Forex: Trusting Probabilities and Mastering Psychology


Traders, and especially new traders, seem to not grasp the fact that trading currencies is a
game of numbers and where mastering the psychological states are essential to good trading.
Even seasoned traders with an excellent track record seem to forget the law of numbers and
give no thought to the psychological aspects of trading.
Traders who understand the law of large numbers, make it work for them to benefit their
trading strategies and ultimately their profitability.

The Law of Large Numbers

The law of large numbers states that if the probability of something to happen is X%, the result
will approach closer and closer to that probability the more attempts are made.

Take a small test:

A coin will be flipped 100 times. With each tale, you will win R0.50 and with each head you
forfeit R0.25. (Flipping a coin has a 50% of landing on tales)
Would you participate in this adventure?
If not, then you are no trader / entrepreneur and can only operate in the safety and comfort of
a steady job – you are overly risk averse. The trader with an appetite for risk on the other hand
has an expectant return of: Profit = 100*(0.5*50 – 0.5*25) = 100 * 12.5 = R1250

In the given example above, the AVERAGE profit is R12.50 per flip. But that does not mean that
R12.50 will be made with each flip. The trader could lose on 10 flips in a row, which might
shaken his / her confidence, but this losing streak will NOT change the expected profit of the
game in the long run.

The lesson from this small test is that with each coin flip, EDGE will emerge to produce a net
winner. The trader needs to internalize and accept uncertainty: the result of one trade is not
guaranteed, not even for the best trader in the world. The trader needs to preset conditions to
exit losing trades to be able to trade again and again. This also means that not every trade will
stretch to 1 000 pips and the trader will need some way to estimate where to exit from a trade.
To take probability even further, a compromise between Stop Loss and Take Profit levels are
required as distance from the starting point. A target of 500 pips will not be obtained regularly
and there should be “breathing space” for price movement. Price movement will ultimately hit
your Stop Loss, and if to wide large losses will be suffered.

To have more winners than losers in trading requires everything….. chart analysis,
understanding market momentum and mood, macro analysis, risk and money management.

THE item that that makes all of this possible: emotional control and clarity of mind. The trader
must find a system or strategy and stick to it at all times.

Trading Psychology

Looking at a trading chart the trader has to realize that the chart has no feelings and neither
does the chart care about the trader. The currency market is driven by a mixture of
fundamental forces and the aggregate “belief” of the market participants. The market
participants are humans and computer programs developed by humans. The interpretation of
the market may be polluted by wishful thinking, reality check problems and a variety of other
human emotions.

In trading, the majority of participants are doing the wrong things or following incorrect
actions. That is why there are so many traders in the market losing money. Some of these items
include the setting of to tight stops or no stops at all, using to high leverage, chasing the
market, not able to “see” clear trade setups, using items such as “head and shoulders” as
magical formulae and trading with technical indicators as if the indicators will accurately predict
the future. It is not wrong to use these items, but only in a responsible manner. These items do
not provide the trader with an edge – nearly everybody else utilize them. What is required is a
deeper understanding of the market and to not fall victim to the psychological traps of denial,
avoidance, cognitive capture / information bias, fear, greed and other mental toxins providing a
distorted reality. The trader must be able to look at the chart without wanting to see a buy or
sell opportunity. Just notice “WHAT IS”. Ask if recent candlestick patterns are convincing? Is this
part of the bigger picture or is something seen which looks bigger than it really is? Look at the
15 minute chart and be convinced that the price can’t go higher while reality is a 5 year low.

What is required from the trader is to understand and trust large number probabilities, keep
losses small in relation to profits, avoid setting stop losses to tight, find a system with a small
edge that would suit a particular trading personality, aim for an 80% win rate and a 20% loss
rate, look at the market without emotions, ego, psychology and manage stress. This way the
trader can enjoy process without ever stop learning. No trader can stop learning, reading,
working on self, strategies and understanding the market.


The aforementioned discussion is all good, neat and well, but also need to be put in practice
and practically applied.

