In a previous tutorial, I talked about the importance of developing a solid trading strategy and sticking to it. These two skills, developing a strategy and following it, will determine how profitable you become in forex trading.

Unfortunately, very few forex traders in Kenya are able to practice this trading discipline.

But Why?

The answer lies in emotions.

Human beings have emotions that are hardwired into them. These emotions, which include fear, greed and pride, are strong beasts. You will need to understand how they influence your forex trading decisions and what you can do about them.

How Do You Keep Emotions out of Your Trades?

The short answer to this question is that you can’t get rid of your emotions.

As long as you are breathing and your nerves are alive, you are going to experience emotions. They are hardwired into you.

In fact, your decision to learn how to trade forex is driven by emotions. There is nothing as uplifting as entering into a trade and exiting with a tidy sum of profits. It makes you feel like you are high on steroids. Just accept that as long as you alive, you will be experiencing some pretty intense emotions when you are trading.

What’s the Secret?

You can’t block out emotions. The secret is to understand them, know where they are coming from, and device a plat to deal with them. Of course this is easier said than done, but I have a few tips that should help you:

  1. Put your eyes on pips, not dollars and pennies: Don’t let the exact amount of money you are making or losing on a trade distract you. The market does not know how much money you had put into a trade, but it knows where the current price lies.
  2. Swallow your pride: The forex market is not about who’s right when. It is all about making money. There is only one way to measure your success in forex trading. Are you making profits or losses? Nothing else matters.
  3. You are going to lose money in some trades: Take it to your head. No trader is immune to loses. Just like making profits, taking loses is part of the routine in the forex market. What you need is a solid risk-management strategy to ensure that you loses do not exceed your profits.

To be successful in forex trading, you must develop and refine a disciplined trading strategy.

Regardless of the type of trader you are, you will need to sculpt an organized forex trading strategy.

A solid trading strategy is what marks the difference between making money and consistently losing money in forex trading.

What is Your Plan?

A forex trading plan is an organized approach to entering, executing and exiting trades in the market. Do you have one drawn out?

Here are the 3 pillars that you should include in your forex trading strategy.

  1. Position sizing: Position sizing is something that you need to plan for before you enter into a trade. How large will your position be? By carefully planning your position size, you will always know how much money you have at stake.
  2. Where to enter the market: One of the biggest blunders that forex traders in Kenya (and around the world) is to enter trades blindly. The MT4, with its ease of use, is very tempting. However, if you love your money and sanity, you will not click on any of those buttons just anyhow. You need to determine exactly where you are going to enter the market and what you will do in case the market does not reach your predetermined entry point.
  3. Setting stop loss and take profit orders: The third pillar to developing a solid forex trading strategy is to understand how and when to exit your open positions, both when you are winning (take profit) and when you are losing (stop-loss).

That’s it!

If you muster these 3 things, you will consistently make profits in the market. You will minimize your losses and enjoy watching every trade that you make. The opposite is also true, ignore these 3 pillars of a solid trading strategy at your own peril.

These three pillars are what stands between you making profits or losing money on the forex market. It is unfortunate that many beginner and experienced forex traders in Kenya open positions on the market without paying heed to any of these.

Do you have a game plan? Is it written down? Can you explain to a 8-year old what signals you will use to enter a trade, what position you will hold and where you will place your stop loss and take profit orders? If you find yourself fumbling for the words, you need to go back to the drawing board. Refine your trading strategy.

Trading without a plan is like driving with a blindfold across your eyes. You might be able to fumble and start the ignition, but will you keep the vehicle straight on the road? Will you be able to park it?

Don’t break any of the forex trading rules, or the market will break you.

Following Your Forex Trading Strategy

[pro_ad_display_adzone id=”12455″] It is all good to have a solid trading strategy developed, but what ultimately determines your profitability is whether you follow the strategy. No matter how good you think your trading strategy is, it won’t work if you do not follow it.

Your emotions are one of the greatest threats to your trading strategies. At time, emotions will bubble, making you lose focus of your strategy. At other times an unexpected piece of market news will surface, making you want to abandon your trading strategy. Whenever you abandon your trading strategy, you become as good as the guy who entered into the forex market without any plan.

