November 2021

How to Spot and Avoid Forex Scams – For Newbie Traders

As a beginner in forex trading or someone who has shown interest in forex trading, you will be a prime target for various forex scams and online schemes. Most forex scams take place online although a fair number of offline schemes happen too. How do you spot a forex scam and what can you do to better protect yourself from scammers and fraudsters after your money?

The rule of thumb when it comes to forex trading is to know what you are getting into first before you make a deposit. Do your research and be confident that you understand what forex trading entails and whom to trust with your money. Online review websites and discussion forums like r/Reddit should also be your friend if you want to avoid known forex scams.

5 Red Flags to Look for When Getting into Forex if you are new

Fake Forex Websites

Fake trading platforms or forex websites that purport to help traders access the markets are the newest forms of forex scams. In this scam, a person will create a website with all the bells and whistles of a trading platform. However, whenever a new user creates an account and makes a deposit, they lose their money because they can’t make withdrawals.

Fake forex websites come in various forms and designs. Some are easy to detect while others are so well-engineered that it will take a seasoned hacker to spot them. However, the following red flags can help you detect a fake forex website or trading platform:

The website does not support secure payment processers

Scammers will never allow secure payment processors like PayPal because they don’t want users to request refunds. Most of them prefer less secure payment methods like bitcoin, credit card, or bank transfers.

Scammer use copycat homepages

Be on the lookout for forex websites that copy the homepage of a well-known broker or trading platform just to trick new traders into depositing to the wrong account.  Always check that the web address or URL at the top of your browser is authentic. Well-known forex brokers rank at the top of Google results pages so you are safer accessing them from a normal web search.

Fake forex websites have no contact information

Double-check that the forex website you are accessing has verifiable contact information and a physical address.  You can go the extra step and give them a call or verify their contact information using third-party tools.

Fake forex platforms do not have helpful information and blogs

If the forex website you want to use does not have any forex trading guides, tutorials, and a blog, it should be a red sign that the website is a scam.  Authentic forex websites publish up-to-date guides and articles on forex that can help beginners learn how to trade and make a profit.

The platform or broker does not support established trading platforms like Metatrader.

If you cannot link your broker to a well-known platform like MT4 then you should probably be looking elsewhere unless you know the broker well enough.

Fake Forex Support Websites

In this scheme, scammers create fake support websites that appear to belong to established brokerages or platforms like MT4. If a trader happens to land on these fake support pages, they will be tricked into giving access to their accounts to these scammers.

To avoid falling victim to support scams targeting forex traders, you should only access the support page through the broker’s official website or get their contact information directly from the website. More importantly, you will never be asked to send or give your login credentials by the official platform owner. They don’t need it because they already have internal support tools that help them access your account from their end whenever you need help.

Scammers That Promise To Trade For You

This type of scam happens both online and offline. While it is possible to find legitimate traders who will take your deposits and trade on your behalf, you should be careful when getting into such an arrangement. A lot of traders end up losing their deposits to unscrupulous traders who gamble with other people’s money or simply aren’t interested in forex trading.

You should especially be wary of traders who promise big gains as part of their customer acquisition strategy as this is usually a huge red flag. Forex trading is a risky venture and it’s unlikely that they will always make profits.

There are a lot of scammers out there after your money because they know anyone interested in forex trading has money to spend and is ready to make a deposit. Do your homework and make use of the information on forums to avoid such scams.

November 10, 2021 by Education Market News

How to Determine the Ideal Position Size as a Day Stock Trader

Your trade size, also known as position size is more critical than your entry and exit positions when stock trading. While traders can have the best strategy, it does not compensate for an overly small or big trade size. In this case, traders will either take in too little or too much risk. Excess risk can lead to more losses than little risk.

Position size can be described as the total shares you acquire on a trade. Your entire risk is divided into two categories; account risk and trade risk. A trader should be conversant with how these components align with one another.

Having that knowledge helps you identify the right position size regardless of the market conditions, your strategy of choice, and the trade setup. Here are tips to help you establish the ideal position size for day stock traders.

Set a Risk Limit for Your Account Per Trade

Set a dollar or percentage amount that you will risk per trade. Many professional and seasoned traders have a 1% risk on their accounts. For instance, if a day trader’s account has $50,000, they could risk $500 for each trade.

Suppose your risk is 0.5% you will be risking up to $250 per trade. You can also leverage a fixed dollar amount. In this case, your account risk should still be less than 1%. Other trade factors may fluctuate but the account risk remains constant. Do not change the risk amount you take for different trades. If your account risk limit is 1% try to maintain it for all your trades.

Establish Cents at Risk on Your Trade

After setting your account risk per trade, focus on the trade at hand. Cents at risk is the trade risk and you can determine it by finding the difference between your stop-loss order position and the trade entry position.

The stop loss concludes a trade if it loses a specific amount of money set by the trader. Many traders leverage this strategy to limit risk on their accounts per trade. When you initiate a trade, consider your entry position and the stop loss point.

Your stop loss should be as nearer to the entry position as possible but far enough to prevent the trade from incurring a loss before the expected price move occurs. Once you identify the right position for your stop loss in terms of cents, you can calculate the right position size for that specific trade.

Identify Position Size for a Trade

Money at risk is the maximum amount you can risk per trade, while cents at risk is the trade risk. You can leverage these figures to establish the traded shares, which in this case, is your right position size.

The right position size = money at risk/cents at risk.

Suppose your account has $45,000 and the risk on your account is 1% per account per trade. You can risk a maximum of $450, which in this case is the money at risk, and want to trade a certain stock. You can choose to buy at $50.10, and position your stop loss at $49.99, placing a $0.11 risk, which in this case is the cents at risk.

Divide your money at risk amount ($450) by the cents at-risk amount ($0.11) the final amount will be 4090. That will be the total number of shares you can take on your trade at a 1% risk level. Now round the final amount to the nearest whole lot, which in this case will be 100 shares.

The right position in the case of this trade will be 4,000 shares. The position size is accurately registered to your account’s trading specifications and size. Worth mentioning is that the above calculations do not include commission charges.

Takeaway

Precise position sizing is crucial for successful trading. According to experts, your risk percentage should be 1% or less per trade. Avoid choosing an overly low risk because doing so prevents your account from growing. On the other hand, risking too much could deplete your account resulting in losses.  Determine your cents at risk per trade as well. You can establish your share position size based on your cents and account risk amount.

November 9, 2021 by Forex Trading Trading Strategies

NFCW: Commodity Price

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Source: Federation of Nepal Gold & Silver Dealer's Association