Abstract:

Some people have the capability of "business man or woman" by nature but others need to learn and have a process to get success.
I am not a business man by nature, in fact, I prefer to buy things to cover all my needs because I never wanted to be a businessman until to know about Forex Market less than two years ago.

This kind of business has from my view point two majority groups, trader, and investor.
The purpose this article is to expose the main features of each and share with you a tactic used today by some investors in Australia.

1.- Trader:

Working as a trader on Forex Market I can say that there are two ways to the pursuit and get profits, it is scalping or trading with techniques and tactics in a period of short term.

By scalping is oriented to people who likes to get in on the Forex Market take some profits (less than +10 pips) and get out quickly.
Trading in a period like a mid or long term we could have big profits like +50, +100 but less than +500 pips.

But the process and strategies are equal or more planned and structured than for scalping. The main difference is about stress.
Scalpers need to be monitoring the position or watching the charts every 5 minutes or less but trading without scalp checking the charts maybe require an interval of few hours maybe two or three times a day.

Main [b]features of trader:[/b]
  • Work area: Currency pairs
  • Commission per trade: Brokers fee more like 0$ but can be a small percent of each trade.
  • The frequency of trade: daily and frequently check open positions.
  • Strategies: open, patterns, news, indicators, price action without indicators, etc.
  • Inversion live: from Low to high, less than 500$ to over 5000$
  • Goal profit: from small to medium.

2.- Investor:

People who like to work as investor prefer to search opportunities the different way that scalper or trader. This kind of approach gives to the investor more time to think, study and get less stress. Also, the risk is high compared to an inversion as a trader.

The profits in this kind of work are about more than a trader because the check of the charts and the portfolio is weekly.
The strategy used is similar than a trader but the concept and tools are more refined.

Main features of investor:

  • Work area: Shares or stocks
  • Commission per trade: fixed more like between 30$ and 80$. Each transaction (information by a local bank of Australia).
  • The frequency of trade: daily study, check open positions weekly, search the best opportunity.
  • Strategies: specific indicators and fundamental.
  • Inversion live: from medium to High, more than 5000$
  • Goal profit: High.
In my research working as trader and scalper I have found a simple process to act as an investor, and that process I will share here if someone likes to try it but in demo first.

The core to make a proper selection of shares or assets I was found as two ways:

  1. Checking publication of finance journalists of each country and select the top 10
  2. Using a simple but power calculation to get a ratio on each familiar share.

Publications:
There are people by each country that works and make publications about shares and investments, in my situation I am familiar
with Australian stocks. So if I decide to get involved in this kind of investment the best could make a selection of this information.


Indicator:
There are platforms that have built in the indicator ROAR, called Ratio of Annual Return but I can not find until now something like that in duka's copy platform.
But if we do not have this indicator we can use the proper base concept like this formula [ROAR = A/B ^ (1/X) -1].

A = current Value
B = started Value
X = elapsed time, years between A and B
^ = exponential


Chart to show the calculation:

This chart shows only the base calculation.

A = 82.1
B = 118.85
X = 2
^ = exponential

ROAR = 82.1/118.85 ^ (1/2) -1
ROAR = 20.3%

Specific strategy can be used as Investor on Forex Market:

Disclaimer, this strategy was not tested on live or demo account yet. This is a theoretically one based on my personal research.
I am planning to work it on and post the results the next year if you wish to try it by yourself but without any guarantee, you could make some adjust and fit it better.

  • Filter 1: Look for shares with a rate of annual return is above 15%, better if is equal or above 20%.
  • Filter 2: if week current candle open is above the last week candle close then entry buy, otherwise sell.
  • Risk per trade: capital to put in risk.
  • Set stop loss: high and lows of the previous candle, if sell uses high if buy uses low.
  • Size or Lot: Risk per trade / Stop Loss.
Example of entry on selected share:


Filter 1: OK is above 20%
Filter 2: OK to buy
Risk per trade: 2000$
Planed entry: 81.1$
Stop Loss at: 71.75$ (potential loss 9.35$ per share [81.1$-71.75$])
Shares to buy: 2000$ / 9.35$ = 213.90$
Lot size: 213.90$ / 81.1$ = 2.6 standard lots.

Conclusion:

I am a trader and sometimes had to scalp, this is not a proper practice because there are things more valuables in my life.
Trading by monitoring few times a day I think is best and in the medium term I want to be an investor.

Big money can be made as an investor but is necessary to start small, practice to get the ability to make proper business as an investor.

Are you trader or investor ?
which one is best for you ?
Translate to English Show original