Forex copy trading is a modern approach to participating in the foreign exchange (Forex) market, offering individuals an opportunity to engage in currency trading by mirroring the strategies and actions of experienced and successful traders. This innovative concept bridges the gap between seasoned traders and newcomers, democratizing the world of Forex by allowing less experienced traders to emulate the trading decisions of more knowledgeable professionals.

At its core, forex copy trading operates through specialized online platforms or brokers that facilitate the connection between two distinct roles: strategy providers (the seasoned traders) and followers (the less experienced traders or copiers). The strategy provider’s trading activity is automatically replicated in real-time in the follower’s trading account, with each trade executed in proportion to the follower’s investment.

One of the significant advantages of forex copy trading is accessibility. It grants entry to the complex world of Forex trading without the need for extensive knowledge or experience. For beginners, this can serve as an invaluable learning tool, allowing them to observe and comprehend the strategies employed by experts.

However, it is essential to note that forex copy trading comes with its share of challenges. Successful trading depends on the competence and consistency of the chosen strategy providers. Therefore, selecting the right traders to follow is crucial. Additionally, while copy trading provides access to potential profits, it also exposes followers to potential losses, as unfavorable trading decisions made by strategy providers will be mirrored in their accounts.

To maximize the benefits of forex copy trading, it is advisable to conduct thorough research when selecting strategy providers, set clear financial goals, establish risk management strategies, and regularly monitor and adjust your portfolio as necessary.

In summary, forex copy trading has revolutionized how individuals engage with the Forex market. By enabling less experienced traders to follow the strategies of experts, it offers a unique learning experience and the potential for financial gains. However, it is essential to approach it with caution, select strategy providers wisely, and employ effective risk management to navigate the inherent challenges of this trading method.

Forex copy trading is recommended for individuals who are interested in wealth creation in the forex space. It is particularly well-suited for beginners who want to learn about Forex trading by observing and emulating the strategies of experienced traders. Additionally, it can be beneficial for those who seek diversification in their investment portfolios and are looking for an accessible way to potentially generate returns through Forex trading without the need for in-depth market analysis. However, it’s important for individuals considering forex copy trading to conduct thorough research, carefully select signal providers, and have a clear understanding of the risks involved to make informed decisions and maximize the potential benefits.

Check out my Windsor Brokers, Ingot Brokers and HF Markets Copy trading profiles

WHAT TO LOOK OUT FOR WHEN SELECTING A FOREX BROKER.

Scrolling through social media checking out forex trading content, I came across a question repeated across random posts, which forex broker do you recommend? I pondered on that question asking myself whether there are certain irreducible minimums one should seek before settling on a forex broker. Do note, these are my personal thoughts and bias limited to forex trading in Kenya.

1. Regulation and Licensing

There are instances where forex brokers have suddenly closed their operations and left with depositors’ funds. Usually these are brokers regulated or licensed in foreign markets but operating in other markets. For safety, I do recommend you pick a broker regulated and licensed in your jurisdiction. The licensing in your jurisdiction ensures the brokers comply with rules and regulations cutting across the capital markets. In Kenya, forex brokers are licensed by Capital Markets Authority (CMA) as Non dealing online foreign exchange brokers https://www.cma.or.ke/licensees-market-players/

2. Account types

To cater to various trading styles and experience, forex brokers do offer a variety of accounts that vary in features. What you might not know is that these features do represent revenue streams for the brokers. In simple terms, these features are used to entice you and that’s how the brokers do make money from you.

• Commissions

Irrespective of your trading style, you want to avoid accounts that do charge a commission. You cannot underestimate the impact of commissions on your profits. Usually they will offer an account with low or nil spreads but charge a commission. You would be better off with an account with slightly higher spreads but NO commissions. If they don’t make money from commissions, swaps will get you.

