By John Callingham
If you're one of the many people who want to jump into the
forex bandwagon, you should be on the lookout for the best forex
currency trading system that can help you start out.
But, before anything else, you should get yourself familiarized
first with the basic concepts of currency trading and how it
works. The most basic item on the list is the definition of
currency trading, also known as foreign exchange or forex.
Forex is the exchange of currencies based on how strong or weak
one currency performance is from the US dollar (USD). The
currencies that are usually paired with the USD for trading are
the Euro, Yen, British Pound, Canadian Dollar, Swiss Franc, and
Australian Dollar.
When an investor speculates that there will be significant
changes or fluctuation in currencies he choose to trade, he can
either buy or sell. This buying or selling will spell out if he
has gained profit or lost.
Forex currency trading system should one follow
All forex currency trading systems have different indicators
and styles in trading but there are a lot of similarities that
helps their user succeed in trading.
Simple is best in any forex currency trading system since it
can easily be adjusted in case of any market changes. Too
complicated systems will be difficult to break down to pieces in
case there are any adjustments needed.
Forex system should be able to logically adapt changes
The forex market is one that may experience drastic changes
every now and then. The currencies' values fluctuate too, from
time to time. A very good forex currency trading system should
be able to adjust to the changes that are happening and be
logically efficient to react accordingly so that losses are kept
to a minimum.
System must allow drawdown and recovery
The natural cycle in forex trading is that one profits and gets
rewarded when he takes the risk or loses as a hurtful
consequence of the risk. Trading systems should be able to
follow this natural cycle by allowing 20 to 30% loss and
allowance of a few weeks or months for drawdown.
System must have firm rules of money management in place
Money management in forex doesn't just mean putting a stop when
about to lose a lot. Money management means having a grand plan
that has been prepared in advance to counter any obstacles while
trading. A trading system should have rules set to protect the
user from losing a lot during trading.
The best trading system is easily operated by anyone
If one knows how to play the forex game, the forex trading
system should be easy for him to use. It should be able to
detect signals and perfect timing to help the user execute a
good trading move.
These are some of the common factors among the many forex
currency trading systems now available. It is up to the user to
choose which one he thinks will best suit his trading style and
his skills.
About the Author: John Callingham is a professional Forex
trader who has been teaching people how to trade the forex
profitly for years. To learn more about John's award winning
course on profiting in trading Forex visit
http://www.ForexReviewInsider.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=284056&ca=Finances
Wednesday, November 26, 2008
Forex Currency Trading - How Does it Work?
By John Callingham
Forex currency trading is creating quite a buzz these days.
With the rising cost of living, it's not hard to understand why
so many people are juggling two to three jobs at a time and
turning to the Internet to look for money-making opportunities,
one of the most popular of which is entering the Forex market
and trading currency.
Some people still have this notion that to be successful in the
Forex, one must be an accountant, economist, or a genius at
numbers. Contrary to popular belief, success in the Forex market
is now more attainable than ever, thanks to the many tips you
can find online. But before you jump on the bandwagon and join
the Forex hype, it's best if you first take a moment to find out
what Forex currency trading is and how it works.
Forex is actually short for Foreign Exchange, a currency market
in which one currency is traded for another. It is said to be
the largest market in the world. The market consists mostly of
currency traders who speculate on movements in exchange rates.
In order to earn the profit, which after all is the goal of
every Forex trader, they must take advantage of even small
fluctuations that occur in exchange rates. The market has a
24-hour trading day that operates throughout the week, which
makes it convenient for some traders to work during the day and
trade at night.
In the Forex market, every pair of currencies makes up an
individual product and is normally marked as XXX/YYY, where YYY
refers to the ISO 4217 international three-letter code of the
currency into which one unit of XXX's price is expressed. An
example of this is to note 1 euro as equivalent to 1.2045 dollar
as the amount translation of EUR/USD. This is how Forex currency
trading is determined.
Unlike stock markets and future exchanges, when you engage in
Forex currency trading, you engage in a form of international
bank and an over-the-counter market; this means that in the
Forex market, you can't find any single universal exchange for a
specific currency pair. Throughout its operation, individuals
trade with Forex brokers, Forex brokers with banks or financial
institutions, and financial institutions with financial
institutions. Once the European session end, the Asian session
or the US session will start; this ensuring that all the
currencies of the world can continually trade. Traders, whether
individuals or corporations, can react to the news once it
breaks, instead of incessantly waiting for the market to open,
which is what is required in most other markets out there.
These days, with the proliferation of tutorials on Forex
currency trading, average people are given the chance to trade
currencies as if they are experts on the field. It is easy to
learn once you've set your heart on making money this way. And
you can make money, even while you're doing nothing, thanks to
automated Forex trading bots, which can do the trading for you
while you tend to your family, job, or other things.
About the Author: John Callingham is a professional Forex
trader who has been teaching people how to trade the forex
profitly for years. To learn more about John's award winning
course on profiting in trading Forex visit
http://www.ForexReviewInsider.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=284057&ca=Finances
Forex currency trading is creating quite a buzz these days.
With the rising cost of living, it's not hard to understand why
so many people are juggling two to three jobs at a time and
turning to the Internet to look for money-making opportunities,
one of the most popular of which is entering the Forex market
and trading currency.
