Develop your own style and trust yourself: trading tips from Forex Crunch's founder

A feature interview with trader and Forex Crunch founder Yohay Elam on how he became a forex trader, lessons he has learned along the way and why ongoing education is crucial for both new and experienced traders.

Periodically, we are able to bring in guest writers to the Fair Trading Technology blog. For the past month, we have been pleased to have Forex Crunch founder Yohay Elam add his voice and experience as a trader.

Elam has been forex trading for more than five years, sharing his accumulated expertise as a writer and editor at Forex Crunch. The site aims to help people trade forex responsibly by providing balanced commentary and an editorial stance firmly grounded in the principles of solid forex trading. Before founding Forex Crunch, Elam worked as a programmer for various hi-tech companies and holds a B.Sc. in computer science from Ben Gurion University.

He spoke to us about how he became a trader, lessons he has learned along the way, and why education is important, both to new and experienced traders alike.

How and when did you first become involved in forex trading?

I have always had an interest in macroeconomics and the movements in currencies. When a friend told me about an educational course about forex, i jumped at the opportunity. The course included the basics of technical analysis, the basic things that impact them and some tips from seasoned traders that were not shy to show weaknesses alongside strengths of their own trading style. This gave me inspiration to become a trader.

How did you learn about the forex market?

Apart from the course, I also performed my own research on the internet. Today, there are many websites that provide information for beginners and for veterans alike. When I began trading, I did some general searches on Google, as well as a guidebook that I had received from another trader. It took me a few months to get my act together.

Did you make any mistakes when you first started? What is the most important lesson you brought with you as you continued to trade?

I made many mistakes at the beginning. The biggest mistake was to get obsessed with the markets and traded too much, imagining setups that were never there. In addition, after a few successful trades, I enlarged my positions and limited my account.

Are you a fundamentalist or chartist?

I lean heavily towards the fundamentals. The economy, interest rates and politics move currencies. I see that a technical analysis is useful for entry points and exit points.

Have you had a mentor or any role models throughout your trading career?

I didn’t have a mentor or a role model. I did get some advice from some experienced traders, but the best advice I can give to someone else is: develop your own style and trust yourself. In hindsight, a high-quality mentor would have shortened the learning process and provided stronger fundamentals for trading. I believe that having a mentor is useful for a limited time, but that a trader eventually needs to walk on his own two feet.

Tell us about your best and worst trades

The best trade I had was on the ”dragon” GBP/JPY that hit my distant take profit point during the night. I was delighted to wake up to a profit.

 The worst trade was on GBP/AUD. I did see the general direction, but it hit the stop-loss point before making the real move, which was very frustrating.

Would you describe yourself as a long- or short-term trader and why?

Long-term trader applies better to my trading style. I tend to look at the fundamentals and often leave trades open for a long period of time. I also look for breakouts from ranges as potential entry points, although the first break can be a false one. The second move is usually stronger.

What trading style do you use and how does it set you apart from other traders?

I don’t think that my trading style is very different or unique. Perhaps the mix between fundamentals and technicals is more unique. The important thing in the style is that it has to fit the trader’s personality – otherwise, it won’t work.

Do you have trading rules that you go by?

The basic rule of thumb that I preach is: ”don’t risk more than 2% of your account all at once”. This basic money management rule provides newbies with more breathing room to trade, learn, lose, and win before they burn out their account, giving them enough time to learn the FX market.

How have you educated yourself about forex trading?

Education never ends. There is always something new to learn. Any system needs to be tweaked from time to time and every trader needs to be reminded of safety rules from time to time. I read, and also write, a lot of educational material which helps me stay alert and offers me insight into what I can change in my own trading strategies to stay successful.

How did you get involved as a guest blogger for Fair Trading Technology?

I am happy to provide guest posts for Fair Trading Technology. I feel very comfortable with the co-operation because, similar to Forex Crunch, Fair Trading Technology promotes transparency and a solid approach. This is something that I greatly value in any partnership.