Author: kelly Price
Article:
If you want to make big triple digit profits in forex trading,
these simple tips will help you even if you have never traded
forex before...
Here we will give you the basis of a simple forex trading
strategy which is simple to understand, can be implemented in
just 30 minutes a day or less.
There is a big misconception in forex trading that you get
rewarded for effort - you don't, you get rewarded for being
right with your trading signal and that's it.
You also don't get rewarded for trading often in fact, this
causes most traders to lose which leads me into the tips.
1. Trade Infrequently
Be patient, the big trends and high profit trades don't come
around every day and you need to be patient. I know traders who
trade about once a month and make triple digit gains, because
they are so selective with their trades.
2. Learn to Trade Long Term Trends From Breakouts
It's a fact selling breaks to important new highs or lows on a
forex chart, works as most trends develop from them. If you want
to know more about breakouts, simply look up our other articles,
it is one of the most simple and profitable ways to trade.
Focus only on the big trends which last for many weeks or months
and forget short term trading. The reason for this is you don't
have the risk to reward on your side and will lose.
3. Hit High Odds Hard and Don't Diversify
This will simply dilute your gains and on a small account and
most traders don't have enough money anyway, to diversify
properly. When you have a trade you like, focus on it and don't
be tempted to take other trades on.
4. Risk 10 - 20% Per Trade
If you are trading a high odds trade you need to hit it hard,
risk 10 - 20% of your equity on it and don't make the mistake
most traders do, of trailing a stop within normal volatility.
Most traders get a profit, bring the stop right up, get taken
out and then the trade goes back the way they thought and makes
thousands or tens of thousands of dollars and their out.
I have always maintained picking the long term trend is easy,
entering it and staying with it, is the hard part.
Tail your stop slowly and outside of normal volatility, sure you
give a bit back when the trend changes but you will get far
bigger profits overall doing this.
Keep in mind if you could get just 50% of every major trend you
would be very rich.
Remember This to Win
In forex trading does not require you work hard, it requires
that you work smart and get the right education.
If you have a simple robust forex trading strategy, are
selective with your trading and have the discipline to follow
long term trends, you can make a lot of money and enjoy currency
trading success.
About the author:
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uccesful Forex Trading visit our website at:
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Monday, August 4, 2008
Forex Trading Profits - Simple Tips For Triple Digit Profits Any
Currency Trading Basics - the Best Currencies to Trade
Author: kelly Price
What are the best currencies to trade? Here we will answer this
question and also look at a few over looked currencies and in
particular one of the best for novice traders.
Here we are going to look at the best currencies against the US
Dollar.
Perhaps the most important consideration is turnover and
liquidity of the currency traded. and these currencies also
offer the tightest pip spreads which reduce your cost of doing
business. You can trade the majors for just 2 or 3 pips and the
currencies with the highest volume against the dollar are.
- The Euro
- The Japanese Yen
- The British Pound
- The Swiss Franc
Any trader should consider the above 4 and the euro and the yen
are favorites for most traders and will work well for swing
traders or trend followers.
I trade the euro, yen and Pound but not the Swiss Franc -
nothing against it, it's a great trending currency but it tracks
the euro to a degree now as the country has become more
integrated with Europe so I have picked the euro.
Two other great currencies to trade are, the Australian and
Canadian Dollar.
They don't have the volume of the big 4 and spreads are a little
wider but for trend followers they offer some excellent trends
and with both being commodity currencies, they have given some
great trends over the last few years with the recent surge in
commodity prices.
If I was to pick a currency that is good for novices, it
wouldn't be the euro or the yen - but the Canadian dollar.
It works well on any technical system and offers reliable trends
and the major advantage is it lacks the frequent volatility
spikes you see in the big two
Of course any list of best currencies to trade is going to be
subjective but if you are a novice trader or trading the majors
and want a change, check out the Canadian dollar - it really is
a great currency to trade.
About the author:
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on href="http://www.learncurrencytradingonline.com/subscribe.html">C
urrency Trading Basics visit our website at:
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Forex Trading Education - How to Use Support and Resistance For
Author: Monica Hendrix
An essential element of your forex trading education is using
valid support and resistance to time your trading signal. Here
we are going to walk you through a live example of how to use it
properly.
The currency we are going to look at on our forex charts is the
Japanese yen.
If you look at the yen daily chart, you will see a very valid
resistance level at the 108.00 level and since March of this
year there have been numerous tests of it, over 20 and yet the
dollar has failed to close above it supported by momentum.
This resistance is very valid because there have been so many
tests. Resistance or support gain validity
- the more times they are tested and hold
- The more different time frames and the wider apart they are
- The traders who trade the market and the news sees the level
as significant
Watch the level then confirm the Trade
The way to trade it is to wait for the rise but DON'T sell until
you see momentum turn down and two great indicators for timing
your trade are the stochastic and the Relative Strength Index.
Simply wait for the level to be tested and wait for them to turn
down.
Never just assume a level will hold, wait for confirmation via
momentum indicators
Once this occurs you can be short and you know when you're wrong
- if prices close above resistance.
This simple method of trading into valid resistance or support
works and providing you time your entry correctly with momentum
indicators, it can make a lot of money.
We have used this simple strategy to clear thousands of pips
profits, this year and we have kept it simple, nothing
complicated about it but it doesn't mean it simple strategies
can't make money they can.
While resistance holds you keep doing it sell into the level and
take profits when the dollar becomes oversold, then wait for the
next test.
Follow Reality of Price Change
If the price breaks up and closes strongly above resistance, the
odds will favour further strength in the dollar.
Simple and Effective
Sure it's simple but it can be very profitable and the above is
a good example of a low risk, high reward way of trading into
valid resistance.
You don't need to do anything else, than trade the reality of
price change on the charts and if you do and you confirm your
moves this simple forex trading strategy can make a lot of
money.