Some people still have this notion that to be successful in the
Forex, one must be an accountant, economist, or a genius at
numbers. Contrary to popular belief, success in the Forex market
is now more attainable than ever, thanks to the many tips you
can find online. But before you jump on the bandwagon and join
the Forex hype, it's best if you first take a moment to find out
what Forex currency trading is and how it works.
Forex is actually short for Foreign Exchange, a currency market
in which one currency is traded for another. It is said to be
the largest market in the world. The market consists mostly of
currency traders who speculate on movements in exchange rates.
In order to earn the profit, which after all is the goal of
every Forex trader, they must take advantage of even small
fluctuations that occur in exchange rates. The market has a
24-hour trading day that operates throughout the week, which
makes it convenient for some traders to work during the day and
trade at night.
In the Forex market, every pair of currencies makes up an
individual product and is normally marked as XXX/YYY, where YYY
refers to the ISO 4217 international three-letter code of the
currency into which one unit of XXX's price is expressed. An
example of this is to note 1 euro as equivalent to 1.2045 dollar
as the amount translation of EUR/USD. This is how Forex currency
trading is determined.
Unlike stock markets and future exchanges, when you engage in
Forex currency trading, you engage in a form of international
bank and an over-the-counter market; this means that in the
Forex market, you can't find any single universal exchange for a
specific currency pair. Throughout its operation, individuals
trade with Forex brokers, Forex brokers with banks or financial
institutions, and financial institutions with financial
institutions. Once the European session end, the Asian session
or the US session will start; this ensuring that all the
currencies of the world can continually trade. Traders, whether
individuals or corporations, can react to the news once it
breaks, instead of incessantly waiting for the market to open,
which is what is required in most other markets out there.
These days, with the proliferation of tutorials on Forex
currency trading, average people are given the chance to trade
currencies as if they are experts on the field. It is easy to
learn once you've set your heart on making money this way. And
you can make money, even while you're doing nothing, thanks to
automated Forex trading bots, which can do the trading for you
while you tend to your family, job, or other things.
About the Author: John Callingham is a professional Forex
trader who has been teaching people how to trade the forex
profitly for years. To learn more about John's award winning
course on profiting in trading Forex visit
http://www.ForexReviewInsider.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=284057&ca=Finances
Forex Autopilot System-Make Money While Doing Nothing!
By John Callingham
Earning money just by sitting? Sound impossible but true. If
you are busy looking for ways on how to earn extra cash to save
yourself with the worsening economic condition of your place
then you must have heard about the Forex Autopilot System. What
makes this system sparkle among the rest is that it offers the
idea of 'trading while you sleep'. Having a system which is
competent enough to create intelligent decision without actually
being babysat the whole day is something which will leave
salivating over with.
Actually, the Forex Autopilot System would automatically do the
trading without any assistance thus you can expect your eyes not
to be glued on the monitor. People who already had traded their
money online would for sure realize the importance of this
system since it can really save their neck from the hassle. In
addition, it does not only give you the opportunity to trade
even if you are far away but most of the time, they prove to
create the right decision than your personal intuition.
Given that you don't want to contest the fact that you make the
best decision in trading at all times, then congratulation since
this extra feature would no longer apply to you but at least to
other who are desperately longing to get the best deal out of
their cash. Let us all face it. There are those who belong among
the average investors who consider themselves as no expert about
all the nuts and bolts of market trading. And without any doubt,
even if you are lucky in this field, you are definitely most of
the time kicking yourself to have a second guess to create the
right pick.
So what are some of the features of Forex Autopilot System that
can leave you on cloud 9?
1. They are being employed by both the professionals and
beginners and even those people with no experience on trading or
whatsoever. No matter if you possess not a single background
about it; you can surely make use of the system with ease.
2. On the real Forex account, you can commence to trade for as
low as $1000 USD or you can even learn about the demo account
without actually paying anything.
3. The Forex Autopilot System is an efficient and tested system
that can give you the chance of earning thousands of dollars in
just a day!
4. The system would work in any country.
5. Since it can work day and night, it is just like having the
real you on guard at all times. It is indeed consistent and very
reliable since you can just watch it work without actually doing
anything.
6. The Forex Autopilot System would run on MetaTrader platform
which anyone would know is one of the most wonderful trading
platforms there is in the Forex arena and which you can download
without any fee.
7. You can test the system without trading capital risks. Thus,
you can begin your test drive this day and see how it works.
About the Author: John Callingham is a professional Forex
trader who has been teaching people how to trade the forex
profitly for years. To learn more about John's award winning
course on profiting in trading Forex visit
http://www.ForexReviewInsider.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=284048&ca=Finances
Earning money just by sitting? Sound impossible but true. If
you are busy looking for ways on how to earn extra cash to save
yourself with the worsening economic condition of your place
then you must have heard about the Forex Autopilot System. What
makes this system sparkle among the rest is that it offers the
idea of 'trading while you sleep'. Having a system which is
competent enough to create intelligent decision without actually
being babysat the whole day is something which will leave
salivating over with.
Actually, the Forex Autopilot System would automatically do the
trading without any assistance thus you can expect your eyes not
to be glued on the monitor. People who already had traded their
money online would for sure realize the importance of this
system since it can really save their neck from the hassle. In
addition, it does not only give you the opportunity to trade
even if you are far away but most of the time, they prove to
create the right decision than your personal intuition.
