Truth About FX

What’s the best way to know your broker?

In this episode of Truth About FX, Walter digs into the most common red flags forex traders should avoid. He gives some useful hints on where to look for the “best” brokers — and the reason why they stay at certain places — and how do you know which broker to trust? Walter puts out a simply way to test this.

Download (Duration: 07:33 / 8.6 MB)

In This Episode:

00:49 – be real

01:34 – burned to ashes

03:00 – test them

04:51 – “A” account

06:05 – drag their feet

Tweetables:

Where does your broker regulate? [Click To Tweet].

Test your broker  [Click To Tweet].

Never give 100% [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. We’ve spent a lot of time on the pitfalls inherent in each of us traders and this is a question coming from a reader by the way. What are the most common broker red flags we should be avoiding?

Walter: This is a good question. Overall, the most common complaints about brokers are unfounded — which I know is kind of controversial. If you think about it… First of all, let’s just be real. There are dodgy brokers, no doubt, and that’s just a fact to life and it’s often like futures traders. You hear people like futures traders point to forex and say, “Oh, it’s a bunch of baloney. Forex is a big scam because the brokers are all dodgy.”

That’s not true. I mean, if you think about it if you’re running a business and you start stealing money from people — which is basically what dodgy brokers do — then you’re going to get a bad reputation.

I know for a fact like here in Australia, there’s one broker that doesn’t even market anymore. They’re actually kind of like have an introducing broker that does all their marketing for them because they basically burned their reputation into ashes.

It does happen and I’ve had accounts with dodgy brokers. Here’s what I would say: there’s a couple of things that you can look at. One, you can look at where they’re based and where they regulate. Now, that’s not going to tell you everything but it’ll tell you something.

You’re going to need to ask why would someone be based in St. Vincent and the Grenadines. It could be for tax purposes, it could be because they wanted to take on US clients and they don’t want to be based in the US to get slapped.

It could be lots of reasons why so that’s one thing. Obviously, if you go to a broker who is regulated in the United Kingdom, in the United States, Australia and even places like Singapore and New Zealand or Canada, those are great places to look for brokers.

That’s one thing to look at where their head offices and where they’re regulated. The other thing is because you can actually have a broker who is in the United Kingdom but their main office is in Malta so they’re not actually subject to the same regulations that a broker would be if their head office i...

In this episode of Truth About FX, Walter gives light on the importance of backtesting… But what if you don’t have enough data? He talks on why statistics is important and how this can help you see results even if you don’t have enough data.

According to Walter, it all boils down to being confident with your system and how you work your way towards your trading goals

Download (Duration: 07:18 / 8.4 MB)

In This Episode:

00:38 – move forward

02:92 – shovel in the dirt

04:04 – reward yourself

05:39 – absolute speed

Tweetables:

Reward yourself along the way [Click To Tweet].

It’s all about the expectations  [Click To Tweet].

Focus on what you have [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. I’ve got a question for you. What if somebody wants to backtest and understand the importance of backtesting but they just go so slow that it’s frustrating for them because they can’t get enough data. How would you recommend they move forward?

Walter: There’s a couple of suppositions in there. One is they don’t have enough data. I don’t know. Maybe they do, maybe they don’t. We have to look at that and make sure that’s the case. But, let’s say that this trader feels like he needs to have — I said he because most traders are men but could be a woman. Most really good traders are women. So, let’s say she says, “I need to have 500 trades and I’m only able to knock out 10 in an hour and I don’t want to spend 50 hours doing this.”

Maybe that’s what is going on. I don’t know where that number came from. There’s a point of diminishing returns. In statistics, usually what happens is… I mean it depends on what the question is and so the question dictates the statistic that you use but, in most cases, I hear people say things like “You must have 30 in order to have a statistical significance, blah, blah, blah.” That’s a load of hooey. You could have 10 and it can be significant.

Let me put it this way. Let’s say you were out there digging in the forest and you’re looking for gold. You’re digging in the forest and you’re looking for gold. Holy crap, the first time you sink your shovel into the dirt, ting! You hear this sound and I’ll be darn if I didn’t just see a gold nugget with my shovel.

Now, let me ask you something. Would you be more willing to say, “I think there’s gold in that dirt.” Or, would you be more likely to say, “You know what? We really need to dig 30 tons of dirt out of here before we know if there’s any gold in that dirt.”

That’s the same thing with statistics. You can actually have a really small sample and if it’s really a strong result, there’s probably going to be a lot there. That’s the same thing. Like, that’s why I used the gold digging thing. I just came up with it.