This article was written on the 2nd Of August, good luck and
good trading.
About the author:
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on href="http://www.learncurrencytradingonline.com/subscribe.html">F
orex Trading Education visit our website at:
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Trading Forex - Renminbi
Author: Mike P. Kulej
Article:
China is making business headlines everywhere we look. It has
the largest population, the fastest growing economy, the biggest
export/import imbalance, most imposing foreign reserves. And, by
many accounts, the most undervalued currency, which is, in part,
the reason behind Chinese meteoric rise as on of world's
dominant markets.
There is some confusion as to the correct name of Chinese
currency. There seem to be two different names used
interchangeably. One is the Yuan, while the other is Renminbi.
Yuan is the measure of account, while Renminbi (RMB) is the
correct name of the currency, meaning "people's money". Even in
Forex circles there is no conformity, as the term Chinese Yaun
(CNY), is still commonly used. Little wonder just about
everybody is confused.
This currency is not a freely "floating" one. Since 1997 until
2005, China maintained a peg of 8.27 to a dollar. In eyes of
many economists and politicians, that was a chief reason for
Chinese staggering trade imbalance, estimated to be over 1
Trillion dollars. The People's Bank of China was under enormous
international pressure to let Renminbi float. In 2005 the bank
moved the peg to 8.11 USD.
Eventually People's Bank of China (PBC) moved to a managed
floating exchange rate based on market supply and demand with
reference to a basket of foreign currencies. The daily trading
price of the U.S. dollar against the RMB in the inter-bank
foreign exchange market would be allowed to float within a
narrow band of 0.3% around the central parity published by the
People's Bank of China (PBC); in a later announcement published
on May 18, 2007, the band was extended to 0.5%.[19] The PRC has
stated that the basket is dominated by the U.S. Dollar, Euro,
Japanese yen and South Korean Won, with a smaller proportion
made up of the British Pound, Thai Bath, Russian Ruble,
Australian Dollar, Canadian Dollar and Singapore Dollar.
As of this writing (late July 2008), RMB is quoted at 6.82 USD.
This represents a 21% appreciation since the removal of peg.
Large move in currency terms. Despite this fact, many studies
indicate that RMB is still severely undervalued, and is expected
to rise in value over coming months and years, against the
entire basket of tracking currencies. How can a trader take
advantage of this appreciation? There is number of
possibilities. The easiest is to enter Chinese equities market
through any ETF exposed to China. There are many of them, with
varied level of both exposure and play. While this approach is
the simplest one, it is also the least direct one when pure
currency movement is sought. Not the best option for Forex
trader.
Another financial vehicle to consider is a Market Vector
Currency Exchange-Traded Note, a form of ETF. Morgan Stanley
issued Chinese Renminbi/USD ETN, which trades under the ticker
symbol CNY. This instrument is supposed to shadow the currency
fluctuation and trade like a stock. It can be purchased through
any stock broker. Just like all of this type of products, it
lacks the the advantages of spot Forex market, namely 24 hour
trading and scalable leverage.
Most appealing option to a Forex trader is to trade Renminbi in
a spot market. Fortunately, this possibility exists, but is
offered by very few brokers. You might have to look around a
little. There are some shortcomings to this option. The spread
is very wide, making day trading prohibitively expensive, to the
point of not being practical. Some periods during trading day
lack liquidity, making it very difficult to get in or out of the
market. If your intention is to take advantage of long term
expected appreciation, you can easily use this option for "buy
and hold".
General long term predictions for Renminbi are calling for
significant gain against the earlier mentioned basket of
currencies. While it might very likely be true, one musn't
forget that China is still a developing country by western
standards. Her financial markets will go through many peaks and
valleys, some of which will surely be prolonged. Renminbi is no
exception and is certain to experience large corrections.
About the author:
Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex
LLC. He specializes in mechanical trading systems as explained
on
Spectrum Forex LLC offers numerous services to individual
traders. He also publishes trading blog
questions and comments e-mail him at kulej@spectrumforex.com.
www.forextradingwins.blogspot.com
Summer Forex Trade.Advice.
Author: roman sadowski
We are coming into summer forex trading season on foreing
exchange market.Most of experienced traders would tell you that
this is the worst time to trade anything and the best time to
lose your forex capital.If you have been watching Forex currency
movements you would probabaly notice how much they have slowed
down over the past two month sand how difficult is to make any
pips these summer days on forex market.
Econimic situation is not very stable this summer.It is clear
that nobody really knows what next trading day may bring.Many
financal businesses are off for the summer,interenet activity is
slow and there are not too many people out there in their
offices in front of the screens following forex market.They all
having fun in the hot spots. As a forex trader you will have to
consider all those aspects to plan your summer trading with
confidence. If you wonder what happened to your system or why
the other systems do not perform as good as before this is only
because above reasons.Summer trading is always extremely
difficult and tricky even for most experienced traders. Maybe
the time has cometo change your approach to trading for a while
until they are all back to work in september. There are few
things you could do to wait it throughj and not expose your
account to much damage. First and the most effective is to go on
holidays yourself.There is nothing you can lose this way and we
all need holidays anyway.
If you have no luck to do so and you decided to stay on
trading,there are few tactics you can implement and you may come
out not bad overall. Pick up signal providers with free trials
and demand performance evidence before you join.All providers
with an honest and positive summer results are the way to go .If
thet can make profits in summer so can you.. Review your money
management strategy .Risk less and trade less.Remember this is
going to be difficult now to make profits. Do not trade pairs
which you are not sure off.In other word do not gamble trades..
The big advantage we would like to recommend is to be extra
careful and watch closely your trades.Watch your account balance
and do not let it go down.It will be difficult to build it again
in september. For more information and advice please go to
About the author:
For more information and advice how to trade in summer please go
to
www.forextradingwins.blogspot.com
Forex Money Management - a Simple Strategy For Bigger Gains and
Author: kelly Price
Forex money management is crucial to your trading success and
you need to at all time protect your core equity. This is a
simple effective strategy I have used for many years to improve
profitability and it works.