Given that you don't want to contest the fact that you make the
best decision in trading at all times, then congratulation since
this extra feature would no longer apply to you but at least to
other who are desperately longing to get the best deal out of
their cash. Let us all face it. There are those who belong among
the average investors who consider themselves as no expert about
all the nuts and bolts of market trading. And without any doubt,
even if you are lucky in this field, you are definitely most of
the time kicking yourself to have a second guess to create the
right pick.
So what are some of the features of Forex Autopilot System that
can leave you on cloud 9?
1. They are being employed by both the professionals and
beginners and even those people with no experience on trading or
whatsoever. No matter if you possess not a single background
about it; you can surely make use of the system with ease.
2. On the real Forex account, you can commence to trade for as
low as $1000 USD or you can even learn about the demo account
without actually paying anything.
3. The Forex Autopilot System is an efficient and tested system
that can give you the chance of earning thousands of dollars in
just a day!
4. The system would work in any country.
5. Since it can work day and night, it is just like having the
real you on guard at all times. It is indeed consistent and very
reliable since you can just watch it work without actually doing
anything.
6. The Forex Autopilot System would run on MetaTrader platform
which anyone would know is one of the most wonderful trading
platforms there is in the Forex arena and which you can download
without any fee.
7. You can test the system without trading capital risks. Thus,
you can begin your test drive this day and see how it works.
About the Author: John Callingham is a professional Forex
trader who has been teaching people how to trade the forex
profitly for years. To learn more about John's award winning
course on profiting in trading Forex visit
http://www.ForexReviewInsider.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=284048&ca=Finances
Forex Signals - Will They Help You Or Hurt You?
By Richard M. Davieess
The Forex market confuses many inexperienced traders. Some
companies take advantage of their confusions by enticing them to
purchase Forex signals. Forex signals are touted as a way to
help the new traders get a better understanding of the market
and how the market works. Thinking these signals will give them
an advantage, many novice traders purchase them. Some traders
benefit from the signals and some don’t. Whether Forex signals
are worth the cost is a matter of dispute.
Each trader must decide for themselves if the benefits of the
signals are worth the cost. New traders in the Forex market
should research the value and usefulness of signals before
deciding if they should purchase them. They should learn more
about Forex signals, find out what precautions to take, and how
to proceed. They should also learn what other options they have
instead of paying for Forex signals.
Novice traders are cautioned against paying for Forex signals
by many experts. Signals may seem appealing to inexperienced
traders, but signals can have disappointing results. The trader
needs to trust the person selling the signals, and that can be a
difficult thing for an inexperienced trader. According to
experts, if the people selling Forex signals were great traders
then they would be making their living from the Forex market
instead of from selling Forex signals. Traders considering
buying the signals should consider this distinction carefully.
There are few things you should consider before buying Forex
signals. Traders should select signals from sellers who give a
free trial. Legitimate businesses are willing to allow you to
test their information before buying it. Traders should get
audited results from the signal provider. Company who are
unwilling to give audited results should not be considered. In
order to ensure that the trader is receiving information that
will benefit them, they should only work with companies who are
willing to provide previous, audited results to the trader.
Companies who validate their information are easier for the
trader to trust than companies who refuse to give traders a
trial of their services and audited results.
Inexperienced traders who want some help getting started should
apply for a trial account from a Forex broker. Trial accounts
allow traders to practice trading without using real money, and
thereby learn about the Forex market. Traders can use trial
accounts to learn the fundamentals of the Forex and gain
experience with trading and research. Many brokers offer trial
accounts with the expectation that traders will gain information
and comfort with the Forex, and will develop a business
relationship with the broker.
Traders who decide to open a traditional Forex account should
start trading with a small deposit until they gain experience.
Traders who start trading with a small account will be less
afraid to trade because they have less to lose. Once traders
move from a trial account to a traditional account they should
keep in mind that the different ramifications from their trades
may cause a psychological impact from using real money. Traders
should be aware of this when they begin traditional trading and
should act accordingly.
About the Author: Effective Forex Trading is your guide to
profiting in the Forex market using leading edge Forex trading
systems, technical analysis, swing trading strategies and much
more! Trade Forex with confidence with our free Forex Signals
nnewsletter. Get your free copy at
http://www.effectiveforextrading.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=282104&ca=Finances
The Forex market confuses many inexperienced traders. Some
companies take advantage of their confusions by enticing them to
purchase Forex signals. Forex signals are touted as a way to
help the new traders get a better understanding of the market
and how the market works. Thinking these signals will give them
an advantage, many novice traders purchase them. Some traders
benefit from the signals and some don’t. Whether Forex signals
are worth the cost is a matter of dispute.
Each trader must decide for themselves if the benefits of the
signals are worth the cost. New traders in the Forex market
should research the value and usefulness of signals before
deciding if they should purchase them. They should learn more
about Forex signals, find out what precautions to take, and how
to proceed. They should also learn what other options they have
instead of paying for Forex signals.
Novice traders are cautioned against paying for Forex signals
by many experts. Signals may seem appealing to inexperienced
traders, but signals can have disappointing results. The trader
needs to trust the person selling the signals, and that can be a
difficult thing for an inexperienced trader. According to
experts, if the people selling Forex signals were great traders
then they would be making their living from the Forex market
instead of from selling Forex signals. Traders considering
buying the signals should consider this distinction carefully.
