FOREX

Dr Forex says - Let me explain to you once and for all why and how leverage destructs trading accounts.
I am very pleased with the reaction I received on my “Leverage Part 1” newsletter. I get the impression that it helped to clear up a number of issues for forex traders “out there”.
I hope that this newsletter will help you to change your position from being “out there” to “in here”.
“Out there” is a maze, mostly the blind leading the blind, and all spell-bound by the illusions created by the marketing wizards of forex. Forex forums are popular – they have become sites where the uninformed can meet with the unsure and concoct theories that are unsustainable. Would-be traders who don’t know what they are looking for tend to frequent these forums and as Yogi Berra, the famous baseball player said "You've got to be very careful if you don't know where you're going, because you might not get there."
“In here”, with me, you will know where you are going and together we will reach the destination of consistent and successful trading.

Congratulations on a stellar start with your newsletter.Indispensable! I am glad I bought a lifetime BWILC mentoring subscription because you will become so much in demand your tuition price will probably go way up.It is noteworthy that I only began consistently making any money in forex when I switched to the BWILC way. Even more noteworthy is that I'm making money in ever-increasing amounts as the BWILC techniques gradually become second nature. Thanks for rescuing me from my former dead-end efforts.

To re-cap
Last time I said that with leverage we must clearly distinguish between what’s available (100:1, 200:1, 400:1, 500:1) and what you can choose to use. I showed you how the marketing wizards trick people into trading with very high leverage, convincing them that it is a good thing. These people are often unaware of the devastating effect of leverage on their account. It’s like speeding on a mountain pass but thinking you are on the flats. It can only end in one way … disaster.
We concluded that:
What is usually referred to as leverage is actually the margin required expressed as a ratio if you use all the borrowing power the broker will allow you to.
Real leverage is determined by dividing your capital into the value of your positions.
Real leverage can differ from trade to trade and increases with multiple simultaneous trades (open positions).
Margin required has no influence on your risk if you trade properly with modest leverage within your means and margin is not to be used as a risk calculating principle.
I also want to re-cap on the most basic issue regarding leverage, that is, its proper calculation.
Leverage is about borrowing money. To calculate leverage you must first know how much you have and then you must divide that into how much you are going to trade with (the size of the lot you are going to buy, or in effect, borrow).
Let’s say you have €20,000 and you do a trade (buy EURUSD of 100,000). Your leverage is 100,000/20,000 = 5:1. For every €1.00 you actually have you trade with €5.00.
Now I specifically used euro as an example as I want to make sure you understand the difference between “Trader’s leverage” and “Professor’s leverage”. I did refer to this in the Part 1, but only in passing and because this is important I want to make very sure you understand what I mean.
I guess many readers of BWILC (the book) skipped Part 3 – “All that Jazz”, or flipped quickly through it and missed the part where I explain leverage. They may also have missed the very important little paragraph on base currencies and currency quoting conventions. For real money dealers in banking dealing rooms these things are of paramount importance and it is second nature to them, but for some reason retail forex speculators see it as of minor importance and thus they make crucial mistakes in calculating their risk.
You see, if you look at a leveraged transaction in the futures market or the stock market the calculation is really simply - as in the example above. If you live in India and you do a leveraged transaction on the Indian stock exchange you have rupees and your borrow rupees and you trade some listed stock on the stock exchange. It is a very straightforward calculation: divide what you have into the value of your deal. But matters are not so simple in the forex market.
The first minor complication is making sure you know what you have. In other words, in what currency is your account? Let’s assume it is US dollar. (I think many more US traders should diversify their trading account to other currencies as a way of mitigating the risk of having all their eggs in one basket.)
The problem with leverage calculations in foreign exchange is that you have to divide apples into apples. Consequently you must express the base currency of the currency pair you trade in the currency of your account.
So we are back to basics. What the heck is a base currency? It is not the currency of your account. The base currency is the currency named first in the currency quotation. When we say EURUSD, euro is the base currency. When we say USDJPY, US dollar is the base currency.