The idea there is if you see gold straight away, then there’s probably gold down there. You could’ve been lucky.

In this episode of Truth About FX, Walter talks about the Psychology of Trading and overcoming fear. Why is it important to have confidence in your trading and how can you overcome this barrier? He lets out some insider notes on how you can buildup your confidence and make this your trading edge.

Download (Duration: 04:18 / 4.94 MB)

In This Episode:

00:31 – overcome fear

01:18 – fear of loss

02:07 – baby steps

Tweetables:

How do you build your confidence? [Click To Tweet].

Take those baby steps  [Click To Tweet].

Keep adding to your confidence [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody writes in and asks: They’re trying to apply a trading system that is to their advantage but they need to overcome some fear associated with that trading system. What should they do?

Walter: Psychology of trading is a major key so this trader sort of identified that. When I hear fear, it’s probably fear of losing that I think is going on here. Although, for a lot of traders the fear of missing out on a great trade is also a big one but the fear of losing is probably what’s going on here.

This trader thinks what’s happening is he doesn’t have a trading system that is to his advantage. In other words, he feels that he doesn’t have an edge so that’s confidence. There’s two things going on here.

One is he doesn’t have confidence in his strategy — and there’s a couple of things you can do there. Number two is the fear of loss. I’m just going to read between the lines here and say this is what’s going on. I hope it’s right. But, the good news is even if it’s not the trader’s specific problem, a lot of traders do that with this problem.   

Number one is how do you build your confidence? The easiest way is to backtest in Forex Test or use a MetaTrader Demo Account and hit the F12 key and record your trades in the spreadsheet. That’s number one.

Number two is you can build up your confidence by running a demo account with your strategy. I was just talking to a trader the other day. He’s been running his strategy on a demo account and had consistent results. I think his largest drawdown was like 6 or 5% or something. He’s done really well and we’re just like, “C’mon man. Go live.” He was like, “Yeah, you’re right.” It’s just the next logical step so take those baby steps.

If you’re coming from a place of fear and you have no confidence, you just didn’t know what to do, just take those baby steps. Do the Forex Tester. Do the demo account and then do the small account.

Let’s say that when you trade live, you’re going to trade with $25,000 then, that means when you start live, you start with 250 bucks. Just a really really small amount. Trade in as you would with $25,000 account but just keep building those wins.

Keep adding to your confidence and then after you do that for six months or so, you look back and go, “Wow,

In this episode of Truth About FX, Walter dives into price action and drawing support and resistant lines correctly. He talks about scalping. And did you know that there’s a simple way of identifying support and resistant zones?

Download (Duration: 07:34 / 8.7 MB)

In This Episode:

00:29 – losing more

02:03 – focus

03:12 – simplest way

04:06 – special case

Tweetables:

Identify your trading style [Click To Tweet].

Focus on support and resistance  [Click To Tweet].

Trade double bottoms [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody wrote in and asked. They want to learn how to master price action but they’re losing more than they gain right now and it seems like they can’t time the entries and they can’t draw support and resistance lines correctly. What should they do?

Walter: There’s a couple of things here that are… What’s going on here I suppose is this trader has a couple of ideas that may or may not be true. As we all do, we walk around with these ideas that may or may not be true.

He believes that price action is the way to go. That’s good because that means that this trader has identified how he wants to trade. Awesome! I love it. That’s great. However, this trader has loses that exceed the profits.

That means one of two things. Either the loses and the profits are about the same size and you have more losses than winners. Or, more likely — which is most often the case — you have more winners than losers but your losers are way, way, way too big. That’s because our natural inclination — and I’m no different than anyone else listening to this — is to try and win more often than to lose.

When you do that, when you try to win more often than you lose, the easiest way to do that is to take really tiny, small winners and then take these big, fat losers. That’s the easiest way. It’s called “scalping”.

That’s the easiest way to ponder to your desires as a human. But, here’s the thing, you don’t have to necessarily time the entries to get into these things. What I would do is focus on the support and resistance.

You believe in price action, you believe in support and resistance. What if you just do this, what if you just look at the D1 charts — and I’ll post a video on the show notes for you — but what if you’ll just look at the W1 charts as a way of identifying your support and resistance zones.     

You have the W1 charts, you go to the line chart and you identify your weekly support and resistance zones, and you just trade the D1 chart off of that. What if you also didn’t have to time your entries but instead let’s say for example, the markets been going down, it finds double bottom on support.