One of the best suggestions to approach the market without fear, misgivings or greed is to have
a well-documented trading plan. A trading plan that sets out the traders’ goals which starts
from the ideal situation to be achieved and cascaded down to practical small units to be
achieved. In addition to the personal goals to be achieved, the actual strategy on the currency
pairs to be traded must be included. This strategy will spell out which currency pairs will be
followed, the type of analysis (fundamental versus technical), which indicators will be used, the
time scale, on which circumstances will entry and exit points be based, the leverage, risk and money management. These rules need to be followed very meticulously and record must be
kept in a disciplined manner.

Utilizing a trading plan should be the only routine that need to be followed during the trading.
It should be followed religiously and the results recorded. The trading plan need to be analyzed
and the trader must learn from mistakes. Mistakes must be used to tweak the trading plan to
better the plan. The habit to follow the trading should be reinforced with a positive mindset
and on a conscience the trader must address any and all psychological issues.

With the trading is it possible for the trader to act without emotions and see what the factual
situation on the chart is. By repeating the trading plan over and over (big number probability)
the trader will become profitable in the long run. By repeating the trading over and over the
trader will overcome psychological attachments fear, greed, anxiety elation and any other
human instinct or emotion which could have a negative impact on profitability.

What differentiate C2Wealth Training from the rest?






the training service providers in the Forex industry.







potential a reasonable chance to make an informed decision.



being different in this article.





income from they may live.

Let us look at these two aspects separately:

Education versus Training



But what is difference between education and training?



on an operational level.



development which improves performance and productivity in the current environment.







less cost effective than classroom-based interventions.



and ensure that all learners receive equal interventions.






how a change in the one will affect the other.


there is tendency amongst certain training service providers to provide limited functional








There are various training programs available after completing the initial foundation training



thus, be training and not education.





Forex Business Approach










lost and the Forex business will go under.


  • Losing trades
  • Broker spreads and commissions
  • Trade roll-over and swaps
  • Computer hardware
  • Internet costs
  • Other office equipment


and has the possibility to totally wipe out the account.



losing trades by means of the following:

  • Be the eternal student with an unquenchable appetite for learning
  • Invest in yourself and not trading bots





time with a lower risk to reward percentage.














interest can become a major cost element.








learning opportunities.

Forex Trading Advantages


Forex traders normally conduct business at whatever time is convenient for them- this
translates to freedom from normal office hours. Forex traders can operate at any time they
wish. As expected, this attracts people from different time zones, lifestyles, and experience
levels. If you have an internet connection, then you can trade from anywhere in the world.


Since your trading involves only a currency pair and not multiple combinations of markets and
trends, the opportunity for profit is always there. There is no bulldog watching of rising or
falling of markets, goods and industries. Profits can be achieved whether the market is bullish
or bearish for one currency against the other. What matters is the direction of the trade in the
right currency pair.


The forex market is open 24 hours on weekdays as it is a worldwide market. If compared to
other markets that function at certain hours and days, the forex market dwarfs’ other markets
in terms of activity and opportunities in the week. Investors can exploit trends and setups that
happen within the week, anytime.


Due to the highly liquid nature of the forex market and to the technology involved in
transacting the trades, you have one of the most important features that attracts traders to
forex- the lower trading costs. You can forget about the accustomed costs that take away from
your bottom line and focus solely on the spreads. Furthermore, spreads paid as commissions to
the brokers in the forex market are normally smaller than those other markets. This can only
translate to better profits.


Due to the electronic nature of the transactions, analyzing and managing assets is highly
efficient and easier than it used to be. All information is accessed through the platform from
the computer. Deals are executed as you see them and as they fit your strategy. This gives you
a better feel of the market cycle, making your decisions easier and your predictions more
accurate on every trade.


Unlike other markets where leverages are small, forex trading allows for higher levels of
leverage, providing the opportunity to trade to up to a hundred times the assets in your
account. Forex brokers can allow a lot of leverage depending on the type of account. Naturally,
this can also convert into higher risk if you don’t know what you’re doing, thus, the importance
of learning to trade forex the right way. Risk management is very important to protect your
account from highly leveraged losses. It is very important to learn to trade forex the right way
from the start to avoid potential losses.


Forex trading is considered the perfect free market for logical reasons. All traders are given an
equal playing field. Even when one currency is falling, by definition, this just means that there is
another currency rising against the one that is falling and opportunity for profit exists. An
unlimited earning potential, the stability, the freedom, and the even opportunity are the main
reasons why you should learn to trade forex and what makes the foreign exchange market an
exciting opportunity for anyone.