When we say the price of EURUSD is 1.2755/8, then we mean for each euro you will have to pay 1.2758 US dollars if you buy euro and if you sell euro you will receive 1.2755 US dollars. Let’s say that with our $10,000 US dollar denominated trading account we buy one “standard lot” of (€100,000) EURUSD. The value of the transaction in US dollar terms is $127, 580. We have $10,000 and therefore our leverage is 127,580 / 10,000 = 12.75:1. For each one dollar we trade $12.75 - we have leveraged or geared our account 12.75 times. (There is no difference between “leverage” and “gearing”.)
But it became commonplace in the retail forex world to simply express such a transaction as having leverage of 10:1. Doing this ignores the fact that we are dealing with both apples and pears and just divide the 10K into 100K. It is an interesting question why this has become the normal practice, and I would like to spend some time explaining why I think it has.
Some history
In December 2003 the US regulator, the CFCT, which in terms of the Commodity Futures Modernization Act (2000) started to oversee OTC (over the counter) forex, issued new margin requirement rules. It seems to me that until then the marketing wizards advertised 100:1 or 200:1 leverage (or 1% margin requirement) without understanding that whichever is the base currency of a specific transaction has an important impact on the margin they require. They simply didn’t care. All accounts were in US dollar and they simply charged 1% of the number 100,000 currency units as if it was always US dollars. At the time the most traded currency pair - EURUSD - was valued less than one dollar per euro, and so this didn’t have an impact because the margin was actually more than 1% of the contract value. For example, while EURUSD traded at 0.9250 the contract was worth $92,500 and $1,000 was more than 1% of that ($925).
This changed when the euro increased substantially in value to more than $1.00 per euro, and suddenly the margin they charged was less than 1%. The CFTC also issued rules during 2003 that the margin requirements of retail OTC (OTC vs exchange traded) forex brokers must be brought in line with those of the exchange traded forex futures. This caused an uproar because the margins needed to be up to 4% - 8% and the marketing wizards objected that they would lose money to unregulated companies.
Their objections worked (as we all know by now) because margin requirements are still from as little as 0.25% based on transaction sizes, with the most common at around 1%. What the regulator did achieve is to force the correct (accurate) calculation of margin as a percentage of the base currency contract amount.
Understanding the exact amount that you trade should be pretty important, one would think. One would also think that retail traders that pay good money for trading advice, or training, from an e-book to a classroom course or home study course, will receive correct guidance in this regard. Unfortunately this is rarely the case.
How too high leverage kills potentially promising trading careers
Leverage amplifies the volatility in the market in the leveraged trading account by the factor of the leverage.
I am going to explain this problem with a story of two friends, Frank Marks and Buck Sterling.
Frank is a teacher in history and doing his PhD on ancient civilizations and Buck is a computer programmer. For his yearly vacation Frank decides to visit Stonehenge in the UK and he consults Buck who has recently started exploration in currency trading, assisted by an e-book “Forex Trading for Idiots”.
They went to a free seminar but Frank decided it was not for him. Buck however forked out the $1,500 for a weekend course, with free prices, free graphs, free this, free that, and a system to leverage his $3,000 to make $1,500 a day trading the British pound around the “London open”.
Buck initially struggled but recently he got the hang of it and made no less than $70,000 demo dollars. Slightly in awe Frank enquired of Buck how he was doing it and what the essence of the system was. Bucks reply? “Leverage buddy, leverage”. (Let me also add that Buck had $50,000 demo money.)
So Frank, mindful of his pending trip to the UK asks Buck to let him know when the best moment would be to exchange his money for Pounds Sterling and Buck obliges, showing him on 5 minute, 15 minute and 60 minute charts when the moment has come to buy GBP - the stochastix screams ”buy” and the fantastix promises wealth. At the top of the hour Frank rushes over to the Bureaux de Exchange and pays 1.88 US dollar for each of his 5,000 GBP. Altogether he pays $9,400. Buck, who has now written a programme on his Easy Money forex software, has just made 15,000 pounds worth of demo money overnight. Frank is becoming envious.
