There is a lot of confusion out there amongst beginners not only about risk, but how leverage and interest factor into the calculation.

Needless to say, these forum posts end up being super long threads about how to calculate your leverage, then how to calculate your risk and some people even throw in an interest rollover calculation into the mix just to show you how smart they are.

Quite frankly, it isn’t that complicated.  I feel bad for the beginners who have to read through these long, drawn out forum posts when the solution is very simple.  If you are just getting started in Forex, here is how to calculate risk in Forex.

Easy, right?  I’m all about making things as simple as possible.

I’m using Oanda as an example because they are my broker, I do not get paid to promote them.  Check to see if your broker has a similar risk calculation on the order screen.  If not, you may consider switching to a broker that does.

The great thing is that you can try out demo accounts from almost all of the brokers out there and see how you like their platform.  So before you switch or even before you deposit real money, start demo trading and figure out which broker works best for you.

###

If you have never heard of this movie, I would highly recommend that you check it out on Netflix.  I mentioned it before, but I never posted the video.  Or if you like to kick it old school, get the DVD.  I don’t find it inspirational because I want to do something crazy like this.  I find it inspirational because it shows us how far you can really take your passion.

Check out the trailer:

How far can we take our trading?  What is really possible?

Well, I was definitely walking the tightrope on this trade.  Here is the analysis:

The final result was a +1.03% gain on the trade.  As always, this was a strategy that was backtested and demo tested before ever risking real money.  You can check out the history of the process here.  The price action looked good and I should have let the final position run!  As I write this, I would have been up 252 pips, if I held on.

Oh well, this is why this blog is not called “Duh, Winning”.

But that’s not the right way to think.  I’m not going to should all over myself.  Lesson learned…bring on that next trade!

Hope you are trading well!

###

Photo Credit

The reason that there are so many scams in this market is because Forex was unregulated for a long time.  Until very recently, you could manage other people’s money in the Forex market without a license.  Think about those possibilities.

Anyway, there is a certain individual that came up on my radar recently that is a perfect example of how Forex scams are set up.  Hopefully this post will help beginners avoid such unscrupulous individuals.

For people who take things literally, I’m not actually telling you to do this.  I hate people like this!  The following is my way of making fun of how badly some of these scams are set up.

Step 1: Create a fake name and back story

The first thing that you have to do is create a believable name and compelling life story.  In this case, I came across a “person” named Adrian Shiroma.  Luckily for Adrian, he is Japanese/Spanish, so most English speakers cannot understand his website enough to realize that it is BS.  I’m not even going to give the website the gratification of a direct link, so you can Google the name if you want to check it out.

Step 2: Setup a free blog

Yes, if you want to scam people out of millions of dollars, there is no need to spend $100 and get a real domain name and website hosting.  Just setup a free blog on Blogger or WordPress.  Nobody will know the difference.  If you Googled the name, you will see the blog that I am talking about.  He even uses a free Hotmail email account.

In all fairness, there was a very small chance that he is a real person, so I sent him an email.  After all, I have been known to be wrong in the past.  So this is what I said…

No surprise, but I didn’t get a reply.  Probably because he speaks Spanish…yeah right!

There is a “track record” on his homepage going back to November 2009.  But if you actually go back through his blog posts, they only show records going back to March 2011.  That is half-assing at it’s best.

The actual currency pair and prices are mysteriously blocked out and somehow the account always starts with $30,000 in it.

Hmmm….

In addition, there are is no account name or number on the statements that are posted.  It looks like a random report from Metatrader that could have been done in a demo account.

Step 3: Create buzz

Now go out and spam as many Forex blogs as possible.  Here are the comments that were left on my blog:

I left out the email address and IP addresses because I actually give a shit about privacy.  However, they were all from the same email and IP address.  But they were clever and used different names.  Important point there, be sure you are taking notes.

When looking around for proof that he won the Traders Marathon, I couldn’t find it.  No surprise there either.  Great idea though.

