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Risk disclaimer: The information presented on our blog are for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. MyFxMentor cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions. Risk disclaimer.

Lerato Masigo 8/9/24 Lerato Masigo 8/9/24

Importance Of Trading With an FSCA Regulated Broker?

South Africa is a very popular market for both traders and brokers, this is due in part to the role played by the Financial Sector Conduct Authority (FSCA).

The FSCA, is the license issuer for forex trading in South Africa and lays down regulations which are well organized and trading friendly.

Due to existing regulations, a strong local financial sector, and growing demand for FX in South Africa and Africa, brokers are choosing South Africa as their operations hub in Africa. With great interest though comes the challenge of having to navigate through all these different brokers when making the decision to sign up with a broker.

It is for this reason, i will be sharing the most important things to look out for when choosing your next broker and why the first and most important step should be making sure it is FSCA regulated.

Trading with a broker that is regulated by the Financial Sector Conduct Authority (FSCA) is important for several reasons:

Investor Protection: The FSCA enforces strict regulations that protect investors from fraudulent activities. This includes ensuring that brokers maintain segregated accounts for client funds and adhere to high standards of financial integrity.

Regulatory Compliance: FSCA-regulated brokers must comply with local laws and regulations, which helps ensure fair trading practices and operational transparency. Consumers are provided with the necessary education when they deal with financial institutions.

Dispute Resolution: The FSCA provides mechanisms for resolving disputes between traders and brokers, offering a level of recourse if issues arise. The last thing that any South African trader wants to find out is that they invested in a fraudulent or scam broker. This is something that can be avoided when South African traders use FSCA-regulated brokers and heed the warnings issued by the market regulator.

Confidence and Credibility: Trading with an FSCA-regulated broker can enhance a trader's confidence in the broker's reliability and ethical standards, as the broker is subject to regular audits and oversight.

Risk Management: FSCA regulation includes risk management protocols that brokers must follow, reducing the likelihood of excessive risk-taking that could jeopardize client funds. FSCA-regulated forex brokers provide all types of traders with the necessary warnings, education, information, and all other material and tools to help them in a wide range of competitive financial markets. Some warnings can involve those against maximum leverage, derivative instruments, financial instruments, trading costs, trading accounts, and more

Overall, FSCA regulation serves as a mark of trust and reliability, ensuring that the broker operates within a framework designed to protect traders and maintain market integrity.

Happy Trading!!

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Lerato Masigo 4/30/20 Lerato Masigo 4/30/20

Ask Yourself These Questions Before Taking Your Next Trade

A pilot goes through an extensive pre-flight checklist to avoid any problems once that airplane gets airborne. Similarly, you must go through a trading checklist before you get ‘airborne’ and enter a live trade.

But, how often do you sit down in front of your computer, open your trading platform and begin searching for trades without going through any type of checklist to make sure you’re doing things right? For most traders, this is how they operate all the time and it’s a big reason they don’t make money.

Trading plans or checklists may seem boring to you, but if they do it’s because you aren’t thinking about them right, in fact, when you start viewing them as ‘cheat-sheets’ that can actually make you a more profitable trader, you will start looking at them from a different perspective.

A trading plan / checklist will act as a filter which you put your predetermined trading criteria in and that will act as not only a trade setup filter, but also as a trading mistake filter. We all need a trading plan to stay on track and to stay grounded – I still use a mental checklist everyday before looking at the charts. However, when beginning, you need to print this out or write it down and physically go through it each time you scan for trades, until you have made it a HABIT!

Today on this article we will be discussing some of the questions i ask myself before executing a trade. You are welcome to use this as a foundation / example checklist for you to begin building yours from…

Am I In The Right State Of Mind To Enter This Trade

Are you in a calm, collected and overall objective state of mind before you enter this trade? Did you enter this trade for the right reasons or is it a revenge or greed-fueled trade? You will have to be honest with yourself here obviously, and you will have to act on that honesty, otherwise it’s a waste of time. Remember, you are delving into the trading world where there is no boss, no one is looking over your shoulder to keep you accountable. You must do the right thing when no one else is looking – trading is perhaps the ultimate test of one’s character!