There are few things you should consider before buying Forex
signals. Traders should select signals from sellers who give a
free trial. Legitimate businesses are willing to allow you to
test their information before buying it. Traders should get
audited results from the signal provider. Company who are
unwilling to give audited results should not be considered. In
order to ensure that the trader is receiving information that
will benefit them, they should only work with companies who are
willing to provide previous, audited results to the trader.
Companies who validate their information are easier for the
trader to trust than companies who refuse to give traders a
trial of their services and audited results.
Inexperienced traders who want some help getting started should
apply for a trial account from a Forex broker. Trial accounts
allow traders to practice trading without using real money, and
thereby learn about the Forex market. Traders can use trial
accounts to learn the fundamentals of the Forex and gain
experience with trading and research. Many brokers offer trial
accounts with the expectation that traders will gain information
and comfort with the Forex, and will develop a business
relationship with the broker.
Traders who decide to open a traditional Forex account should
start trading with a small deposit until they gain experience.
Traders who start trading with a small account will be less
afraid to trade because they have less to lose. Once traders
move from a trial account to a traditional account they should
keep in mind that the different ramifications from their trades
may cause a psychological impact from using real money. Traders
should be aware of this when they begin traditional trading and
should act accordingly.
About the Author: Effective Forex Trading is your guide to
profiting in the Forex market using leading edge Forex trading
systems, technical analysis, swing trading strategies and much
more! Trade Forex with confidence with our free Forex Signals
nnewsletter. Get your free copy at
http://www.effectiveforextrading.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=282104&ca=Finances
Trading Risk Management - Rule of Three
By Lance Beggs
Would you like to discover a quick and simple risk management
strategy that is easy to apply to any trading plan, and has the
potential to vastly improve results? Excellent!
I’m not talking about the placement of stop losses, which is
what most people consider as ‘risk management’. Rather, this is
a simple tool for managing the risk in your trading business.
Effective trading requires focus and discipline. There are many
external factors that can interrupt your focus, and destroy your
discipline, such as:
- An unreliable internet connection
- Your charting platform losing its signal
- A knock at the door
- The telephone ringing
- A baby crying
- Hunger
- Noticeably too hot or cold
- Fatigue (hopefully from late night trading study, rather than
alcohol and party induced fatigue)
And as if that’s not enough, there are many internal factors
that can also interrupt your focus, and destroy your discipline,
leading you to make decisions and actions based on emotion,
rather than following your documented trading plan. You’ve no
doubt experienced some of these already. The internal factors
would include things such as:
- Hesitation in entering once price triggers an entry
- Hesitation in exiting when price hits your stop loss
- Doubt about your entry after entering the trade
- Fear of exiting at your stop loss
- Worry about how you will explain another loss to your partner
- Any thought about an early exit of this trade, just to make
up for earlier losses
There’s a whole lot more, but hopefully you get the point.
One flaw in many trading plans is the absence of a valid
strategy for managing these risks. So, let’s fix that situation.
The problem is, traders have no guidelines as to:
- When the risk justifies us stopping our trading,
- When to just pause trading and manage the issue, or
- When to ignore it and continue trading.
The way I do this is using a very simple risk management
strategy developed by Shell, a global group of energy and
petrochemical companies. Obviously they didn’t create it for use
in trading – I just find that it works really well in this
environment. (Yes, I know what you’re thinking - I am a risk
management nerd!)
What we need to do is firstly classify your current trading as
being in a GREEN, AMBER or RED condition. Think of a set of
traffic lights. GREEN indicates that everything is fine. This is
the desired trading environment. RED is a compulsory STOP
condition. And AMBER is a warning that you need to be prepared
to stop.
What I’d like you to consider is documenting any RED conditions
within your trading plan. This might include things like:
- An unreliable internet connection
- Your charting platform losing it’s signal (when you have no
alternative)
- Fatigue due to less than six hours sleep the night before, or
more than four consecutive nights with less than eight hours
sleep (customise this for your own requirements)
These are mandatory STOP trading criteria. Alongside each of
these risks you need to define the actions you will take. For
example, how will you manage your charting platform going down?
If you’re a long term trader this might not cause too much
stress and may actually be an AMBER rather than RED – your stops
may be in the market and you probably have alternative charting
options. However if you’re a day-trader operating on small
timeframes, this is clearly a RED criteria. You may choose to
manage this by contacting your broker by phone and closing out
all positions.
So, for each risk we define as a RED, we simply document a
procedure to manage that situation. And when one of these
conditions emerges while trading, we carry out our procedure,
and then stop trading until the condition has gone.
Now, everything else that is not as serious as a RED, but can
still influence our trading, is an AMBER. The problem here is,
as mentioned before, when does it justify stopping, or when
should we just continue with our trading?
The Rule of Three risk management strategy simply states that
if you get three or more AMBER conditions then that is also an
automatic stop. At that point you can either quit for the day
and head for the golf course, or manage your AMBERs back to
GREEN and resume trading.
So, if your baby is teething, and just won’t stop crying
despite your partners attempts to comfort her, and you just
suffered your second loss in a row, and you now find yourself
hesitating at an entry trigger – that’s three AMBERs.
STOP TRADING!
Before you continue, make sure you manage your risk back into
GREEN, or at least less than three AMBERs. Perhaps take a short
break to review your two losses and confirm that the setups were
valid, review your trading statistics to confirm that two losses
in a row is a normal occurrence, and conduct a short relaxation
and visualization session. If you’re braver than I am you might
also ask your partner to take the baby out for a drive (ask
nicely though!)
