The big thing in forex trading is the over arching umbrella word ‘scam’. It’s got this really ugly cloak to those that haven’t explored or educated themselves on the topic. That cloak is full of dodgy information, bad publicity, dubious characters and potentially money being lost. So, when I share with people that I ‘trade’, 80% of the time there’s an immediate negativity around it, all shaped by the stories heard and seen. Clearly showing that trading though well intentioned is very much a misunderstood industry by many.
My own story.
I’ve always wanted to trade currency. Some of the movies I watched as a kid influenced the, ‘wall street, suited up, fast pace’ feeling. In recent years I’ve loved movies like, ‘The Wolf of Wall street’, ‘The big short’, ‘Inside Job’, ‘Wall street’. It’s the buzz and excitement around watching currencies and stocks be influenced by the sentiment of the people and the political activities that take place to make this happen. It was always something I have loved but never thought I would be able to do. Stories of losing thousands, scams, taking years to get educated and not feeling good enough to do it all ate into the stories of never getting into trading. Until 2019.
On the whole, when I've mentioned it to friends, family or acquaintances, it creates a strange energy of ‘hmms….not sure now of what you do!’ sounds dodgy!! And to the untrained, yes it can be. "Be careful Nick, it’s a scam" "careful you don’t get scammed", and "Its all illegal". So, my goal here is to just pull off that cloak on this topic and just help people open the door to a rather good way of making your money work harder for you. Trading isn’t discriminatory in anyway. If you get educated and learn some strategies and keep to your trading plan with key rules you can make it work for you. But its first getting past the first hurdle.
The Financial Conduct Authority
This is an important financial body in the world of trading. All brokers (I’ll come back to this term) are required to be registered with them to allow trading to take place lawfully. You can review their website and see the stringent terms and conditions brokers need to follow. You can also check up on brokers and those who have been called into question by the FCA. It was my go-to place when I was checking the broker I use. This is part of your education and really is a foundational subject to review.
All brokers are required to be registered with the FCA regulatory authority in the country they operate. All brokers provide legal documentation which covers your rights as a user and the terms in which you are signing up too. Its important you know this and read them. When you open an account with a broker, they will request you to identify yourself through supporting paperwork. They just want to check you are real and verify you. This is another important step when considering the trading services you will use. The broker is like your bank but for forex trading. They have access to the forex markets and they do the hard work of connecting you to it so you can trade different currencies. Most brokers are free to sign up to and they make their money via the trading activity you conduct. For example, commissions and swaps on trades taking place. They make money in other places too and you can read about it through the terms and conditions. Again, another important step in getting educated on forex trading. Brokers also provide resources, training and FAQ’s to help you with your trading. Use them – they are there to support you.
Algorithmic Trading/ Expert Advisors
This is the technology part of trading. Using technology to help you trade. Algorithmic trading/ Expert Advisors are trading robots – created by trading professionals to take the guess work out of trading and help enter trades based on a set of pre-set criteria. Algorithmic Trading isn’t new. Its been around for a number of decades and they are getting better. Technology is helping retail traders (like me) help get a step into the trading zone, start trading, earn some profit and learn on the go too. ‘Set and forget’ is another common phrase around algorithmic trading because the technology is doing the hard work that someone has programmed it to do. The key benefit of using technology with trading is that you don’t have to be watching the currency movements all the time, its done for you and it takes away the emotional part of trading. This I talk about a little bit further down. But your trading mindset is probably 70% of whole trading strategy. Like life, if you are too emotionally involved – you may not always make the right decisions. Algorithmic trading has a lot more advantages and is used heavily by banks and financial institutions too. We embrace technology everywhere in our life. Using technology in trading makes sense too.
I’ve been trading since January 2020 using an algorithmic service and its been the right decision for me. It has allowed me to work my capital properly and make a profit, its allowed me to learn more about trading while its going on around me and its disconnected the emotional part of my trading.
A great place to check up on algorithmic systems is the website called myfxbooks.com. Its basically a place where traders, systems and the results of their trading can be shared for all to see. Another great way to review a potential algorithm service you are going to use.
So where is the scam Nick if we have all this regulation?
The scam happens where people write tag lines saying, “I can turn US$200 into US$5000 in 7 days.” You’ve more than likely seen them. Scammers feed on the uneducated viewpoint. They feed on that emotional feeling of earning so much money in a short period of time. If you look up ‘forex trading groups’ on Facebook you will see so many promises of a ton of my money in a short period of time. It’s made to sound easy, achievable and accessible. Let’s be clear. Its accessible but achievable and easy are the to elements that need an upgrade quickly. Its never easy. You can have good trading months and bad ones but over a year if it averages out then it’s a good thing and seems easy. Achievable also yes. But your view on trading is important part of this story. If you think in 3 or 6months you will be a millionaire then you are mistaken. Trading needs patience, time, consistency and a plan. If you can’t hold those then its best you don’t get involved in trading. Be on the look out for them, but don’t’ dismiss the good ones. Do your homework, educated and start discovering.
When I was younger I couldn’t wait until I could drive. The offer of freedom, going where I wanted to go, playing the music I wanted in the car and hanging with my friends was simply great. But when I was dreaming about those days I did not think about the risks, learning to drive, insurance, fuel costs. Those were just back thoughts. But when the opportunity to drive came around I was so excited, so enthusiastic. I remember my first lesson, and would you believe, I’ve seen my mum and dad drive a manual for so long that when it was my turn to actually do it, I messed it up!!! I was so embarrassed. That was my first fail at driving. Then as driving lessons continued my confidence plummeted, I thought I’d never get it. The risks on the road, changing lanes, indicating at the right item, being mindful of other cars – OMG.. all of that was front and centre and at times I cried, felt overwhelmed, worried that I ‘d never be able to drive and be stuck in a taxi for life!! There’s mindset again!! All that played into my driving. You will be pleased to read that I passed my driving test first time, so I was really proud. Getting your license is such a badge to independence. Now I had to think about risks, I was still a learner really, insurance, fuel – the baggage that comes with the responsibility of driving is large. But as the years progress, we don’t think about it. Its something we do and get on with! With that long story – what I’m trying to say is that trading too comes with risk, learning to trade, capital concerns, worry of getting it wrong but in the long term as we get better at trading, learn from our mistakes we too can be better traders. It does not happen overnight. I am only 18 months into this journey and I’m still learning. I have a learner’s mindset always. My patience is better and I’m more comfortable now letting the market do its thing and I keep a reactive mindset. The moral of this paragraph is get educated. See what the trading world is like. Research it, do your due diligence and explore it.
I do make money while I sleep. Not a lot right (yet) but I’m in this for the long term. As I said above trading is a long-term activity that needs patience and consistency. My personal mission is to build this income stream and in the coming years see this as an income stream that covers our bills and expenses and helps us just enjoy life a little bit and take the pressure of the corporate rally we are in! If this is something you want to do, then get educated. See what your options are and plan! Then go for it!
Forex trading is a possibility for you, just get educated!
I'll continue to write on the subject of 'get educated' as part of my mission to help people see trading as a potential option for them! The commentary I write is not financial advice, it is meant to help others with their self knowledge and growth.
I serve people who want their money to work harder for them instead of it sitting in the bank.