Some other things to consider are: Did you just come off a big winning trade that may be inflating your confidence in your trading abilities to an unsafe level? Traders often lose money because they get overly confident and this causes them to take bigger / more risks in the market. Remember, you’re only as good as your last trade, so stay focused and remain in the proper trading mindset or your last trade might negatively impact your next one.

2. Am I Mentally And Financially Prepared To Accept This Risk?

Ask yourself before entering a trade, are you mentally prepared for the results of the trade, win or lose? This is where trading education great Mark Douglas shines, he gets in-depth into the psychology of trading and really hammers-home the point that every trade’s outcome is essentially random, a 50/50 shot, and that is how you need to view it. However, that doesn’t mean that overtime, over a SERIES OF TRADES your edge is only 50/50. It means that there is a random distribution of wins and losses for any given trading edge. So, you could have 20 losses in a row followed by 40 winners in a row (rare, but possible). However, that is a 66.6%-win rate over the series of 60 trades. But, most traders cannot mentally withstand even a few losses in a row, let alone 20, do you catch my drift here?

You must remember that any one trade, looked at in a vacuum / apart from the rest, simply doesn’t matter. As a result, you need to think and behave in agreement this fact. Meaning, if you are analyzing your trading performance, you cannot care AT ALL about any one trade, it is the overall results, the series of many trades that proves your performance. It will do you a WORLD OF GOOD to remember these points every time you’re about to enter that next trade. Remember, you must let your trading edge play out sans interference on your part, otherwise you cannot properly gauge its performance over-time as a trading approach.

3. Did I Position Size My Trade Correctly?

Did you apply the correct position size to the trade? Position sizing means adjusting the number of lots (your position size) to meet your pre-determined 1R risk amount per trade whilst considering your stop loss placement, which we will talk about next. Always determine stop loss placement before position size. You risk per trade should stay the same. You find the best stop loss placement to give the trade a good chance of working out (don’t put stops too close) and then you adjust your position size to meet your 1R risk.

4. Is The Risk To Reward Realistic?

Is the risk reward ratio realistic? Meaning, is there a logical profit target available relative to nearby key chart levels that allows you to get a 2 to 1 winner or more? You need to make sure that your stop loss and profit target both make sense in the context of the surrounding market structure.

5. Do I Have A Plan To Exit This Trade?

Do you have an exit plan for this trade? What is your overall plan to exit this trade for either a win or a loss? Are you planning to exit at a certain horizontal level or are you planning to trail your stop and let the trade run because it’s in a strong trend? Will you move to breakeven at a certain point or just set and forget? These details should be ironed-out before entering the trade. If a dramatic turn of events happens whilst the trade is live (like a huge price action reversal against your position, for example) you can intervene, but in most cases, you want to pre-determine your exit strategy and stick to that no matter what.

6. Does The Trade Fit My Trading Plan

Finally, if you’ve answered all the above questions successfully, then your answer to this last question should be “yes”. Your trading plan can be a checklist like this, although yours will be more detailed, and only if a trade passes each filter should you give it the “OK”. Don’t worry, eventually, the process of going through each filter will become a habit and something you almost don’t even need to think about it. You will intuitively know if a trade passes all your filters and criteria because you will have gone through your checklist / plan manually so many times that it will have seared itself into your brain, it will become part of you.

7. In A Nutshell

We all need guidance in life, we all need mentors to improve and excel. I can be your trading mentor by teaching you what I know and what I have learned via my trading programs and members community, but it’s up to you to put in the ‘hard-work’ and follow-through with what you learn. Today’s lesson is another piece of the trading puzzle; you need to actually make a checklist like this and put it to use in your day-to-day trading and if you do, I guarantee you will see an improvement in your trading. You are going to naturally be more selective and methodical regarding which trades you take and how you trade the market. We have additional confluence and technical analysis specific questions which we include in our trading routine. These however are specific to our trading strategy which is why we have not mentioned them on this blog. You are welcome to join our team and benefit from all the additional tools we use to give us an edge in the market.

Make this trading checklist a part of your daily trading routine and you will wonder how you ever traded without it.

Happy Trading

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Lerato Masigo 3/31/20 Lerato Masigo 3/31/20

The Trader Lifestyle Series - The Pros and Cons of Day Trading

Want to start trading?

Many people do. For them, it’s a dream come true.

You work for yourself, and using your own money. You trade what you want, and without anyone restricting you…

You make enormous amounts of money, you are free to travel and do what you please with your time. You can accumulate a ton of unique experiences. The dream life.