If you’re satisfied that you’ve now managed the situation back
to less than three AMBERs, or ideally completely back to GREEN,
then you’re right to start trading again. Otherwise, take the
day off. Sometimes a ‘three AMBER’ complete break from trading
is a wise move.
While we all hope that our trading will occur within a
completely GREEN environment, life’s just not like that. The
Rule of Three risk management strategy gives you a simple
guideline for when enough is enough – and you need to either
stop completely, or reduce some of the external or internal
risks. Try it, and see if it helps in your trading as much as it
does in mine.
It’s simple:
- GREEN is GO,
- AMBER is CAUTION and
- RED is STOP, but
- 3 AMBERs are equivalent to a RED. Stop trading, or manage
those AMBERs back to GREEN.
Happy (hopefully GREEN) trading,
Lance Beggs
© Copyright 2008. Lance Beggs. All Rights Reserved.
About the Author: Would you like to learn more about how I
trade the forex and equity index markets? Check out the
articles, videos and trading resources on my website right now
at http://www.YourTradingCoach.com .
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=297164&ca=Finances
Would you like to discover a quick and simple risk management
strategy that is easy to apply to any trading plan, and has the
potential to vastly improve results? Excellent!
I’m not talking about the placement of stop losses, which is
what most people consider as ‘risk management’. Rather, this is
a simple tool for managing the risk in your trading business.
Effective trading requires focus and discipline. There are many
external factors that can interrupt your focus, and destroy your
discipline, such as:
- An unreliable internet connection
- Your charting platform losing its signal
- A knock at the door
- The telephone ringing
- A baby crying
- Hunger
- Noticeably too hot or cold
- Fatigue (hopefully from late night trading study, rather than
alcohol and party induced fatigue)
And as if that’s not enough, there are many internal factors
that can also interrupt your focus, and destroy your discipline,
leading you to make decisions and actions based on emotion,
rather than following your documented trading plan. You’ve no
doubt experienced some of these already. The internal factors
would include things such as:
- Hesitation in entering once price triggers an entry
- Hesitation in exiting when price hits your stop loss
- Doubt about your entry after entering the trade
- Fear of exiting at your stop loss
- Worry about how you will explain another loss to your partner
- Any thought about an early exit of this trade, just to make
up for earlier losses
There’s a whole lot more, but hopefully you get the point.
One flaw in many trading plans is the absence of a valid
strategy for managing these risks. So, let’s fix that situation.
The problem is, traders have no guidelines as to:
- When the risk justifies us stopping our trading,
- When to just pause trading and manage the issue, or
- When to ignore it and continue trading.
The way I do this is using a very simple risk management
strategy developed by Shell, a global group of energy and
petrochemical companies. Obviously they didn’t create it for use
in trading – I just find that it works really well in this
environment. (Yes, I know what you’re thinking - I am a risk
management nerd!)
What we need to do is firstly classify your current trading as
being in a GREEN, AMBER or RED condition. Think of a set of
traffic lights. GREEN indicates that everything is fine. This is
the desired trading environment. RED is a compulsory STOP
condition. And AMBER is a warning that you need to be prepared
to stop.
What I’d like you to consider is documenting any RED conditions
within your trading plan. This might include things like:
- An unreliable internet connection
- Your charting platform losing it’s signal (when you have no
alternative)
- Fatigue due to less than six hours sleep the night before, or
more than four consecutive nights with less than eight hours
sleep (customise this for your own requirements)
These are mandatory STOP trading criteria. Alongside each of
these risks you need to define the actions you will take. For
example, how will you manage your charting platform going down?
If you’re a long term trader this might not cause too much
stress and may actually be an AMBER rather than RED – your stops
may be in the market and you probably have alternative charting
options. However if you’re a day-trader operating on small
timeframes, this is clearly a RED criteria. You may choose to
manage this by contacting your broker by phone and closing out
all positions.
So, for each risk we define as a RED, we simply document a
procedure to manage that situation. And when one of these
conditions emerges while trading, we carry out our procedure,
and then stop trading until the condition has gone.
Now, everything else that is not as serious as a RED, but can
still influence our trading, is an AMBER. The problem here is,
as mentioned before, when does it justify stopping, or when
should we just continue with our trading?
The Rule of Three risk management strategy simply states that
if you get three or more AMBER conditions then that is also an
automatic stop. At that point you can either quit for the day
and head for the golf course, or manage your AMBERs back to
GREEN and resume trading.
So, if your baby is teething, and just won’t stop crying
despite your partners attempts to comfort her, and you just
suffered your second loss in a row, and you now find yourself
hesitating at an entry trigger – that’s three AMBERs.
STOP TRADING!
Before you continue, make sure you manage your risk back into
GREEN, or at least less than three AMBERs. Perhaps take a short
break to review your two losses and confirm that the setups were
valid, review your trading statistics to confirm that two losses
in a row is a normal occurrence, and conduct a short relaxation
and visualization session. If you’re braver than I am you might
also ask your partner to take the baby out for a drive (ask
nicely though!)
If you’re satisfied that you’ve now managed the situation back
to less than three AMBERs, or ideally completely back to GREEN,
then you’re right to start trading again. Otherwise, take the
day off. Sometimes a ‘three AMBER’ complete break from trading
is a wise move.