• Swaps

On some level you have to accept that brokers must make money. Swaps are the cost of holding securities in this case trades overnight or over the weekend. In my experience, to the trader, swaps are cheaper than commissions. Why are they cheaper you may ask? Suppose you sold EURUSD. Further, suppose the Euro interest rate is 4.5% while the USA rates are 5.5%. Effectively the cost of holding this trade for long period is 0.055-0.04, the positive difference means the trader earns something extra. Suppose we went long/bought, the cost of holding this trade would be 0.04-0.05. By now you have surmised that swaps may or may not affect your profits (50/50) but commissions will affect your profits.

Do note I have not shared much about spreads. My trading orientation, swing trading has taught me that spreads play a very minor role in trader success or failure for that matter.

In addition to spreads, deposit bonuses have a way of enticing prospective traders into believing the bonus is extra capital for trading. Usually this attracts reckless trading, my recommendation, avoid them.

3. Deposit and withdrawal methods

As I mentioned in the opening statement, my opinion is limited to Kenya. You want to work with a broker who offers deposit and withdrawal methods that are convenient  and inexpensive. Luckily the brokers I have interacted with do offer multiple methods, bank transfer, card transfer and mobile money otherwise known as Mpesa to Kenyans.

4. Forex Copy trading

This is a bonus, and not a mandatory requirement. Forex copy trading offers high risk investors the opportunity to invest in forex trading. This account is ideal for traders and high-risk investors alike. Traders get to showcase their skill and earn additional income through copy followers while high risk investors get to participate and earn from forex trading expertise. Therefore, a forex broker offering forex copy trading ranks top on my list. For more, check out my Forex copy trading video https://youtu.be/U8EBRCvsLiw?si=EpgYgSBbpK5VzUW7

In summary, these are the three key parameters one should consider before opening a forex trading account, number one and two are mandatory.

PITFALLS TO AVOID IN FOREX TRADING

I have been on the forex trading journey for a while now. I have learnt the hard way what to do, how to do it, and when to do it. I have also learnt what not to do. If you want to avoid the dangers that lurk in the world of forex trading, this article is for you.

1. Underestimating forex trading and assuming it will be easy.

It is best we get to understand certain realities; forex trading is not easy. The faint-hearted should not attempt forex trading. Many have been attracted by the illusion of quick profits and obscene returns. Possibly you have watched a video where a trader (possibly a scammer) is showing off lots of profits, either in terms of real money or on the MT4 screen in blue (indicative of profits). Usually, thereafter, many individuals express desire to start forex trading with little to no knowledge. The assumption is that if I dedicate a few days or weeks, I will be able to trade profitably. Many people walk away when forex trading is unyielding after a few inconsistent attempts. No worthwhile endeavour in this world is easy.

Point to note: the majority of would-be traders take 2–5 years of trading before breaking even. When I say break even, I imply there is a sunk cost (lost capital or blown accounts). Approach forex trading with the expectation that it will demand more from you. Make no mistake, there is success and fulfilment in forex trading in the long run.

2. Linear thinking and unrealistic expectations

If I make X trades per month and make Y profits multiplied by 12 months, I will make Z dollars by the end of the year, so the argument goes. I used to think like this. Linear thinking convinces you that everything in forex is additive or multiplicative; there are no delays, no losses, and no compounding.

Repeatedly, I have advised individuals to approach forex trading as a business first and then look to cash in on the profits much later, when the business has grown. You have to be willing to put in months—possibly years—before you reap the benefits. Remember, the forex market transfers wealth from the impatient and incompetent to the patient and competent.

3. Poor risk management and position stacking

In relation to linear thinking, when greed sets in, sense leaves the equation. Traders make reckless decisions that expose them to unnecessary risks. This includes oversized lots and position stacking. Often times traders will trade aggressively by placing unnecessarily large lot sizes on small accounts. Other traders will stack trades; place several trades of one instrument with the objective of maximizing returns. The outcomes are usually heart-breaking. This is one sure way to blow your accounts in pursuit of unrealistic profits.