While these could be the rewards of implementing an effective trading strategy, the Forex lifestyle is more than just riches but forming a routine that will help you become successful.

To help you on your way, we have therefore put together this guide with some important pros and cons about day trading. Here, we’ll dig deeper into the main advantages and disadvantages of day trading. By the end of the article, you should be able to answer whether day trading is the right choice for you.

What Is Day Trading?

Day trading is one of the most popular trading styles used by traders around the world. Day trading involves opening a trade or multiple trades during a day and closing them by the end of the current trading day. As a result, traders can immediately measure their trading performance by the end of the day, unlike in swing trading or position trading where trades are held for days or weeks.

In addition, day trading offers a fast-paced trading environment where traders don’t have to wait for a long period of time to find and open a trade. While this trading style isn’t as fast and aggressive as scalping, it’s still a sweet spot for many traders who want to get some action in the markets.

Pros of Day Trading

Trading Strategies

Day trading allows you to use a variety of trading strategies across all major markets. Popular day trading strategies include breakout trading, trend-following, and counter-trend trading.

In breakout trading, traders try to catch the initial volatility that occurs immediately after the price breaks an important technical level, such as chart patterns.

Trend-following strategies, as their name suggests, involve opening day trades in the direction of the underlying intra-day trend. Trend-following is perhaps the most popular trading strategy among day traders as it returns an attractive risk-to-reward ratio with a relatively high success rate.

Counter-trend trading strategies involve opening trades in the opposite direction of the underlying trend. Counter-trend traders aim to catch market corrections that occur after a prolonged and strong uptrend or downtrend. This trading strategy is slightly riskier than breakout trading and trend-following and should be used only by experienced day traders.

Lots Of Trading Opportunities

Since day trading is a relatively fast-paced trading style, it offers a large number of trading opportunities – every day.

Day traders base their decisions mostly on intraday timeframes, such as the 15-min, 30-min, 1-hour, and 4-hour ones. Those timeframes offer much more tradeable setups than the daily or weekly charts used by swing traders and position traders, which is a major advantage of day trading.

A higher number of trading opportunities doesn’t necessarily mean more profits. Always follow your trading plan and only place trades that are fully in-line with your strategy.

Performance Measure

Day trading involves opening and closing trades during the same trading day, which means that you get your daily results relatively fast. Many traders like to know whether they’re in profit or loss on a daily basis, and day trading allows exactly that.

In longer-term trading styles, traders often face periods of negative price-movements, which doesn’t only require a higher trading account to withstand those movements, but also a lot of patience and discipline to stick to their trades even when times become tough. To measure your performance, create and keep a trading journal with all of the trades that you take during a day. Not only will you be able to track your performance, but you can also look for trading patterns that tend to reduce your profits or lead to losses that can be avoided.

Overreaction to News

Markets consist mostly of human traders, and humans tend to overreact to news. That’s why you’ll see large price-movements around certain news, even if those news shows to be relatively unimportant for the markets. As a day trader, you can take advantage of that behaviour and squeeze out additional profits.

The main thing to know when trading the news is that the actual number is not important. It’s the actual number relative to the forecast that matters. If, for example, the US non-farm payrolls come in at 200k but markets forecasted an increase of only 120k, that’s better than expected and will likely have a large impact on the value of the US dollar.

Technical Setups

As a short-term trading style, day trading is largely affected by technical levels. As the trading timeframe becomes longer, the focus shifts from technical levels more towards fundamentals. In the very short-term, market noise tends to lead to price movements. Over the medium-term, mean-reverting becomes increasingly important, and in the long run, changes and trends in fundamentals create trends in the underlying security.

When using technical analysis in day trading, try to combine a number of technical tools and only take a trade once all or the majority of tools confirm a setup. This is also known as a confluence of technical levels.

Cons of Day Trading

Limited Profit Potential

Given the shorter holding periods of trades and shorter timeframes on which day traders base their decisions, day trading has a more limited profit potential compared to swing trading. In addition, traders close their trades by the end of the trading day regardless of their profit. While this practice eliminates overnight risk, it also limits the potential profits of promising trade setups.