In addition, if you Google Adrian Shiroma, there are a bunch of “interviews” on different websites like Baby Pips and Forex Banks.  Well, actually it is the same interview, posted in different places.  Another key point, get the maximum mileage from your crappy broken-English interviews.

One funny thing is that if you look on his blog, he spams his own blog!  There are multiple comments that are exactly the same.

Apparently he had some videos too, but most have been taken down.  That is one area that you can improve on.  Be sure to make quality videos.

However, I did find one on YouTube and it is pretty funny.  I don’t know Japanese (in spite of my name and 6 years of Japanese School) or Spanish, but I’m pretty sure that she never says Shiroma at any time in the “broadcast.”  Look carefully at the subtitles…you will see Adrian Shiroma come up a couple of times, but she says “Yamanaka.”

The final thing to look for in the video is at about 0:53.  The name Adrian Shiroma comes up with the Japanese characters under it, but they are wrong.  If you do a quick search for the Kanji, this is what Shiroma should look like.  Hmm….

Step 4: Take the money

Now, this is the easy part.  Just get them to send you money.

I’m not exactly sure how he does it because I never got that far, but I’m sure it is pretty easy.

There you have it!  That is all it takes.  Pretty sad huh?

Why I posted this

Ordinarily, I would just ignore the spam comments on my blog.  But in this case, the scammers did put in a little effort into this, so I want this to show up in Google alongside the name.  Actually, I want this post to outrank him for his own name!

Of course, experienced traders will recognize this as a scam right off the bat.  But beginners may fall for it, so…

Avoid Adrian Shiroma!

###

Photo: Matt From London via Flickr Creative Commons

Actually, it did go off once, but I wasn’t around to take the trade.  But I am OK with that.  I have pretty thoroughly tested the Wallaby system that I am trading in the EURUSD with Forex Tester 2 and my testing showed that there will be extended periods of about a month or so when trades do not fire off that often, if at all.

If that is the case, then there is nothing I can do except watch.  Some people get bored with this and want to force trades that aren’t there.  I know that I was like that in the beginning, so I wanted to take a few minutes to reinforce why sitting on your hands is also a position and some questions you should be asking yourself if you absolutely refuse to.

The bottom line is that you can’t lose what you don’t risk.  Your risk is substantially higher if you are trading a system that you haven’t tested and do not know what the expectancy is beforehand.  You only want to take calculated risks, not SWAG (Scientific Wild Ass Guess) trades.

It commonly boils down to a pursuit of money not the love of trading.  I love the process of trading and that is the only reason that I have stuck it out this long and still maintain this blog.  Do you?

If you are just after what you think is a fast buck, it doesn’t exist.  You have to really love the challenge and be able to deal with the uncertainty.  You also have to be realistic about what you can make.

When I first started trading, I thought that I could solve all of my money problems by becoming a badass trader.  While this is entirely possible, there are also other factors that I needed to take into consideration.

For me, the biggest factor is the huge amount of debt that I currently have.  As pro trader Bubble Boy pointed out when I interviewed him, trading is a very psychological game and having a lot of debt will mess with your head and your trading.  His mentor insisted that he pay off all of his debt and recommended that I do the same.

So I cashed out my trading account to pay down one of my credit cards and have been working on creating income that does not depend on psychology.  This has led to a more Zen-like trading experience for me because I have found that I am not forcing trades and I have rediscovered that I enjoy trading well.

Another potential roadblock to becoming successful is your full-time job.  In fact, I emailed two aspiring traders this week and both of them said that it was very difficult to trade around their demanding jobs.

Getting out of a job you hate is another reason that people force trades.  I am totally guilty of that one too.  If this is the case, can you possibly switch jobs to something that is less demanding?  If that is not possible, then can you tailor a trading system that is based on a longer time frame so you don’t have to watch the market that often?