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Rollover Interest in Forex


Overnight interest is either paid or earned on all open positions at 17h00 Eastern Standard Time (EST) – which is 22h00 South African time. The time might vary between some brokers. This interest, also called rollover or swap, will either be credited or debited on the full size of the open positions and is also dependent the established margin and position in the market. Depending on the interest differential, interest will be either received or paid.

Description of mechanics

The interest fees are called rollover, because it occurs when an open position from one settlement date is rolled over into the next settlement date. Rollover transactions occur automatically if the open position is hold past the change in value date. Behind the scenes, the settlement occurs in two business days. Thus, if its Mondays before 17h00 EST currencies are trading for value on a Wednesday, so that after 17h00 EST on Monday the trade date becomes Tuesday and the trade is traded for value on a Thursday.

Trades that are opened and closed before 17h00 EST are not liable for rollover as there is no change in settlement date.

Wednesdays carries a 3 day rollover. On 17h00 EST, the value changes from Friday to Monday, a weekend rollover which means a three day rollover (Saturday / Sunday / Monday) which means the rollover costs / gains are going to be three times as much as any other day.

Why does rollover Interest Credit or Debit Occur?

Trading with currencies is trading with cash. Going long with a currency is similar to holding a deposit in a bank and interest will be earned. Going short on a currency is similar to borrowing money on which interest is to be paid. With traded currencies the relationship is more complicated. With a currency pair, a currency with a positive balance is being hold (currency going long) and a currency with a negative balance (currency going short) is being held simultaneously. The difference in the interest rate of the two countries is called the interest-rate differential.

Being credited or debited for rollover is dependent on two factors: 1) the position being hold (long or short) and 2) the interest-rate differential between the two currencies in the pair being traded.

Every currency trade involves borrowing one currency to buy another currency. Therefore is interest rollover charges part of Forex trading. Interest is being paid on the currency borrowed and interest is being earned on the currency being bought. Effectively, interest is being earned or paid depending on the direction of the trade.

Currency being bought with a higher interest rate than the one being borrowed will result in a positive net differential rate. Funds will be earned. Selling a currency with a higher interest rate than the currency being bought will result in a negative net differential, and interest will be paid for the rollover. The rollover costs/credits are based on the position size and the larger the position size, the larger the cost or gain will be.

Interest rates are not cast in concrete and are changing constantly with changing economic conditions.

Can paying swap rates be avoided?

Normally, there are three ways to avoid paying swap rates:

1.      Trade in the direction of positive interest

Trades can be entered in the direction of the currency that gives positive swap. But only focus on this when there is a history of positive results

2.      Trade only intraday and close transactions before 17h00 EST

This way swap would be avoided. This strategy should only be employed because of trading strategy and not because of swap considerations.

3.      Open a swap free Islamic Account offered by some brokers

These particular accounts are run in full compliance with Islamic beliefs and the policy of no interest to be paid upon business transactions.

Finding rollover rates on trades

Current rollover rates are available in MetaTrader 4. Find the rates from the following path:

  • Open Market Watch (Ctrl + M)
  • Click Specifications
  • Scroll down to find:
    • Swap Long; and
    • Swap Short

A positive number will indicate interest to be received. A negative number will indicate interest to be paid. If both numbers are negative means that interest rates are nearly the same.


Rollover swap rates are a reality when trading currencies. The trader needs to take this cost seriously to ensure that accounts stay profitable. If possible, avoid the paying of rollover fees and if rollover fees are unavoidable ensure prudent funding of accounts.

What a Trader needs to know about the Forex Market

The Forex market came into existence in the 1970’s when the United States abandoned the gold standard as benchmark for the value of the US Dollar. Forex in itself is an abbreviation for foreign exchange and the root purpose of the market is to evaluate the currency of one country to the currency of another country.

It was in 1973 that the countries which formed part of the industrialized world decided to make their currencies freely available to trade. This immediately formed the exchange rate in terms of value of one currency pitted against another. This further led to the establishment of currency prices being quoted on a daily basis. The explosion in computer technology made foreign exchange transactions possible in most parts of the world. Due to the foreign exchange markets, the world today is truly a global village and it is possible to perform intercontinental business transactions from every corner of the world.

