Today visiting the editorial board of Fortrader magazine Dmitry Gurkovsky is an analyst at RoboForex, a private trader, a lecturer and a presenter of training courses for beginning traders. Let’s talk about trading in currency, cryptocurrency and other assets in Russia.
– Hello Dmitry. How did it happen that you became acquainted with trading in financial markets?
– Greetings! Acquaintance with financial markets and trading took place, on the one hand, by chance, and on the other, quite naturally. But I did not understand this right away, of course. In childhood, he watched films in the style of “Wall Street” and “Swap places”, read Dreiser’s “Financier”, etc. etc. True, I also did not immediately understand the main messages of these works, but what impressed me was the existence of a sphere of activity where the effectiveness depends more on you personally, and less on the surrounding circumstances. Everything is almost like in sports. I always dreamed of such business or business, where everything depends on abilities, intelligence, discipline, perseverance, and determination. But I think I’m not the only one who was inspired by films and literature.
On top of everything, from early childhood, I always liked to solve various kinds of tasks and puzzles. This was another help that further motivated me and inspired confidence in the chosen path. Well, I got acquainted directly with trading already at courses for beginners, which were conducted at the business training of one of the brokers in the early 2000s.
At the same time, I want to note that my basic higher education is not related either to finance or to the economy. Many will ask: “How is this possible? Why? This is nonsense! ” I will say that it’s even better. I avoided getting the “blinkers” and prejudices of the “classical” education. And later, I used my profile skills and managed to look at the market from a different angle, because I realized that everything in the world is interconnected.
– Trading is increasingly becoming part of our lives – many people know about the foreign exchange market, binary options, cryptocurrencies, or are holders of certain securities. In your opinion, why is the popularity of speculation in Russia and the CIS countries so actively developing in recent years?
– As a researcher in human society, I can say that I see a number of reasons.
- The first one is that in the 90s a new at that time margin retail trading market began to form, which is now actively developing and “gaining momentum”. That is, the consumer market “tasted” a new “tasty” product, and this is natural.
- I consider the second reason to increase the level of financial literacy and adopt the investment culture of developed countries.
- Well, and the third important reason I consider the inclination and desire of many people to take risks, play.
Many perceive trading as a game in a casino, and it is almost impossible to convince them.
Only a small percentage of those who come into trading work on themselves, their system and style of trading, realizing that this profession is creative and requires skills, abilities, knowledge of techniques and technologies. Although, if we digress a little from the main reasons, then, of course, everyone wants to earn corny money … And this is also natural, understandable, and even good!
– Can anyone become a trader in your opinion?
– Can anyone become a trader? No! The only one who is persistent and makes efforts to this. Studying, practicing on a demo or cent account. But the determining factors are mind flexibility and quick wits. Well, and disciplined compliance with the rules of their own trading system.
– What qualities should a trader have to become a professional?
– Good question.
- First, openness to new knowledge, technologies, skills. I usually call this “flexibility of consciousness.”
- Second, guide the psychology of the trader, not the player!
- Third, the ability to distinguish currency pairs from stocks, knowledge of what a pip is, and understanding of analysis methods not as a trading strategy, but only as its integral part.
- Fourth, the market “owes nothing to anyone”, and not a single trader is able to “move” it alone.
- Fifth, to earn the notorious million, you need at least half a million to invest. That is, with a hundred bucks on the “depot”, becoming a dollar millionaire tomorrow will not work. Reality is not very “sweet”.
- Well, and the main thing – the trader must be patient and be able to wait, like a fisherman or a sniper.
– What is the most common mistake, in your opinion, that traders make?
– I believe that there are a lot of errors, and they can be interwoven individually with each trader.
The first and main mistake is the incorrect interpretation of the market and yourself in the market. From this “grow” all the others. By and large, all errors can be divided into psychological and technical.
Psychological is associated with emotions, primarily with greed and greed. The novice trader in the pursuit of “easy money” is constantly trying to beat the market, to deceive him, not realizing that the market is deeply indifferent to what the average trader thinks about him. The market is always right!
Bargaining traders “stumble” on a poor understanding of money and risk management. Accordingly, this encourages them to overestimate risks without closing profitable or loss-making deals on time, and “sitting out the drawdown” leads to negative results.