While we all hope that our trading will occur within a
completely GREEN environment, life’s just not like that. The
Rule of Three risk management strategy gives you a simple
guideline for when enough is enough – and you need to either
stop completely, or reduce some of the external or internal
risks. Try it, and see if it helps in your trading as much as it
does in mine.
It’s simple:
- GREEN is GO,
- AMBER is CAUTION and
- RED is STOP, but
- 3 AMBERs are equivalent to a RED. Stop trading, or manage
those AMBERs back to GREEN.
Happy (hopefully GREEN) trading,
Lance Beggs
© Copyright 2008. Lance Beggs. All Rights Reserved.
About the Author: Would you like to learn more about how I
trade the forex and equity index markets? Check out the
articles, videos and trading resources on my website right now
at http://www.YourTradingCoach.com .
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=297164&ca=Finances
The Keys to Successful Forex Trading
By Julie Landry
The forex market is a nonstop cash market where currencies of
different countries are constantly traded, typically via
brokers, which are known as forex brokers. Foreign currencies
are constantly and simultaneously bought and sold across local
and global markets while traders increase or decrease the value
of an investment upon currency movements. The forex market is
the most volatile market in the world, often creating huge price
swings. You should learn how to ride these trades for maximum
profit before diving into it. It is definitely not a game for a
newbie and you need to brush up on your skills before getting
your hands wet.
The forex market is mostly a network of computers and large
banking institutions that provide a marketplace for the forex
market. It is the largest financial market in the world, with
trading volume that is several times larger than all of the
global equity markets combined. The high liquidity of the FX
market greatly increases its price stability, and market
participants can always trade on a tight spread. The forex
market is difficult to understand for just an average
individual. However, once the market is broken down into simple
terms, the average individual can begin to understand the
foreign exchange market and use it as a financial instrument for
profitable investing and the mitigation of risk.
Currency trading can be performed by a trader online. By
trading directly with your broker, a dealer and a primary market
maker, there are no extra parties between you, the trader, and
the buyer or seller of the currency pair. Currency trading is an
education in and of itself and requires you to follow your
trades very closely in order to understand what is happening and
why it is happening. The exchange rates on currencies fluctuate
on a daily basis, so it's important to keep abreast of them.
Currency trading software is a widely used trading mechanism
that allows you to make more money in the currency trading
market. Currency values are largely determined by government
monetary and fiscal policies, and these do not change from one
day to the next. This means the underlying fundamentals remain
intact for long periods of time. Currencies are an unstable
market where things can change at a moment's notice, so having
your thumb on the pulse of the market is the key to success.
Forex trading is all about the exchange of international
currencies. One currency is sold to purchase another. Many
people believe it is the most lucrative home based business
venture at the moment. It is a business where you can earn an
income without selling anything, without pitching a sale to
people and without running around after clients. Forex trading
is attractive because it offers unparalleled freedoms. A forex
trader can live anywhere as long as he or she is within reach of
the internet.
Trading foreign currencies is not bound to any one trading
floor, since it continuously takes place electronically between
a network of banks over a 24 hour period. Forex trading is easy,
but making money with it is not. You need a plan! Forex trading
is confusing if you do not understand what the numbers are and
why they are significant for you. You have to know what the
market is saying and understand the importance of all the
possible signals.
About the Author: Julie Landry makes a living with forex
trading. For more educational resources about learning how to
trade the forex markets, visit http://www.forexverse.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=303215&ca=Finances
The forex market is a nonstop cash market where currencies of
different countries are constantly traded, typically via
brokers, which are known as forex brokers. Foreign currencies
are constantly and simultaneously bought and sold across local
and global markets while traders increase or decrease the value
of an investment upon currency movements. The forex market is
the most volatile market in the world, often creating huge price
swings. You should learn how to ride these trades for maximum
profit before diving into it. It is definitely not a game for a
newbie and you need to brush up on your skills before getting
your hands wet.
The forex market is mostly a network of computers and large
banking institutions that provide a marketplace for the forex
market. It is the largest financial market in the world, with
trading volume that is several times larger than all of the
global equity markets combined. The high liquidity of the FX
market greatly increases its price stability, and market
participants can always trade on a tight spread. The forex
market is difficult to understand for just an average
individual. However, once the market is broken down into simple
terms, the average individual can begin to understand the
foreign exchange market and use it as a financial instrument for
profitable investing and the mitigation of risk.
Currency trading can be performed by a trader online. By
trading directly with your broker, a dealer and a primary market
maker, there are no extra parties between you, the trader, and
the buyer or seller of the currency pair. Currency trading is an
education in and of itself and requires you to follow your
trades very closely in order to understand what is happening and
why it is happening. The exchange rates on currencies fluctuate
on a daily basis, so it's important to keep abreast of them.
Currency trading software is a widely used trading mechanism
that allows you to make more money in the currency trading
market. Currency values are largely determined by government
monetary and fiscal policies, and these do not change from one
day to the next. This means the underlying fundamentals remain
intact for long periods of time. Currencies are an unstable
market where things can change at a moment's notice, so having
your thumb on the pulse of the market is the key to success.
Forex trading is all about the exchange of international
currencies. One currency is sold to purchase another. Many
people believe it is the most lucrative home based business
venture at the moment. It is a business where you can earn an
income without selling anything, without pitching a sale to
people and without running around after clients. Forex trading
is attractive because it offers unparalleled freedoms. A forex
trader can live anywhere as long as he or she is within reach of
the internet.