For a better understanding of the foreign exchange market, attributes of the market will be highlighted. This is an effort to shed light about the currency market to facilitate the move to become a Forex trader:

  • Currencies are always traded in pairs in the Forex market. For every foreign exchange transaction, one currency is traded for another, i.e. GBP/USD will translate to how many Dollars it will take to purchase a British Pound.
  • Symbols are being used to indicate currencies. The GBP symbol indicates the Pound Sterling and the USD symbol indicates the United States Dollar. Other symbols include the AUD for the AUSTRALIAN Dollar, the EUR for the European Union euro, CHF for the Swiss Frank and the JPY for the Japanese YEN to name but a few.
  • There are current approximately 150 currency pairs available which could be traded in the currency market
  • There is a market price associated with each currency pair, i.e. EUR/USD, GBP/USD, USDJPY. This price refers to how much of the second currency it will cost to buy one unit of the first currency. An exchange rate for the GBP/USD is 1.2801, then it costs 1.2801 US Dollars to purchase a Pound Sterling.

On the reverse side, to establish how much it will cost in Pounds to buy a US Dollar, the calculation is flipped, and 1 (one) is divided by 1.2801 to give answer of 0.7811. It therefore costs 0.7811 US Dollars to buy one Pound. The price of the currencies constantly fluctuates as global transactions occur, 24 hours a day during the week.

  • A pip is the fourth decimal in place in a currency pair. When the Japanese Yen is involved as the second currency, the pip is the second decimal. When the price of the GBP/USD moves from 1.2800 to 1.250, a profit of 50 pips have been made – if you were in a buy transaction. If you were in a sell transaction and the price moved from 1.2800 to 1.2750, you would have a 50 pip
  • The profit made depends on how much of the currency were bought or sold. Currency pairs are transacted in lot sizes. The standard lot size is 100 000 units, the mini lot size is 10 000 units and the micro lot size is 1 000 units. A standard lot size pip is worth $10,00, the mini lot size is worth $1,00 and the micro lot size pip is worth $0.10. This is on the assumption that the accounting of the trade account is in US Dollars.
  • For any pair where the USD is the second currency, the pip values in the previous paragraph applies. However, if the USD is quoted first, the pip value will be different. Example: The pip value of the USD/CHF (Swiss Franc), the normal pip value is divided by the current USD/CHF exchange rate. Thus, a micro lot size is worth $0,10 / 0.9435 = $0.1060, where 0.9435 is the current price of the pair, and subject to change.
  • The JPY pairs (USD/JPY), follows the same process, but is then multiplied by 100.
  • In terms of trading, the first currency in a trading pair is always the directional currency on a forex chart. In the GBP / USD chart, when the price is moving higher, it means the Pound Sterling is moving higher relative to the USD. Similarly, if the price on the chart is falling and moving lower, then the Pound is declining in value relative to the US Dollar.
  • There are three forms of commissions used by brokers in forex. These commissions are the cost of forex transactions. The commission structures are not universal to all brokers and each broker applies the structure as they would see fit. The cost structures are (a) a fixed spread, (b)a variable spread; and (c)a commission based on a percentage of a spread.

The spread is the difference between the bid price (what the broker is prepared to pay for your currency) and the ask price (the price the broker is prepared to sell the currency)(The ask price is always higher than the bid price)

In a quote “EURUSD: 1.4952 – 1.4955” there is a difference of 3 pips (as calculated on the fourth decimal). This difference is called the spread. With a broker offering a fixed spread, the trader will always pay 3 pips transactions costs.  In the case of a broker with a variable spread, the spread would move up and down, depending on the currency pair being traded and the market volatility level.

Some brokers charge a small commission, sometimes as little as two-tenths of one pip and the trade will be passed on to a larger market maker with whom a relationship exists. This larger market maker could be able to provide a very tight or small spread that only larger traders could access.

  • Forex interest or rollover is another cost to take into consideration. Rollovers are the interest paid or earned for holding a currency transaction open overnight without settling. Each currency has an overnight interbank interest rate associated with it, and because forex is traded in pairs, every trade not only involves two different currencies, but also two different interest rates. The rates involved here are not central bank rates, but the overnight interest rates at which banks borrow unsecured funds from other banks. Should the interest rate on the currency the trader bought be higher than the interest rate of the currency sold, interest would be earned on the transaction. If the interest rate on the currency bought is lower than the interest rate on the currency sold, the trader will pay rollover interest.
  • Rollover rates on a Wednesday is three times higher than on a Tuesday. This is to account for the fact that banks are globally closed over the weekends and therefore the interest for the weekends are made up on a Wednesday.