Many errors are associated with a lack of desire for learning and a reluctance to invest in their own development. Well, and another erroneous position in the behavior of the trader is the lack of discipline. Psychology and its individual characteristics are the cornerstones of trading.
I consider technical errors to be a misunderstanding and incorrect application of analysis methods, as well as the inability to use the analytical forecasts of my market colleagues: traders, investors, analysts. The assertion that traders should only trade based on their personal opinions is erroneous. Such a postulate leads traders astray, forcing them to ignore the potential of numerous information resources. The fallacy of this point of view is clearly refuted by the statistics of successful traders who do not adhere to it.
– Many people consider trading either a frivolous affair or a fraud. What can you say about this?
– Anyone who considers trading a frivolous activity simply does not know and does not understand what it really is. To judge trading, you need to figure it out a bit, trade. And the opinion about deception is most likely expressed by those who do not disdain themselves with deception or who are ready to be deceived at the subconscious level. Yes, perhaps there is no smoke without fire, but these are insignificant particulars that have no prospects and future.
– Do you think that cryptocurrencies and technologies related to them have a future?
– Blockchain technology is the future today! This is a new word in the world of communications, transmission, and storage. If government agencies move to the use of this technology in their work, then this speaks volumes: the potential of globalization and improving the quality, speed, and security of payments. Everything that improves and simplifies human life has a great future.
If we turn to cryptocurrencies, then using the example of bitcoin or ether, we can understand that they are interesting to people and are in demand. Perhaps the legitimization of all cryptocurrencies as a legitimate means of payment will “spur” demand even more. Perhaps the “first-born cryptocurrencies” will soon fade into the background and they will be replaced by a galaxy of new, conditionally “highly specialized” ones, which will balance the market as a whole and reduce risky volatility. But the investment attractiveness of virtual currencies is only “gaining momentum.”
And if we talk about cryptocurrency trading, I want to immediately assure traders that this is exactly the same tool for trading as the EURUSD currency pair. I want to say that digital currencies can be analyzed using technical analysis, and trade according to well-known trading strategies. Their dynamics are quite calm and technical, expressed in the language of traders. AND! One of the main advantages is trading on Saturday and Sunday! It can be said that this is just a trader’s dream.
– How do you feel about the introduction of Forex regulation in Russia?
– The “Forex Law” adopted in 2014 actually began to operate in 2016, so the issue of market regulation is not a novelty. Market participants providing services in the foreign exchange market received a temporary head start to join the SRO, obtain a license from the Bank of Russia, and it is impossible to work without it, but we understand that this is done for customers and this is right.
But, the main thing to understand is that for many retail brokers Russia is a small market in terms of capacity, therefore additional requirements regarding their activities entailed decisions to completely reorient to other markets. European brokers do not need a CBR license, because the terms of trade are better and the reliability is higher than that of Russian licensed companies.
– Many companies to one degree or another criticize the current legislation regarding currency trading in Russia. In your opinion, what could be changed or added to the law to make it as effective as possible?
– The first and main thing to think about is the product and the client. And in the new working conditions, a broker licensed by the Bank of Russia can offer a limited set of tools and services, which currently does not meet the request from customers.
In fact, companies operating in the Russian legal field can offer the client only trading in currency pairs with marginal leverage. Also, the trading conditions that a licensed broker in the Russian Federation can offer are significantly inferior to competitive companies from other jurisdictions. This makes Russian jurisdiction less competitive than foreign.
For experienced traders, such restrictions can serve as a motive for finding more comfortable working conditions.
The current law is intended primarily to protect the interests of clients, but in this form, it drives the broker into those conditions in which he will no longer be interesting to the client. In my opinion, this is the main contradiction of this legislative paradigm.
– What would you recommend to newcomers to forex?
– First, learn to analyze and trade!
Second, having studied the trading platform, begin practical trading, at least with a small amount. Formulate your goals as specific and precise as possible, develop a trader’s business plan, even 3 business plans: minimum, standard and maximum.
Third, create your trading style, risk and money management model, and be sure to adhere to these rules.
Rich Dennis said: “There is no need to be right in the market, you need to do the right thing,” and Bill Williams: “Reality does not exist, only our perception exists.” I recommend “take into service.” Broaden your horizons and never give up!