Buck explains to Frank that the Alligator has hoisted the white flag upside down with a Doji dangling from the Hangman’s noose yesterday; the Resistance is throwing away their guns while the Support is building a new base closer to the action on the daily charts; and your lucky star is in the right quadrant because the Paralytic Tsar made a handbrake turn on the dot. Translated, says Buck to Frank, it means that if Frank buys another 5,000 GBP while he is at it he is going to make a tidy profit because, “‘the GBP trend is up and the trend is your friend”, says Buck paging through Forex Trading for Idiots.
Frank rushes off to the Bureaux de Exchange and buys another 5,000 GBP. Buck was correct; today Frank paid 1.89 dollars per pound Sterling. Total expense: $18,850 for GBP 10,000. By the time Frank is on the plane, Buck is launching his trading career with real money, funding his commission free, two pip spread on majors, 200:1 leveraged trading account at Money-for-Jam Capital Partners with a $20,000.00 deposit.
The next few weeks Frank has a wonderful time in the UK and decides a week before his return to visit the Arlington racecourse and play the horses. The GBP is now trading at 1.95. Of course Frank thinks that Buck is rolling in money – the trend is one’s friend. Frank’s luck holds and he wins GBP 10,000 with the Pick Six after Long Shot wins the 6th race by a wet nose.
At home a few days later he exchanges it (his 10,000 GBP) for USD at the airport for a rate of 1.92. Frank receives $19,200. He has made $350 after being on vacation. Not bad. Buck, however, should be a millionaire by now!
First day back on the job Frank finds Buck deeply engrossed in a computer program. His two trading screens are blank.
“You were right”, says Frank with admiration. “The trend is your friend.” He places a souvenir from Arlington on Mark’s desk. “I had a great holiday and afterwards I was in the black, thanks to you. You’re a genius. What’s the pound trading at now?”
“No idea”, says Buck his head down.
A little taken aback Frank asks about the Paralytic Tsar, whether the Resistance is still building bases, and if the Hangman has been busy. “No idea”, says Buck, “I am not interested.” He looks wretched. The penny drops for Frank.
“How much did you lose Buckey?” “Twenty K”. Shocked Frank presses Buck for an answer. “Leverage buddy, leverage”.
Later the two talk in more detail and the sad story unfolds. Says Buck:
“The problem was that initially I was a bit too conservative. I made a few good trades with 50:1 leverage. In other words I made $100.00 per pip. By the time the GBP hit 1.9500, I was up to $40,000. So I decided to increase the stakes a bit and I leveraged the 40K 80:1, in other words I would make $320.00 per pip. I had to place the stops a bit closer, because that is how Idiot Money Management works. So I placed the Idiot stops 15 pips away, initially. What happens? I get taken out 3 times in a row, same day, $14,400 down the tube. What happens then? The market turns around and heads off in my direction just after having stopped me out. In fact, my third stop was taken out on a downward spike and 20 minutes latter two of my trades would have been in the money.”
“Well the next day the trend was back and I bought another 80:1 now with 30K, so $240.00 per pip. I realized this GBP is a bit volatile – and so I kept the stop, this time at 30 pips. Well call me the stop-out king. I was taken out by only 5 pips. That was $7200 down the drain. I realized it made a double top at 1.95 and got the signal that the trend has changed - 15 minute Parabolic SAR was crystal clear. I sold big time ….. $200 per pip.
So what happened next? I am not too sure, at some stage I was 50 points up and then all hell broke loose and well, I had my stop well out of the way. That was $6,000 gone and from there it was pretty much all over. I had to use tight stops because I didn’t have much left in my account and the same thing kept happening over and over. I started realising that volatility with real money is a bit different from volatility with demo money. I can’t explain it, it just seems bigger. My stops seemed like magnets drawing the market. Ping! Stopped out, market reverses and goes in my direction. Well, two days later I had 3K left. Money-for-Jam Capital Partners has the rest.
Let me tell you something Frank, leverage is not a double-edged sword - it’s a bloody guillotine and my head was on the block”.
Buck had to deal with the variance in his account created by market volatility and amplified by leverage. It would seem that Frank had a punt, and Buck lost money in an adverse market. In fact they were both gambling, the only difference being that Frank knew his win on the horses was a matter of luck. It is part of our psychology that when we do well we ascribe it to our talent and when we do poorly we ascribe it to bad luck. Often it is just randomness, nothing more and nothing less.