With these concepts the new traders should have a better understanding of what is happening when there are movement on a forex chart. It will be easier to identify the profit potential available from chart movements.


Can you make a living trading Forex?

Can you make a living trading Forex?


One of the most repeated questions asked regarding Forex trading is: ”Can a person make a
career out of trading Forex?”

This question is asked not only by persons outside the realm of trading, but also by persons
who have completed some form of training and are now wandering into Forex trading. No
doubt is this a difficult question to answer. There are many people outside Forex trading who
will answer in the negative given the perceptions that do exist of Forex trading.

The short answer to this question is simply: “Yes you can”. But like most things in life, this is not
clear cut and in black and white. The answer needs to be qualified to enable those persons who
are considering a career in Forex to make an informed decision.

Forex as a Career and Business

The first item to be aware of is the fact that if a person wants to change from a paying
profession to become a Forex trader is the fact that to succeed Forex needs to be seen as a
business and not as a part time hobby.

And like any other business will the Forex business require funding; starting capital to fund your
business and open a live trading account. Being under-funded will not result in a living wage
with Forex. The amount required to operate as a full-time trader will differ between individuals.
As a rule of thumb, to effectively manage the risk on every trade, a decent amount of money is
required in order to trade a large enough position size to make enough money to support the
trader while at the same time not risking too much of the account balance.

Part time trading for extra income is relatively easy at the early stages of a trading career. But
the period of part time trading should be utilized to learn to trade with consistency rather than
accumulating wealth. Even the part time trader who has a large sum of money available should
focus on getting consistent results. A profitable track record and self confidence will follow in
the wake of consistency. Not focusing on the mechanics of successful trading will eventually
lead to losses.

It is also possible, like with any business, that things can go horrible wrong. To counter this
possibility, the independent trader is advised to have reserve cash at hand to cover for such an
eventuality of running out of trading funds.

Tools required to become an independent trader

An independent trader requires a set of tools to become a trader of note. The following
paragraphs will highlight some of the requirements.

Educations and Training

It is important to obtain the very best education and training before considering a career in
Forex trading. The market is constantly changing, and trading skills always need to be updated.
Forex training and education is required to familiarize the novice trader with all the concepts
and terminologies. In the high risk Forex market not only the concepts and terminologies, but
also the art of trading strategies and Forex maneuvers need to be mastered. Forex education
and training should possibly enhance with the guidance of a professional mentor.

Forex education and training needs to become a life-style. However, education and training are
no guarantee for success, but will move the odds to be more favorable.

Reliable Forex Broker

exchange market. Currency traders use these brokers to access the 24-hour currency market.
Before trading, a forex broker will require customers to deposit money into their account as
collateral. However, through leverage, customers can trade larger amounts than what is
deposited in their account.

Most major forex brokers will allow prospective clients to use a practice account so that they
can get a good understanding of what the system is like.

MT4 Trading Platform

The MT4 platform has become a market standard and there is a good reason for that. It is the
most advanced and trustworthy Forex trading platform available on the market, and even with
its complex and advanced features, the user interface is friendly and intuitive, making it an
attractive option for new and experienced Forex traders alike.

Doing the right things in Forex Trading

Perusing a career as Forex trader requires that the right things being done correctly. Trading
the Forex market does not only depend on being sufficiently funded and the attendance of a
training course. They are very important considerations, but other items required for successful
trading include the following:

  • The learning and mastery of an effective trading strategy with which the trader is
  •  Designing a tangible and working forex trading plan where items such as the following are being spelled out:
    • The risk to reward scenario
    • Forex position sizing
    • Stop-Loss distance
    • Entry and Exit strategy
  • Setting up a trading journal to create a track record
  • Adhering to careful money management principles

Psychological Factors

Forex trading is the one place where human attributes and stressful psychological factors play a
crucial role.

Trading Forex is stressful at its’ best. The market is highly volatile, ever changing and what
worked yesterday does not apply today. Forex trading is the place where fear, hope, greed,
excitement, elation and depression meet.

