy, revenge trading, to name a few. Developing a profitable trading mindset is a requirement to become a professional trader. It’s something you must work on, it doesn’t just ‘happen’. It begins with education, with learning about common trading pitfalls and understanding why you make them, then developing a plan of action to combat them and hopefully, to defeat them forever.

Professional traders know they may not always be in a trade.

The bulk of pro traders are not day-traders, because quite frankly, day-trading is extremely difficult to succeed at. Most pro traders are patient, calculating swing traders who know what they’re looking for. So, professional traders do not think about the market from the mindset of needing or wanting to be in a trade. They think about it much more objectively; “Is my trading edge present? If so, then I execute my trading plan, if not, then I don’t trade, no big deal either way”. The primary difference in mindset between an amateur and a professional trader is that the professional has no urgency in his trading approach. He or she is simply playing the game because they want to win at it, not because they are ‘trying’ to make money. Making money is a by-product of doing everything well enough to win.

Professionals trade when most people are too afraid to trade.

Perhaps more than anything else, the hallmark of a professional trader is that they trade when others won’t. Perhaps more specifically, a professional trader will typically be on the opposite side of a trade than an amateur.

As an example – A trend might seem very ‘old’, like it ‘should’ end any day now, but the professional knows that markets can go much further than people think; even when it looks ‘too’ high or low, markets can continue to extend. Thus, the professional trader will have no problem buying into a ‘very high’ up trend or selling into a ‘very low’ downtrend, whereas the amateur trader will be trying to pick the top or bottom and continuously get stopped out for losses as the trend inevitably continues.

The strategy of a professional trader.

Professionals wait patiently for their trading edge (trading strategy) to setup. This may not always be as black and white as just a price pattern or an EMA crossover; some professionals just know when market conditions are ripe for an entry. This could be a combination of technical and fundamental knowledge or just one or other. The point here, is that a professional knows what they are looking for and they don’t waste energy and money going after anything that isn’t exactly what they’re looking for. They’ve developed their trading edge through years of learning and trial and error, which has developed a strong gut feel to compliment chart reading and market analysis.

They have confidence in their trading strategy and they don’t doubt whether it works or if they should keep using it. If you aren’t trading your strategy with 100% confidence in it, then you need to re-think that strategy and perhaps learn a new one.

I obviously can’t speak for every professional trader out there, but I do know a common thread that all our strategies have in common. We all take a sniper-like approach to our trading, which basically just means we only trade if our edge is present and we do not waste ‘bullets’ on less than obvious targets. Another good metaphor to explain the strategy and mentality of a professional trader is how a crocodile behaves. A crocodile is a finely-tuned killing machine. It has developed its hunting strategy through millions of years of evolution, to the point where it has become habit. It doesn’t hesitate. It waits patiently because it knows what it’s looking for so well, it can feel it. For more on what crocodiles can teach you about trading, check out my article on crocodile trading.

Capital management and managing risk.

Professionals have a risk and money management plan. You, most likely do not, if you’re losing money that is. Do you understand why risk management is so important? Do you understand capital preservation? Do you understand the importance of having a proper exit strategy in place for every trade you take? Professionals do understand these things and they do have plans for them.

A professional trader is aware that trading correlated markets and not properly reducing risk, will result in taking on more risk than they are comfortable with. You must understand market correlations to a certain degree and make sure you are not doubling up a position by trading two markets simultaneously that are highly correlated, like the EURUSD and GBPUSD for example.

Being aware of current market volatility, stop distance changing.

Professional traders have a keen awareness of market volatility. They understand that volatility changes often and they know they need to adjust their approach accordingly. For example, you would not use the same stop loss distances or profit targets in a market that has very low volatility as you would in one with high volatility.

Trading plan.

A professional trader has built his or her trading plan on a solid foundation consisting of the three main points discussed above: Mindset, Method and Money. I refer to this as the “3m’s of trading”. Without a firm understanding, mastery and development of all three of the M’s, you will not succeed. You must build your trading foundation on those 3 m’s. If your money management is off, even if your strategy and mental state are on point, you will fail. The same goes for the other parts, if one of the three is off, you won’t make it.

Professionals Continue to Learn & Study.

Professionals learn from others, more experienced than them. I have a good article that I wrote recently that goes through 20 quotes from trading legends, check it out to learn more. Don’t be afraid to admit you don’t know it all and take instruction and insight from others who know more than you. The hallmark of an intelligent and successful person is not that they know a lot, it’s that they admit they don’t know everything and they are constantly learning more.

A poor man is one who thinks they know all there is to know and does not continue to grow their knowledge. The rich man is humble and knows that to earn his fortune he must continue to study, his thirst for knowledge and personal growth is insatiable. So, if you really want to start making money trading, start by learning how to trade, keep learning and never stop.