The cost of leverage
This story, with different shades but the same central theme, is repeated every day as aspiring forex traders burn out accounts.
In addition to the fact that high leverage forces you to place close stops - the bread-and-butter revenue for the forex broker - and dramatically increases the chances of you becoming a victim of the very short-term randomness of the forex market, it is also costs you a whack.
Many traders think there is no cost in trading because the spread is not seen separate from either the pips they lose or the pips they make. This is wrong because a transaction consists of two parts. The cost, and then the profit or loss. The cost is the amount debited to your account equity if you closed a trade you have opened immediately, without a change in market price.
Let’s say you get a GBPUSD quote 1.8650/55. You buy at 55 and if you sell immediately you would sell at 50. Your cost to deal is 5 pips. You broker sold to you at 55 and bought from you at 50. We can say the real market is already 5 pips against your position. You can’t claim the spread, unless you make a winning trade – if the market moves in your direction you reclaim the spread. But if you make a losing trade there is a 5 pip cost in addition to what you have lost due to an adverse price movement. The higher you are leveraged the more the spread costs you, bleeding money from your account
Let me give you a practical example. Highly leveraged retail forex speculators would jump at the chance of using a trading system that is wrong 35% of the time but because it cuts losses and runs profits, they are confident they would come out ahead. They would be wrong.
If you are un-leveraged, the only way in which you can lose all your money is if the currency you hold loses all its value.
From a cost point of view Frank Marks, when he bought his GBP probably paid a 15 pip spread at the Bureaux de Exchange. For him to lose all his money something would have had to happen to GBP to make it lose all its value – a meteor from the heavens obliterates the UK. Unlikely. And so, the GBP value Frank holds is relatively stable. But the moment you add leverage it amplifies in your account, creating instability, as the story of Frank and Buck illustrated.
But what I really want to get to is this: If you take an active highly leveraged trader who does, say, 40 trades in a month leveraged at 20:1, the real cost of his trading before profit or losses due to price fluctuation starts playing a role. The maths looks like this: 40 trades X 5 pips x 20 (mini) lots = $4,000. If he is using the trading system that is wrong 35% of the time (he is getting stopped out because of short stops) the cost that he can’t recoup is $1,400 or 14% of his capital. That is a direct cost to your trading business, and it is this cost that I am attacking – it is a highly questionable “overhead” if you consider that trading is a business.
If a trader using this trading system breaks even he is a very good trader. But in the long run he will eventually lose because the leverage, besides whatever else it does, is draining his account.
If you understand randomness you will know that those 35% of losing trades can come at any time. They can be the first 14 trades of the month. The effect of the highly leveraged losses on a trader’s equity, only once, with a really bad run, can be devastating to his account. In order to maintain his “system” he has to drop his transaction size, particularly after a bad run. Therefore it is going to take him a lot longer to make up the losses. In the process, even though his transaction size is smaller, his leverage is still the same (and too high) because his margin is dwindling.
If you really want to work out your return then you should work out your return, not expressed as a percentage of your margin but as a percentage of the total value and cost of your transactions. >/p>
Leverage amplifies everything in your account – at the same time not much has changed in the markets.
Another consequence of leverage is that it amplifies the variance in your account equity. And this (variance) has nothing to do with sustained profitable trading.
In the short term, days, weeks, months, (some will even say a few years) if you look at the result of your trading, there is a good probability that all you are seeing is random variance cloaked by the pretence of an intelligent trading system. There simply isn’t enough data to establish that what you see is the result of any edge or skill that you have.
It would be completely insane for Frank, after his visit to Arlington, to start a career as a bookmaker. But in the same way it was just a little bit less naïve for Buck to think that he had cracked it based on a few weeks of positive variance in his demo account.
If you know anything about probabilities you will know that the chances are very high that a series of coin tosses will end 50 / 50, either heads or tails. But did you know that if you take a series of 100 coin tosses the range of 50 / 50 will mainly be between 38 / 62 with very few lying outside these parameters.
Unfortunately it seems to be part of human nature (behavioural psychology has proved this) that we tend to see patterns or series where they don’t exist. And we usually do this based on insufficient data. Novice traders who so dearly want to do well are especially prone to reading into a short profit series that they have some edge and that they are on the brink of a long-term successful career in trading. Once they open their live accounts, probability rears up and bites them.