Developing a solid trading strategy, and then sticking to it, are two of the most important skills in forex trading. If I was to name one characteristic of a successful forex trader, it wouldn’t be killer technical analysis skills, aggressiveness or gut instincts. It would be a well-refined trading discipline.

Forex traders who lay down a solid trading strategy, and then follow it are the ones that survive on market from one season to another.

Before you do anything else today, make sure you have drawn out a trading strategy. In the next lesson, I will be showing you how to distance your emotions from your trades.

The best way for beginner forex traders to become acquainted with the forex market is to trade on a demo account.

But where do you get a free demo account to practice trading?

Don’t sweat the small stuff. Many forex brokers offer a free demo/practice account. To access the demo, you only need to sign up on the broker’s website for free, and you are good to go.

Practice or demo accounts are funded with ‘virtual money’. You are free to use the virtual money to place trades in the market. Any profits made on a forex demo account cannot be withdrawn, neither can loses be debited on your account.

Why Demo Accounts?

Practice accounts give you a great opportunity to experience the live forex markets without putting any of your money at risk.

  • You can analyze how prices change in different times of the day
  • You can see how the behavior of different currency pairs differ from each other
  • You can see how the forex markets reacts to different news releases
  • start analyzing charts and improve your understanding of how margin and leverage work
  • You can use a demo forex trade account to strengthen your strategy before putting it live

Using a demo account, you can start trading in real market conditions without the fear that you are going to lose money. If you are looking for experience in forex trading, a demo account is what you need.

Demo/practice accounts are also an excellent way of testing how a certain broker’s platform works. Unfortunately, there is one thing that you can’t simulate on a demo trading account: the emotions of trading. To get the best out of your trading account, you will have to treat it as if it contained your hard-earned money.

Getting Started With a Demo Account

I assume that you have already signed up with a forex broker of your choice. If you haven’t, I recommend you do so right now. Here are our recommended partners.

There are two broad ways that you can trade forex on the markets. You either place direct orders using a click-and-deal featured on the MT4 or you employ orders to be executed when the market meets certain conditions.

Placing Click-and-Deal Orders

Many forex traders love trading the market at its current positions (click-and-deal orders). They love the certainty of knowing they are in the action as opposed to placing an order that may or may not be placed. This ‘live activity’ is part of what makes the forex market so alluring. It is like sitting in a room full of stock brokers shouting their orders (think the Wolf of Wall Street!)

Most forex brokers provide trading platforms that give you the live stream of currency prices in the market. These platforms will allow you to place a trade with a single click of your mouse button.

To place a trade on such platforms,

  1. Specify what amount you want to trade
  2. Click buy or sell

The forex platform will respond instantly, mostly within a second or two. If the trade went through, you will receive a popup notification and your MT4 will update to show your open position. If the price changed in-between you placing the order, the platform will notify you that the trade did not go through.

The order might also fail to go through if your trade is larger than the margin allowed. In this case, you will need to reduce your trade size and try again.

One important thing to keep in mind when trading on a click-and-deal platform: Any action you take on the platform is your sole responsibility. You might have meant to click “Sell” instead of “Buy”, but no one knows for sure, except you.

Using Orders on a Demo Account

Orders are an important part of the forex market. They are trades waiting to happen. Savvy forex traders use orders to catch market entry points that would otherwise elude them when they are not in front of a trading screen.

Recall that the forex market is open for 24 hours a day, 5 days a week. A market move is as likely to happen when you are in front of your screen as when you are deep asleep. If you have a daytime job, market moves are also most likely to happen when you are deeply engrossed in your boss’s menial work.

Orders are how you are able to capture market moves and enter trades when you are not in front of your trading screen.

But orders are have more uses than simply capturing market movements when you are asleep. I can’t emphasis the importance of using orders strongly enough. In a highly volatile market, using orders can help you capitalize on quick market movements while limiting the impact of negative market moves on your account.