Trading foreign currencies is not bound to any one trading
floor, since it continuously takes place electronically between
a network of banks over a 24 hour period. Forex trading is easy,
but making money with it is not. You need a plan! Forex trading
is confusing if you do not understand what the numbers are and
why they are significant for you. You have to know what the
market is saying and understand the importance of all the
possible signals.
About the Author: Julie Landry makes a living with forex
trading. For more educational resources about learning how to
trade the forex markets, visit http://www.forexverse.com
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=303215&ca=Finances
Learn Forex Trading
Copyright � 2008 Andrew Daigle
Capitalizing upon the buying and selling of different currencies,
the Forex market is the largest in the world, where trillions of
dollars exchange hands on a daily basis. To profit from this
powerful market, it is important to build your foundation with an
understanding of Forex basics.
Forex Trading Quotes
Before you can develop currency trading strategies, you need to
be able to read Forex quotes. Foreign exchange quotes are always
listed in pairs (i.e. USD/JPY 103.2): the first listed currency
is known as the base currency and has a constant value of 1 unit,
while the second currency is known as the counter. In this
example, USD/JPY 103.2 signifies that one US dollar will obtain
103.2 Japanese yen. When quotes are rising, it means the dollar
is increasing in value, and when they are falling, the dollar is
decreasing in value.
In Forex trading, two-sided quotes are offering encountered (i.e.
EUR/USD 1.4355/1.4360) and represent the bid and the ask price
for the currency involved. The bid is the price at which you can
sell the base currency, and the ask is the price that you can
buy. The difference is commonly referred to as the spread. In the
example above, you can buy one euro at 1.4355 US dollars or sell
one at 1.4360. The difference is how brokers manage to offer
commission-free services, as they always pocket this difference.
Trading Major Currencies
No novice should try to develop any Forex trading techniques
outside of the seven major currencies: the US dollar (USD), Euro
(EUR), Japanese yen (JPY) British pound (GBP), Swiss Franc (CHF)
Canadian dollar (CAD) and Australian dollar (AUD). Don?t attempt
Forex trading with a minor currency, as it could produce
liquidity problems for you, and you may have difficulties
selling. It is always best to trade currencies that you are
familiar with and have high volume, as this further assists in
your understanding of the strengths and weaknesses.
Forex Trading Players
Until 1998, currency trading was essentially limited to banks,
major currency dealers, and major multinational corporations. The
late 90s, the market was broken up into smaller units and became
available to the retail investor. You should be aware,
nonetheless, that if you decide to develop a currency trading
strategy, you will be pitting yourself against the largest
financial institutions in the world.
Why should I do FOREX Trading?
This market is hands down, the largest market in the world. It is
one of the few markets that trades 24 hours a day. This allows
you the opportunity to implement your currency trading strategies
at any time and from any place. The leverage in this market is
unparalleled by any other, offering huge profit potentials with
minimum capital requirements. However, it is not advisable to
partake in Forex trading without first learning currency trading
strategies, for there are no rewards without risks.
============================================================
Andrew Daigle is the creator and author of many successful
websites including ForexBoost at http://www.forexboost.com
a free forex training resource and business partners at Forex
Confidental at http://www.forex-confidential.com for trading
signals and live professional training. ============================================================
Read More Articles From Andrew Daigle:
http://thePhantomWriters.com/free_content/d/index.shtml#Andrew_Daigle
Capitalizing upon the buying and selling of different currencies,
the Forex market is the largest in the world, where trillions of
dollars exchange hands on a daily basis. To profit from this
powerful market, it is important to build your foundation with an
understanding of Forex basics.
Forex Trading Quotes
Before you can develop currency trading strategies, you need to
be able to read Forex quotes. Foreign exchange quotes are always
listed in pairs (i.e. USD/JPY 103.2): the first listed currency
is known as the base currency and has a constant value of 1 unit,
while the second currency is known as the counter. In this
example, USD/JPY 103.2 signifies that one US dollar will obtain
103.2 Japanese yen. When quotes are rising, it means the dollar
is increasing in value, and when they are falling, the dollar is
decreasing in value.
In Forex trading, two-sided quotes are offering encountered (i.e.
EUR/USD 1.4355/1.4360) and represent the bid and the ask price
for the currency involved. The bid is the price at which you can
sell the base currency, and the ask is the price that you can
buy. The difference is commonly referred to as the spread. In the
example above, you can buy one euro at 1.4355 US dollars or sell
one at 1.4360. The difference is how brokers manage to offer
commission-free services, as they always pocket this difference.
Trading Major Currencies
No novice should try to develop any Forex trading techniques
outside of the seven major currencies: the US dollar (USD), Euro
(EUR), Japanese yen (JPY) British pound (GBP), Swiss Franc (CHF)
Canadian dollar (CAD) and Australian dollar (AUD). Don?t attempt
Forex trading with a minor currency, as it could produce
liquidity problems for you, and you may have difficulties
selling. It is always best to trade currencies that you are
familiar with and have high volume, as this further assists in
your understanding of the strengths and weaknesses.
Forex Trading Players
Until 1998, currency trading was essentially limited to banks,
major currency dealers, and major multinational corporations. The
late 90s, the market was broken up into smaller units and became
available to the retail investor. You should be aware,
nonetheless, that if you decide to develop a currency trading
strategy, you will be pitting yourself against the largest
financial institutions in the world.