In forex trading, you focus on protecting your capital and minimizing risk before you can think about returns. Take care of your downside; the upside will take care of itself. Remember, forex trading isn’t a sport; aggression is not required.

4. Comparison, the thief of Joy

My little experience has taught me that the grass isn’t always greener on the other side. Comparing your journey, process, and profits is a sure way to entertain doubt and jealousy. Doubt has a way of convincing you that others are doing better than you. I was once told that comparison is the thief of joy. Sometimes I have compared my own analysis with that of other traders and altered my analysis, missing out on profitable trades. It doesn’t matter how much your competitors are making; stick to your journey and trading plan and submit yourself to time. Interestingly, once I am done training a student, the first instruction is to unfollow me on all social media platforms. I need them to develop confidence in their skills without comparing themselves to me.

5. Stale knowledge and complacency

I suffer from this disease, as do many former masters. Champions have this insatiable desire to always improve for their own satisfaction. In trading, the same approach is required if you are to advance to mastery. I have noticed that once you settle into your rhythm and style of trading, one tends to let go of the hunger to do better. Over time, you fail to notice simple errors that compound over time and derail your journey. If you are still analysing the market the same way you did 12 months ago, something is wrong.

I make it a habit to always clear my charts and analyse markets afresh. It takes time, but it allows me to look at the market differently once I’ve gathered new information and knowledge. I make it a habit to schedule two learning sessions per week where I watch masters in forex trading and seek to learn something new.

ITS FRIDAY, MARKETS ARE CLOSED, WHAT NEXT?

Entrepreneurship is a tough undertaking, primarily because nobody tells you what to do, when to do and how to do it. That is true in the world of forex trading hence the low survival and success rates. In rare circumstances do traders share their tips on how to remain relevant and successful in the long run. I have made it my purpose to share tips that will aid in your journey. Very few articles and sources of information exist out there on what to do when markets are closed. Majority of us learn the hard way but over time, every trader tends to develop their weekend or time off routine. Mastery takes commitment and time. A large proportion of traders use this time to refine their analysis, set ups and general strategies.

So, markets are closed, what next?

This is the best time to take a neutral look of how the week played out. Take this time to journal and seek clarity. What went according to plan? What didn’t go according to plan? And why? Often times we are eager for Monday to come around for us to jump back into the market. Without self-reflection, we tend to repeat our mistakes. Personally, I like asking myself the following questions (example of answers)

What is happening in the market?

Is the market trending or ranging?

Why is it happening?

Has the market mitigated a previous demand or supply zone? Is there a break of structure or change of character?

How is it happening?

Is it a bullish or bearish correction?

This process allows me to accurately read and analyze forex pairs and assess whether my previous set ups are still valid.

I do recommend once in a while you clear your charts and start analyzing markets afresh. Will  you arrive at the same conclusion as before?

Finally, take a breather, walk away from the charts and enjoy life. Time away from charts allows your mental and emotional state to be in equilibrium. The market isn’t going anywhere, your skill however, can advance or retrogress. Taking time off to recharge and polish your view of the markets will eventually pay off in the long run.

5 TIPS TO SURVIVE AND THRIVE IN FOREX TRADING

The desire to achieve financial freedom is universal. The world of financial service and forex trading in particular is appealing primarily due to the magnitude of profits one can make. By the same measure, the magnitude of losses cannot be ignored. Ambition and passion alone cannot assure your success in forex trading. I would like to share tips and lessons that can improve your odds of success.

1.     Knowledge is power, right knowledge is freedom.

Seek knowledge about forex trading patiently and at all cost. Many delve into forex trading with little to no knowledge and expect to make it. Remember, forex trading is a zero-sum game, what you lose, somebody else gains. It’s a ruthless game of skill and patience. If you are not investing in the right knowledge you are guaranteed to be fodder for traders who consistently improve themselves. In my course, I teach you the skills required to analyse the market in 12 weeks, thereafter I expect you to make 50 trades as a way of practicing and refining your edge. Submit yourself to the process of learning. Accept and make peace with the fact that learning is a never ending process.