Common Forex Market Orders

There are many type of orders available in the forex market. However, all orders are not available with every online broker. Before you sign up for a forex account with your broker, you will need to verify whether they offer all orders that you might want to place during your trading career.

Take profit orders

Don’t you just love the name!

Take profit order are used to lock in the profits that you have already accumulated on a trade.

Limit orders

A limit order is an order that triggers a trade at a more favorable price than the prevailing market price. A classic example of a limit order would be “Buy low, sell high”

Stop loss order

This one doesn’t sound so good, does it? But don’t ignore it. Among all orders, the stop loss order carries more significance and is critical to your success as a forex trader in Kenya.

In their most conventional use, stop loss orders will close a trade that is losing money. In your case, you’ll be using stop loss orders to limit loses to an acceptable threshold. If you do not set stop loss orders, you are leaving your account at the mercies of the market, which is nothing short of financial suicide.

Trailing stop-loss orders

One of the keys to successful forex trading is limiting the size of your loses while exponentially maximizing your profits.

The best way to do this is to let your winning positions run and stopping your losing positions. A trailing stop-loss order does exactly that. It will adjust its order rate as the market move, but only in the direction of your trade. For instance, if you are long CHF/CAD at an entry of 1.5750, and you’ve set a trailing stop-loss order at 30 pips, the stop will first become at 1.5720.

If the CHF/CAD moves higher, the trailing stop adjusts itself, pip for pip. It will continue to adjust higher as the market moves higher. If the market reaches its peak, the trailing stop will be 30 pips below the top. If the market ever moves down by 30 pips, your trailing stop-loss will be triggered and your position will be closed.

To the savvy Kenya forex trader, a trailing stop is a powerful order.

One-Cancels-the-Other Market Orders

Also commonly referred as OCO’s, a one-cancels-the-other market order is a stop loss order paired with a take profit order.

An OCO is an incredible insurance to a savvy forex trader. All positions remain open until one of the order levels is hit. When one order level is triggered, the other one is simultaneously closed.

For instance, if you are short on USD/JPY at 117.00 and you believe that the currency will keep moving up once it hits 117.50, you’d place your stop loss order at that point. At you then place your take profit here.

The above scenario has clearly marked out your playing field. If the USD/JPY keeps playing between 117.49 and 116.26, your positions will remain open. Conversely, if the market hits 116.25, your take profit order is triggered and you walk away smiling. If 117.50 is hit first, you’ll suffer some clearly pre-demarcated loss, nothing to worry you so much.

OCO orders are highly recommended for every order you have open in the market.

Managing Trades on a Demo Account

At this stage, you have placed orders and placed all the requisite orders. Is it time to sit back, relax, and watch the market do its thing, right?

Not so fast, amigo.

The forex market is not some form of gamble where you roll the dice and wait for Lady Luck to smile upon you; it is a dynamic environment where variables that influence your trades are constantly cropping up. These variables alter the way prices develop and render previous price expectations null.

A lot can happen between the time you set up your trades and the time they hit their targets. Forex trading is not a set-it-and-forget it kind of a thing. You need to keep abreast with market developments.

This is a continuation of our free forex trade risks and pitfalls series. You can read the first and second part of this tutorial here and here.

If you would like to never miss a tutorial on our forex trading strategies consider joining our mailing list here. Alternatively, click CTRL+D on your keyboard to bookmark this page.

In today’s tutorial, I will not only show you how a poor trading strategy puts your account at risk but also give you some incredible tips on strengthening your forex trading strategy.

The fact that forex trading is a zero-sums game is clearly a liability. However, if you decide to look at your glass as half-full, this reality is actually a big plus. It means that you can make money regardless of the direction of the forex market (bearish or bullish). Failure to make money in the forex markets implies a poor strategy on your part.

One of the poorest trading strategies that I have seen is overtrading. The strategy brings to mind the image of an overzealous scalper who opens and closes multiple positions with careless abandon.

The other common mistake is trading too many positions at the same time.