PLEASE LEAVE A COMMENT BELOW – I WOULD LIKE TO HEAR YOUR FEEDBACK :)

About Nial Fuller.

How Long Does it Take to Become a Profitable Trader?

What Lions Can Teach Us About Professional Trading.

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40 Comments Leave a Comment.

Hello nial…. this article is good… and i have past through many stages in forex…. i guess professional trading is all about experience because no matter how you tell a newbie to avoid such mistake they always do.

A little advice i always give the newbies is learn from your failures , go live and trade very very small lot size with money you can afford to loose like $50 cent account trading,

And never give up… it takes years of experience to be profitable.

i wish i could have the mind of professional trader after several years of training.

Thank you very much, we will try to become professionals.

Dear Nail, I been following your articles for months but this article is really commendable.

Thanks for all your articles.

I choose to be a professional trader.

This article is really commendable. You are indeed a reliable FOREX mentor. Thanks for all your articles.

Excellent article Nial. Keep it up!

Dear Nail, my name is kunle Feyisetan and I have been following your articles for months but I have decided not to write you until I understand some issues about you methods but as at now I’ve understood at least 50% of what you are talking about . I will still continuing reading you article. Really you are a professional trader that I will like to follow.

Thanks Nial. It is VERY meaningful and expressive.

Hi Nial, I’m on the way to become a pro daytrader, with some years of experience on my shoulders, and I would invite all your followers to print this article and attach it to the wall, aside their trading workstations. It’s full of common sense, and that is exactly what I have found over the years. Compliments, keep it up.

This article was so timely for me….. thanks a million mr Nial fuller.

This was so timely for me and thanks a million.

This informations are hard to come by. They can only come from someone as generous as you.

Thank you. The above post was a good overview for beginers.

Great inspiration thanx for keep on motivating us.

Another great article. Really appreciate your way of presentation, making things so simple and easy to understand. I just joined your group and hope to learn more.

Thanks for sharing, very informative as usual.

What a articles.

That was awsome man. They are completly true.

Would you please tell us how we can set these rulls up in our daily trading.

Anyway you’re generous.

I like you man. you are a good guy.

THANK YOU SO MUCH for the great article. I remember the day I asked you questions on how to profit consistently, during that time I didn’t have the three major requirements to succeed as a trader, I went back to the drawing board, cultivated a proper trading mindset, trading method and managed the money in the account. Now am on the right track after losing $20000, thank the information.

I just started trading on the Demo, but when I read your article I’ve realised that I still have a lot to learn and I believe that I will become a successful trader one day with your guidance.

Thanks Nial, the wisdom above is priceless.

Follow your plan. Dont deviate.

That is what I did not do. become that Sniper.

Nial its me again….i am your regular follower….it was another great article highlighting some important aspects in your previous articles in a nice simple to understand way….. i wish i could talk to you on the phone but last time i called i could not reach you……pl respond to me by at least personally so that i feel elevated that my mentor has responded to me….thanks.

Sorry I was unavailable. I always respond to s within 8 to 12 hours though. Please me here –

Hi Nail thanks for the advice. Looking forward to the training. and more encouragements see n future to trade. Dream big and see me as a successful trader with your constantly help.

Thanks Nial – all brilliant advice. So glad I am a member of the community.

That’s inspiring Nial .

Thank you, Niall, for your invaluable work. Reading your article every time I open something new for myself. Isskrenne grateful.

You are one of the only ones out there who truly teaches and not just in it for a quick money grab. I have been following you for a long time, been in the markets for a long time(without much success) I am looking forward to studying your program and becoming a professional trader down the road.

• Woaoo Teacher. After I read and learn a lot of your wonderful teaching and training, when I think that I am finally understanding the whole thing, then I realize the truth of the greek philosopher teaching. THE ONLY THING I KNOW IS THAT I KNOW NOTHING.

an insight to better trading plan is what u always offer me. im a big culprit to such downfalls and still fail to make money, but lose constantly. thanks again bss.

Thanks for having a ‘nice; heart, showing other traders the light of Trading.

As always, great advise.

Thank You, Nial, all this is so heart-felt, so great, time is approaching for me to soon be a life-time member of Your trading comunity. Regards.

Mr Nial, thanks for making me forex oriented, I have been following your precious article and adhering strictly to it, that I have now started to feel yes, Forex Trading is real not an illusion as a lot if people considered it to be. thankse.

Hi Nial. Another great article. I love how you bring out these kinds of articles when the market is faffing about. Ive noticed this a number of times. Good timing. Just waiting for the surf to pick up:)

Your articles are very helpful to me. I read them for some time and I feel that I am well on the way to a professional trade.

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