A really strong weekly support level so you trade the D1 chart there, after the second bounce,

Do you know what type of trader are you?

In this episode of Truth About FX, Walter dives into creating your own strategies and why copying from the “gurus” might be your biggest mistake. He digs into understanding your risk profile, the Cycle of Doom, and building up your confidence.

Download (Duration: 07:34 / 8.7 MB)

In This Episode:

00:37 – face the challenge

01:45 – two things to understand

03:03 – risk profile

05:25 – break it down

Tweetables:

Decide your type of trading [Click To Tweet].

Find the strategy that fits you  [Click To Tweet].

Take responsibility for your trading [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. We’ve got a question from a reader and this person asks: “I’ve been through about or over 500 indicators and price trading systems.” Now, this person faces the challenge of creating strategy with these tools and don’t know where to go from here. They’re not profitable yet and they’re pretty frustrated. What would you recommend?

Walter: This is a good question. It sounds like this trader… What’s going on here is, essentially, he’s or she’s lost confidence. It’s because of the Cycle of Doom that I’ve talked about where you hop on an indicator or strategy for a little while until it goes bad and then you hop on a new one. That sort of thing.

What’s happening here is I believe, if you read between the lines of the question, it says, “I can’t build my own strategy so I’m looking for gurus to try a different strategy.” What’s happening is this trader is shifting responsibility from himself to the gurus.

It’s like, “Okay, I’ve learned what I can and I can’t make it work so I’ll rely more on what other people do.” In my estimation, that’s a huge mistake. I think what’s going on here is not the right thing and there’s basically two things that this person needs to understand.

One is, what type of a trader are you? Do you like to follow the trend or do you wait for the end of the trend? Do you like trading when the market is consolidating in a box and just go up and down in a channel or something like that or you want to trade it from one end of the channel to the other or one of the box to the other? Or, do you like when the market is really, really, really quiet because you know it’s going to break out and just go crazy sooner or later?

You have to decide what type of trading do you do. Do you trade range-bound markets? Do you trade trending markets with the trend? Do you like to see the collapse of trend or do you like to trade breakouts? There are so many different ways to trade even though we all give them fancy names and every guru says, “I invented it.”

There’s really a few different ways to trade. What I would say is look and decide how you want to trade. Find the strategy that makes the most sense to you. You can build more later but find the one that really resonates with you and then you n...

In this episode of Truth About FX, Walter tackles one of the biggest trading barriers: financial disadvantage. Should finding good trading resources be expensive? According to Walter, it shouldn’t be… Actually, the best trading education is available for FREE. He also talks about some useful tips that will help you set your risk per trade and build your confidence based on your habits.

Download (Duration: 05:10 / 5.9 MB)

In This Episode:

00:45 – financial disadvantage

01:57 – totally off

03:15 – finger-pointing

04:21 – free stuff

Tweetables:

You are the key [Click To Tweet].

The information is out there  [Click To Tweet].

Take what you can [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody wrote in and asked: They’re having trouble finding a comprehensive educational package that will allow them to gain all the knowledge and necessary to trade successfully. But, what’s holding them back is that their financial situation hasn’t allow them to purchase anything, I guess is what they’re trying to say. What would you say about that?

Walter: They’re saying that still the currently financial disadvantage which is the only obstacle on my way. The real key here… And I know that this is going to sound like all zen-like and everything but it’s not the system, it’s not the information. It’s you.

Every trader who’s done this for a long time comes to the realization sooner or later — and it’s usually later — which is I am the key to the system. It’s you. You, the trader, that’s critical here. It has nothing to do with the system.

If you feel like you need to buy that $15,000 moving average crossover system, don’t. That’s not important. What’s important is you can go online and find plenty of… Well, heck! My book is available online for free.

You can get all my videos on eBay. It doesn’t matter. It’s out there. The information is out there. All you really have to do is find something that you’ll go, “Yes! That makes sense to me.”

That’s the key part. When you first read about or hear about or learn about a system, if you first think, “No, about that.” If it just doesn’t seem right, if it feels like it’s the wrong thing, then maybe you shouldn’t.

It could be that your intuition is just totally off and that’s the case when we first start trading. But, more likely, I think you should just gravitate towards something that makes sense to you.

It might be like trailing exit and taking really big profits now and again is what makes sense to you. Okay, fine. Or, it might be that having a win rate over 60% and having 1.5 reward to risk ratio strategy or something like that, whatever.

