Ken Chigbo, or Ken FX Freak as he’s commonly referred to on social media, is an Instagram famous forex expert.
Having spent several years as a forex analyst, he tired of the City and branched out on his own, helping people to trade forex and cryptocurrencies while pursuing his primary passion: travel.
Ken recently took over Skrill’s Instagram Stories to share five trader challenges and how to solve them. If you missed his Instagram Takeover, you can catch up on his tips below.
Challenge 1: Overtrading
Have you had a spate of successful trades?
Be careful – it’s easy to get flushed with success and try to ride the wave by opening up more positions on a whim. But without the requisite planning and forethought, you’ll likely end up losing all the gains you’ve made that day.
Overtrading can be combated by sticking to a set of rules: a checklist of triggers that tell you whether or not to enter a trade.
That way, the only positions you’ll have open will be the ones you’ve thought through and that have passed your own stringent requirements — such as, how much capital am I risking? Or what is the risk to reward ratio?
It’s a natural brake on your spending splurges and limits the number of positions you have to monitor at a given moment.
Challenge 2: Accepting losses
Experience makes you a better trader. But you need to accept you’ll never be a perfect trader. You will have ups and downs and — as time goes by — your ups will come more often than the downs.
One strategy to cope with losses is to accept that from every loss you can learn a valuable lesson.
Many football managers pore over videos of their team’s defeats because understanding why losses have happened shows you how to turn things around.
It’s the same with forex trading. Have a good think about why you lost out – you’ll probably find you ignored your strategies. If you didn’t, it’s time to change your approach.
Challenge 3: Blowing your capital
Blowing capital is the act of losing money through unwise investment.
Forex trading is a marathon, not a sprint. Hurrying into trades and forgetting to take a measured approach is a common reason why traders lose out.
Trading is a fine craft; one that you need to learn, to finesse, and to continually improve. Take your time when learning the basics.
Trading one to two per cent of your capital might not sound very exciting, but when you think of it in terms of losses rather than profits, it makes sense.
Most of us can afford to lose such a small fraction of our capital, and since losses are always possible, planning for the worst-case scenario is sensible.
As you get better at making good trades, that 1–2% starts becoming larger, and you’ll soon become self-sustaining.
Challenge 4: Withdrawing fast
Are you waiting several days to withdraw your profits from your broker? Having access to your funds as and when you need them isn’t just convenient; it’s vital to being a more motivated trader.
Think of trading as a job – you’ve invested your time and your energy into making trades, and you need to see a reward when they come good.
Ken uses Skrill to make fast, secure withdrawals from his forex broker to his Skrill account. Once the funds are back in his Skrill wallet he can reinvest them with another broker or withdraw them straight to his bank account.
Challenge 5: The Fear Of Missing Out
Watching a forex pair turn up can be exciting… unless you’ve not taken a position on it, that is.
So they never miss out on a big change, inexperienced traders often overinvest and make impulsive decisions. This rash behaviour is caused by FOMO: fear of missing out.
Forex trading takes place 24 hours a day, early Monday to late Friday in the UK. It’s impossible to have a stake in every single pair that’s moving and neither should you.
Don’t invest in a currency without basing your decision on clear logic. If unsure, hold back and watch to see how the trade would have gone if you had invested.
This will help you understand whether it would have been a good move for the next time a similar situation arises.
Rise to the challenge
Whether you’re doing it for fun or you aim to give up your day job, trading forex and buying crypto is an exciting skill to pick up.
But as Ken says, it’s not a ticket to instant wealth – it’s a craft that comes with months and years of learning, honing and improving.
Starting slowly is always the best way to learn, and when your money is at stake, it’s the only way to do it.