Risk of Overleveraging Your Trades

Most markets don’t fluctuate much over the day. As a result, day traders utilise more leverage to squeeze out the most profits and take advantage of those small price movements. While leverage can be very efficient, traders who over-leverage their trades also risk larger losses.

Leverage is a double-edged sword and should be used only according to your trading plan. Make sure to create a strict risk management plan to cap your leverage or risk-per-trade in such a way that eliminates the risk of ruin (i.e. blowing your account.)

Market Noise

The shorter the timeframe you’re trading on the more market noise you have to deal with. Market noise represents erratic and unpredictable price behaviour without any technical reasoning or news that could have led to those movements.

Market noise presents a real problem for short-term traders, and the only way to avoid getting stopped out too early is to widen your stop-loss level. Take a look at the previous volatility in the pair, and try to set your stop-loss above or below recent support and resistance levels, giving the market enough space to perform.

Conclusion: Should You Day Trade the Market?

Let’s admit it, we’ve all started trading with a day trading style, opening and closing multiple positions during the same trading day. Some traders who found that approach to be too fast-paced gradually switched to longer-term styles over time, such as swing trading.

While fundamentals (such as news reports, for example) can have a significant impact when day trading, fundamental analysis becomes proportionally more important as you zoom out to longer timeframes. Most day traders are technicians and sometimes incorporate some news trading around important market reports.

Still, bear in mind that day trading requires discipline, patience, and a good understanding of the markets in order to return positive results over the long run. If you’re still new to the markets, swing trading could be a better choice to gain trading experience before switching to a faster trading style like day trading.

Swing trading gives you more time to make trading decisions and to get out of a trade if you realize that your analysis is wrong. Therefore, try becoming profitable with a longer-term trading style before switching to shorter-term ones.

Happy Trading

Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com

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Lerato Masigo 3/15/20 Lerato Masigo 3/15/20

10 Step Game Plan For Currency Trading Success

There is an old expression in business that says, if you fail to plan, you plan to fail.

It may sound cliche, however people that are serious about being successful, including traders, should follow those words as if they are written in stone. Ask any trader who makes money on a consistent basis and they will probably tell you that you have two choices:

1) Methodically Follow A Written Plan or 2) Fail.

If you already have a written trading or investment plan, congratulations, you are in the minority. Everyone can become a successful trader however not everyone is prepared to put in the time. So the first piece of advice I can give you on how to become successful as a trader is this:

Trading Is A Business, So You Have To Treat It As Such If You Want To Succeed.

Obsession. Passion.

You will need to have a healthy obsession with trading. You have to absolutely love trading. You have to love analysing the charts. Again and again and again.

However there is a very thin line to this, if you're too in love with your trading vehicle or investment, you give way to flawed decision-making. It’s your job to capitalize on inefficiency, remember your most important role is making money.

The Foundation

This is where the real work starts. You need to get the basics right.

Build your foundation.

Focus on the process instead of the profits. You should take a broad overview approach of what trading forex actually, invest in a mentor, ensure that you are learning everything related to trading.

Also start looking into creating a trading account with a regulated broker. This allows you to get a feel of how trading actually works while getting familiar with the different trading platforms. We always recommend ICMARKETS as the preferred broker, We have been using them as our preferred broker for a long time now and their spreads, swaps, support and reliability are top-notch and they are highly regulated so you know your money is protected.

The foundation stage is meant to get you up to speed with everything related to trading. It’s like a bird’s eye view on things like brokerages, the forex market itself, technical analysis, fundamental analysis, trading psychology and more.

Trading Plan

If you haven’t already, you should start creating your own trading plan. A trading plan defines everything that might be going on in your trading. It will be a place where you set goals, what your motivation is, what kind of trader you are, what type of trading style you’re comfortable with, what the exact rules are for your trading system and so on.

A trading plan will give you the guidance you need to be a trader. It will prevent you to take a free-styling, random and impulsive approach to the market. Just the process of writing down how you think about your trading will give you new insights.

The difference between a successful trader and a losing trader is that losing traders lack structure. A trading plan provides that structure.

Journaling

We all need some accountability. We need to know what works and what doesn’t. We need to track our performance in a way that we can review and adjust if needed.

We need a trading journal.

Journaling your trades is the process of writing down the stats of every trade you take in a journal. Entry price, exit price, date, time, stop loss and take profit target, setup type, time frame and so on. You will want to include a chart screenshot as well to be able to review it later on.