If a friend asked me to name the ingredients to a disastrous trading strategy, the following 4 items would automatically go into the list:

  • Increasing your leverage
  • Increasing your lot size
  • Increasing the frequency of your trades
  • And diversifying your trades

While trading different currencies at the same time as part of a broad trading strategy is a show of savviness, it also implies a certain level of amateurish approach to forex trading.

When you first begin trading forex, stick to a handful of currency pairs and hold your positions till you meet your take profit or stop loss mark.

Second, there is no rule that states that you absolutely have to place a trade. As a forex trader, I understand the temptation to have a position open in the forex markets at all times. Try your level best not to fall for the temptation.

If the market is gyrating crazily or you cannot spot entry signals using your strategy, the best thing is to let the market be. Do not try to force your way into a position.

Trading with Someone Else’s Strategy

One of the biggest strategy blunders you can make when trading forex is relying on someone else’s trading signals. Forex beginners are especially prone to falling for advertised trading signals, forex robots and managed accounts. Trust me, all these are recipes for disaster.

The advertised systems promise hefty profits. However, you should view such promises with a skeptical attitude. Why would anyone with a clear winning strategy advertise it to the public instead of keeping the system to himself and continue reaping all the awesome profits.

In a nutshell, blindly using robots and software that trade for you or generate ideas is not a feasible approach to trading forex. To be a successful trader, you need to learn and practice how to trade.

The same goes for trading reports and technical analysis details published by major forex portals and forex brokers in an intraday basis. For novice forex traders, there is a risk of information overload. While most of these reports will contain a nugget or two of wisdom, they will also be mostly pampered with a lot of filler and blubber that is likely to steer you from your trading strategy.

Before you trade using ideas generated by anyone else, scrutinize them and backtest the strategies offered. To borrow from Albert Einstein, one of the world’s wisest men, “the clever thing is to never stop questioning.”

Market conditions are always changing and so should your strategy. I have followed and interviewed a lot of veteran forex traders. One common thing I got from all of them is the need to continuously educate yourself and practice with different strategies.

Key Takeways

Have a solid trading strategy. Avoid the temptation to overtrade. If there is no definite entry signal, do not force yourself into the market. Learn how to trade. Open a demo account today and keep practicing how to trade. It is the only way you get better and solidify your trading strategy.

Finally, if you liked this article, kindly do me a favor. Share it on Facebook, Twitter, Google Plus or LinkedIn!

This is the second part of our forex trade risks and pitfalls tutorials. You can read the first part of this series here. If you would like to continue receiving tips on how to trade forex in Kenya, consider joining our newsletter.

Understanding Volatility and How it Poses a Risk to Your Account

Just like human beings, the forex markets have certain traits and behaviors that can be observed and studied to better understand them.

Volatility is the measure of how much a currency fluctuates. If a currency shows high and erratic fluctuations, it is said to have a high volatility.

Volatility is one of the easiest ways to gauge exposure to risk. By looking at the recent volatility of a currency pair, you can gauge how much risk you will be exposed to if you decide to take a position.

However, volatility can also be a risk in and by itself.

Volatility spikes around news releases. If you understand that a major news release is due, and your account cannot afford a potential loss on the account, consider closing down your positions or scaling down the leverage.

Even if you are not a fundamental trade (i.e. you are not trading the news) it is important to be aware of the dates when major news releases come out and their potential impact on your portfolio.

How Does Volatility Affect your Account?

Swing forex traders view volatility as a negative as it represents risk and uncertainty. Contrariwise, high volatility makes the forex market more attractive to day traders.

Sudden and high volatility in a currency pair can make the price plummet below your stop-loss order. This leads to premature execution of stop loss orders.

For instance, if in a volatile market you placed your stop loss at 100 pips, and then the currency rebounds, it is possible that it will crash through your stop loss in no time at all.

Before you open a position in the forex markets, study the recent volatility history of the currency pair.

Over 90% of the people who start trading online forex in Kenya get their accounts wiped out in less than six months. However, you do not have to become part of this statistics. You can trade forex in Kenya and become as profitable as you wish to be.