Making these adjustments can put you on the right track and reduce your tendency to force trades.  Is that too much of a sacrifice for you?  Then trading may not be your true passion and you are better off finding something that is.  Your heart and your bank account with thank you for it.

###

Photo: fallwithme via Flickr Creative Commons

That made sense to me because any jackass (including myself) can create a Twitter account and start Tweeting their trades, but the odds of those predictions being right are very small because most people are not profitable traders.  In addition, there are going to be a few pro traders there that will be right more often than most.  When the two groups are very polarized, that may be a good time to take a position.  Similar to how people trade the COT report.

But could this be applied to Forex?  Let’s take a look and the pros and cons…

Potential Benefits

Tracking one or two pairs like the $EURUSD on Twitter would give you a lot of insight into what people are thinking about the market and what the ‘dumb money’ is trading.  In addition, if you know who the pros are, you can also get a feel for what the ‘smart money’ is doing.

Also, watching Twitter is free and you don’t have to pay for an expensive data feed.  I like free.

Potential Downfalls

One potential negative to watching the Twitter stream is that if you are easily influenced by outside opinions, Twitter could just confuse you.  There also may be the temptation to use Twitter as a primary indicator.  I doubt that it could be a primary indicator, but I won’t know until I give it a try.

Also, the currency markets are huge compared to a single stock, so the ‘dumb money’ may have less of an impact on the overall market.  My gut tells me that a bad trader can sniff out a bad trade in any market, but we will have to see.

My Experiment

So in addition to trading the Wallaby, I’m going to start watching the $EURUSD in Twitter and StockTwits to see if there seems to be any correlation between what people are trading and being able to predict price moves.

Want to try this for yourself?  Here is how to get started:

This is just an experiment, so DO NOT go trading real money with this idea!  But if you think this might work, I invite you to follow along and see what you think.

What do you think?  Leave a comment below…

Hope you are doing well during this hectic holiday season.  If you are not trading well and wonder what you can do to improve your trading, the first thing I always recommend is doing some serious backtesting.

Doing this will not guarantee your success of course, but it will put you way ahead in terms of knowing how a system trades and getting a feel for what to expect over a long period of time. This can give you the confidence to take trades, stay in trades and see if a trading system has positive expectancy or not.

I realize that a products like Forex Tester 2 are not cheap and in some cases, that money really is better spent on learning to education (courses, seminars, etc).  But if you are at the point in your career where you ready to get serious and really find out what a trading methodology is like and not rely on the SWAG (Scientific Wild Ass Guess) method of trading, then you are reading this post at exactly the right time.

The good folks at Forex Tester usually do a sale during the holidays and this year they are offering an excellent 25% discount.  However, I want to help you out as much as possible, so if you purchase through my affiliate link, you will be able to pick up a copy of Forex Tester 2 for $135 instead of the normal $199 price.

That is a 32% discount off the normal price and an outstanding deal for a great piece of software.  Of course, there is a 30 day money back guarantee, but this sale only lasts until January 1, 2012 so if you have ever considered getting this important piece of forex trading software, now is the best time.

I don’t just promote it, I actually use it!  If you do end up purchasing the software, here are some great free resources that I have developed over the years to help people backtest:

• My FREE backtesting course – Learn the basics of backtesting and develop a plan to test ideas to see if they have a chance of being profitable
• My review of the software
• Some actual backtesting results from a system that I have been testing/trading

Hope you are having a great holiday season and as always, let me know how your trading/testing is going!!

Cheers,
Hugh

First of all, there isn’t as much noise on G+.  No crazy game updates or invites to forex scam webinars.  There are also no group updates, ads or long ass sidebars.  It is all focused on the content that people are creating.

For awhile, most of the people on G+ were the techies…but I’m starting to see more of the general population come in. Why is it important to be on G+?

Well, for some people, it isn’t.  But with all of the integration that Google is doing with it’s search engine, you have to get on board of you are a content creator. They are working on establishing an “author rank” based on the quality of the content you put out and it will all be linked to your G+ account.