Journalling trades has many benefits:

it allows you to take a more stats and data-driven approach instead of gut feeling ways of trading the market.
it’s a logbook of your past trades, providing valuable statistics such as average win rate, the average risk to reward, Sharpe ratio and much more.
it allows you to implement review routines (more on that later) and see what you did right and where you made mistakes. This feedback loop is immensely valuable.
it holds you accountable.

Keeping a trading journal can be as simple as writing down your trades in a notebook, but it can just as well be something you save in Tradingview, Excel or specialised trading journal software.

Structure

Then you need structure in your trading. Build the habits of top traders.

Want to know their secret?

Trading routines.

Routines are what will bring consistency to your trading life. And I don’t mean routine in the boring, creativity-depriving sense. Routines should be created to improve your life and enhance creative thinking.

And it can be as simple as this:

Weekend (Sunday) - Analyse The Market And Create Your Watchlist For The Following Week

Mornings - Trading Prep For The Day

During The Day - Trade Management/Monitoring

Weekend (Saturday) - Review Previous Week And Do Some Fundamental Research

Monthly - Review Trading Month

Structure helps keep you in line with your trading routine… consistently.

Consistency

You need consistency.

Keep working at executing your trading plan flawlessly.

Often review your performance and if you see deviations, investigate why this is happening so you can potentially adjust. Keep on learning.

Consistency is incredibly important so keep an eye on making sure you survive as a trader.

The important lesson is that, once a trader has confidence in their trading plan, they must have the discipline to stay the course, even when there are the inevitable losing streaks.

In Conclusion

Most traders fail to tap their full potential, eventually cashing in their chips, but it really is because most forex traders don’t stick around long enough to know if they could’ve made it or not.

Become a proud member of the professional minority by following classic rules designed to keep a razor-sharp focus on profitability.

Will this set you up with the best chance of actually making it as a forex trader? Yes! And that’s basically all you can hope for. Work hard, don’t give up, have patience and you might make it. The freedom (both financially and in time) are so worth it.

This is part one of the #10 Step Game Plan For Currency Success” looking out for the second installment soon.

Happy Trading

Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com

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Lerato Masigo 1/21/20 Lerato Masigo 1/21/20

To Make Big Money In Trading, Forget About The Money And Focus On The Trading

Trading currency is one of the main market trading options, along with stocks, commodities, and real estate. Each of these is unique in some way, but what unites them all is that there’s a buyer, a seller, and a market where the exchange takes place.

In this blog post I want us to discuss the realities of making money from Forex Trading.

This is the main concern for a lot of individuals who think about getting into the Forex market, and whether it’s possible to make money from Forex trading?

Obviously, you’re into trading to make money, the dream is always to earn money and live however way you choose to live and enjoy the freedom trading brings. I know those are some of the things that lured me to trading in the beginning of my career.

Almost everyone coming into trading is drawn in by the desire to make money and improve their lifestyle. Whether you want to admit it or not, that is probably why you are on my blog; because you think you can make a lot of money trading or you think trading can bring you an amazing lifestyle change.

Hey, there is absolutely nothing wrong with those kinds of thoughts and feelings because they ARE obtainable goals if you study hard, perfect your craft and manage to keep your trading balance intact long enough to live to trade another day and come out the other side profitable. Let me ask you this.

Do You Love The Money Or The Process?

Do you REALLY LOVE THE PROCESS of learning about markets, studying and looking at charts and trading in general? Do you TRULY enjoy it? Or, are you just sort of tagging along because you think you can make quick money? For most traders, especially beginning traders, the honest answer is the latter.

In trading, as with any business endeavor and life in general, if you aren’t IN LOVE with the process you are VERY RARELY going to achieve the goal. Read that last sentence 5 times before you continue.

That said, the lifecycle of a typical Forex beginner goes something like this.

Get excited by a course that promises quick money and comfortable living.
Sign up for a Forex broker without ever doing any further research.
Blow through a large amount of money in a short amount of days.
Conclude Forex is a scam, and no one makes money.

So again i ask… Do you love the money or the process?

Because if you really loved the process then the approach would be so much more different and i’d be glad to give you some advice on how you can go about beginning your trading journey in the most reputable manner however for the sake of this blog i will not get into that though feel free to shout if you’d like some advice from our team.