If you want to make money in forex, you have a choice of long
term trend following and trading the big trends, or trading the
over bought - oversold areas via swing trading.
Before we move on forget day trading or scalping it doesn't work
so you have the choice of the above trading methods and this
strategy combines them.
I am going to start with an example of my own trading. I am
dollar bullish on the euro and got my short in at 1.60 and we
have seen a big decline of 500 odd pips. A nice return and I
think the euro is going far lower - but we could get a good
rally as we are oversold at present. So what am I going to do?
Simple...
Put 50% of the trade in the bank and leave 50% in the market.
Ok it could run lower but I am still in the market with 50% and
will put another 50% in on the next euro rally when it becomes
over bought.
The advantage of this simple money management tool is:
You are following the long term trend and banking along the way
using swing trading indicators, taking profits on surges and
putting dollar longs back in when the euro becomes overbought.
You are active but still following the long term trend.
Sure 500 pips is nice - but I think the euro is going to trade
into the 1.40s, so I want to hold the trend but if things go
against me, this strategy allow me to come out with a profit.
This method allows you to take a bit more risk to the stop and
remember - most traders can pick direction of trends, what they
can't do is get their stop levels right and get stopped out to
soon.
Most traders cannot simply sit on a long term trend and this
method allows them to do so and you are always in the market. If
you look at any forex chart you will see trends that last for
many months and make tens of thousands of dollar and this method
will let you tap into them.
50% is the core position 50% is liquidated on surges in your
favour and then put back in for full exposure on short term
rallies against you.
In the next article I will show you the indicators to use and
how to decide when to take profit and when to enter new
positions, with this simple but powerful money management
technique.
About the author:
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orex Money Management visit our website at: href="http://www.learncurrencytradingonline.com">http://www.learn
currencytradingonline.com.
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Saturday, July 5, 2008
Sorting Through a Forex Brokers List
Author: lockearticles1
Article:
Forex trading will be easier if you hire a forex broker. A forex
broker will not only be a “middleman” between you and the
forex market, but it will also be the one to supply facts and
figures, suggest forex trading strategies, and offer trading
decisions whenever necessary.
Forex brokers are trader companies with a level of experience in
the forex market. Their experience can be crucial for you for
higher chances of winning. On the other hand, you may hire the
wrong forex broker and end up losing instead of gaining profit.
That is why you have to make the right choice and browse through
the forex brokers list. To effectively choose a broker, you only
have to follow these easy tips:
Choose a Broker with Proper Credentials
How can you identify those forex brokers with the right
credentials? You can immediately create a shortlist by
eliminating prospective broker companies that are not registered
with the Commodity Futures Trading Commission as a Futures
Commission Merchant.
The designation of FCM will mean that the trading client will
have protection against fraud or anomalies that violate existing
trade practice regulations. It will also be a good way to
preserve your personal security and to ensure your safe entry to
the trading circuit.
Make an Effort at Research
Research has gone a long way since the advent of the Internet.
Nowadays, if a company has no website, you will think twice
about its business acumen. This is because if a company is
maintaining a website, it will usually mean that they are
exerting an effort to penetrate new horizons such as the
Internet. Companies like these are to be taken seriously.
Try to look up some of their existing clients and how they fare
in their trading. Note that facts and figures are easily made-up
in a website, so be sure to cross-check any information that you
may find.
Test Their Response Time
Now that you have researched about the prospective forex broker,
try to test their response time to their clients. You can do
this by sending an email to their customer service.
A company that timely answers inquiry requests from prospective
clients is serious in its business. The response time reflects
the level of their customer service to their clients and is a
sign of professionalism.
Know How Much You Are Going to Pay
Keep in mind that forex brokers are never free. Never let your
guard down just because they gave you free trading tips.
About the author:
Though some offer free advice, you will always have to pay for
their services so when choosing the right forex broker, be sure
to be aware of how much they charge for their services. To get
some great tips on forex, visit
http://www.forextradingmethods.net now! The best forex
information on the net, guaranteed.
Currency Trading System - a Free Profitable Trading System is
Author: kelly Price
Article:
The currency trading system enclosed, works, will continue to
work and you can get started with it and use it to seek forex
trading success. All you need to know about it is enclosed.
Don't confuse this currency trading system with the junk robots
you see online for sale which come with made up track records
simulated in hindsight, this one has been used by savvy traders
for over 20 years and works.
The system was originally devised to trade commodity markets but
works on any trending market and of course forex markets offer
excellent trends.
The System is known as the 4 Week Rule and was devised by
Richard Donchian one of the most influential traders of all time
and here is the system and its very simple but don't be put off
all the best trading systems are - here you go:
Buy a new 4 week calendar high and reverse to a short position
on a break to any 4 week colander low maintaining a position in
the market at all times.
That it and while it sounds simple it is based on sound logic
and this system if you test it makes money here's why:
- It trades breakouts and it's a fact that most trends start
from new lows or highs
- It trades infrequently and is after the longer term trends
The advantage of the system is
- It will put you on the right side of EVERY big trend
- It is totally objective all you do is follow the rule
- It takes very little time to use this system
The only disadvantage of the system is when markets don't trend
and of course it can generate signals that cause losses so you
may wish to add a filter:
Exit any position on a one or two week low and then wait for the
next 4 week signal to re enter. You can also use short term
moving averages to exit the trade as well.
This system may not be complicated but it is effective at making
money longer term. You need discipline to follow it as its not
fussy about exact market timing but it puts dollars in the
pocket longer term and will beat 95% of sold systems online.
If you think that a simple system couldn't make money test the 4
Week Rule and you may be very surprised!
