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7 steps to stable trading with success + infographics
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7 steps to stable trading with success + infographics

created Forex Club26 February 2018

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Surely you've experienced it - tempting offers for easy and quick profits, zero fees, moreover a guarantee and financial bonuses after deposit! This is how often the factory of forex traders works. In reality, however, a significant proportion of investors lose out to the market. Zero fees, guarantees or bonuses don't help. It is striking that often failure is not due to a bad strategy or a pernicious investor psychology.

So why are so many investors closing their bills?

Often the fate of the investor on the newly created account is already predicted before the first click on the chart. Previously selected account options predict your future success or failure.

Fortunately, there are 7 rules that can significantly increase your chances of profitable forex trading, this is the goal of all of us, right?

We have compared below seven steps related to trading on the forex market. In addition, we will also give you the opportunity to compare how well you deal with fulfilling these rules. You will also learn what you can do to direct your trade further in the right direction, in the direction of regular profits.

7 steps to trade on the forex market successfully

In cooperation with several professional investors who managed to survive difficult beginnings in the currency markets, we have prepared seven important sub-points that are necessary for success in the forex market:

lynx 7 rules

Do you believe that the fulfillment of the above seven steps is necessary for successful forex trading? In such cases, you will certainly be interested in what parameters of the invoice you should look for.

In order not to stay just theoretically, we decided to materialize these seven steps to create something unique on the Polish market - the most advanced forex account in Poland.

Below, we present these seven points on the example of principles prepared by us. At the end of the article, these points are also shown in graphic form.

However, we must warn that this bill is not for everyone. It is directed only to advanced investors on the forex market.

Step 1: Get access to the interbank market with the greatest liquidity and forget about MM

Have you 'burned in' already on the account of the Market Maker broker (MM), and now you trade with the ECN broker? Or are you among the lucky ones who avoided this expensive lesson on MM and started directly at ECN?

Warning! It is estimated that from all investors who are convinced that they trade on an account with an ECN / STP broker, only a few percent of transactions are listed on the real interbank market. Over 90% of companies do not represent such standards as ECN broker should have!

So not every ECN is ECN. You should be interested in who creates this ECN market structure.

Some ECN brokers send customer orders to markets that are created by a very limited number of liquidity providers. Liquidity providers can be combined with the broker in various ways. Due to their structure and quality of trading, these markets resemble the functioning of MM brokers.

Each major forex investor should have direct access to the interbank market, where the prices of several large banks or even other institutions are quoted. Only on such a liquid market you can get the best results, which can significantly increase your profits.

2 Step: Provide the best performance to reduce the total transaction costs

What is the purpose of the best execution of the order? In order for the broker or the market where your order is to be processed, it does not lower your profits.

What can happen if the execution of orders is limited? In short, you can say that the chances of continuous profits from forex trading are rapidly decreasing.

Most investors still do not realize that the way transactions are made has an even greater impact on profitability than trading costs in the form of fees and spreads. Especially in active forex trading, such practices as re-quoting, artificial slips in execution or delays in the execution of transactions largely determine the success of your trade.

We know from our own experience that the same strategy traded on different accounts may not achieve the same results. Even the best investors can not trade profitably if they do not have optimal conditions.

So how do you get the best implementation? Only and exclusively through access to the real interbank market.

LYNX customers receive direct access to the interbank market, which includes 14 of global banks such as JP Morgan, Citigroup, UBS, Barclays, Goldman Sachs and others. Over 70% of the global volume is traded by these banks. Instructions are sent to the market anonymously. If a particular bank makes the listing worse, it does not matter, because there are many other contractors who are ready to fill your orders at the best prices.

Thanks to access to one of the largest currency pools in the world, narrow spreads are achieved, there are no artificial requery and delays in the execution of orders. No margins and only direct access to the offer on the interbank market.

ecn lynx

Step 3: Work responsibly with the lever

Many independent studies have shown that the share of investors achieving profits decreases with the use of higher leverage. This effect is also increased for larger accounts. It is true that the largest share of investors with losses is investors with lower capital who use higher leverage.