Let’s look at some of the reasons that may suggest you may be trading for the wrong reasons.

You’re thinking only of money, not enough about trading or your trading plan or strategy. Trading really shouldn’t be all about ‘money’ to you. The money is just a way to keep score in a game that tests your ability to remain disciplined and patient in a world of constant temptation. If you are trading properly and focused on the process and excited about the process, you will make money and that money is like the score, if you’re score is going up, you’re winning, if it’s going down you are losing. Ironically, when you focus too much on the score (money) you end up losing.
You’re already making plans of what you’ll do after you make XYZ money in the market, you only think about the rewards and not the risks. Like the last point, but a bit more specific; I know a lot of amateur traders who get super excited about the possibilities of what they will do with the money they make from trading. It’s great to have ambitions and goals, don’t get me wrong, but this cannot consume your thoughts. If you’re making plans of how you will spend money you haven’t made, your trading mindset is not right yet.
You trade for no good reason, even late at night before bed, pressing some buttons for the gamblers endorphin release, you need to be in a trade. If you end up trading all the time, entering one as another one closes out, you don’t want to trade anymore, you NEED it. This is trading addiction and I can promise you that it will very quickly drain your bank account.

Let’s also look at what i feel should be the right reasons to trade:

You should trade because you love trading, plain and simple. You must love the process of trading, not only the dream of the end-goal, or you will never achieve the end-goal
You’re becoming methodical and well-structured in your approach, making plans and keeping notes and spreadsheets, you’re taking this seriously. Once you start doing things like this you know you’re on the right track. Being methodical and having a trading plan and keeping a trading journal in spreadsheets of your trades is something traders do who truly enjoy the process. These things keep you accountable and help develop proper trading habits and routines.
You live and breathe markets, it’s what you do, it’s who you are, every precious moment of free time you’re reading a post on a blog like the one you’re reading now or you’re reading a classic trading book and you’re studying charts religiously, even if you’re out and about.
You love self-improvement. Trading, more than anything else, is about self-improvement. Show me a successful trader and I will show you a person successful in other areas of his or her life. Intense discipline, focus, passion, patience – these are the ingredients of LIFE success not just of trading success.
You simply love markets, you love charts, you love business and entrepreneurship, you love studying what drives the world economies.

In conclusion if you want to get fit and healthy and achieve your optimal body composition, you must fall in love with the process of working out and eating healthy, because if you don’t fall in love with it all, you will never continue to do the little things day in and day out that lead to the type of body you want. Same thing in trading. To get the money and the cars and houses and the life you want, the life that IS possible from trading, you have to love the process, the little things, the details, otherwise you’ll never stay committed to the discipline that is required. As they say, the devil is in the details.

To succeed at trading you must let go of the need to control the outcome. You must trust the process. You must trust your intuition. You must trust yourself. You must fall in love with the process if you want to get the results you’re looking for.

Happy Trading

Want to join the MyFXMentor Team? See trades taken by our top trading analysts, join our live trading chatroom, and access our strategy library! Simply contact us on bookings@myfxmentor.com

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Lerato Masigo 1/12/20 Lerato Masigo 1/12/20

PASSIVE INVESTING VS ACTIVE INVESTING

There are generally two types of investors when it comes to the world of business. On one side, you have passive investors who aim to build their wealth gradually. These investors buy securities for the long haul and do not seek to profit from market timing and short-term price fluctuations.

On the other, you have the active investors who take a relatively higher degree of risk in an attempt to maximize returns. Instead of focusing on the safety of principal or income, they emphasise capital appreciation as their primary investment goal.

Investing money can be an excellent way to generate some passive income and make your money work for you, let’s take a closer look at active vs. passive investing, and the pros and cons of each.

What Is Active Investing?

Active investing, as its name suggests, means the investor takes a hands-on approach to their investments. The currency market is continually changing — the prices rise and fall depending on how a particular country is doing, and those changes affect the portfolios of active investors. The goal of active investing is to make as much money as possible by buying when prices are low and selling when they are high, so an active portfolio is always changing.

Active investing requires a deep understanding of the fluctuations that take place when the market is open. Currency market analysts study the patterns of these market changes and make predictions based on that information. This isn’t something the average person can approach on their own. This is why a lot of traders that participate in active investing usually have mentors, analysts, portfolio manager and trading communities that help them with market insight.

