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.

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.


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.

Forex Investing for Dummies

The foreign exchange market is among the most active markets globally, with an average daily trade volume of over 6 trillion dollars. As a newbie trader, there are some things that you need to be conversant with. That way, you will make the most of your trading experience and have a successful one at that.

What is Forex selling and buying?

Selling and buying in Forex is speculating a downward or upward currency pair movement, hoping to make a profit. Forex trading is always about buying a currency and then selling another. This is the reason why you’ll notice that that currency always comes paired. As such, if there’s an expected base currency strengthening against its quote currency, you buy.

There are factors that determine when you should sell or buy Forex, for example, your trading strategy and marketing commence time. Generally, it is best to sell and buy when the foreign exchange market is most active. It is in this busy time that volatility and liquidity are high.

For example, the Forex market in the UK is busiest at 8 AM, just after the London session is opened. At 10 AM, trading is less liquid. It will again pick up at noon UK time, which is when American markets commence trading.

Is it possible to sell without buying in Forex trading? 

It is possible to sell without buying. This is what is known as going short or short-selling. It means that you want to sell because you believe that that currency’s price is going to fall. In essence, when there’s a fall in price, you will most likely make a profit.

How you can sell and buy currency pairs

Here are some ways on how you can sell and buy currency pairs:

  • Determine how you want to trade: There are basically two ways to go about it: via a broker or spot Forex.
  • Understand the workings of the Forex market: Understand the networks used to sell and buy Forex. Also, learn about over-the-counter markets.
  • Open trading accounts: Find a suitable platform to open your trading account with. You should try out the demo version first before making any permanent commitments.
  • Create your trading plan: This is great for giving your structure for when you close and open positions.
  • Choose a trading platform: Find a customizable platform to fit your trading needs, preference and style. For example, go for one that has risk management tools, interactive charts, and personalized alerts, etc.
  • Open a position: This is when you get to choose if you will sell or buy.

Trading strategies to consider

There are three popular Forex trading strategies you should know of:

Trend trading

This basically involves the use of technical indicators like RSI (Relative Strength Index) and moving averages. Simply put, they’ll help you to tell if the market is in a bullish (uptrend), bearish (downtrend), or sideways trend. It is also used as a long-term or mid-term trading strategy.

Trend reversal

This is when there is a currency pair’s price movement turnaround. It can happen when a bearish trend turns bullish and vice versa. Here, you can also use technical indicators like a stochastic oscillator in determining if the pair is in oversold or overbought territory.

Managing Risks when trading the FX market

Here are some steps that will help you manage risks effectively when trading the Forex market:

  1. Make sure you have learned as much as you can about Forex trading and the market.
  2. Understand leverage and derivative products.
  3. Have a trading plan
  4. Have a risk/reward ratio set in place.
  5. Mitigate your risks with limits and stops
  6. Keep your emotions in check constantly.
  7. Watch current events and news
  8. Always commence with demo accounts to feel how it is without having to use real money.


When it comes to using trading strategies, you should not solely rely on one. Always be willing to use new approaches because they all have the benefits at some point. The current market is dynamic, which is one reason why using one strategy doesn’t cut it anymore. Be well prepared, and you will be able to navigate market changes successfully.



Forex Trading: Essential Trading Strategies

Forex is also known as foreign exchange. It is a marketplace where traders can exchange currencies. Like any marketplace, it is filled with many kinds of traders with different needs. The forex market has a suitable trading form that meets the different needs its traders have.

Choosing a specific trading form may not be easy especially for a novice. It requires some understanding of the different markets and strategies that exist. Let’s take a look at the different trading strategies.

Types Of Trading Strategies

The forex market is filled with many different traders. Each of these has specific needs and preferences which will determine how they trade.

A trader needs to determine how long they intend to trade. This will be affected by several factors. Ultimately, traders can trade long-term or short-term, or somewhere in between. There are many strategies that traders can apply.

  1. Day Trading

As the name suggests, these are the kind of traders that trade daily. They don’t leave any open trades overnight. They open all their trades during the day and then close them at the end of the day.

Day trading aims to take advantage of price movements in the day. It requires keen monitoring during the day to determine the direction of price movements. Trades make profits or losses based on the direction the trade takes.

This kind of trading requires in-depth knowledge to execute successfully. A day trader uses multiple techniques to help them make decisions faster and also to ensure that they are successful. Some key characteristics can help identify a day trader.

  • Their main focus is on technical patterns rather than data analysis.
  • They trade in high volumes.
  • Rather than focusing on long-term trading, they trade via day averages.
  • To gain more profits, they focus on quick turnovers.