I want to make this very practical.
Let’s say you use 20:1 leverage to do all your demo trades and you hit a good run of luck and end positive, making 20% that month. Remove the leverage and thus the amplified variance in your account equity and your return may have been 2% - and that was during a good short run. What is going to happen if you have a longer period of say four months with three “bad” ones? You are nowhere. If you maintain the high leverage you will have losses during the bad runs that probably exceed the profits during the good runs.
By deciding at the end of a good high leverage stint you are now ready for real trading is exactly the type of thing that Money-for-Jam Capital Partners would want you to do, because they know they are going to get money for jam – from you.
What I am talking about is how variance in your account forces upon you a changed and negative mindset. You cannot concentrate on the market, which is what a trader should always be doing. Instead you are obsessed with the chaos in your account. What is the price out there, what are the factors you should be aware of? You don’t know. Your energies are being utilised in completely the wrong place. In short, you have lost the sort of perspective you need in order to trade successfully.
You find yourself in a situation where you can’t even handle the natural swings and retracements that occour in a trending market.
Variance of this magnitude due to leverage not only robs your account of money; it robs you of the ability to trade sensibly. Simply put, to be able to buy low and sell high you need to have an idea of what’s low and what’s high in the market. But it is exactly this perspective that you lose, paralysed with fear of further losses in your account as opposed to “further losses” in the currency market.
Can you make money with low-leveraged trading?
Good and well some will say, with your low-leveraged system you can’t lose too much, but can you actually make money? Is it worth your while? I believe you can, and in addition to the track record in BWILC where I show how I made 74% in two months on a trading account with low leverage, I can show you how others are doing it. To make money your forex trading strategy must be based on a genuine edge to beat the basic 50 / 50 odds of any trade.
I have developed a strategy that provides an edge. I call it my 4X1 strategy: one currency, one direction, one lot and one percent. This is my E=mc2 and just like Einstein’s formula turned a few things that were taken for granted upside down, this formula turns upside down the sort of orthodoxy and accepted wisdom peddled in books such as Forex Trading for Idiots.
Here is a fascinating true story from one of my clients. When he started out with my mentoring programme his answer to the question - Assuming that you have struggled until now, what would you ascribe this to? – was:
Most of my struggles have been believing what I have read on trading systems. Biggest problem has been placing stops too close to random price movements in order to limit my % of risk on the overall account. You are the first to expose this folly to me. However, I’m now concerned on just how to make any “real” money with so little gearing.
That was in January 2006. In March 2006 he funded a live trading account of $5,000 and by end of August 2006 his account was well up. After 5 months of trading, using the above formula and appropriate low leverage he was looking at an annualized return of 278%. His actual return was 129% - in anyone’s book that should count as “real” money.
Oh, and his trade accuracy is 90% (ie 10% losing trades), the typical losing trade is larger than the typical profitable trade and the largest single profit was 4% of initial trading capital, which shows that there is a real edge, not a one-night stand on a single big trade that convinces you of your own new-found “brilliance”.

Introduction
The following facts and figures relate to the foreign exchange market. Much of the information is drawn from the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2007. 54 central banks and monetary authorities participated in the survey, collecting information from approximately 1280 market participants.
Excerpt from the BIS:
"The 2007 survey shows an unprecedented rise in activity in traditional foreign exchange markets compared to 2004. Average daily turnover rose to $3.2 trillion in April 2007, an increase of 71% at current exchange rates and 65% at constant exchange rates...Against the background of low levels of financial market volatility and risk aversion, market participants point to a significant expansion in the activity of investor groups including hedge funds, which was partly facilitated by substantial growth in the use of prime brokerage, and retail investors...A marked increase in the levels of technical trading – most notably algorithmic trading – is also likely to have boosted turnover in the spot market...Transactions between reporting dealers and non-reporting financial institutions, such as hedge funds, mutual funds, pension funds and insurance companies, more than doubled between April 2004 and April 2007 and contributed more than half of the increase in aggregate turnover." - BIS
Structure
Decentralised 'interbank' market
Main participants: Central Banks, commercial and investment banks, hedge funds, corporations & private speculators
The free-floating currency system arose from the collapse of the Bretton Woods agreement in 1971
Online trading began in the mid to late 1990's
Source: BIS Triennial Survey 2007
Trading Hours
24 hour market
Sunday 5pm EST through Friday 4pm EST.