2.     Focus on risk not return

You read it right, focus on risk, not return.

High risk = High return =High probability of failure.

Low risk= Low return= Low probability of failure.

Low probability of failure ensures you survive long enough to earn consistent returns. Think of your capital as a tool of trade. Without it you can’t hunt or trade, therefore cannot feed. Would you be willing to risk your tool of trade in high risk environment or low risk environment where you are assured of consistent future possibilities? It is better to risk your tools hunting a rabbit daily or weekly as opposed to unrealistically hunting an elephant. Focus on capital protection long enough and the returns will roll in effortlessly. Take care of your downside, the market will take care of the upside.

3.     Less is more

Forex trading is a long-term business. Voluminous trades are not the key to long-term success, lesser trades will do the trick. Suppose you have two traders, Mary and Joseph. They are both interested in succeeding in forex trading, however, Joseph places three micro lot (0.01) trades and Mary places only one micro lot trade (0.01). Joseph is aggressive compared to Mary and is likely to be rewarded big time for his aggression. You are right to think that, but forex trading is not a sport, aggression is not required. Should the market head in their expected direction, Joseph stands to make more money compared to Mary. For a moment, let us assume that the market goes in the opposite direction, who stands to lose more? To reinforce point number two above, Mary is assuming low risk; she has better chances of succeeding in the long-run.

4.     Trade your plan

Many traders do fail to consistently follow their plan. I am no exception. In my short trading career, I have come to the following conclusion;

1. If you follow your plan and succeed, you are more confident and profitable.
2. If you follow your plan and fail in a trade, you are wiser.

Adhering to your plan not only improves your edge but it also reduces your exposure to emotional trading; particularly fear and greed. My inability to follow my plan has exposed me to fearful trading and greedy pursuit of profits.

     a.         Fear

At the beginning of 2022, I went short on gold. Putin and Ukraine happened and gold rallied. My plan indicated gold would fall to 1700 price handles. I decided fear knew better and exited my positions on a Friday. Monday morning, as if to mock me, the market sent gold spiralling downwards from 2000 to 1800 and subsequently to 1700 levels. I let fear rob me of a perfect trade. Later in the year, I went long on GBPAUD. Upon close interrogation of the market, fear took control in the absence of empirical data and I closed the position with 6 dollars profit on a micro lot. Later that evening, GBPAUD rallied to my intended take profit, I would have walked away with 23 dollars. The price of fear was 17 dollars for this particular trade.

     b.         Greed.

In the same year, I placed trades with the intention of making 50 dollars per trade. The market was more than willing to reward me with 30-40 dollars per trader. Yours truly would not take the profit. Later on, the market reversed and took all the profit and converted the trades to running losses. I sacrificed guaranteed profits for unrealistic profits.

5.     Continuous learning

The process of refinement is never ending and thinking otherwise is folly. Your process to mastery must return to the full circle. Inevitably, you will find yourself where you started, seeking more knowledge, but this time, it is specific knowledge to improve your edge. You are conscious of the mistakes you are making and willingly seeking additional knowledge to remedy the situation. Evidently the quality of your analysis ,trading plan and confidence gradually improve supported by competence. Value learning over money.

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EVOLUTION OF A FOREX TRADER

You have seen posts about forex traders making millions and living large.  A part of you is excited and desires to get into this thing called forex trading, you want to get the bag. You sign up for a demo account and decide you are going to make it. Welcome to the stages you will have to go through if you want to make it as a forex trader. Do note I am sharing from experience the actual stages you will endure, yes endure before you taste success.

STAGE 1; THE IGNORANT TRADER.