This kind of trading strategy requires monitoring price movements throughout the day. If can’t closely monitored, it can lead to serious losses.

  1. Swing Trading

These are traders that are somewhere between short-term and long-term trades. Such trades are longer than a day (they continue overnight) and positions can be held for several weeks.

Swing traders, as their name suggests, focus on buying when prices begin to rise and opt to sell when they start to drop. This kind of trading requires a close analysis of price movements. Timing is key for a swing trader.

Key characteristics of swing traders include;

  • They use a blend of analysis techniques. Both fundamental and technical analysis is essential for swing traders.
  • They focus on short-term price movements. This helps the traders to capitalize on the upward swing.
  • Swing trading also focuses on extremes. These can either be high or low.

A major benefit of swing trading is that it has a high chance of making a profit with a low risk of making losses. It is a beneficial means of trading for those who don’t have the time to focus on price movements throughout the day. Keeping an eye on movements for a few hours daily is enough to make good decisions.

  1. Position Trading

If day traders could be placed on one end of the trading spectrum, then position traders are the other end. They focus on long-term trades. Position trades can keep trades open (hold positions) for weeks, months, or even years.

They mostly focus on fundamental analysis for their decision-making. This involves in-depth research and data analysis and looking for opportunities.

Some key characteristics that define position traders include;

  • Low volume trades. Many times they only hold a few trade positions in a year.
  • Most of their decisions are affected by economic models such as the national economy, the condition of the market, and interest rates.
  • It mostly focuses and relies on fundamental analysis to make decisions.
  • Position movements are captured in bulk. Position traders hope that prices will appreciate over time.

Due to the nature of position trading, they can cause long-term losses if predictions are wrong.

Wrapping Up

Forex trading is a lucrative marketplace especially for those who are in the market for speculative purposes.

There are many benefits to forex trading including the few barriers to entry even for beginners. Retail trading allows individuals to trade on the forex market. A novice should research the different strategies that exist before beginning to trade. Having a clear understanding of how long you want to trade, whether long, medium, or short term, is essential.

Forex Trading Managed Accounts-Pros and Cons

When you are new to foreign exchange trading, it is challenging to understand the currency movements or the analytics used for trading. Furthermore, it is even harder to predict how different aspects influence the financial markets or establish how to handle leverage or when to enter or exit a position for good returns. These reasons and more make some investors look for professional brokers to trade on their behalf using managed accounts.

Suppose the owner of a forex trading account has a thorough understanding of market behavior. In that case, they may be in a better position to determine if another person would perform a better job trading the foreign exchange market than they could do themselves. It may be advantageous for both novices and the more experienced traders to open a forex trading account with a reputed forex account manager.

How a Trading Managed Account Works

The first step to opening a managed forex trading account will be to look for a broker that offers such services because not every brokerage does so. The broker then opens an account for the investor. The investor deposits some money into the newly created account for the trading to begin.

Before trading begins, the investor and their financial advisor sign a legal agreement called a limited power of attorney (LPOA). The legal agreement seeks the investor’s permission for the account manager to trade on their behalf.

The consequence of granting this permission enables the account manager to link their account with the investor’s account. It also ensures instant copying of any transactions carried out on the master account of the manager over to the account of the investor.

Even though the investor’s account is under an account manager, only the investor can have complete control and access the trading account. Investors may see their account balance at any time, as well as the daily trading activity. They can withdraw or deposit money anytime they want without incurring any penalties.

Pros and Cons of Using a Forex Trading Managed Account

Opening a forex trading account may also be an ideal option for investors acquainted with the market but are conscious of their limits as traders or are too busy to trade. As such, they prefer that professionals manage their trading accounts. Trading using a forex trading managed account offers significant benefits, but there is always the possibility of disadvantages.


Amongst the most significant benefits of a managed trading account is the expert help provided to you by the broker or brokerage firm. If you are a novice trader, it can be extremely challenging to succeed in the foreign exchange market. Sometimes, it may require trading for a few years until you are confident enough to trade independently.

Using the services of an account manager enables you to delegate the management of your transactions to a qualified and competent forex trader who takes care of everything on your behalf. You can choose to do other things without having to worry about your investment.

Using the services of a trading account manager also enables you to begin trading right away without learning about the technicalities involved in the Forex market for months on end. It will also allow you to reduce the time required to understand your trade and begin generating money almost instantly after you begin trading.

Managed forex accounts save you valuable time because all you need is to set up your account, and the account manager will handle all the trading transactions.