The important thing here is you focus on what makes sense to you and then from there, get good at it by practicing it and that’s free. You download a demo account and you can scroll back on MetaTrader and hit the F12 key and record your trades.

In this episode of Truth About FX, Walter digs into the psychology on why demo trading is more profitable than live accounts. He shares how “desensitizing” yourself can help you overcome your trading fears…And how keeping a journal can bring you one step closer into correctly executing your trades and bringing in the profits.

Download (Duration: 06:15 / 7.2 MB)

In This Episode:

00:17 – bulk of the reason

02:03 – scared of dogs

03:06 – let the dog sniff you

Tweetables:

Demo traders make more money [Click To Tweet].

Start with a simulator  [Click To Tweet].

Desensitize yourself [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody writes in and asked: Why can’t I be successful with live trading when I’m successful with paper trading?

Walter: This is a really good point. This is quite common and it’s also, I think — I believe — the root of the reason why when you look at trading competitions, in the live account competitions, you will see… Let’s say, the winner has 600% return which is really good over the course of a month or whatever — three months or whatever it is — and then you go to the demo account competition and the winner makes like 5,000% over the same period of time.

If you’ll look at it, it’s always the case that the demo traders make more money than the live account traders. Now, I believe you can get into the differences between trading on the demo and trading with the live feed and there are definitely valid concerns there but I think the bulk of the reason why this has happens is Psychology.

It’s Psychology. It’s because people, when they’re trading fake money, they’re okay with having losses and they’re okay with taking huge giant risk. When they’re trading live, real Dollars and Euros and Pounds, they don’t and it’s more difficult.

This is what’s going on with you and this is what happens to everybody. The key here is to desensitize yourself. Systematic desensitization is one of the ways that in Psychology, like if you have a fear and you fear something, they’ll slowly work you into that.

Let’s say you have a fear of a dog. I had a friend that I went to Graduate school with. She got her PhD like two years before I did and she was scared of dogs. She knew it was an irrational fear.

She knew that she should like dogs and all that like most people do or at least tolerate them but she was horrified whenever there was a dog. She thought that it would come and attack her.

And so, what they had to do with her was what they typically do with a fear. Like this is  slowly work you into a situation where you’ll feel like more and more comfortable with the dogs.

What you’ll do is you’ll go, they’ll put the dog in the corner or they’ll show you a video of a dog, and you’ll watch the video on a computer screen or whatever it is.  “Oh! That’s great,

In this episode of Truth About FX, Walter talks about the impulse control and the psychology of overcoming this trading barrier. He shares some cognitive tricks that can help you work on your trading impulses. He also lets some other tricks off his sleeves on how you can work around your trading discipline and manage your risk.

Download (Duration: 06:15 / 7.2 MB)

In This Episode:

00:50 – block off

02:00 – flashing colors

04:05 – impulse control track

Tweetables:

Control your impulses [Click To Tweet].

You need a plan  [Click To Tweet].

Build up your confidence [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. We’ve got an interesting question here. Somebody asked: Somehow I’m in love with the Naked Forex trading system but — and “but” is capitalized — I’m always stuck into the M5 and M15 charts because there’s action.

This person saw your video when you’ve talked about trading lower time frames and how it can activate certain parts of the brain that are similar to doing drugs. This person asked “How can I avoid this? Would it be best to just block off the lower time frames in MetaTrader and what’s your best trading style?” How should they go about figuring out which style is best for them?   

Walter: This is a tricky one. Really, what’s going on here is — and this is pretty common — you want to feel like you’re doing something. You want to be a trader which means you’ve got to go trade. You’ve got to take some trades.

A lot of traders, such as myself, I’ve learned though is that overtime if you’re able to just take a step back and do a lot more planning and anticipating and lot less reacting and sort of just going wherever the market sends your way. If you look at it, if you look at the platform — I’m sure you probably noticed this — it doesn’t matter if it’s MetaTrader or any of the other platforms, if you put someone who knew nothing about trading, someone who didn’t know anything about trading, the first thing at all, you plump them in front of the trading platform, typical forex trading platform and then you would plump them in font of a video poker machine in Vegas, there’s no difference.

It’s the same thing. That’s why they make all these noises and flashing colors, it’s to get your attention. That’s exactly what it is. So the question is how do you get away from that?

It all comes down to, in a Psychology term, it comes down to “impulse control”. It means you’re not able to control your impulses. People that have brain damage, this is the number one thing.