What Is Passive Investing?

Passive investing is the opposite of active — instead of buying low and selling high over and over again, passive investors buy stocks and hold onto them. They don’t need to anticipate the market’s every move because they’re not going to sell their holdings according to the whims of the market. Instead of relying on the big paydays that come with selling stocks, these investors generate passive income from dividends and interest over time.

Active Investing Pros And Cons

Let’s take a look at some of the pros and cons of active investing.

Pro — Flexibility: The market is continually changing, and sticking to a passive investment plan could cost you money in the long run. Active investing gives you the flexibility to buy and sell to maximum effect as the market shifts.
Con — Cost: Active investing is expensive, even if you have significant returns coming in every year. The cost of having a portfolio manager, mentors, and analyst can come at a significant cost to the investor.
Pro — Tax Breaks: Even losses can be beneficial for active investors. They can stack their stock market losses against their taxable income, which reduces year-end tax bills.

Passive investing pros and cons

What about the pros and cons of passive investment?

Pro — Lower Costs: Passive investment is one of the cheapest ways to take advantage of the stock market. There are very few fees, no overhead costs like you’d incur by hiring a portfolio manager, and you don’t need to make a substantial initial investment.
Con — Fewer Returns: Since you’re not buying and selling as the market changes, your returns won’t be as high as they would be with active investment. It’s an excellent option for anyone who wants to leave money in the market for the long haul, though, with steady passive returns trickling in every year.
Con — Fewer Options: Passive investing may limit you when it comes to what companies you can invest in. Most index funds focus on the top companies in a given area, preventing you from taking advantage of new startups that may just be entering the market.

Whether you choose to actively or passively invest your income is entirely up to you. Hopefully, these pros and cons will help make that decision a little bit easier.

Happy Trading

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Lerato Masigo 12/14/19 Lerato Masigo 12/14/19

Trending and Consolidating Markets – The Different Types of Forex Markets

Understanding what the price is doing is an essential aspect of forex trading. Depending on the type of forex market, we can execute trades differently, as such it becomes imperative for a trader to understand which type of market they are dealing with.

The market is split between two types of markets:

1) Trending Market.

2) Consolidating Market.

Now, let us look at what is a trending and consolidating market. And then we will see how to identify the type of market correctly.

TRENDING MARKET

The market which tends to move in any one direction is called a trending market. In this type of market, the price create a series of higher highs and higher lows or Lower highs and lower lows. It happens due to the imbalance between the buyers and sellers in the market.

Now, based on the direction in which the price is moving, there are two types of trending markets.

1) Bullish Trending Market (Upward Trending Market)

2) Bearish Trending Market (Down-Trending Market)

Let us try to understand each one separately with the exact psychology behind it.

1) Bullish Trending Market.

The price is said to be in a bullish trending market when it moves in the upward direction. While moving in an upward direction, the price creates a series of Higher Highs and Higher Lows.

2. Bearish Trending Market

The price is said to be in a bearish trending market when it moves in the downward direction. While moving in a downward direction, the price creates a series of Lower lows and Lower highs,.

Let us take a look at the psychology behind the bullish trending market.

Why Does Price Create Higher Highs And Higher Lows?

The price moves up because of the dominance of buyers over the market. It means that the number of buyers is more than the sellers, i.e., more traders are now on the buying side, and hence the momentum of the market is towards the buyers. It causes the price to create a higher high.

Now, when the price is moving up and making a higher high why does the price suddenly retrace and create a higher low?

It happens because at a significant level the buyers take profit which creates some opposing pressure. And this cause the momentum to slightly shift toward sellers.

Now, you must be wondering, If the buyers gave away the momentum to sellers why didn’t the market reverse and instead keep going back upward after the retracement. It happens because there weren’t enough sellers to absorb all the buyers and hence the price kept moving upward.

In the same way, we see lower lows and lower highs in a down-trending market.

Consolidating Market.

The price is said to be in a ranging(consolidating) market when the price moves sideways. The price behaves as if, it’s trapped between two walls and whenever the price hits either of the walls, it bounces back.

During a a ranging market, the price creates temporary support and resistance, and it continues to move between those two levels.

The reason behind the formation of a range is that both the sellers and buyers are in equilibrium.

So, what makes the price eventually break that range?

