Top Secrets Professional Forex Traders Know

Do professional traders have secrets?

“I'm only rich because I know when I'm wrong.” - is one of the eye-opening quotes from Alchemy of Finance- a book by George Soros.

While it may appear that professional traders possess some formula for success, the reality is that their so-called secrets are not really secrets after all. The knowledge and strategies they employ are accessible to anyone who's willing to invest time and effort in learning them. What distinguishes traders is their commitment to learning and the refinement of their skills. Their success stems from being vigilant, disciplined, and being thorough in understanding politics, capital market and economic policies.

They have identified the opportunities beforehand and trusted their instincts to make the most of them even during the crisis.

Top Forex secrets successful traders know

While there is no strategy that guarantees success, in Forex trading, certain principles and techniques can enhance a trader's chances of profitability. These are straightforward principles that shape professional Forex traders’ trading choices.

Strategy 1: Proactiveness on market sentiment

With a keen lookout at the economy and market, you can understand the overall mood of the traders and anticipate the following market trend in advance. With this strategy, you can determine who buys or sells a particular currency. Knowing this can help you make better trades.

Using this strategy, George Soros anticipated the downtrend in the baht currency at the end of the Asian Financial Crisis; hence, he bet against it and earned whooping profits in 1998. His speculation was said to be completely based on the analysis of Thailand's fiscal and monetary policies before the baht dollar unpeg.

Strategy 2: Jump on in the uptrend

In this strategy, professional Forex traders keep a sharp watch on the currency movement and try to catch a trend when it's strong. Moving average(MA) is the best indicator to identify the uptrend. Forex traders buy when the 50-day MA is above the 200-day MA. The traders are quick to exit the trend if the chart indicates a down run. The trick here is to jump in when the trend is strong, not when it's about to reverse.

Strategy 3: Breakout fading

The top Forex traders always focus on support and resistance levels for profitable entry and exit. Sometimes, when currency price gives a false breakout on charts, indicating it will make a big move, but then it doesn't. The top Forex traders make money by betting against these fake moves.

Strategy 4: Decreased volatility breakout

In this strategy, professional Forex traders calmly accumulate or sell the currency when the market is quiet. The consolidation or short selling is on the basis of a deep understanding of upcoming economic, fiscal, or trade policies. Remember, all the top traders hit the jackpot only when others were dormant or inactive. The success saga of John Polson only started when he was able to predict and strategically bet against the 2008 mortgage crisis outrightly.

Strategy 5: Carry trade

This is one of the most complicated strategies, usually involving deep pockets. In this strategy, top Forex traders borrow currency at lower rates and invest in high-interest rates, anticipating higher returns. For this strategy, professional brokers follow these steps:

First, borrow a currency that has a low-interest rate. For example, if the Swiss franc (CHF) has an interest rate of 1.75%, they might borrow a large sum in CHF.

Next, they will invest the borrowed funds into a different currency, like the Australian Dollar, which offers a higher interest rate (4.05%) and invest it there.

This strategy will help them to earn the differential amount in interest rate currencies. That would be 4.05% (from the Australian Dollar) - 1.75% (from the Japanese Yen) = 3.7%.

Eventually, they will repay the CHF loan by returning the Australian Dollars.

The risk is that currency fluctuation could negate your earnings or even result in a net loss.

Strategy 6: News straddling

This strategy involves macro trading skills where you find opportunities through news events like economic reports or political instability. One of the top Forex traders, Louis Moore Bacon, is notorious for using this news-straddling strategy and betting against American stocks. He knew the Gulf War would happen and made trades based on how he thought the news would affect currency prices.

What is the secret strategy in Forex?

The strategies are known to most traders; the skills and ability to make timely decisions are secret for the profitable trade. The secret of top Forex traders was to rely on their understanding of market trends as a weapon in their strategy. They know that economic indicators, political developments and central bank decisions all influence the market. By staying informed and carefully analyzing these trends, traders can make informed trading decisions based on the probabilities of market movements. This knowledge enables them to spot and take advantage of high-probability opportunities effectively.

Another secret among traders lies in their ability to control their emotions. Emotions can cloud judgement. Lead to decisions. Successful traders learn to manage their emotions and make choices based on their trading plan and market analysis.

What is the number 1 rule of Forex?

The top rule of Forex is focusing on the risk-reward ratio.