However, for that to happen, there are some fundamentals of forex trading that you have to keep in mind:

#1 Currency Trading is not a get-rich-quick scheme

Sorry to break your heart, but if you are looking to get into forex so that you can retire at thirty, you couldn’t be more wrong.

Forex trading is a skill, and it takes a lot of training, time and persistence to be profitable in the trade. The truth of the matter is that if you are just getting into the trade, you will lose more trades that you will win. This is why I highly recommend that you trade on a demo account for as long as it takes you to return some profits.

If you do not have a forex demo account, click on this link to open one right now.

#2 Focus on only one or two currency pairs

Trying to be a jack-of-all-trades (pun intended) is the easiest way to wipe out all the capital you have invested in forex trading.

Pick one or two currency pairs, study them until you understand how they are affected by prevailing market conditions. Practice dealing them on your forex demo account.

It is overwhelming to keep tabs on all the major seven currencies that are commonly traded on the forex market.

If you are going to pick one of the major currencies, go with the EUR/USD. It offers the best spreads, which will cut down on the price you pay to get into a trade. However, since the currency is highly traded, it is very unstable and you will need to be more savvy when trading it.

#3 Follow Financial News

As a beginner in forex, you will mostly be using technical analysis to get into trades. This does not however mean that you shouldn’t keep tabs on the news affecting the forex market.

Trading forex in Kenya without a clear picture of what news is being released and how the news is affecting the market is a recipe for disaster.

Mostly, immediately, news is released, the market tends to be very volatile, and it is advised that you wait 15 minutes after the break of important news before you place a trade.

Now, assume that you are not aware of when news is released? Do you see why it is important to keep tabs on political and economic news from around the world?

#4 Follow the Analysis of Forex Trade Experts

There are guys there who have been trading forex since God-knows-when. They are experts in what they do, and they are generous with their opinions.

Do not shy away from following them on Social Media, Youtube, websites and forums.

While reading the analyses from forex trade experts, write down what direction they are predicting the market will go and the levels they have predicted to be the key resistance and support points for the day for the currency you are following.

Some of the best places to find daily expert opinion about the market include:


#5 Always Have a Trade Strategy and Plan

By failing to plan, you are planning to fail.

That is some deep ancient wisdom right there. Forex trading is not gambling. There are indicators and signals that clearly point where the market is headed. Make use of these.

More importantly, however, never enter a trade without a strategy.

Before you make a decision to go long or short, you should clearly have an entry and exit strategy. How much profit do you want to make from the trade?

What loss can you tolerate on the trade?

Place your take profit and stop loss, and stick to them. Do not get greedy and do not let fear get the best of you.

If you do not know how to analyze forex charts, make a point of taking a training course.

Since scalpers open many positions in the forex market that do not last for more than 5 minutes, they love trading in high volumes. The high-volume lots traded by scalpers allow them to make maximum profits in the little time that they have positions open.

In this article, I am going to show you the two forex trading strategies that successful scalpers use:

  1. Rapid fire trading
  2. Piranha Trading

As a scalper your most important tools include a computer, stable internet connection, and lots of coffee to keep you wide awake late into the night.

Who is a Scalper?

A scalper is a type of forex trader who places and closes trades in the forex markets rapidly. Scalpers open hundreds of trades every day but will rarely hold open positions for more than 5 minutes. I like to think of them as guerilla traders.

Scalpers make use of technical indicators and price action charts to outline their forex trading strategies. All their trading strategies are developed on the short timeframe charts (M1 and M5). Plotting their trades on these charts allow them to enter and exit the market numerous time on any given trading day.

Although scalping can be very exciting and adrenaline-filled, the constant monitoring of the markets can lead to mental fatigue, which can make your trading erroneous. To stay on course, you need to know when to take a break. Impose simple rules on yourself and have the self-discipline to follow them through.

You may, for instance, decide that you are going to stop trading for the day after you have traded for 2 hours or after you have made say 20 pips.

Scalper Strategy #1: Rapid Fire Trading

The Rapid Fire strategy works best when the forex market is on a clearly defined trend. It is an action packed strategy that requires you to think on your feet and act as fast.

