A question I am often asked both in my forex training rooms and also by email, is whether the forex market is a good place to start as a new trader. Here is a typical email I received recently along with my reply.
Question
Hello Mrs. Coulling, I live in Toronto, Canada, not that matters. Just thought you would like to know how far your impact has been (global, I’m sure.) I have just read Volume Price Analysis and really liked it. I have to read it again and take notes. Anyway, I am a new investor and learning as much as I can. My question is; for what reason do you only trade FOREX as opposed to other markets. Is it just a good fit for your trading style or what? I’m also curious as to what market(s) offer the best returns once a good skill level has reached in VPA analysis. And lastly, what kind of compounding annual return can I expect over a longer term time horizon (or even a short one) I look forward to hearing from you.
Answer
Many thanks for your email and its great to hear from traders around the world – so I always like to know where people live – makes me feel more in touch! Thank you so much for your very kind comments which are much appreciated and I’m so pleased you enjoyed the VPA book and I’ll try to answer your questions as best I can as follows:
- I focus mainly on forex and commodities for my speculative trading. I enjoy forex for the mental challenge – it is a complex market but not complicated and one that forces me to use my brain when trading, to really understand and analyse market sentiment which is then reflected across all the markets. FX sits at the heart of all the other markets and is the one which displays the constant ebb and flow most quickly, and with VPA we have the perfect methodology to interpret these moves. I guess in a nutshell, I enjoy the challenge it presents. It also fits my lifestyle as I am privileged to live in the UK and so get the best markets to trade early in the morning!
- In terms of the best markets – I would suggest that FX is the hardest of all. There are ‘easier’ markets where you are simply trading one instrument such as a stock, index, commodity or bond etc, With forex you are trading one against another and which can also be bought or sold against many other currencies at the same time. This is what makes forex so complex. If I was starting out, I wouldn’t start with forex. I started in index futures.
- Returns is a difficult one – but the average equity fund manager is doing well at 7% to 10% per annum – consistently. Forex funds tend to be higher – some achieve 20% to 30% per annum – but consistency is generally the issue. They may have a great year and then a terrible year ( or month) I hope the above helps and many thanks once again and may I wish you every success in your own trading.
Hello Mrs Coulling. My name is Vera from the UK and I have just finished reading your book Forex for Beginners, and I really enjoyed and it I found some of the chapters really clear to understand and some chapter I will have to go back and read again,but still a really good book.
I really felt your honesty in the book and that you really want people to do well in this.
My questions is that I would like to start putting this into practice and I would like to try a demo account and you mention in your book Ninjatrader.
Is the Ninjatrader free to use if I wanted to go live or is the Demo account the only free part.
The other thing is that someone asked you a question on what is best to start trading on and your answer was that they should do Index future, and if that is so, do you have a book on this or do you have a webinar on this subject?
Hello Vera and many thanks for taking the time to drop by and get in touch and thank you for your very kind comments which are much appreciated, and I’m delighted to hear you enjoyed reading the forex book. With regard to your question, the NinjaTrader platform is indeed free to download, but you will need to pay for the live data, although they do offer a basic end of day feed. The other alternative is to start with an MT4 account and platform which offers everything for free including the brokerage and live data. This is the platform most new forex traders start with as it is available from virtually every broker around the world, and all of them offer a live demo account. Finally with regard to the best place to start, whilst you can trade forex on an MT4 account, many of these brokers are indeed offering markets such as indices, so you would certainly be able to start there if you wished, and it is much easier than where I began with index futures. Index futures are just one instrument but I would not suggest this is for a beginner as you will need a specialist account and broker. Trading futures requires large capital and margin requirements and any broker will ask for your trading experience before taking you on as a client, so I would not suggest you start there. I started this way by accident and my entry to trading was odd to say the least and not the norm. So please consider this carefully before moving forward, and I would suggest you start in the forex market with the smallest account size possible as you learn. This is something I teach all my students. When you first start, it is learning how to lose, and from there how to be consistent. It is not about making money when you begin. Once you can be consistent, then you can start to think about moving forward. I hope this helps and thanks again and wishing you every success – Anna