By Yervant Bohdjalian
Having been in the forex business since 1983, first as a forex trader and now as CEO of a regulated Cyprus Investment Firm licensed to offer forex trading to customers through an MT4 electronic trading platform, many people ask me to explain to them the difference between a forex trader and a gambler.
The only common factor between a forex trader and a gambler is that both are looking to make money from the forex market. But other than this, they operate in totally different ways since the trader usually takes calculated risk when entering a position whereas the gambler takes random risks with a 50:50 chance of success or failure and risking all the money.
The experienced forex trader will have the following characteristics when trading in the forex market:
* Has adequate capital to trade without using excessive gearing, which in ideal conditions should not exceed 20:1 leverage.
* Uses a Money Management system, whereby the size of the position opened depends on how much he is allowed to risk or lose.
* Based on a predetermined risk profile, he knows how much a trade will make, lose even before the trade is actually opened. When a position is opened, the trader automatically will post the take profit, stop loss orders or adjust them very slightly during trading time.
The experienced forex trader will have the following characteristics when trading in the forex market:
* Has adequate capital to trade without using excessive gearing, which in ideal conditions should not exceed 20:1 leverage.
* Uses a Money Management system, whereby the size of the position opened depends on how much he is allowed to risk or lose.
* Based on a predetermined risk profile, he knows how much a trade will make, lose even before the trade is actually opened. When a position is opened, the trader automatically will post the take profit, stop loss orders or adjust them very slightly during trading time.
*Attempts to combine the fundamental developments with technical analysis tools but does not become sentimental.
The gambler on the other hand usually has the following characteristics when trading in the forex market:
* Most of the time is under capitalized, uses excessive leverage to achieve over-ambitious profit objectives.
* Has no risk management or money management strategies.
* Does not follow a set of rules, but engages in random trading ideas and believes the odds in the forex market are better than an online casino.
* Does not learn from past mistakes, always blames others when a trade goes sour.
At Eurivex, a Cyprus Investment Firm regulated by Cyprus Securities & Exchange Commission (CySEC 114/10) licensed to offer forex through its own MT4 trading platform, as well as licensed to offer portfolio management services and hold client funds, the strategy is to rely on expert help from industry professionals and combine this with the firm’s internal systems developed over years with a close eye on the newswires for developments affecting the currency markets.
The gambler on the other hand usually has the following characteristics when trading in the forex market:
* Most of the time is under capitalized, uses excessive leverage to achieve over-ambitious profit objectives.
* Has no risk management or money management strategies.
* Does not follow a set of rules, but engages in random trading ideas and believes the odds in the forex market are better than an online casino.
* Does not learn from past mistakes, always blames others when a trade goes sour.
At Eurivex, a Cyprus Investment Firm regulated by Cyprus Securities & Exchange Commission (CySEC 114/10) licensed to offer forex through its own MT4 trading platform, as well as licensed to offer portfolio management services and hold client funds, the strategy is to rely on expert help from industry professionals and combine this with the firm’s internal systems developed over years with a close eye on the newswires for developments affecting the currency markets.
The Eurivex Managed Forex Accounts management model is based on purely systematic approach to trade selection and trade management whereby all entry, exit, take profit and stop loss points are known before a trade is initiated.
Eurivex follows a pattern recognition model designed by a major Swiss bank, aimed at capitalizing on the false breaks which are so common in forex market, but also take advantage of a major trend unfolding, after a major resistance or support point is violated and thereafter the market does not return back to the pivot point.
The Eurivex Managed Forex Accounts management model is applied to EUR/USD, GBP/USD, AUDUSD and EUR/JPY forex pairs since we believe that over-extending the markets under watch may mean missed opportunities. Eurivex also attempts to stay only in markets where most activity occurs during European time, when Eurivex fund managers are at their station desks and following market developments closely and because the above currencies are the most liquid.
(Yervant Bohdjalian (yervant@eurivex.com) is a certified Portfolio Fund Manager and Executive Director of Eurivex Ltd. (www.eurivex.com) a Cyprus Investment Firm, authorized and regulated by CySEC, license #114/10 with expertise in managed forex accounts. The views expressed above are personal and do not bind the company and are subject to change without notice. The comments mentioned above are not to be considered as an offer to subscribe, invest or benefit from an investment scheme, nor are to be considered as advice for trading in markets. The comments are for information purposes only and are general in nature. The examples will vary and depend on individual circumstances. Trading on margin and leverage is risky and may result in losses. Past performance is no guarantee for future performance.)
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