Trading begins in the Asia-Pacific region followed by the Middle East, Europe, and America
Size
One of the largest financial markets in the world
$3.2 trillion average daily turnover, equivalent to:
More than 10 times the average daily turnover of global equity markets1
More than 35 times the average daily turnover of the NYSE2
Nearly $500 a day for every man, woman, and child on earth3
An annual turnover more than 10 times world GDP4
The spot market accounts for just under one-third of daily turnover

Forex trade is becoming more lucrative and attracting more and more people to start trading. There is about $3 trillion turnover daily and more people are becoming interested. If you are a newcomer in this field, there are lot of things that you would hear from authorities and "so-called experts" like using Forex robots and other automated trading strategy. There are things that you need to identify about Forex trading, as beginner. Not everybody in the Forex trading wins everyday. This is totally a myth. As a matter of fact, there is about 95 percent of Forex traders who lose their money everyday. Start erasing all your images that Forex trading is uncomplicated and can be done easily. Winning in Forex trading is not only about proper trading tools and equipments. It is also about trading knowledge and mindset. Forex trading is not only about winning. There are also losing periods. It is important to identify and understand this fact, since there are few "experts" who would say that there are trading systems that would enable you to have 100% trade wins and zero loss. This is impossible!If you are a newcomer, is using a Forex robot the best alternative for you?It can, as long as you would be using it correctly. There are different reasons why an expert would like to use a Forex robot. It could be because of time constraints, wanting to be more flexible, improving their deals, or keeping their emotions at bay to help them make more transactions. A newcomer or a beginner is a variant case. Forex robot could actually make things easier for a newcomer. Forex trading could be complicated and difficult, a products like the expert advisor would help beginners understand the principles about Forex trading and understanding the variant strategies and systems. Expert traders, over time, have developed their own "winning recipe" or their profitable trading strategy. A newcomer cannot compete with that. A Forex robot assists a newcomer in coming up their own winning trading strategy. Beginners would always follow a beginner's curve where they could lose a lot of money while giving variant trading methods and strategies a try. To help the newcomers, these Forex robots can accomplish trades for the beginner. Forex robots can be readily brought from variant websites. They are very popular since it can work with Metatrader4. You just need to configure it at the beginning and later let it run to autopilot. Its installation and setup process is also very easy to accomplish. Aside from that, there are also videos and instructions that comes with the expert advisor which you can watch to expand your understanding on how the system would work. Aside from that, some Forex robot vendors would offer training kit. This would help you get some basic ideas and trading knowledge on how the Forex market works and what to expect from it.

With only 27 years it is one of the Hispanic-Japanese promises of the forex trading of this new decade. He doesn't like ¨the duplicator¨ to call him but the certain thing is that it is able to bend the balance of a forex account with easiness. In the phone interview Adrian could be many things about their career and their life How so certain it is that that you duplicate the accounts? Adrian Shiroma: I don't duplicate them, I triplicate them (laughs), I think that it is exaggerated because not all the accounts can be duplicated easily, it depends on several things: the size of the account, available markets, for example: small accounts cannot duplicate them easy, but if to give him a good profit, but the big accounts are easy to manage. Adrian are you consents of your fame?, do you think that it is exaggerated or that you really deserve it? Adrian Shiroma: The good things come alone when make all with love, then people request me advice, they puts me on approval and now my own clients are those that have given me that fame. But I don't believe it to me, I know that people exist better than me.How did you begin in this? Adrian Shiroma: Surprisingly I began with a documentary that I saw myself when I has 18 years that called ¨The divine Proportion¨, spoke on the I number golden and the persistence of this in all the proportions that are in the universe. We find it in our body, in you hoist them, plants, galaxies and recently I discovered that the physical beauty is increased to measure that its face completes these proportions. Interesting What is the relationship this has with the forex graphs? Adrian Shiroma: All, what shot my interest toward the markets was the mention of these in the documentary. Notice that this proportion finds it in the setbacks, arches and fibonacci fans, it fits perfectly in any graph of the market, it is a divine constant of the nature. Always from boy. I foresaw when an event will repeat. And when seeing the news it confirmed it to me to myself so I always had the restlessness of discovering