The strategies in Forex trading do not rely on hitting wins with every trade; instead, they involve calculative profits while effectively managing losses. The rule is commonly known as the 2% rule, where traders never risk more than some small portion of their capital on any given trade. Usually it means the maximal risk range from 1% to 5% (2% in everage). To ensure traders can navigate through periods of market volatility, it is crucial to abide by this principle.

Effectively managing risk also entails establishing stop-loss orders. These orders enable traders to exit a trade if the market moves against them beyond a threshold. This strategy serves to safeguard profits and limit losses.

How to start trading Forex wisely?

If you are a beginner and considering entering the world of Forex trading, it is essential to approach it wisely to maximize your chances of success. Here are a few tips to help you get started:

By following these tips and approaching Forex trading with patience and discipline, you can start your trading journey on the right foot.

Best Forex brokers 2024

1

9.4/10

Go to broker

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest.

Minimum deposit:

$50, $100 (for UK clients)

Bonus for deposit:

0%

Regulation:

CySEC, FCA, ASIC

Review

The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA. eToro Profile Details

Pros/Cons

•the minimum transaction amount for copying is $1;

•handy functionality for passive investing;

•regulated by independent monitors;

•it is possible to purchase contracts for fractional shares (that is, to invest amounts less than the cost of one share);

•it is possible to buy shares at once (not CFDs) on the US stock exchanges.

•high spreads;

•periodic technical failures in order execution;

•lack of the most popular platforms such as MetaTrader 4 and MetaTrader 5 in Europe and the CIS;

•no access to ECN systems, orders are processed only according to the STP (straight-through processing) scheme with access to specific liquidity providers;

•there is a commission for withdrawing funds;

•impolite support staff;

•inconvenient website.

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2

9.2/10

Go to broker

Your capital is at risk.

Minimum deposit:

No minimum

Bonus for deposit:

0%

Regulation:

FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA

Review

The name OANDA is an acronym for “Olsen & Associates” or “Olsen AND Associates”. It is registered in the United States and provides its clients with a wide range of financial services in most countries of the world. The company was founded in 1996 and is currently regulated in four jurisdictions. The main regulator of the broker is the UK Financial Conduct Authority (FCA). Oanda Canada is licensed by IIROC. The company has several significant awards to its credit, including a victory in the category "Best Forex Trading Technologies" from the UK Forex Awards, "Best Trading Platform" from FX Week, as well as "Best Customer Service" from the US Foreign Exchange Report.

Pros/Cons

•Minimum deposit from 1 dollar.

•A large selection of the most popular trading instruments.

•Several reliable and reputable financial regulators.

•Inconvenient and poorly functioning site.

•Lack of cent accounts.

•Lack of bonus programs.

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3

9.1/10

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Minimum deposit:

$1

Bonus for deposit:

0%

Regulation:

FCA, BaFin, ASIC, MAS, CySec, FINMA, BMA, CFTC, NFA

Review

IG Markets has been providing brokerage services for retail traders since 2014. It was established in 1974 in London to work with professional traders. It is a part of the IG Group with representative offices in 17 countries. IG Markets stocks are traded on the London Stock Exchange as a part of the FTSE 250 index. The broker is regulated by FCA (Financial Conduct Authority | the UK), CySec (Cyprus Securities and Exchange Commission), ASIC (Australian Securities and Investments Commission), BaFin (the Federal Financial Supervisory Authority | Germany), FINMA (Swiss Financial Market Supervisory Authority), and NFA (National Futures Association). The IG Group global representative office is supervised by BMA (the Bermuda Monetary Authority). The broker provides services of trading Forex and different CFDs through MetaTrader 4 and its in-house platforms for retail and professional traders.

Pros/Cons

•Regulated activities and participation in compensation funds;

•No minimum deposit requirements when opening an account with the international division;

•Leverage is available for trading currencies and CFDs;

•Wide range of trading assets and markets;

•Fee rebates for new and active existing clients with large trading volumes;

•Floating spreads from 0.6 pips for retail Forex traders;

•Bonuses for new clients and partnership programs for different client categories.

•The broker can reject opening accounts to traders with low capital or insufficient knowledge of derivatives trading;

•Deposits and withdrawals can’t be made with e-wallets, electronic payment systems, or cryptocurrencies;

•Trading conditions differ for various countries, so you have to look for the broker’s website in your country.

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