About the author:
NEW! 2 X FREE ESSENTIAL TRADER PDFS
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and more on href="http://www.learncurrencytradingonline.com/subscribe.html">C
urrency Trading System visit our website at:
href="http://www.learncurrencytradingonline.com">http://www.learn
currencytradingonline.com.
Forex Trading - Poker Players Often Become Trading Millionaires
Author: Sonia Kristina
Article:
If you thought that poker paying couldn't teach you much about
forex trading you would be dead wrong. If you can play poker
successfully you can trade and win because there is a unique
mindset needed for both. Even if you don't play poker you will
learn the skills needed from this article.
Any successful poker player will tell you that to win you need
to know when to bet ( when the odds are in your favour) how much
to bet and when to quit, to preserve equity and the skills
needed are neatly summed up in the old gamblers saying:
"There's a time to hold them a time to fold them and a time to
get out of town fast"
The successful poker player relies on himself there is no one to
help him at the table (contrast this with most forex traders who
trust mentors gurus or junk robots) and they rely on tremendous
discipline to not trade at all, or quit and take a loss and keep
their losses small (contrast this with the forex trader who
hates admitting their wrong), now you can see why they make
great traders.
Trading relies on you - no one else can help you.
You must get the right education and have confidence in it and
then the hard part - apply your trading system with discipline
in the market. Just like in poker your playing the odds not the
certainties, many guru's would have you believe.
You have to have total confidence in what you are doing and the
equation for market success is:
Logical well thought out method + the discipline to execute it =
forex market success.
If you don't have the discipline to execute your trading system
- you may as well not have one!
The poker player will take loss after loss - but he will have
the confidence and discipline to know that his time will come,
when he can load up his trades and win big. Most traders simply
cannot take a strong of losses but that's part of trading and
you must do this.
You need to understand you have to lose to win.
Forex trading is actually quite simple anyone can learn to trade
currencies but 95% of traders lose. The reason is not because
they can't learn to trade, it's because they like to follow
others or want to win all the time.
They simply don't have the discipline, or mindset to win and the
poker player does.
So learn this:
You need to stand on your own two feet. No following others or
believing all the hype that forex trading is easy - its not.
You then need to have confidence in what you're doing, to give
you confidence and the discipline to preserve your equity by
taking small losses and wait for your opportunities and run them
to big profits, when they come.
So if you play poker successfully or for that matter blackjack,
then you already have the traits needed to win. If you don't
play poker you will see the logic of the material enclosed and
can incorporate it in your forex trading strategy and seek forex
trading success.
About the author:
NEW! 2 X FREE ESSENTIAL TRADER PDFS
ESSENTIAL FOREX TRADING COURSE
For free 2 x trading Pdf's, with 50 of pages of essential info
and more on href="http://www.learncurrencytradingonline.com/subscribe.html">W
in at Forex Trading visit our website at: href="http://www.learncurrencytradingonline.com">http://www.learn
currencytradingonline.com.
Forex Trading - Commonly Held Views That If You Believe Them
Author: Sonia Kristina
Article:
Here are some commonly held views on forex trading that if you
believe them will see you lose and most traders do, so don't be
with the majority avoid these beliefs at all costs - here they
are...
1. Forex Robots Work
You have seen them, present great track records but there all
simulations in hindsight!
If you want to lose use one and you can do it quickly, by buying
a forex robot with a simulated track record!
2. Trade Short Term
Day trading and scalping is destined to lose as all movements
within a day are random. Again when you see a track record of
someone saying they win at it - look for the world "simulated in
hindsight" Day trading is a mugs game.
3. You Need to Predict to Win
If you think about this it's simply guessing and no one knows
what will happen next, so don't predict, trade the truth and
reality of price change only.
Before I forget don't be taken in by all the scientific theories
of market movement, if there was one, there would be no market
as we would all know the price in advance!
Forget predicting and trade the truth of change of price as you
see it in black and white on a forex chart.
4, Trading Breaking News
Waste of time - markets don't move on the news, they move on how
traders perceive it, that's why markets rally when there most
bearish and crash when there most bullish. If you think you can
make money trading news, think again.
4. You can Make Big Profits on $100.00!
The amounts that many brokers ask for today is tiny and with the
leverage and volatility in currency trading it's like tossing a
coin.
No one should consider trading less than $1,000 and preferably
$5,000.
5. Use Leverage Available
This is the one that traders hang themselves with. Brokers give
200:1 as standard and even 400:1 and most traders like to use it
- but volatility kills them.
Over leveraging wipes out the bulk of new traders 10 - 20: 1
leverage is enough for most traders.
6. All You Need to Win Is a Good System
Not true, its like having a high performance racing car, if you
don't have a careful disciplined driver, the car will crash.
In forex terms you can have a good system - but its going to
lose and you are going to have to stick with it and ride out the
losses. If you cant execute your trading strategy with
discipline in these periods, you will never hit the home
straight and win.
Think discipline is easy - think again, its not, even for
experineced traders its hard to stay on course, when your losing
money and the market makes you look stupid.
HOW TO WIN!
As you can gather you need to avoid the majority and get a
simple system that's logically and you can apply with
discipline. It sounds easy but its not you need to work at it
but don't be dismayed your effort will be well worth it and you
can soon be enjoying great forex profits on a regular basis.
About the author:
NEW! 2 X FREE ESSENTIAL TRADER PDFS
ESSENTIAL FOREX TRADING COURSE
For free 2 x trading Pdf's, with 50 of pages of essential info
and more on href="http://www.learncurrencytradingonline.com/subscribe.html">C
urrency Trading System visit our website at:
href="http://www.learncurrencytradingonline.com">http://www.learn
currencytradingonline.com.
Forex Day Trading and the Road to Financial Freedom and a
Author: Sonia Kristina
Article:
Forex day trading seen as the road to financial freedom by many
traders and the appeal is obvious take small risks and build a
fantastic second income. If you are a day trader not making as
much as you think you can or a novice trader looking to start
read this article...
