With all the stereotypes and prejudices, surrounding Forex industry, it’s hard to separate the wheat from the chaff and find straight answers to the most commonly asked questions.
How much money should you start with? Do you need to have an economics degree to be successful? Or maybe forex is all about plain luck?
We have invited Edoardo Ciampelletti, seasoned Forex and CFD trader and Orbex account manager, to answer all these questions. Edoardo has been trading for years, and moreover, he sees how his clients perform, so he is definitely the person to ask about trading pain points.
So, Edoardo, how did you start trading? What were the reasons behind entering the Forex market?
I started trading when I was studying at University. I joined a portfolio management class with my friend, and we decided to invest in stocks and bonds. Two years later I decided to try my hand in Forex. So, all in all, I have been trading for 8 years.
As for the reasons, well, I like the fact that the Forex market is always open and available. It’s exciting to know that something can happen at night and change the situation in the market completely. This kind of dynamic keeps me alert and focused.
Were you frustrated in the beginning? What difficulties did you face?
The beginning is always difficult: most often new traders lose unless they are extremely lucky. You start being successful only when you learn to observe and understand the market, because you need to have experience and, sure, an ability to take a hit – every trader loses at some point.
In my experience, the hardest part is risk management. You have to decide how much you can risk, objectively assess your possibilities, and understand when to get out of the trade. Sometimes it’s better to close your positions and have another look at the situation.
Do you think anyone can trade?
It all depends on your personality type. I certainly wouldn’t recommend forex trading to a risk-averse person, because if you panic you lose. Forex needs a cool headed person with the ability to make decisions. According to my observations, doctors usually do well, and it’s easy to explain. They have developed analytic skills, and they don’t rush into opening positions.
Do you think financial education is essential for a trader?
No, trading is all about observation and psychology, it has nothing to do with education. I studied economics, and I can tell you with confidence, that trading and having a degree in economics are not connected. Of course, some knowledge of basics is good, but theory without practice is worth nothing.
Okay, and here’s the most popular question. How much money do you need to start trading?
Realistically? I would say $20 000 is a right amount to open 4-5 positions a day and have a successful strategy. Of course, you can start even with $1000, but such a small volume you would have to open fewer positions at any given time.
From your experience as an account manager, who are the people who actually succeed at trading?
Those, who can interpret the market, news, and open the right volume. It’s a very important point which I always mention, talking to my clients.
Open 4-5 successful positions per day, and then close your laptop and go have a dinner. That’s it! To trade you need to have a clear head, sleep well, this way, you can stay focused.
Sometimes I see my clients getting overexcited and opening 30-40 positions – it’s crazy, you can’t control this amount of trades!
And, finally, how do you choose what product to trade? Personal preferences or cold calculation?
Every trader should have a basket of 3-4 products he/she likes. And with “liking” I mean knowing how to trade them. So, it also comes to experience – you know how a product behaves, remember trends, and it makes it easier to predict future market movements.
As for me, I usually trade only 3 products: USDCHF, Gold, and Silver. But if there’s a great opportunity in other pairs, for example, elections or another political event, I might consider joining the trend.
If you need Edoardo’s help, you can always find him at Orbex! Ask your questions and get expert answers!