Don’t be deceived by talk of trading methods! A series that will dramatically change your FX life with just 5000 yen [To Avoid Being Fooled Edition] Part ④ = About rumors and conventional wisdom = Understanding trading methods

There are various rumors and common beliefs spread around the FX world, but are you taking such information at face value?

As for overseas accounts and domestic accounts, I covered them last time, but this time

1. About EA (Expert Advisor) and discretion

2. About scalping, day trading, and swing trading

3. About spreads, margin maintenance rate, and swap points

4. About Japan time, European time, and U.S. time

5. About high leverage and low leverage

6. About trend following, contrarian strategies, and range trading

I would like to discuss these topics.

As I mentioned when talking about overseas accounts and domestic accounts in ①, charts in ②, and devices in ③, ultimately information is also about how you use it.

Let's strive to select information that matches your conditions and environment through careful analysis.

1. About EA (Expert Advisor) and discretion

When you hear about automated trading, there are certainly people who find it suspicious. However, only a few can point to the reasons for such feeling.

To understand that, we need to consider what is necessary in comparison with discretion.

Currently, EAs are commonly developed in MQL4, a language centered on MetaTrader 4.

Programs are not built beyond what can be done on this platform.

In other words, if the performance on MetaTrader has a limit, it is inevitable that programs may not fit well.

One such example is multi-time frame analysis.

MetaTrader programs are premised on conditions and flows for each time frame.

Also, screen switching cannot be performed.

If you understand that such development environment affects the resulting program, you will realize that not all EAs fit; only some do not fit well.

However, even among these EAs, there are ones that aptly incorporate conditions to generate profits.

If you have never seen such examples, or you dislike EAs as dubious, you may gradually reach a point where, as you age and human errors increase, discretion trading reaches its limit and you either withdraw or switch back to using EAs; such choices tend to emerge.

As an analyst, the optimal solution would be that it is not too sloppy.

Also, many people think discretion trading involves doing something special.

In reality, there is a mechanical trading method as a base; in each situation, one senses the level of risk, adds filters to the trading method, makes adjustments, and changes the strategy to fit.

Interpretations like "holding the holy grail" are out of the question.

2. Scalping, day trading, and swing trading

Regarding these topics, generally the expectations and nature of FX companies and brokerages come into play.

As for expectations, because some points overlap with 3. About spreads, margin maintenance, and swap points, I will describe them there.

As for the nature, for companies with narrow spreads, more trades mean more fees, so some promote scalping; for larger, more stable companies, long-term operations may target swap points or swing trading.

Also, considering the risk of negative spreads and large swings in swing trading, there are cases where day trading is promoted.

These recommendations change depending on each company’s merits and demerits, so the best solution is to find what suits your own trading.

3. About spreads, margin maintenance, and swap points

Here I would mainly discuss each company’s intentions.

In simple terms, where will the losses we incur flow to?

Scalping yields a minimum guaranteed profit as a fee for each company.

Margin maintenance is ostensibly to protect personal assets, but in reality, because such margin maintenance exists, this can trigger stop loss orders and orders to recover funds, which can be seen on charts.

In other words, it is like a bonus for each company.

That aspect is arguably somewhat fraudulent.

However, since it is a world of risk, jumping to a conclusion from one-sided thinking is premature.

In that sense, if you can read charts, it is best to steadily accumulate profit from swap points over the long term.

And with swap point operations, there is also a possibility that stop-loss price hunting occurs in the same way.

These discussions do not intend to criticize each company; rather, the root cause is that funds move without actual rescue measures being taken.

4. About Japan time, European time, and U.S. time

Generally, along with pieces that say the market doesn’t move in Japanese time and starts moving in European time, there are beginner books that promote entry during European time. But on technical charts, it is merely that conditions align at those times, and there is not enough concrete justification.

Also, as discussed in 7: Risk-reward, [Important Materials] ③ = capital management = the probability of Balasa’s bankruptcy, it is important that profit-taking points and stop-loss points are clear before starting trade, and that the ratio is secured within a range that avoids bankruptcy.

5. About high leverage and low leverage

Regarding this, even players making large trades appear to use high leverage intensively, but most of them tend to lose half or more of their total funds when losses occur.

Such trading cannot be considered prudent; it should be viewed as near-gambling.

Some people say they should not be criticized by others because it is their own trading, but if this is framed as a planned event, that interpretation might fit. However, in terms of normal trading and within reasonable bounds, it is abnormal, and as the organizer distributing information, one cannot absolve responsibility for such reckless behavior.

6. Trend-following, counter-trend, and range trading

If a beginner assumes there is no edge in counter-trend trading when they know nothing, that is understandable. But in reality, what materials or conditions exist that determine whether there is an edge is crucial for expected value, and even within a trend, whether it is a strong move from the start or a moment of exhaustion near the end affects trust; without understanding this, one cannot be considered advanced.

Also, range trading is difficult; if you avoid trading because it’s hard, that is a personal choice. However, if you understand the trend that arises from ranges, you must recognize the range, and since price movement from a range can influence a new trend, you cannot devise defenses against deceptive moves unless you have that understanding.

Having reviewed these various rumors and conventional wisdom, how was it for you?

If you calmly delve into each point, you may find discrepancies between what you imagined and the actual data or events.

If you incur losses proportional to your recognition, it means you carry risk in yourself even before considering methods or technicals.

Why not take this opportunity to reconsider?

With that, this session of study ends here. See you next time.