Currency trading advice from 10 years experience


Currency trading is strictly connected to winning money and losing them. Do you know that 90 percent of traders suffer money loss? Or that almost 80 percent give up during the first two unsuccessful years?

Trading is not always an easy business. Your job as a trader is to learn, develop, improve your knowledge and techniques in order to not end up in those 80 percent. Here I share my experience in the currency market that I have gained during the last 10 years.

Do not rely on overbought and oversold levels in the long term

This is the first lesson that I have learned. At the beginning of my trading journey, I have read various guides about the overbought and oversold levels. What I found there, was that if there are too many new buyers on the market so it reaches the overbought level, the prices will soon go down. In the same way, if there are too many sellers on the market so it reaches the oversold level, the prices will rise.

RSI is in oversold area but GBPUSD is still going down
RSI is in the oversold area but GBPUSD is still going down

I have lost a great deal of money before I had discovered the market does not work this way. Reaching overbought or oversold levels does not necessarily mean the change in the price direction.

It does happen, that the market remains in the overbought or oversold levels for a long time, many days, weeks or maybe even months. In the chart above, you can see the RSI hits and sometimes exceeds the value of 30. Many traders believe they should enter a long position at these moments. But you can notice that in the long term the market is still going down.

Chasing the overbought and oversold levels is not the right approach. For every true signal from RSI or the stochastic oscillator concerning those areas, there will be ten fake ones. And that is why I stopped paying attention to the overbought and oversold levels a long time ago. With no regrets.

EMA 200 on GBPUSD chart
EMA(200) on GBPUSD chart

EMA(200) is the only moving average you need

Probably many new traders are making the very same mistake I made at the beginning. I was using multi indicator charts. One week I added 5 or 6 indicators on the chart. It did not bring me any good. So the next week I removed those indicators and add few other. And so on and on.

Guess what? It did not work. Finally, I removed all the indicators from the chart. The only one left was 200 EMA.

200 EMA proved to be a highly reliable tool in the trending time. It is very useful in defining long term trends and can be used as a potential support/resistance levels.

The reason why 200 EMA is so good in technical analysis is that it is widely used among big institutions like banks or hedge funds. You will instantly recognise its value when you look at EMA on any currency pair or cryptocurrencies.

Do not stick to your demo account for too long

We do certainly recommend to start on your demo account first. But don’t get too attached to it. It is not so obvious that you will succeed on the real account even when trading was going super good on the practice account. Being conscious that you are trading real money has a quite big influence on the decision making process.

At some point it is good to begin with real money
At some point, it is good to begin with real money

Once you feel comfortable enough trading on the demo account, when you have tried your strategies and you have learned to read signals, move onto the real account. But start small, because the psychological pressure associated with risking genuine money might affect your judgment. You can even trade cents instead of dollars.

With time, you will get used to the thought of having real money at stake. Then, you will be ready for bigger investments.

Losing money is a part of the game

Trading is not that easy as one can think. But you can learn it and with every new experience, you become a better player. Losing money is a part of this game. You may take some important lessons out of failure.

Losing money is a part of the game
Losing money is a part of the game

Okay, I know losing is not funny, nor enjoyable. To tell the truth, it will probably turn out to be an extremely unpleasant experience. But keeping in mind a bigger picture will help you to get through it.

The most important thing is to learn from this situation. To draw conclusions and not to repeat your own mistakes. With every error, you become wiser. It can save you from a bigger loss in the future.

It is crucial to match the strategy with your type of personality. I made such a mistake once and it cost me a lot of money.

At the beginning of my trading experience, I found an online course on scalping. They ensure a high success rate. I was drawn into it. I was using their strategy for a few weeks and ended up with 20% less on my account.

The problem was not in the strategy itself. The problem was in not taking into account my preferences. I didn’t want to spend all day in front of the computer. I didn’t want to monitor the price movements very closely. I just didn’t like the fast-paced trading style which was strictly connected with this particular strategy.

Scalping didn’t work for me because it didn’t match my personality. I recommend you identify your preferences, your risk tolerance. Find out if you are a day trader, a position trader, a swing trader or maybe a scalper.

Protect your capital

As was already said, you should choose a strategy that goes well with your personality. If you have difficulties with that, focus on the tools and the indicators that you find most convenient. This simple trick will help you establish the right strategy.

Protect your capital
Protect your capital

Now that you have your perfect strategy created, you should learn to keep your focus on protecting the capital. Before thinking about how much you can earn, consider how much you can lose. This is the key point to successful trading. After all, you cannot win if you are out of the game.

In order to stay long enough in the game, you have to preserve the capital. Only then you will see the results and if the strategy is rewarding or maybe you need to improve it.

At the beginning of my trader carrier, I could be described as a person with a gambler mentality. My focus lied on the prize, on how much money I will make. I completely underestimated the loss. And that was a mistake.

So when you start trading, the question you ask yourself should not be when you will make a profit. It should rather be how can you trade and preserve your capital and how you can deal with losses to be still in the game one month or one year from now.

My advice is to gain experience in the market while protecting the capital. If you come to the point you won’t lose money, you will be in a better position than 90 percent of the traders.

Here I shared the tips that I have for you after 10 years of trading. I made those mistakes and now I can save you from repeating them. I had my ups and downs. I still lose trades sometimes or hesitate before entering the trade. Do not get discouraged. Keep going and the success will be yours!

Good luck!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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