Rapid Fire Scalper Strategy relies on two main criteria in the forex market:

  1. Highly liquid currency pairs
  2. Lowest timeframes available

The strategy is best deployed on the EUR/USD currency pair using the MI chart window. Trading on the M1 time frame is like driving on the fast lane in the interstate. The timeframe presents close to 50 trading opportunities every day.

Rapid Fire Indicators

Because of the high frequency trades witnessed with the rapid fire strategy, scalpers do not have the luxury of using different indicators to analyze the market.

The two indicators used with the strategy are:

  1. Parabolic SAR- Used with settings of Step02 and Maximum 0.2.
  2. Simple Moving Average (SMA) – With a Period of 60, and applied to the close.

Both Parabolic SAR and Simple Moving Average are trend indicators, meaning that they work best when the forex market is on a clearly defined trend.

The SMA is used to identify the direction of the trend. We go long when the EUR/USD price climbs above 60, and conversely go short when the EUR/USD price falls below 60.

Parabolic SAR is used to give the exact entry point for both the short and long position. When the price rises above the Parabolic SAR, we go long on the EUR/USD. If the price falls below the Parabolic SAR, we go short on the currency pair.

Scalper Strategy #2: Piranha Strategy

If the forex market is not trending, it is moving in a range. The Piranha Strategy was invented for use when the markets is in range.

Let us dive into marine life. Marine piranhas take small repeated bites on their prey until the prey is totally vanquished. While a single bite might not inflict much harm to a prey, frequent bites are lethal and will usually lead to the death of the prey. The piranha scalping strategies works in a similar way. It gives forex scalpers plenty opportunities to bite small chunks of profit from the forex market.

The piranha strategy works best on the GBP/USD currency pair using the M5 (5-minute) timeframe. Using the strategy, a trading day presents trades with 15-20 trading opportunities.

Indicators to use with Piranha Strategy

The Piranha strategy utilizes one indicator, Bollinger Bands, with Period 12, Shift 0 and the Deviation left at default (2).

The Bollinger Bands are used to identify market entry opportunities. Ideally, you should go long when the price of the GBP/USD touches the lower band and go short when it touches the upper band.

I have had the privilege to tutor many intermediate and beginner forex traders in Kenya. Almost all the traders I have dealt with ask one common question:

“What should I do right now, should I buy or sell?”

The question reminds me of when I first started trading online forex.

The truth is that there is no definite answer to this question. What you do at any particular time depends on what type of a trader you are.

There are 5 broad types of forex traders:

  1. Day traders
  2. Swing traders
  3. Scalpers
  4. Position Traders, and
  5. Mechanical traders

Your forex trading strategy depends on which type of a trader you are. Understanding what type of a trader you are will help you refine your forex trading strategy and avoid trading from fear, greed and faith, which are the three greatest pitfalls to successful trading.

My Experiment

Before we discuss the 5 types of forex traders, I would like to share with you the results of an experiment that I conducted with two of my forex students, who I shall call John and Mary.

At the beginning of the experiment, I gave both John and Mary a simple trading strategy that they were to follow. The strategy consisted of a plan on when to go short and when to go long.

To make things easier for them, I sent both of them daily SMS alerts to remind them to watch out for trade setups.

After one month, I evaluated their trading results, which were very different. John had made net returns of 40% on his account while Mary had only managed 10%. Several factors make these results very interesting:

  1. Both Mary and John started with the same amount of capital
  2. Both of them carried out the same number of trades
  • Both of them had excellent entry strategies

So, how could their results be so different?

After carefully analyzing their trades, I discovered where the discrepancy emanated. While both of them had good entry strategy, Mary constantly interfered with her trades. She would get anxious, abandon the strategy and exit trades before they ran their course.

On the other hand, John stuck to his entries and exits. He left his trades run their full course. He either got stopped or hit his targeted profit.

Both traders had a similar strategy, but their personalities were very different. The message from this experiment is very clear. What you need is not a forex trading strategy, but a trading strategy that marries with your personality.

There is nothing like a perfect strategy in forex trading. The best strategy is the one that suits your personality.