the because of these sensations. Then I discovered that if we can predict a certain event we could also use it to predict the following movement of a forex graph and it was this way, those they were my beginnings.Do you work especially for some company? Adrian Shiroma: I manage accounts for a lot of people, they are those that call me. I manages some private funds, and I now am managing the account of a brazil celebrity.Which indicators your usually uses to open your operations?Adrian Shiroma: My trading style is tendential is based on the proportions Fibonacci by means of one formulates that I discover and that I apply in my EA which I have programmed for my own trading. I Usually trading to 4 hours without indicators, In days of high volatileness only me duplicate the hunger (laughter), I like when the market this anxious one, I like when the market is renewed, this it is my inspiration to trade. I avoid to watch the balance of the account but until to have finalized the day, I watch soon it and I say - ohhh, I believe that that is a lot of money. (laughter).What is your secret for your trading operations?Adrian Shiroma: It is a secret, I only apply it in my operations and the programming of my robots like the AureoFX, at the moment I don't have thought to reveal it but I am for sure many other traders has already given with her What do you say of the use of automatic systems in the trading of FOREX? Adrian Shiroma: There is something that I have very clear: 97% of EAs is disposable even those that they make you win a lot, these usually take off in fact all that they give you the following week . Only 3% of the EA are good but they are not commercial, they use them the banks, brokers and corporations. Do you think that people give a wrong use to the EAs? Adrian Shiroma: Definitively yes, I have done systems with regular results that could give stable profit to their users but the problem this in that people don't know how to use them neither to configure. People people want to see immediate results and they forget that the FOREX is of patience market and in occasions it becomes rebellious and it doesn't want to have you close. One can say that the FOREX has its temperament. To enter and to leave is two very important strategic movements of survival with discipline. The common error it is to seek their EAs to give him such an infinite money as their ambition without having an investment plan. Do recommend us especially some EAs? Adrian Shiroma: I recommend that you learn how to trade better than your own EA, it is curious that when you arrives at that level, people it is already it consents that it is useless to use EA because their abilities overcome them, then the automatic systems become something of ¨elite¨ then for those advanced traders that want to program their strategies in one to reduce their work load, they are themselves those that use them and they are not in sale. Something exists very curious: if a system of 3% put on in hands of an operator average he would have lost short term because he doesn't know how to use it or worse even: he believes to know but that the author and it modifies the parameters of the system to try to get but in less time. Do you operate your accounts manually or with EA? Adrian Shiroma: I have a work method that always works me, a EA always needed of the support of the trader and the robot's trader, I believe that my systems and I make a perfect team and we supplement ourselves as couple. Which the instructions are to use an EA correctly?Adrian Shiroma: The good EAs usually indicate you so that markets were created, it cheats them frames and I number of lots vs balance in account. The 2 errors but common they are: to have it ignition the whole day and to alter the parameters especially to increase the lots after seeing earnings what places the account in constant danger. Personally I think that all commercial EAs are totally crap. What you recommend to recover a negative account?Adrian Shiroma: The first thing is to change the trader, if he is the same owner the one that operates her this it will be bound sentimentally to her and for but that wants it it didn't take a positive one. If it is also a third. Alone a good trader with a good money management can recover the account little by little before it is late. Why is it said that the brokers operates vs the user? Adrian Shiroma: Not only it is said, it is a fact that in all the contracts of account opening clauses exist in those that it is indicated that the broker operates in our against, in other words: that if we win in an operation another person that should lose in that same operation should exist so that they can pay us. This had untied many bad experts on the part of some clients that sign this clause without reading it in the one that the broker the right is reserved to pay. However it is not very common to see cases of unpaid in grateful brokers. What advice do you give to those traders that are beginning in this world of the FOREX? Adrian Shiroma: The trading is an art and as all art it costs to be developed, the virtuous musician didn't become expert of one year for the other one. The beginner should burn so many demo accounts it can burn rehearsing own strategies and learned to prove which is the one that but it is coupled to his trading style and personality. Do you believe that the trading is for everybody? Adrian Shiroma: That is as if you asked me if we all have talent to be medical, the answer is not, our talents are some (we are not good in everything), each person should discover for what is good and that is achieved rehearsing, the experience will give you the answer, if you believe that you have talent for this studying and practicing found the answer. How can they contact with you the readers that are interested in a account managed? Adrian Shiroma: Write to the mail: adrianshiroma@hotmail.com or to visit my blog: http://adrianshiroma.blogspot.com cannot sometimes respond all the emails but have for sure that I read them all. Thanks to Adrian Shiroma to grant us this phone interview and we hope to continue counting on you, learning of you in the future, many successes