For the sake of this post lets us assume the trader’s name is Joe. He is excited about forex trading, he consumes e-books and videos on forex trading hurriedly. A demo account is opened and Joe is making trades here and there. Some are in profit some are running losses but Joe is determined to continue. After a while, Joe figures he is getting better at it, a few profitable trades have convinced him he is good to go. He even wonders, why is it so hard for others. I don’t see what the fuss is about. You are right Joe, you don’t see. You are in darkness, a world full of ignorance. The false confidence triggers some decisions, Joe decides to open and fund his first live account.

Beginners Luck

For all he knows, he has begun his journey of making money, unaware his journey is about to evolve. A few trades into it and he has made X dollars in profit. Damn, Joe, you are on fire. Additional trades are made, with the possibility of more profits, Joe is excited. At this point, Joe is unaware that he only possesses about 5 % knowledge, which leaves a whole 95% of ignorance that is about to slap him in the face. The markets do what they always do, transfer wealth from the impatient and incompetent to the competent and patient. He blows his first account and possibly cannot function properly (I remember my first blown account). The transition from demo to live trading tricks you into believing you just replicate the same set of decisions and voila, you’ve made it. You forget that this is a live environment with the possibility of loss or gain; odds, and right now, odds are not in your favor. Beginner’s luck has played a cruel trick on many forex traders. At this stage, trader psychology, risk management, and discipline make up the 95% that Joe wasn’t aware of.

Humbled and hurt by this experience, Joe is not deterred. He buys and enrolls in a course. He seeks to understand what happened.

STAGE 2; THE STUDENT.

Hi first loss is still haunting him and Joe aggressively consumes a lot of forex content, in fact, he consumes everything forex from anyone. Joe, driven by passion and possibly heartbreak jumps from strategy to strategy, indicator to indicator searching for the Holy Grail. Trading strategies and styles are largely dependent on trader psychology currently undeveloped in Joe. Luckily Joe meets a mentor, let us call him Mark. Tapping into his experience, Mark untangles the world of forex and illuminates Joe’s path. Mark shares his experience to encourage Joe. Gradually, Joe’s ignorance levels subside as his confidence and competence increase. After spending time mentoring his student, Mark eventually sends his apprentice into the world.

STAGE THREE; A TRADER REINVENTED

Joe has increased levels of awareness, competence, and confidence. He knows what to do and when to do it but his discipline is somewhat inconsistent. He hasn’t fully matured, therefore he makes mistakes willingly, driven by fear and greed. Unfortunately, Joe blows another account, only this time, he knows why. Joe accepts the responsibility and now understands that his success is dependent on his ability to remain disciplined and reinforce his trading psychology. Joe is ready to transition.

STAGE FOUR; COMPETENT TRADER

It has been two years since his first loss. Joe has learned that less is more in forex and that slow is fast. He has developed his unique risk management and trading strategy. Joe is patient in his approach and it shows in his consistent profitability. Fellow traders recognize his progress, the general public is interested in his success.

STAGE FIVE; MASTER TRADER

Experience has compounded Joe’s skill in that he is able to analyze the market and see potential setups and pitfalls. Joe trades lesser than before but makes more per trade. He has evolved to desire higher-quality challenges. At this stage, traders receive independent contract offers from established funds and prop firms because they have a track record of consistency and profitability. They are mature masters. Even if they stumble, they know how to get back up. Unbeknownst to Joe, he isn’t getting the bag as he thought he would, he is making bank consistently. He is financially free and fulfilled.

Such is the evolution of forex trading. It takes approximately two to three years to get to stages 4 and 5. The majority give up in stage one and you will hear them calling forex a scam, a manipulated industry. Knowledge is power, right knowledge is freedom. Prospective traders, submit yourselves to time, you will eventually mature.  Prioritize mentorship in your quest to learn forex trading, it is worth it.

As I write this, I am transitioning into stage 4, keyword transitioning. I still make silly mistakes that hurt my consistency. I intend to walk with you in this journey, I purpose to give you forex content raw and unfiltered.