Why your forex broker is partly to blame.
The forex broker is a major part of the reason why an unimaginably small percentage of traders succeed. Have it in mind that the statistics, if anything to go by, says that 95% of retail traders fail. This is also partly because the retail trader does not stick around long enough to realize success.
This means that the odds are highly against you from the very moment you place an order to buy or sell. There has not been too much highlight on this topic. Do read on to understand why I think so.
When you set out on the journey of retail trading you can’t have access to the market except through a forex broker. After carefully researching through your own means what makes a broker legitimate, you find one, visit their site and then go ahead to create an account with them.
Sooner or later you either receive a call, an email or both from a person who introduces himself or herself to you as your account manager. Many a times, this person tries to convince you with all of his or her might to deposit and start trading right away; without taking into consideration your experience or your capital.
A case against account managers who work with forex brokers.
These account managers try their possible best to be so friendly to you that you might think they are family.
I hate to be the buster of your bubble; but all they are trying to do is to convince you to deposit and trade with them. If you are new to forex, then that friendly gesture spells doom for you.
They are specially trained to get as many clients as possible; so it does not matter your experience or the size of your starting account capital, you must invest no matter what. If twenty people deposit $100 a day with them that is $2000; and it indicates that the forex broker is expanding rapidly.
Take that scenario and calculate it by the month, boom! More clients mean more broker profits and seriously skyrocketing profits if the broker is the type that takes the opposite side of a losing trade.
Don’t go live yet.
Just because your money no matter how small adds up to the brokers portfolio, some account managers go a step further to convince noobs that demo trading is a complete waste of time, and one would have to start live trading with a small amount in place of demo to really have a real feel of trading forex.
Many people buy into that preposterous idea, but it really is something I totally disagree with. That notion is just a test of emotion and nothing else. How are you supposed to throw a $100 to the market without the backing of any tried, tested and proven strategy?
Why don’t forex brokers add price action trading strategies to their educational resources?
I would rather you learn a strategy like price action and test it with a miniscule amount on a live account only after about 4 to 6 months of demo trading. If not, you are better off donating that hard earned money to charity; than throwing it to the market for unsuspecting bulls and bears to pounce on it mercilessly.
If you’re lucky enough to get an account manager who at least has half of a conscience, he or she would interview you and based on your answers; if in the inexperienced lot, give you some advice, warnings and recommendations.
Do not fall for it though; the end only points at getting you to deposit and trade with them no matter what. What I realize is that they direct most noobs to their educational resources which I must say are informative and understandable even for the average person.
Lack of depth in price action resources.
My only worry is that those resources after exhausting all the basic stuff every forex trader should know; points out solely to indicator based trading strategies. Even if price action is mentioned as a trading strategy; the broker’s educational resources would not exhaust it as much as it exhausts indicator based trading strategies. You might want to read this to understand my beef with indicators; Why trading with indicators are a no-no.
By eventually succumbing to these manipulative pressures from an account manager as a forex newbie; there are two things that I am sure of, though I am no seer, and that is; blowing your account away or losing more than 50% of your account capital.
What can one do to prevent this occurrence with a forex broker?
Let it sink in that, the forex broker is the biggest winner at the end of the day; deriving its wins from spreads, commissions and in some instances, your losing trades. It is easier for your account to burn to ashes than for your broker to go bust.
Also, account managers would always be cunningly forceful no matter what! Persuading people to deposit and trade right away irrespective of their experience; is a form of art they have mastered so well.
It would be beneficial to you to move at your own pace and not succumb to their pressures. It is your money after all! If you’re not ready to go live yet; respectfully decline any form of manipulation to invest with your hard earned money with a forex broker right away.
The trend is your friend; your forex broker is your business associate.
After all these rants note that this doesn’t make a broker illegitimate or bad; but it is just a way to get more clients in order to stay in business. It is a tough competition out there between brokers. It is like selling products; without aggressively attracting buyers, you would lose them out to your competitors; and you would be out of business as soon as possible.
Forex brokers need us as much as we need them. However, some of the things to look out for when deciding on a forex broker is to assess the matters pertaining to; regulation, segregation of funds, speed of buy/sell executions, issues with withdrawal, among the many others. See this post to read more about the features you should look out for when searching for a suitable forex broker.
What is your honest opinion on this post? I would also love to know about your experience with account managers and forex brokers in general. See you in the comment box.