We Tend to View Life as Linear but Life Contains a Group of CyclesEarly in life we discover the meaning of past, present and future in linear terms, and we structure our life around those words, but most of the events we experience in daily life occur in cycles. There are several obvious examples. The four seasons, weather patterns, and business transactions, affect our present linear life just like the past and the future are always experienced in the present. A business cycle is defined as the growth and contraction of our economic life. Various business cycles determine global economic trends, and in order to successfully understand and participate in any kind of monetary trading system it’s important to identify a certain business cycle, and the trends it creates. The business cycle is a vital factor in the growth or the shrinkage of the money supply; the more currency in a given market, the less value it has, so the forex market, and the cycles within it, always responds in some way to a business cycle. A Business cycle can define consumer demands, unemployment, the availability of credit, industrial production, and these issue impact international capital, so it either fortifies or depreciates a country’s currency. When a nation is going through a business cycle boom international capital flow increases; traders are always looking for better returns on their investments through international loans or foreign direct investments. An increase in capital flow will cause a country’s currency to appreciate, but if a country is going through the bust cycle of the business cycle, capital investments will disappear and currency values depreciate. The business cycle continues in one direction or another until it’s saturated through market developments or government action. Understanding how the business cycle works gives currency traders the opportunity to short the currencies of nations that are in the bust phase of the business cycle, and long the currencies of nations entering the boom phrase. The key to turning these trades into profits is identifying market cycles with some help from forex analysis tools and forex charts, and then using a forex strategy that flows with them. There are Three Major Currency Market CyclesIt doesn’t matter what financial market you’re investing in; financial markets only move in three cycles. The major market cycles are: Trending, Consolidation and Breakout. The trending cycle is when a currency’s value consistently moves in the same direction; either up or down. A forex trend is defined as progressively higher highs and higher lows. Since currency values usually don’t move in a straight line up or down, it can be hard to identify a trend without some kind of help. A consolidation cycle is also known as Non Trending; it looks like a horizontal line of bars on a forex chart. When the value is stuck between two horizontal supports and resistance levels can’t break these supports for at least seven bars, the consolidation cycle is in motion.Moving averages or other technical indicators will help determine if the market is trending or consolidating. The moving average line will almost be horizontal in a consolidating market. The breakout market cycle occurs when the currency has been in the consolidation market for at least seven bars, and then the price breaks out of this ranging market and creates a new high or low. Most forex traders only have a forex strategy for one or two market cycles. The most popular strategies are for breakout and trend cycles. You Need More Than One Strategy to be Successful in all Three Market CyclesRecent research on market cycles shows that on average the forex market is only in the trending cycle thirty percent of the time; it’s in a breakout cycle ten percent of the time, and is in the consolidation cycle sixty percent of the time. If you only have a strategy for the trending cycle, you’re only trading thirty percent of the time. If you have a breakout strategy along with a trending strategy that only increases your trading time to forty percent. That means if you only incorporate those two market cycle strategies into your forex system, you will be sitting on the trading sidelines sixty percent of the time. Some traders do get sucked in and make trades using the wrong strategy when the market is in the consolidation cycle, and they experience the painful results of that decision, so it’s crucial to have a strategy for each cycle. The bottom line for profitable trades is to identify market cycles as early as possible, and then use the correct forex trading strategy so you flow with the cycles as they change.