Who are the best Forex traders?
It is said in some places that the trick to succeed in the Forex market is doing what Hong Kong traders do, which is using low leverage.
In Japan and Hong Kong the maximum leverage is 25 and 20 respectively.
I have also seen that 50% of Hong Kong traders win doing Forex and that it is thanks to low leverage.
I do not know in what data those claims are based on.
If the amount is referred to one or two days of trading, I believe it. For sure nearly 50% of traders make money after one day of trading.
However if the amount is referred to one year then I do not believe the claim, sorry.
What is more, I would say that the amount of Hong Kong traders who win money after a year is close to zero, basically.
Best Forex Traders
It is possible that it is close to 1 to 5%, but I do not think that more than that.
If we do this study to intraday traders then I would say that the data approximates to zero dramatically.
If we get away from doing day trading then the number of winning accounts will be bigger.
The fact, even though many do not believe it, is that the Forex market is one of the most difficult in the world to make money as trader or investor. It is very complex. The long-term trends are not very clear, in contrast to the stock markets, where trends are much better established. That is why it is difficult to make money in these markets.
Why do people think that because of using a low leverage in Hong Kong, like 20:1 is it possible for them to win?
The fact that people say that “the majority of Asian traders are winners” does not mean it is true. It only means that it has been “written”; which is different than reality many times.
Nonetheless, to tell the truth, there is something certain about that phrase, and that is the fact that possibly the duration of Asian traders is much longer than non-Asian traders.
If we take into account that the majority of European traders and from other countries lose money in Forex and that use that leverage of 100:1 easily, then it is not difficult to deduce that those traders will go bankrupt much quicker than their Asian counterparts.
That is why it is true that by lowering the leverage the traders lose money more slowly, which could be beneficial because it would let them more time to “think”.
This is an issue about which I have written frequently, since I think it is good that people know how the markets really work, especially those fantasize about day trading.
In this respect it is good to read the works of Terrance Odean, an American expert in this field. Even though his studies are about the futures and stock markets we can be sure they are the same for the forex markets.
The Forex market has some sort of myth by which people believe that they can do a lot of money quickly but the problem is that you are not told how you can do those profits.
Nobody tell you that those opportunities of making money do not come as a trader but, for example, as a system developer, among other things.
Do you understand what the next means?
“Make 80% annually with this system”
Well, it is not the system that makes 80% for you; it is you buying the system what give the system developer a good profit.
I hope you have understood that having a low leverage in Forex, like 15:1 is not enough for you to win, but, perhaps, do not lose so quickly as if you had 300:1.
Perhaps I cannot show you evidence of these claims but neither can those who say that: “win 4,000 dollars a month with 2 hours a day trading”.
The Forex is not an easy market, not even for people with experience.
I hope I have made this clear enough.