How do you succeed in the forex market and avoid the traps?

Answer 1

The key is to be as objective as possible when analysing the markets. Since price is a numbers game, where price can only either increase or decrease in value relative to the previous value (tick), it is possible to use objective tools like a spreadsheet to assist in determining how much risk you can handle. Clear definitions of what kinds of risk you are willing to take is a key component of successful trading. This includes the lot sizes/position sizing and expected profit per move

In regards to avoiding traps, there are two major traps to avoid: scam brokers and scam vendors. There are not many scam brokers out there if you stick to the major brokers or those who have been around for a while. PFGBest was an exception of a reputable broker who turned out to be a scam. But use your intuition. Another strategy is to split your funds between a minimum of two brokers. When interviewing your broker, evaluate their ability to answer basic questions. Deposit smaller amounts at first and take advantage of their smaller lot sizes to trade. See how fast it takes to withdraw. Withdrawals should only take 48 business hours maximum to process, in extreme cases. Use Forex Peace Army to determine of a scam broker is operating under a new name. Look at intelligent forex forums and see if there are any reports of people who have problems, although keep in mind that brokers can have competitors who post misinformation. It's usually obvious to know who the trolls are. I also look for other businesses who have a legitimate relationship with the broker. What kind of experience are their clients having with the broker?

Avoiding a scam vendor is easy. See if the vendor actually trades the method they are selling. Remember, a system or indicator is worthless to you if you cannot use it to make consistent profit. And the only way to make consistent profit is to be fully aware of how the system/indicator actually works. Some of the smarter scammers can paint quite an illusion to an unsuspecting customer: fake account statements, fake monitoring systems, quick talk but no actionable results, repackage/ reselling a moving average or free indicator as some new "exotic, next generation" indicator. Certain things cannot be faked, like straightforward, logical order flow. Don't hand over your money until you are satisfied that the broker/vendor can fulfill their half of the deal.