This happens when a group of traders start adding trading positions to move the market in a specific direction, which in turn causes disequilibrium in the market and hence causes the price to break the range.

For example… Consider the price was in a range and it broke the range towards the downward direction, the price broke the range towards downward direction as new traders who entered the market believed that the price has the potential to move down hence creating disequilibrium in the market and causing the price to go down. Now when the price broke the range downward, it took the attention of more sellers, and hence more sellers entered the market which shifted the momentum of the market towards the sellers and made the price to keep moving downward.

The ranging market is considered as a haven for traders. Most of the traders feel most comfortable while trading ranges and a lot of profit is made through it.

It is essential to understand the psychology behind whatever the price does. You cannot just follow the rules blindly because you learned it from somewhere or your mentor told you so. Everything you see or any setup you get into should make sense to you. You are intelligent enough to see things clearly and make sense of every structure you see. If sometimes you cannot understand what price is doing and nothing makes sense to you, then stay out of the market and wait till everything makes sense.

I believe that if you have a proper understanding of price action and if you understand the psychology of the forex market it becomes much easier for you to make profits consistently.

These are the types of the markets which we usually get to see in the forex market. We offer very detailed and specific trading courses to learn how you can take advantage of these markets.

Happy Trading

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Lerato Masigo 12/2/19 Lerato Masigo 12/2/19

Personal Development Tips And Traits For Smart Traders

There are many factors that may lead to failure in forex trading, but one of the biggest reasons is the lack of desire traders have to actually working on themselves. With the need for an education on how the forex market works, the ability to understand analysis, and many other prerequisites, comes one of the main factors needed to succeed in Forex; a strong personality.

While many other factors affect how and when a trade is opened and closed, or how long a position is traded before being closed, the trader’s personal decisions are a crucial part of the equation.

Here’s a list of personality traits to develop towards becoming a great trader.

Self Control

This is a very important factor when trading Forex. You need to ensure you are in total control of your emotions. Do not let a winning trade lead you down the path of greed, control yourself and follow the plan. On the other hand, when experiencing a painful loss, do not get caught in the trap of overcompensating with another trade. Follow your plan religiously, and do not be swayed by your emotions. Let the brain do the navigating, not the heart.

Patience

This might be the hardest trait to acquire for a lot of traders. Experienced traders can tell you that sometimes the most profitable trades are not trades at all. Sometimes the best move is to wait and not trade. Before jumping in, make sure this trade is right for you. Have you done your homework, read the news, analysed the market, listened to the experts? Is this trade what your strategy is telling you to do or are you being impulsive? Sometimes, it is best to be patient; there will always be another trade, another possibility to profit. A phrase we use a lot in our community is “There is no replacement for patience and dedication”

Self Awareness

This characteristic might have been at the top of the list had it been in chronological order. One of the first and most important things you need to do as a trader is get to know your trading personality. Ask yourself what kind of trader you are. Are you the type of person who is willing to take huge risks, lose some big trades, with the hope that your most successful trades will have made it all worth it? Are you the type of person that can leave a trade open overnight? Will you be able to sleep with that on your head? These are just some examples of decisions you need to make before trading. The most important thing is that you know who you are and only then can you decide how to trade. When you pair your personality to your trading style, it becomes a seamless process.

Integrity

This might not be the same kind of integrity you are familiar with in the business world. This is about internal integrity. When trading, it is important to use a trading strategy, but even more important than choosing a good strategy is sticking to the one you chose. Even if you feel that a certain trade is not right for you, stick to the plan. If you think that now is a good time to get out of a position, but your strategy dictates otherwise, it is best to stay on track. No one is monitoring you and your decisions, so it is tempting to follow your hunch, but this will eventually lead to losses, maybe not right away, but definitely in the long term. The best way to keep it real, objective, and scientific is to choose a strategy, implement it, and stick to it no matter what.

In conclusion, many traders fail at the game of Forex because they are not willing to change or train themselves. They are willing to learn trading skills, read the news, and watch the trends, but self improvement and personality development is not what they take very seriously. Let your Forex trading develop your personality and you are sure to see positive results in your Forex trading as well as your day to day life.

This is why at MyFXMentor we do not only focus on embedding trading skills but also growing our members as individuals because we firmly believe that success as a trader goes hand in hand with personal development.

Happy Trading

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