The person attempting to trade Forex who has little self-discipline and not in control of his/her
emotions has little chance of becoming successful in Forex trading.

All Forex traders makes mistakes and loses money. It is the nature of the beast. We all have to
live with it. The successful trader learns from it and is better prepared for the next round.

Is a career in Forex trading possible?

The conditional answer to the question has been given. A well-funded account, attendance of a
quality training course and an understanding of the risks involved, the spirit of
entrepreneurship and the preparedness to work hard in a disciplined manner will set winners
apart from the losers.

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Certainty in Uncertain Times : Forex

Certainty in Uncertain Times


In the times we are living we are faced with change and uncertainty. Change and uncertainty
are the only constants in our lives.
The world is in a constant mode of change. Never had the saying ”you cannot step into thesame river twice” so much meaning. For both the river and the person has changed since first

stepping into the river. The river has a few drops of water less and the person is slightly older.The items that gave us certainty in the past does not seem to be holding true anymore. We were encouraged to excel at school in academics and sports for those items would bring us to a better life. Now being away from school we find that that reality is different from what our parents and teachers told us. We are unable to find a job despite acquiring a qualification. And if and when we do manage to find a job it is often not what we want to do. The remuneration associated with a job is sometimes hardly sufficient to survive on.


We have learned that the old ways are no longer applicable in the world we are living in. To
adapt a laissez-faire attitude and let life runs its course will bring us no closer to a solution. We
have to change with the times and in our uncertainty create our own certainty.
Easier said than done you may point out. True, nothing in this life has ever been easy. But doing
absolutely nothing to change our position is fatal. We will be relegated to a position of
inferiority and we will be dependent on hand-outs. Hand-outs and dependency are not a
dignified life, not for anybody.
We must find a solution where we no longer are dependent on the hand-outs of others. Be that
the government, the churches or the community who are providing. In finding a solution we
must do a mind shift away from the old and trusted ways, for the old and trusted ways are no
longer to be trusted. We must find in the new world we are living in a solution that will give us
back our dignity and make us the movers and shakers of the world.
In the new world we are living in there are many “new ways” that we could adopt to move us to
a newer plain. In the next paragraph we are discussing one of the new ways that has the
potential to lead us to a better life.


Sometimes a solution is staring us in the face, but we do not recognize the solution. We may
have heard of it, but our view is contaminated with the prejudice that others provide.
Sometimes we are scarred to put the solution to the test for what will happen if the solution
works? Psychologically we are sometimes trapped in negative thought, for the negative thought
has become our comfort zone. Moving out of our comfort zone brings change and uncertainty.

One such a solution we would like to present has been tainted with a lot of negativity, some of
which is true. This solution is called Forex trading.
There is negativity associated with Forex trading has some truth for many people have lost
money on the Forex market. Some of the reason is situated in the fact that there are many
scams in the market place. One needs to be careful with whom you sign up as your broker.
Another reason is that people enter the market without proper training. It was found that
persons new to the Forex market who did some self-study course has the biggest potential to
lose money. Forex trading is a serious business and need to be treated as such. Forex also is no
get rich quickly scheme. It takes dedication, focus and self-discipline to become a successful
trader. Which is another reason why some people fail with the Forex market.
But what is also a proven fact is the potential that Forex has to deliver a practical solution to the
dedicated trader to became independent and maintain a sustainable income. People who
attend a training course where they are taught on a practical manner and receive support post
the training have a chance to move to a better life. The training course must provide insight and
practice in all the trading tools – analysis, the setting up and monitoring of trades, the closing of
trades, risk management and money management. The training must also address the influence
of psychology in training.

Forex as Business

To establish a Forex business you need to have a laptop, reliable internet connection, about R1
000,00 to open your account and patience and perseverance. There is no need to register a
business with the authorities.


You should consider Forex as an alternative career to make yourself independent and grow a
business for yourself. Forex has the potential to provide you with stability amidst an
ever-changing and uncertain world. Forex can provide you with certainty in this uncertain world.
Trading with self-discipline, focused on a daily task, repeating positive actions and finding a
reason to trade brings about certainty in uncertain times.
Forex has the potential to provide you with certainty in an uncertain world.