Especially in the case of investors with smaller bills, leveraged trading of tens or even hundreds (and sometimes thousands) is very dangerous. Such trade makes it impossible to observe the basic rules of risk management. You certainly know that a serious investor should not risk more than 3% in the value of his bills (or even less).

An active trader with $ 10 in his account should only risk $ 000 per trade. When using a leverage of 300: 33, the maximum rate change accepted is 1 pips. However, if this trader were to use 9: 200 leverage, he would have to set the stop loss already 1 pips below the entry level. As we can easily see, adherence to the basic principles of risk management becomes practically impossible when using high leverage.

And what could be worse for forex investors than high leverage? High leverage combined with poor performance! Try to imagine how a small margin of accepted exchange rate change remains to an investor who loses several pips before trading with high leverage.

In addition, imagine the leverage that a market maker must use to ensure liquidity for its customers and what a small change in the market is enough to liquidate the capital of these brokers. Just remember the bankruptcy of forex brokers after a strong fall in the Swiss franc two years ago.

A serious investor uses leverage with great respect, adheres to the principles of risk management and looks for a strong partner for his trade that does not play with fire (leverage).

You will not get high leverage in LYNX. A look at the success of our clients convinces us that the leverage of tens is sufficient.

4 step: Do not trade without a strong partner

Strength and stability are attributes that have disappeared from financial institutions around the world in recent years. Even today, there are many questions about too low capitalization of some banks and brokerage houses. It is imperative that every possible scenario is taken into account and that you and your investment partner are prepared for it.

Add to this regulatory arbitrage, which is particularly visible among forex brokers. Even the Polish market is experiencing the invasion of Cypriot forex brokers, who are subject to much less rigorous regulation compared to brokers from the US, Great Britain or Poland. However, it should be noted that Cyprus is already tightening its rules. Another group are brokers from the Caribbean or other exotic places. On the Internet you can find a lot of reviews about their prakryt.

The strength of the broker is verified when the markets go through a difficult period. The last such "test" took place two years ago after the publication of the Swiss franc exchange rate by the Central Bank of SNB.

Strong brokers did not stop listing rates and did not have to transfer their losses to clients to avoid serious problems. Yes, platforms with access to liquid interbank markets have been the subject of continuous trading in these very tough moments for the market. Extreme instability on the market should not be associated with interruptions in technology operations and failures.

In such situations, the biggest problems affect brokers with insufficient capitalization, who in good times benefit from insufficient regulation in some regulatory havens or offer high leverage.

Serious investors should be prepared for any situation because many of them are convinced that it is not possible that their hard-earned return on investment could be lost in a very short time.

5 Step: Keep you safe and secure

The strength of the broker is closely related to the level of security of his clients' trading accounts. If the goal is long-term profitable trading, you should choose a stable broker. Otherwise, there is a risk that even an investor with high return on investment will never pay his profits.

The basic requirement of each investor should be an individual account of assets held on behalf of the client. The client and broker's funds are completely separated on this account.

Especially in relation to the above-mentioned too low capitalization rate of some brokers, it is very important to ensure that your funds are separate from the company's assets. In other words, to prevent companies from fulfilling their obligations with the help of clients' funds.

Another key issue is account security. Most EU brokers offer account insurance for the 20 000 €, which is restrictive for many investors.

Collateral also includes withdrawals from the investor's account. Limiting payments from the account is one of the frequent practices of brokers from regulatory havens. A broker looking for long-term cooperation should not treat the client's private funds as finance to cover his own financial obligations.

LYNX customers are protected by the US self-regulatory regulatory body, the Securities Investor Protection Corporation (SIPC), which provides maximum insurance for 500 000 USD, which consists of insured cash up to 250 000 USD. In addition, IB US provides additional insurance by the Lloyd's insurance company is up to 30 millions of dollars per customer (insured cash to 900 000 dollars), and the total amount of up to 150 million dollars a year, if IB US goes bankrupt for insolvency. The insurance does not apply to futures or futures contracts.