Fact is day trading and forex scalping will lead you to
financial ruin should you decide to base your forex trading
system on them. The reason will become clearer if you ponder the
problem below and it's a hard one and one day traders cannot
solve no matter how clever they think they are.
Think of how many traders all around the world and how different
they are, in terms of their makeup, in terms of strategies they
use, education they have and the degree to which they are all
influenced by their emotions.
Your task (should you wish to accept it!) is to guess or predict
what they are going to do in a matter of minutes or hours - is
it possible?
No!
In days gone by the floor traders made money day trading and had
an advantage over the bulk of retail forex investors, as he had
the news ahead of the crowd and could react quickly - but today
we all have the information in a split second, in all corners of
the world and the edge has gone and you don't hear of this now
as we live in a world of electronic currency trading.
Daily movement of price is random and as you cannot use support
and resistance in these periods, you can apply technical
analysis and tools that work in longer time frames cannot by
there very nature work on random data - you may as well toss a
coin.
You can be lucky for a while - but at the end of the day the
market will sooner or later take your money.
What about all the forex day trading and scalping systems that
have great track records?
Well take a read of the following snippets that normally
accompany these stellar track records and it will make you think
and see them differently
"CFTC RULE 4.41 - Hypothetical or simulated performance results
have certain limitations. Unlike an actual performance record,
simulated results do not represent actual trading.
And the following will also be seen
Simulated trading programs in general are also subject to the
fact that they are designed with the benefit of hindsight. No
representation is being made that any account will or is likely
to achieve profit or losses similar to those shown".
Would you trade a system which had that written on it? Rather
you than me.
The day trading myth is you make profits but the reality is
different. Forex day trading is the road to ruin not financial
fredome
So get the right forex education and get a forex trading
strategy, based on data that can put the odds in your favor and
this will allow you to get on the road to financial freedom.
About the author:
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Friday, June 27, 2008
Reasons For Having a Trading Plan
You can fill your mind with plenty of information, but without a good trading plan and the discipline to stick to it, you will never be profitable.
Think of your trading plan as your map to success. It will be a constant reminder of how you will make money in this market. Of course it’s not required, and if you can make your living by trading without a plan, i will bow down and hail you as the Market Zeus of the Forex.
So you can trade without a plan if you want, but before you make that decision, let me give you a few reasons WHY you should have one.
Reasons For Having a Trading Plan?
Reason 1: It keeps you in the right direction
Consistency is very important to have in your trading routine because it allows you to truly measure how successful you are as a trader. If you have a sound trading system but always break your rules, how can you ever really know how good your system really is? Your trading plan will keep you on target. Read it every day and stick to it.
Reason 2: Trading is a business and successful businesses ALWAYS have plans
I have never seen a successful business not start out with a plan. Do you honestly think Walmart was just created on a whim and then magically became successful? Or what about McDonalds? I’m sure almost anyone can make a better hamburger than McDonalds, but the difference between them and the individual is that they have a successful business plan that guides them to success.
In the same way, you can relate the McDonald’s story to your trading career. Whether it’s by luck or experience, everyone can make money in the forex. However, the difference between a losing trader and a successful trader is the PLAN. If you have a good trading plan and you are disciplined enough to stick to it, you will be successful!
Now you know why you should have a trading plan.
Monday, May 5, 2008
Types of Trading
There are 2 basic types of analysis you can take when approaching the Forex:
1. Fundamental analysis
2. Technical analysis.
There has always been a constant debate as to which analysis is better, but to tell you the
truth, you need to have the knowledge of both. So let’s break each one down and then
come back and put them together.
Technical Analysis
Technical analysis is the study of price movement. In one word, technical analysis equal
to charts. The idea is that a person can look at historical price movements, and based on
the price action, can determine at some level where the price will go. By looking at
charts, you can identify trends and patterns which can help you find good trading
opportunities. The most IMPORTANT thing you will ever learn in technical analysis is
the trend! Many expert traders have a saying that goes, “The trend is your friend”. The
reason for this is that you are much more likely to make money when you can find a trend
and trade in the same direction. Technical analysis can help you identify these trends in
its earliest stages and therefore provide you with very profitable trading opportunities.
Fundamental Analysis
Fundamental analysis is a way of looking at the market through economic, social and
political forces that affect supply and demand. In other words, you look at whose
economy is doing well, and whose economy sucks. The idea behind this type of analysis
is that if a country’s economy is doing well, their currency will also be doing well. This is
because the better a country’s economy, the more trust other countries have in that currency.
For example, the U.S. dollar has been gaining strength because the U.S. economy is gaining strength. As the economy gets better, interest rates get higher to control inflation and as a result, the value of the dollar continues to increase. In a nutshell, that is basically what fundamental analysis is.
Based on experience and research, both technical and fundamental analyses are to gaze at
when you want to trade, each trade swings its focus more to one of the two; I will
basically say that economic news release is more fundamental, while session opening is
more technical. Therefore, watch out!
Fundamental Announcements provides some of the absolute best trading opportunities in
the FOREX markets, and it account for most of the considerably large market moves. In
general (but not always) the markets move relatively slowly when not affected by FA,
thus giving small profit opportunities. Immediately, and for a while after a significant
Fundamental Announcement the markets move strongly, thus providing great profit
opportunities.
Usually Fundamental Announcements are released at a scheduled time. This means that
you can know days in advance when a potentially great opportunity will happen… to the
minute! This could be found on some websites like www.forexfactory.com,
www.fxstreet.com. Focus on the Fundamental Announcements of the country or
economy that you are proposing or already trading their currency pairs for more profits.
Some of the major Global Economic Calendars (indicators) are state below and could be
very volatile and profitable. You cannot watch all the indicators because they change in
importance base on time and condition. Watch out for more insights of different
techniques and strategies of trading the FA indicators.
