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.
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.
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.