If someone has brain damage in front of their head, the frontal lobe which is that part of your brain that basically suppresses you from killing and raping everyone you see, these people go crazy. They try to kill and rape everyone they’ll see.

What we want to do is we want to trade from that area of the brain, not the reptilian emotional part of the brain.

In this episode of Truth About FX, Walter talks about the impulse control and the psychology of overcoming this trading barrier. He shares some cognitive tricks that can help you work on your trading impulses. He also lets some other tricks off his sleeves on how you can work around your trading discipline and manage your risk.

Download (Duration: 04:18 / 4.93 MB)

In This Episode:

00:42 – impulse control

02:03 – trading partner

03:26 – tackling subconscious

Tweetables:

People can’t control themselves [Click To Tweet].

Get a trading partner  [Click To Tweet].

Tackle your subconscious through hypnosis [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. A trader wrote in and asked — is asking — this person has a lack of discipline. What should they do?

Walter: There’s like a gradiance to this. What I would say is if you completely have problems with what we call in psychology “impulse control” and you just can’t stop. You just can’t like you go and gamble all the time in Las Vegas or whatever — Atlantic City or wherever. You go to Macau or wherever the nearest gambling center is. In Australia, it’s the nearest pub. They’re everywhere.   

If you do that then maybe it’s just trading is not for you but if you feel like you still have some shred of discipline and you can make this work and you really believe that, you can ask people.

You can ask five of your closest friends and say, “Would you say that I would ever be able to restrain myself from doing X?”  — whatever your thing is or whatever you love to do — and if they all say, “No, man. You’re not going to be able to stop doing it.” Then, maybe it’s just not going to work.

But, if you think you want to work around this — I’ll put a link in the show notes. There are basically things that can affect your subconscious based on hypnosis or subliminals or whatever.

There are different ways to do it but I’ll link some up for you in the show notes that you might want to look into that will help you with your impulse control because that’s what this is called from the Psychology point of view.

People can’t control themselves. They’re just impulsive, impulsive people. What I would say is maybe work on that. There’s another thing that you could do. Get a trading partner.

Have someone you’ll talk to every week at a minimum and they go over your statements and make sure — if you’re trading live — make sure that you’re following your system. If you’re not trading live — you’re trading demo — they can still go over your statement and make sure that your following the system.

If they noticed there’s a loss there that’s 5x what your stop should be at,

In this episode of Truth About FX, Walter unravels the secret of how to become a profitable swing trader and the advantages of being in a drawdown. He also points out the importance of using trade simulators and some useful books to guide you in becoming a profitable trader and finding your own strategy based on your beliefs.

Also, did you know that being broke can be good for you? You’ll find out why and more on this in this episode…

Download (Duration: 04:18 / 4.94 MB)

In This Episode:

01:00 – completely broke

01:48 – simulation trader

02:28 – top three things

03:29 – the secret

Tweetables:

Envelop yourself in forex tester [Click To Tweet].

You can trade something else  [Click To Tweet].

Just watch the charts [Click To Tweet].

Hugh: Hi, Walter. Somebody wrote in and asked: I’m just getting started. I’m working my way through the School of Pipsology — I think that’s the Babypips site.

My goal is to eventually come up with a system that fits me and I also want to learn to accurately track everything in Excel. I’m not sure if I want to be a full time trader as I am completely broke right now but in a few years, it’s possible.

He or she thinks it’s possible and they want to have the time and money to at least be able to supplement their income.

This person wants to become a successful swing trader.

What would you recommend to this person?   

Walter: This is a really good situation to be in that you’re completely broke because you can make all of your mistakes without losing any money.

If you go back and read the Market Wizards books that will be linked up in the show notes here, you will notice one overarching thing.

I’ve noticed this about all of these traders, almost to an individual, almost to a man, what you’ll notice is that these traders almost all have gone through terrible drawdowns or where they blew up an account or whatever.

It’s really common and so that kind of like threw them in another direction and they’re like, “That’s never going to happen to me again,” sort of thing where they decided that that’s what they’re going to do, just to work against that.

You probably won’t do that if you don’t have any money to trade. Because you’re completely broke, as you say, then what you can do is completely envelop yourself in Forex Tester. Just become a simulation trader. 

You don’t have to trade Forex Tester, you can trade something else. There are other simulators out there. The point is what you want to do — and if you don’t know how you want to trade, like you think, “Okay, swing trader”, that’s one place to start. If you want to do swing trading, what you need to do is take what you’ve learned from the internet, go into the simulator. Just watch the charts.