Customers can also use the British Financial Services Compensation Scheme (FSCS), which provides insurance, investment instruments and funds up to 50 000 GBP per customer. The FSCS Compensation Scheme applies to stock index options outside of US futures and all CFDs. In the event that the client makes use of the possibility of compensation resulting from the FSCS, this may lead to the non-recognition of the right to compensation from SIPC. In LYNX, all clients receive an individual account on their behalf, which is separated from the broker's cash and securities, but also from the capital of other clients and of course with transparent access to financing.

Step 6: Choose only really narrow spreads and low fees

Before you wait for the promise of zero fees and minimum spreads, consider how it is possible that the broker can offer (at a glance) such favorable conditions.

The offer of a zero fee often conceals the cost in the form of a wide spread increased by a margin, and often also in the case of artificial slips aimed at slower execution of transactions.

In the case of very narrow spreads, you should be interested in the markets on which orders are executed directly. In the case of a market where only a broker or related entities are present as a contractor, the terms may be insufficiently good to invest seriously. In such cases, the chances of a worse execution of the order with artificial interventions are increased, as well as the instability of spreads, which remain only on the advertised levels for a very limited period of time.

As mentioned above, from the point of view of costs, it is important that every major investor makes transactions on the interbank market. Here the spreads are more stable and without artificial slips. A small transaction fee should not be burdensome, because due to the faster and more efficient execution of transactions, costs are ultimately lower. An additional plus is that you know exactly how much you paid to your broker.

LYNX ensures the execution of transactions on the real interbank market, as described in the previous steps. As a result, spreads on main currency pairs "majors" range from 0,1 to 0,2 pips. In addition, due to the fact that liquidity providers are banks around the world and in different time zones, the likelihood of inferior performance and broad spreads at check-in hours is significantly reduced.

For active investors whose monthly turnover is at least 50 of EUR / USD flights or 25 transactions of EUR / USD in 1 lot size (or equivalent in other currencies), the minimum fee is only 2,90 USD. The total purchase and sale price (including the spread) is from 0,74 a pip for a EUR X-USD 1 transaction. For other forex investors, the minimum fee is 3,50 USD.

If you are interested in forex trading in LYNX, please visit https://www.lynxbroker.pl/forex-trading/

7 Step: Create a powerful and analytically efficient trading system with the best platform

In the investors' circles Trader Workstation (TWS) is one of the best and most popular platforms. Investors appreciate over 60 types of intelligent orders and over 80 technical indicators. One-click trading and trading directly from the chart are obvious. The platform can be fully adapted to the individual strategy of each investor by means of easy-to-use intelligent commands.

In recent years, the interconnection between the TWS platform and the NinjaTrader trading platform has become very popular with many forex traders. In addition to easy back testing, it also displays popular visualizations (Market Profile, Order Flow, etc.) and tick data.

LYNX offers assistance in connecting the NinjaTrader platform with the LYNX Trading TWS trading platform. In addition, active investors can easily purchase a NinjaTrader license.

Download the information package for free and discover the most advanced forex account in Poland

Access to the most liquid (real) interbank market, fast execution lowering the total cost of your trade and above standard security and your account insurance - this should be the standard for any major forex investor.

Our goal in LYNX is to provide all investors with conditions that will allow them to achieve constant profits not only on currency markets, using a transparent and honest approach.

We've prepared a bill for you that meets the requirements of even the most demanding investors and that is why we believe that this should not escape your attention. For more information on the most advanced forex account in Poland, click on the link below: https://www.lynxbroker.pl/forex-trading/ or click below to download the information package.

Remember, however, that even the most advanced Forex account will not guarantee high profits. In our opinion, these are the results of a sustained and disciplined approach to trade. Our goal is to build a long-term relationship and provide you with the best conditions to make this stable profit as soon as possible.

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PS: Below we have prepared a detailed infographic presenting the basic parameters of the forex account in LYNX. If you want to learn more, call the free number 800-080-563.

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About the Author
Forex Club
Forex Club is one of the largest and oldest Polish investment portals - forex and trading tools. It is an original project launched in 2008 and a recognizable brand focused on the currency market.