1. Trade Reports
2. Gross Domestic Product (UK)
3. Unemployment
4. Interest Rates Reports
5. Core Durable Goods (USD)
6. Retail Sales (USD)
7. Consumer Confidence
8. Trade Balance (USD)
9. ISM manufacturing Index and Prices (USD) (comes 1st of every month)
10. Non-Farm payroll (USD) (being announced every 1st Friday of the month)
11. Employment Change (it will happen the same day with non-farm payroll but an
hour before non- farm payroll).
As I stated before, the pros watch only six major currency pairs. Here they are:
The U.S. dollar vs. the Japanese yen
The U.S. dollar vs. the Swiss franc
The U.S. dollar vs. the Canadian dollar
The Euro vs. the U.S. dollar
The British pound vs. the U.S. dollar
The Australian dollar vs. the U.S. dollar
How to Open a Forex Account
What you need to put in place before trading Forex online are:
1. Domiciliary Account
2. Utility Bills
3. Means of Identification (International Passport, National ID Card or Driver’s
License)
4. Download the trading platform
5. Demo Trade
6. Open a Forex Account with a broker.
7. Fund the account base on your capacity.
HOW TO FUND A FOREX ACCOUNT
Funding your Forex account is so simple but some hidden charges need to be clear to you
before funding the account. And there are ways of transferring from your domiciliary
account to your Forex account in abroad.
The most reliable means of funding a Forex account is through Bank wire transfer i.e
through your domiciliary account. This means is safe and since there is no third party in
Forex, your money is secured.
Also, understand the transfer and withdrawing charges of your Bank before your make any transaction.
STEPS:
1. Get transfer form and details from your broker’s website.
2. Make the transfer and inform your broker so that your Forex account can be
funded.
HOW TO WITHDRAW FROM YOUR FOREX ACCOUNT
1. Simply download and fill the withdrawal form (usually available on your broker’s
website)
2. Signed the completed form and send either by Fax or E-mail)
3. The funds will be wire directly to your domiciliary account (within 48hrs).
NB: You can’t transfer or make withdraw into any other person’s account but yours as
there’s no third party in Forex.
How to Open a Forex Account
What you need to put in place before trading Forex online are:
1. Domiciliary Account
2. Utility Bills
3. Means of Identification (International Passport, National ID Card or Driver’s
License)
4. Download the trading platform
5. Demo Trade
6. Open a Forex Account with a broker.
7. Fund the account base on your capacity.
HOW TO FUND A FOREX ACCOUNT
Funding your Forex account is so simple but some hidden charges need to be clear to you
before funding the account. And there are ways of transferring from your domiciliary
account to your Forex account in abroad.
The most reliable means of funding a Forex account is through Bank wire transfer i.e
through your domiciliary account. This means is safe and since there is no third party in
Forex, your money is secured.
Also, understand the transfer and withdrawing charges of your Bank before your make any transaction.
STEPS:
1. Get transfer form and details from your broker’s website.
2. Make the transfer and inform your broker so that your Forex account can be
funded.
HOW TO WITHDRAW FROM YOUR FOREX ACCOUNT
1. Simply download and fill the withdrawal form (usually available on your broker’s
website)
2. Signed the completed form and send either by Fax or E-mail)
3. The funds will be wire directly to your domiciliary account (within 48hrs).
NB: You can’t transfer or make withdraw into any other person’s account but yours as
there’s no third party in Forex.
How do i Trade Forex?
Trading Forex could be as simple as it is being advertised but before you venture into
online Forex trading, kindly demo trade by downloading the trading platform from any
Forex broker’s website. Moreover, I will advise you start a METAQUOTE4 trading
platform as it is very easy to maneuver, customize and understand be it a beginner or an
expert. Let me sound this warning that there are lots of SCAM online that claims to be a
broker but you can check their rating on www.forexbastards.com/forexbrokerreviews.
I highly recommend that you only open an account with a registered broker. Having said
that, most Forex brokers provide, “free of charge”, an online trading platform that is
integral with decent charting software. I believe you can consider the data reliable and the
order execution proper as long as you are dealing with a registered broker. However,
some trading platforms and charting software are more intuitive and easier to use than
others, so in selecting a broker, you want to open a demo account first and get the feel for
that broker’s platform to see if it is comfortable for you. You will be able to determine
this with a little paper trading over a few days and weeks.
Also, you want to be sure that your brokers charting software is able to plot the indicators
that your trading methods call for. Most will be able to do this, but not all.
You select the pair of currencies with which you wish to make a Forex deal. You
determine the volume (the amount of the deal). You deposit the "margin" (collateral
needed to facilitate the deal. Usually - only a very small portion of the whole deal, say:
1% or 1:100).
Before you finally activate the deal, you can still "freeze" it for a few seconds (only
available at selected brokers). That enables you to either change the terms, or accept it as
is, or altogether regret the whole idea.
When your Forex deal is running, you can monitor its status and check scenarios online
whenever you wish. You may change some terms in the deal, or close it. Ultimately, you
remain in control, only you can decide when the time is right to cash in your profit! Some
Forex brokers will even let you determine a "take-profit" rate, with which the deal will
close automatically for you.
Psychology of Trading
Trade with a DISCIPLINED Plan:
The problem with many traders is that they take shopping more seriously than trading.
The average shopper would not spend $400 without serious research and examination of
the product he is about to purchase, yet the average trader would make a trade that could
easily cost him $400 based on little more than a “feeling” or “hunch.” Be sure that you
have a plan in place BEFORE you start to trade. The plan must include stop and limit
levels for the trade, as your analysis should encompass the expected downside as well as
the expected upside.
