Good day ladies and gentlemen, bonjour mesdames et messieurs and Guten Tag meine Damen und Herren. We are Katya and Sebastian from Vaduz in Lichtenstein. Our principality may be best known for the outstanding financial services sector which caters to clients all over the world. Our parents, we are twins, both work in finance and we followed in their footsteps. We just celebrated our 32nd birthday this week which also marked our 10th year as forex professionals. We received our financial education directly from our parents which put us on a great path and ahead of the curve as compared to many others.
Today we wanted to share our approach, once which was taught to us by our parents, and one which we believe can put many traders on the right track. As many of you are aware, emotions and biases pose two of the greatest risks to any portfolio. As human beings, we are prone to experience emotions and build biases and we are not suggesting to try and turn them off, we are not robots. It is important to understand how emotional decision making and biased analysis impacts your trading process in order to deal with it in a proper way. Knowing the problem provides half the solution is what my father always tells us.
Just about every financial firm takes steps to minimize the impact of emotions and biases by separating analysis from trading. This doesn’t eliminate the negative impacts completely and many who criticize this approach point out that analysts have no “skin in the game”, in other words are not invested in the process. Others highlight the fact that portfolio managers who execute the trades don’t always pay attention to the analysis provided and act on their own instincts. Therefore plenty of performances are not great and analysts from across the spectrum are wrong more than they are right.
Allow us to introduce our solution which has worked in our family for over four decades and has formed the foundation of our financial firm. One of the biggest problems for retail forex traders is that they analyze charts and trade. There is no team in place and all is done from just one source. Therefore everything is biased and emotions take care of the rest. Feel free to browse different sets of statistics from all over the world, retail traders tend to lose money in the forex market. There are other factors at play here, but forex traders who attempt to create a profitable strategy on their own are at a severe disadvantage.
The first thing we can recommend is to find at least one forex partner, a friend and colleague, as it is quite an uphill battle to take on a multi-trillion-dollar-per-day financial monster of a market. You can say we got lucky as we are twins so we didn’t need to find a partner and our parents have lived a near-perfect partnership which proved a great example for us. Our boutique firm now has a total of ten employees and we are proud of what we have build here. Those who can find a few trustworthy partners will do a lot better than the rest. Dividing tasks greatly eliminates mistakes made and the overall long-term performance is greatly increased.
Since analysts at many firms are not personally invested, their analysis is often flawed. Therefore the second and equally important thing to do is to make sure all individuals involved in the forex trading process have an investment in the fund. My sister and I have each contributed 20% of the funds assets for a total of 40% and our ten colleagues have each a contribution of 6% for the remaining 60%. Clients funds are held in separate accounts and we have invested heavily in technology in order to relay our own performance to that of our clients. My sister is in charge of oversight of client’s account and monitors them in order to spot any potential discrepancies.
The next thing we want to point out is that in order to succeed, you need fundamental analysis as well as technical analysis. Ignoring one and favoring the other will rarely lead to a good outcome. We therefore divide the analysis into one team which takes care of a fundamental one while the other team takes care of the technical analysis. When its comes to technical analysis we split the task once again into two teams, one for long-term and one for a short-term view of the market. You can define what this means to you, but for us it is a W1 and H1 time-frames.
Finally, we sit together and share our results. Each time there is an overlap in all three segments, we execute the trades which is handled by our fourth department which executes the trades and manages them. Our fifth department is responsible for risk management. Ideally you will have at least four people involved: one for fundamental analysis, one for technical long-term analysis, one for technical short-term analysis and one for portfolio management. Risk management can be done as a group together. You can also opt to rely on EA’s for more trade insight which is our next step. In order for you to become successful as a forex trader, find the right partners first who will be involved in the process. PaxForex is a great broker and the one where we operate a few of our prime accounts at. Get out, find your partners and start to experience the benefits of trading at PaxForex!
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