Some brokers charge a certain fee for every transaction, while others charge a fixed price. Whichever way, opening an account with an account manager will require you to spend a substantial sum of money. You also have to determine whether using the services of an account manager will be worth what you spend to open and maintain the account.

Trusting someone else to trade on your behalf means you will have no control or influence over the transactions. You are putting your whole investment in danger in the hope that the account manager will make profitable trades. Suffice to say; you may also be looking at significant losses.

Wrapping up

Forex trading has the potential for both loss and profits, which is why some prospective traders choose someone else to trade on their behalf rather than take on the risks by themselves. Before you think of allowing an account manager to run your trading transactions, you must ensure that they are the right ones, with a reputation to protect. A forex trading managed account has many benefits, but you should not forget about the drawbacks.

6 Simple Ways to Avoid Losing Money in Forex Trading 2021

6 Simple Ways to Avoid Losing Money in Forex Trading 2021

Contrary to popular belief, forex has no holy grail, nor is there a one-size-fits-all strategy to profit trading. While many traders have perfected the art of reading market trends, there is still no way of predicting how market forces will sway.

That said, trading does have some semblance of an exact science, and there are several ways you can use fundamental data and various technical indicators to achieve profitability. 

Continue reading…

Fundamentals Of Trading On The Forex Market

The forex market is the largest globally. In essence, it is a platform where currencies are exchanged. It is an important subject matter to traders and non-traders alike because it affects global price movements. Forex is generally used for speculating, which has the potential of bringing in a profit, and hedging, which could potentially protect against losses. Let’s take a closer look at forex trading.

What Is Forex Trading

At its core, forex trading refers to the exchange of currencies. Networks of buyers and sellers form the forex market. They can trade currencies at agreed prices.

The market is quite volatile which means that prices change constantly. The fluctuations are affected by demand and supply.

Forex markets are global and are open for 24hrs on Mondays through Fridays. The market is not controlled or run by a single organization. Instead of central exchange, a network of financial institutions oversees the forex market. Forex trades are normally conducted over the counter (OTC).

Types Of Forex Traders

There are many types of investors in the forex market ranging from institutions to individual traders. Some of the major institutions and traders include;

  1. Central Banks

They play a huge role in stabilizing and growing a nation’s economy. Generally, they manage their nation’s money supply, currency, and interest rates. There are many steps they can take to make the national currency more competitive in the forex market.

  1. Commercial Banks

They create the greatest volume of currency trade. Their trades are usually done on the interbank market where they make transactions on behalf of their accounts or larger organizations. They often facilitate forex transactions making trading simpler for their clients. These trades are usually speculative to make a profit.

  1. Investment Managers

These are the second largest group of forex investors. The group is large because it contains not only investment managers but also hedge funds and pooled funds. This is where currencies are traded for large groups such as pension plans or foundations. Investment managers commonly make speculative trades.

  1. Multinational Corporations

When an organization is involved in international trade, forex trade becomes an essential instrument. Through forex transactions, they can receive payment and even pay for services or goods easily.

Many companies opt to trade forex to hedge against future price movements within the market. This creates a sense of safety for companies while trading in a volatile market.

  1. Individual Investors

Individuals can become part of the forex market through retail trades. They are the smallest group of investors in the forex market but it is increasingly becoming popular. Fundamental and technical analysis are factors that retail traders use to trade. They can be combined or used separately. Their main aim is to use speculation on price movement to make profits.

Ways Of Trading Forex

Spot Market – This forms the main currency exchange market. Demand and supply determine the rates of exchange. The rates are determined in real-time because of the volatility of the market. Spot markets involve the exchange of currency pairs. Such transactions occur ‘on the spot’ meaning that they only last a short period.

Forward Market – These kinds of markets trade are based on contracts. Rather than trade in the present, traders agree upon a specific exchange rate and lock it for a future date. Such contracts are usually based on private agreements.

Future Market – These are standardized contracts made on an exchange. Unlike forward markets, they are not private and can be legally binding. Such contracts allow traders to trade at specific exchange rates in the future, despite the direction price movements.

Each technique is unique and may be used by traders based on their specific needs. For example, a trader seeking to make a profit through speculating on prices will make an investment based on predictions on price movements. Traders need to consider what they aim to achieve before selecting a forex market.

Wrapping It Up

The forex market is the largest in the world. It is popular for many reasons and it also has many benefits. Even though there aren’t many retail traders, individuals may invest in the forex market. Selecting a market should be based on what an investor aims to achieve rather than popularity. However, any novice should take the time to gain some understanding of how forex trading works.