The 5 Types of Traders in the Forex Market

Your personality plays a very important role in determining your forex trading strategy. Are you impatient? Do you get anxious? Do you have a strong appetite for risks? These are some of the personality traits that will dictate which strategy best fits you.

Basically, the only difference between the 5 types of traders is the timeframe that a position is held open. The timeframe increases from scalpers to day traders, swing traders and finally to position traders. The exception is Mechanical traders, who do not heed to any specific time frames.


If forex trading was a superhighway, scalpers would be the individuals on the fast lane. I like to think of them as guerrilla traders. They enter the market multiple times a day, each position they open lasting only a few seconds or minutes. Scalpers can make up to 10 pips on every position that they open.

A scalper’s trading strategy relies on the busiest hours of the forex market, typically when there are two sessions overlapping. Scalpers spend most of their time trying to spot trend changes on the charts. Additionally, a scalper must be able to make snap decisions in order to capture more profits when a trend is changing.

If you are intending to scalp the forex markets, here are the 3 cardinal rules that you must follow:

  1. Spreads: Since you will be opening and closing many positions, you need to trade on currencies with the minimal spreads. The major pairs (USD/JPY, GBP/USD and EUR/USD) usually have the best spreads for a scalper.
  2. News: Scalpers avoid trading during major news announcements. Major news, such as the NFP usually stir different emotions in the forex market and cause inexplicable swings in the major currency pairs.
  3. Leverage: Since they are only targeting small pips on their trades, scalpers must use high leverage to amplify their profits.

Because scalping is fast-paced, many scalpers result to using forex trading software to execute trades on their behalf. You can read about the other two most successful forex scalping strategies here.

Day Traders

A common characteristic with day traders is that they do not like to hold open positions overnight. They open a position at the start of the trading day and close it at the end of the day. Depending on the currency pair they are trading, day traders can make anywhere between 20-40 pips per trade.

Day traders rely on the M15 and M30 chart windows to analyze the forex market.

Day traders care most about closing all open positions at the end of the trading day. Most of them do not care whether the position is at a loss or profit. All that matters is that the position be closed at the end of the day.

Unlike scalpers who avoid trading the news, day traders rely on news to plan and execute their trades. Additionally, a day trader must be able to spot breakouts as they happen.

Swing Traders

Swing traders keep positions open for more than a day but never more than a week. Swing trading is most suited to persons who juggle forex trading with their daytime jobs. Swing trading can yield anywhere between 50-150 pips.

Swing traders have larger profit targets and stop loss levels. Since their profit targets are high and they place far lesser trades than scalpers and day trades, swing traders are less bothered by forex spreads. They can afford to trade currencies with higher spreads.

However, to be pretty sure, swing traders usually have to wait for a few confirmation signals before they open positions.

Position Traders

Position traders are the exact opposite of scalpers. If forex trading was athletics, they would be the marathoners. They can hold a position open for weeks to months. Position traders understand the fundamentals that drive the forex markets and are able to spot trends that can lead to long term profits early on. The profit potential on their trades is usually above 500 pips.

Position traders use the D1, WI and even MN chart windows to analyze the forex market.

Two characters distinguish position traders from the other types of forex traders. They are voracious and astute readers on the financial markets, and they have a very large trading accounts. The large accounts helps them withstand losses should trades go against them for an extended period of time.

Mechanical Traders

Mechanical traders do not care about time frames. They are usually the beginners in forex markets. They are the traders who have learned how to use specific technical indicators, back tested them, and now all their care is implementing the indicators on their preferred trading platform.

Most mechanical traders end up coding their strategies into forex trading software that does the trading on their behalf. The main disadvantage with this type of trading is the false sense of security that it creates. If interest rates change or the central banks take proactive measures to correct liquidity, mechanical traders may suffer prolonged losses if they do not take measure to adjust their forex software to reflect these changes.

Your Perfect Forex Trading Strategy

The perfect forex trading strategy is the one that fits your personality traits and your lifestyle. If you have a lot of time to analyze the charts and you love action-packed trading, you will probably end up being a scalper. If you are juggling a daytime job and forex trading, swing trading will probably fit you best.