Cut your losses early and Let your Profits Run:
This simple concept is one of the most difficult to implement and is the cause of most
traders demise. Most traders violate their predetermined plan and take their profits before
reaching their profit target because they feel uncomfortable sitting on a profitable
position. These same people will easily sit on losing positions, allowing the market to
move against them for hundreds of points in hopes that the market will come back. In
addition, traders who have had their stops hit a few times only to see the market go back
in their favor once they are out, are quick to remove stops from their trading on the belief
that this will always be the case. Stops are there to be hit, and to stop you from losing
more then a predetermined amount! The mistaken belief is that every trade should be
profitable. If you can get 3 out of 6 trades to be profitable then you are doing well. How
then do you make money with only half of your trades being winners? You simply allow
your profits on the winners to run and make sure that your losses are minimal.
Do not marry your trades:
The reason trading with a plan is the #1 tip is because most objective analysis is done
before the trade is executed. Once a trader is in a position he/she tends to analyze the
market differently in the “hopes” that the market will move in a favorable direction rather
than objectively looking at the changing factors that may have turned against your
original analysis. This is especially true of losses. Traders with a losing position tend to
marry their position, which causes them to disregard the fact that all signs point towards
continued losses.
Do not bet the farm:
Do not over trade. One of the most common mistakes that traders make is leveraging their
account too high by trading much larger sizes than their account should prudently trade.
Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only
requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in
his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a
$100,000 investment and not the $1000 put up as margin. Most traders analyze the charts
correctly and place sensible trades, yet they tend to over leverage themselves. As a
consequence of this, they are often forced to exit a position at the wrong time. A good
rule of thumb is to never use more than 10% of your account at any given time.
What is Forex Trading?
The word FOREX is derived from Foreign Exchange and is the largest financial market
in the world. Unlike many markets, the FX market is open 24 hours per day, 5 days per week and has an estimated $1.5 Trillion in turnover every day. This tremendous turnover is more than the combination of all the worlds' stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.
Unlike many other securities (any financial instrument that can be traded) the FX market
does not have a fixed exchange. It is primarily traded through banks, brokers, dealers,
financial institutions and private individuals. Trades are executed through phone and
increasingly through the Internet. It is only in the last few years that the smaller investor
has been able to gain access to this market. Previously, the large amounts of deposits
required precluded the smaller investors. With the advent of the Internet and growing
competition it is now easily in the reach of most investors.
Forex Trading Terminology
Spot Deal: A deal taking part between two parties who can deliver a certain amount of
different currencies to each other within 2 business days of each other (excluding
Canadian dollar where the trade is executed within 1 business day)
Market Order/ Instant Execution: This is the execution you make when deciding to
buy/sell a currency. In other words you see a currency exchange rate quote on screen and
you place a ‘market order’ when you click the button to execute the trade.
Limit Order: This order type is used to buy or sell a pair at a predetermined price. A buy
limit order will only be filled if the market trades (ask) at or below the limit price. A sell
limit order will only be filled if the market trades (bid) at or above the limit price.
Stop Order: This order type is used to buy or sell a pair at a predetermined price. A buy
stop order will only be filled if the market trades (ask) at or above the stop price. A sell
stop order will only be filled if the market trades (bid) at or below the stop price.
Entry Orders: This is basically and advance order, you decide at what price you want to
buy or sell a currency and you place an ‘entry order’. As soon as the currency reaches this
rate your trade is executed.
Stop-Loss Order: This is a function offered by some brokers which is aimed at reducing
your risk; you can decide the maximum and minimum amount of profit or loss you want
to exit a trade at. In other words if you decide you are happy to make $500 from one trade
but don’t want to lose anymore than $500 should the trade go the other way you can
place this safety net on your trade.
Spread: The difference between the Bid and Ask price.
Lot: The amount of units of the base currency when you enter the market. I will like to
explain further in this as many are not getting the concept of the LOT. This is simple the
contract value of the currency you are buying or selling.
Trend: The direction the market is currently moving in.
Long Position: This is used to describe a market in a long-term buy trend.
Short Position: This is used to describe a market in a short-term sell trend.
What does it mean to be "long" or "short" a currency?
Being long means buying a currency. Being short means selling a currency. If a trader goes long GBP/USD, he or she buys GBP and sells USD. Buying a currency is synonymous with taking a long position in that currency. A trader takes a long position in a currency if he or she believes it will appreciate in value.
If a trader goes short GBP/ USD, he or she sells GBP and buys USD. Selling a currency is synonymous with shorting that currency. A trader would short a currency if he or she believes it will depreciate in value.
Bid and Ask Price: Currency is traded in pairs as mentioned above; where one is Base
and the other is Counter currency. The currencies are two-sided quoted, consisting “Bid”
and “Ask” e.g. 2.0440/2.0443. The bid is always lower than the ask price. The Bid is the
price at which the dealer is willing to buy the base currency in exchange for the quoted
currency. This means the Bid is the price at which you (as the trader) will sell i.e. 2.0440
The Ask is the price at which the dealer will sell the base currency in exchange for the
quoted currency. This means the Ask is the price at which you will buy. i.e. 2.0443.
Pip(s): Is the Percentage Interest Points and the last decimal point in a quoted price of
any currency. The most common increment of currencies is known as the "pip." It is the
smallest value change in a currency pair exchange rate. Example: the movement of GBP/USD of 1.7896 to 1.7897 signifies a pip movement. A positive or negative pip value
is how you calculate your profit or loss.
Benefits of Forex Trading
so many people are choosing this market as a business opportunity:
1. LEVERAGE: In Forex trading, a small margin deposit can control a much larger
total contract value. Leverage gives the trader the ability to make extraordinary profits
and at the same time keep risk capital to a minimum. Some Forex firms offer 200 to 1
leverage, which means that a $50 dollar margin deposit would enable a trader to buy or
sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with
$100,000 dollars and so on. Moreover, one must be careful when choosing leverage
because due to experience and research, it is very clear that leverage is misunderstood
and this misunderstanding is a root cause of Forex trading losses and the futile attempts
to overcome these losses without addressing the root cause.