Even if you aren’t writing a blog or trying to gain an audience, why join G+?

To me, the best reason to join is because you can follow who you want and only get information from those people, instead of having to be “friends” with everyone and get all of their crap.  “Really! Do I need to know how long your toenails are?”

This is similar to how Twitter works.  True, Facebook has made some adjustments to where you can subscribe without being friends, but that hasn’t really taken off.

You can also create circles based on your interests.  That way, you can just look at Forex posts or only dog training posts…whatever strikes your fancy.  Don’t want to go through the trouble of looking up all the traders on G+?

Just follow my Trading Circle here.  What do you think?  I would love to hear your comments below…

###

I was a little skeptical, but I am skeptical about everything…especially in Forex.  But I decided to give it a try.  They sent me a link to the free copy of their iPhone app in the iTunes Store and here is what I thought:

Background

First, a little background on HOTR.  I checked out the Hypnosis on the Run website and it looked pretty standard.  They have apps for iOS, Blackberry and Android.  They make hypnosis apps for a variety of different things like:

• Weight loss
• Tennis
• Sales
• Entrepreneurs
• Sales
• Learning
• Trading

Right there, you are probably thinking what I was thinking.  How can they make you good at so many different skills?  That might mean that they are using some generic formula to target markets that people are likely to spend money in.  Or maybe they are actually on to something.

I dug a little deeper and the parent company of HOTR is Subconscious Training Corporation.  I checked out their website and it is pretty clunky but it does the job.  It turns out that they are working with Jake Bernstein to develop the trading module of their business.  I have bought a couple of Jake’s books in the past, but I do not know how legitimate he really is as a trader and educator.

Their business is based on the premise that hypnosis can help you get better results in these different areas.

The App

After I downloaded the app, it gave me a bunch of different options: lose weight, be better at tennis, etc., but I went straight to the trading option.  That is just how the demo copy is, it contains samples of all of the different apps.  The apps on their own cost $4.99 each.

Then I started up the app and it gave me a splash screen.  When I pushed play, a blue pinwheel started spinning and a woman started speaking.  She has a very calm soothing voice and the pinwheel is hypnotic.

The first line says “By using this training session to strengthen yourself from within, you will develop better trading skills.”  That turned me off immediately.  You don’t develop better trading skill by listening to her talk, you will develop better trading skills by backtesting and actually trading!

Anyway, she asks you to watch the pinwheel, then close your eyes.  She then goes through the things that you should remember to do while trading.  Things like: setting stop losses, trading your plan, not getting greedy, etc.

I liked that part.  Some of the wording was corny however, you could tell that a non-trader wrote the script.  But overall, going through a list like this can be beneficial to go through before trading.  It can get you grounded and help you concentrate on the screens.

As I mentioned in the beginning, the recording went on for 7 minutes.  I thought that was a little too long.  I don’t know anything about the hypnosis process, so may be it takes that long to get hypnotized.

But that was a little too long for me.  I see this product as something that you listen to when you first sit down at your trading station and I would rather spend 3-5 minutes on a pregame routine.

But that’s just me.

Conclusion

All in all, it is a good idea.  It may work for some people, but I wasn’t sold on it.  In my opinion, if they shortened the recording time and reworked the script, it could have value.  I liked the woman’s voice though, it was very calming.

Then there is the price…

$4.99 isn’t a lot, but it is a lot for a simple app like that.  I don’t feel that the price is justified given that it is basically just a recording that calms you down.  I can get something like that in iTunes for $0.99.

In addition, if you look at the HOTR website, there is no evidence that this specific product actually works!  They mention that hypnosis works…yes, I know that.

But what is THIS product going to do for me?  There are no case studies or verifiable proof.

Based on these reasons, I would NOT recommend this product as something that will improve your trading.  However, I hope that they continue to work on it and do measurable studies on the results because it has potential.

Note: I was asked by the company to review the free version of their software.  I received no other compensation for this review.