I would like to hear from you. Heck, I would even like to help you sharpen your forex trading strategy. Leave a comment below letting me know what type of a trader you think you are, and why.


Easy Forex is one of the most recommended forex brokerage firms in Kenya. Opening an account with them is easy, and you can start practicing how to trade forex by opening a demo account. However, after some time, you may feel that the time has come to start trading with real money.

So, how do you deposit money into your Easy Forex account?

Easy Forex: Account Types

Easy Forex provides forex traders with 4 types of accounts to choose from depending on the minimum amount of deposit that you have, the lot sizes you wish to trade and the level of desired margin level.

The four account types offered are:

  • Mini Account– Requires $25 to open.
  • Gold Account– Minimum deposit is $500
  • Platinum– Minimum deposit is $5,000
  • VIP– Minimum deposit is $10,000

Funding Your Easy Forex Account

Your trading account needs to be funded before you can start trading. Doing so is easy and takes less than 5 minutes.

You can fund your account from your debit (ATM) card, Credit Card, Direct Bank Transfer or using one of the accepted E-wallets.

Credit cards have become the most convenient way for traders to deposit money into their Easy Forex accounts. The payment method is secure and takes only a few minutes. Simply type your credit card details on the deposit form, and hit ‘Deposit”.

However, you need to note that most forex brokers insist that you can only withdraw funds from the same source that you used to deposit funds. Don’t use your friends Skrill account if you do not wish to withdraw your profits from the same account.


Your trading sucks. Or you are afraid of investing in forex trade because you are afraid of wiping out your account. Imagine depositing $100, $200, $500 or whichever capital you have set aside as forex investment only to receive a margin call after only a few trades…

You would probably walk away and spend the rest of your life trying to convince everyone how forex trading is not conducive. However, the truth of the matter would be that that you made mistakes- mistakes that you could have avoided had you traded more carefully.

Making mistakes in forex will cost you dearly. It will cost you money and your confidence. It will rob you of an opportunity to invest in one of the trades that has incredible returns for the meticulous trader.

At Kenya Forex Firm, our goal is to help you trade forex like a pro. One of the first steps to meticulous and profitable forex trading is to avoid making some of the common mistakes.

Mistake #1 Misusing Your Account’s Leverage

In forex trading, leverage lets you control huge chunks of money with very minimal deposits. For instance, if your forex broker offers leverage of 1:100, you would be able to trade currencies worth $40,000 with a deposit of $400 only. With this level of leverage, the profits can be very tidy. The opposite is also true. If a trade fails to go your way, the losses can be extremely messy.

Fortunately, many forex brokers allow you to choose the level of leverage that you would like to apply on your account.

My advice for every beginner forex trader there is to go for a leverage of 1:10 or trade with  no leverage at all if you can afford a higher initial capital.

After limiting your leverage, you need to make sure that the trades you open are not too large for your account.

Closely related to the issue of leveraging is risk management. Fore every trade that you take, you should ensure that the potential profits are twice the potential loss. This way, your winning trades will always bring in more money than the losing trades are taking away.

Mistake #2  Overlying on Indicators and Other Fancy Techies

A lot of forex traders spend most of their time hunting for the perfect forex trade indicator and neglect the place where the real action takes place.

There is a sad truth in forex trading. Many technical indicators do not have any advantage over reading price action on the naked charts.

Before you are drawn into the cacophony of trading forex by relying on technical indicators, make sure that you can tell the direction the price will move from simply reading a price chart.

Don’t get caught in the nefarious pursuit for a perfect technical indicator. It does not exist.

Mistake #3 Trading Without a Plan

By failing to plan, you are planning to fail

A lot of beginner traders get into forex trading without a functional forex trading plan. However, like every other business, forex trading needs a clear plan.

It is a forex trading plan that keeps you regulated so that you do not exert unmitigated damage to yourself. In your plan, clearly outline the amount of daily profits you are targeting and the amount of daily losses you can accommodate. Once you hit this number, take a break.