Because of the high leverage that Forex offers, Forex positions require a much smaller
account size than stock. Stocks trading similar sized positions as Forex margin
requirements are much smaller than stock margin requirements. And so the reward can be
much greater with Forex, but at the same time, the risk is much greater. But this can be
dealt with effectively with good trading tactics and good money management rules that
allow for maximizing profit potential and minimizing risk.
Now, let me explain in a lame man way that the deposit (money) you have in your Forex
account with a broker is refers to as collateral (margin) for getting a loan (leverage) from
the broker to trade any required amount of currencies.
2. LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid.
This means that with a click of a mouse you can instantaneously buy and sell at will. You
are never 'stuck' in a trade. You can even set the online trading platform to automatically
close your position at your desired profit level (limit order), and/or close a trade if a trade
is going against you (stop order).
3. PROFIT IN BOTH 'RISING' AND 'FALLING' MARKETS: On the stock
markets, you can only make money if shares are rising, but in economic recession and
falling 'bear' markets, there is little chance of making big money. Forex is different. One
of the most exciting advantages of FX trading is the ability to generate profits whether a
currency pair is 'up/bullish' or 'down/bearish'. A trader can profit by taking a 'long'
position, (buying the currency pair at one price and selling it later at a higher price), or a
'short' position, (selling the currency pair and buying it back at a lower price). For
example, if you think the US dollar will increase in value vs the Japanese Yen then you
will buy Dollars and sell Yen (go long). If you think the Yen will increase in value
against the Dollar then you will sell Dollars and buy yen (go short). As long as the trader
picks the right direction, a potential for profit always exists.
4. 24 HRS: From Sunday evening to Friday Afternoon EST the Forex market never
sleeps. This is very desirable for those who want to trade on a part-time basis, because
you can choose when you want to trade - morning, noon or night.
5. FREE 'DEMO' ACCOUNTS, NEWS, CHARTS AND ANALYSIS: Most
Online Forex firms offer free 'Demo' accounts to practice trading, along with breaking
Forex news and charting services. These are very valuable resources for traders who
would like to hone their trading skills with 'virtual' money before opening a live trading
account. I will also want to advise the newbies in the Forex market to at least “Demo
Trade” for 2 months uninterruptedly before going live trading because this will really
help build up strong emotions in live trading. Also, demo trade with what you will fund
your live account with. Take for instance, you wish to fund your live account with $500,
don’t demo trade more than what you will fund your live account with.
You must also take the demo trade serious and maintain the account like a real live
account. Apply all strategies on demo account before applying it on live account.
6. MINI & MICRO MINI TRADING: One might think that getting started as a
currency trader would cost a lot of money. The fact is it doesn't. Online Forex
Firms/Brokers now offer 'mini' trading accounts with a minimum account deposit of only
$200 - $500 with no commission trading. This makes Forex much more accessible to the
average individual, without large, start-up capital. But my personal perspective about the
Forex market is that the more money you have to trade the more you enjoy trading Forex.
How to Get Started In Forex Trading
You may have been hearing about the foreign exchange market (FOREX) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in FOREX and tell you what you need to participate in this fast growing field.Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why FOREX trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.FOREX is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the FOREX, there are risks involved, so finding out as much as possible about the market is a good move for any beginner.FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices. Opening a FOREX account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker - most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage - using borrowed money - varies with accounts. High leverage gives you more money to trade for a given investment.HOWEVER - beginner traders are advised get accustomed to FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most FOREX brokers.Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits. Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites. Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer - just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' - the difference between bid and ask prices.
Monday, April 28, 2008
Success, Failure, and Fear Go Hand In Hand
Speculating in markets is a difficult challenge that will test your emotions more than you can imagine. From birth, we gravitate towards things that make us feel good and run from things we fear. If you take this instinctual action in trading, you will lose. You must understand that proper trading is not easy and you don't want it to be. If it were easy, everybody would be doing it and making money but that is just not the case. The people who do well overtime are the ones who understand that the path of learning and practicing takes time and is always a bumpy road. The key difference between those who fail and those who stick it out and succeed is that the successful ones embrace the bumps in the road. They realize that the bumps are needed failures that allow them to grow. You see, when you experience failure, it is really success letting you know that you have identified a flaw that needs to be corrected or removed.
I grew up playing hockey at some of the highest levels. When I was very young, I would watch other players in practice and admire the ones who never fell down. As a kid, no one wanted to fall down, lose the puck, or make a mistake in practice. However, very soon I realized that the kids that fell down often ended up being the best players at the end of the season. I always worked hard in practice but began to understand that the only way I would fall down is to work harder and take myself OUT of my comfort zone. That set off a chain of events that helped shape everything in my life and always will. I would skate harder and harder in practice and made sure I fell down almost every drill. As long as I was falling down, I knew I was pushing myself out of my comfort zone which meant I was growing and getting better. I then took that thought into games and realized that I had better change my way of thinking there also. If I focus on the other team as the opponent, the best I will ever be is a little better than they are. If I focus on myself as the opponent, I will never stop growing and improving. Instead of being scared to fail, I now understood that success is IMPOSSIBLE without failure.
Most people are afraid of failure in any part of life, especially trading. You have to understand that failure does not happen TO YOU, it happens FOR YOU. It is an opportunity to grow. When you shift your mind and think this way you will smile with each failure, knowing that you have just identified a flaw that needs to be corrected or removed. Adversity is scary in the moment but it is always when we grow the most. How wonderful adversity really is.
If you are one of many who are in the middle of the bumpy journey toward self empowerment through market speculating, stay encouraged. You will make it to the peak if you realize that the valley is NOT your permanent residence. Never forget, to become a butterfly, you must want to fly so bad that you are willing to give up being a caterpillar. Growth and change always go hand in hand with failure and fear.
Have a great day.
- Sam Seiden, sseiden@tradingacademy.com