Why should I do FOREX Trading?
This market is hands down, the largest market in the world. It is
one of the few markets that trades 24 hours a day. This allows
you the opportunity to implement your currency trading strategies
at any time and from any place. The leverage in this market is
unparalleled by any other, offering huge profit potentials with
minimum capital requirements. However, it is not advisable to
partake in Forex trading without first learning currency trading
strategies, for there are no rewards without risks.
============================================================
Andrew Daigle is the creator and author of many successful
websites including ForexBoost at http://www.forexboost.com
a free forex training resource and business partners at Forex
Confidental at http://www.forex-confidential.com for trading
signals and live professional training. ============================================================
Read More Articles From Andrew Daigle:
http://thePhantomWriters.com/free_content/d/index.shtml#Andrew_Daigle
FOREX Currency Trading Tips For The Novice
By Geoff Spencer
Starting a FOREX business venture is risky. Some have cold feet
and may be pessimistic and hesitant. However, the possibility of
earning a fortune is an effective lure in ridding one of their
fears. Starting a financial endeavor with no knowledge or
preparation may double the risk of financial loss. It is vital
be equipped with the proper information and strategies to put
your venture in the black.
You can get insane profits and a greater leeway to hedge your
losses with Currency Trading Tips.
Trading tips are available from well-known and reputable
currency traders.They have encountered and overcome numerous
obstacles in the past and are acknowledged to be an authority on
the subject.
Our globe has been shrunken into a village in which you can
getany and everything you want and need simply by searching the
internet. And now the way has been paved wherein you can gain
access to currency trading tips with just a few clicks of the
mouse.
After compiling all of your tips in foreign currency, you can
apply them to each venture you take. Experts’ viewpoints and the
observations of renowned authorities can be your saving grace,
preventing you from losing everything you have traded.
The following is a trading tip that has proven very helpful:
Consider hedge investments if you want to take the safest route
possible.With hedge investments you keep currencies up to the
point where their value has hit their highest peak. This is not
the fastest strategy to gain, but it is a sure-gain.
In the world of currency trading expect to experience a rush.
One minute your currency may be up and the next minute your
currency is devaluing. The Market is continuously moving in
FOREX. Another good trading tip is that you must create a
diverse portfolio. No matter where the winds of FOREX take you,
you will always be prepared. FOREX involves risk. So as with any
venture, you might experience some losses. In due time, however,
you will stand tall from the fall.
Another tip for currency trading is to try the exact opposite
of hedge investments. This allows for a venture of short term
intervals but it secures high profit. Profits will be in your
hands for a limited time period.However, you may not always
receive profits. There is an equal probability for losses. If
you sense that currency is about to devaluate, sell it
immediately. This will minimize any financial damage. It is
better to have a small loss than a grave loss.
You need to be familiar with FOREX trends. This currency
trading tip should be implanted into your brain for it will help
you to be on top of the currency trading pyramid.
About the Author: Geoff Spencer is a staff writer at
http://www.investors-journal.com and is an occasional
contributor to several other websites, including
http://www.onlinebusinessgazette.com.
Source: http://www.isnare.com
Permanent Link:
http://www.isnare.com/?aid=101810&ca=Business+Management
Starting a FOREX business venture is risky. Some have cold feet
and may be pessimistic and hesitant. However, the possibility of
earning a fortune is an effective lure in ridding one of their
fears. Starting a financial endeavor with no knowledge or
preparation may double the risk of financial loss. It is vital
be equipped with the proper information and strategies to put
your venture in the black.
You can get insane profits and a greater leeway to hedge your
losses with Currency Trading Tips.
Trading tips are available from well-known and reputable
currency traders.They have encountered and overcome numerous
obstacles in the past and are acknowledged to be an authority on
the subject.
Our globe has been shrunken into a village in which you can
getany and everything you want and need simply by searching the
internet. And now the way has been paved wherein you can gain
access to currency trading tips with just a few clicks of the
mouse.
After compiling all of your tips in foreign currency, you can
apply them to each venture you take. Experts’ viewpoints and the
observations of renowned authorities can be your saving grace,
preventing you from losing everything you have traded.
The following is a trading tip that has proven very helpful:
Consider hedge investments if you want to take the safest route
possible.With hedge investments you keep currencies up to the
point where their value has hit their highest peak. This is not
the fastest strategy to gain, but it is a sure-gain.
In the world of currency trading expect to experience a rush.
One minute your currency may be up and the next minute your
currency is devaluing. The Market is continuously moving in
FOREX. Another good trading tip is that you must create a
diverse portfolio. No matter where the winds of FOREX take you,
you will always be prepared. FOREX involves risk. So as with any
venture, you might experience some losses. In due time, however,
you will stand tall from the fall.
Another tip for currency trading is to try the exact opposite
of hedge investments. This allows for a venture of short term
intervals but it secures high profit. Profits will be in your
hands for a limited time period.However, you may not always
receive profits. There is an equal probability for losses. If
you sense that currency is about to devaluate, sell it
immediately. This will minimize any financial damage. It is
better to have a small loss than a grave loss.
You need to be familiar with FOREX trends. This currency
trading tip should be implanted into your brain for it will help
you to be on top of the currency trading pyramid.
About the Author: Geoff Spencer is a staff writer at
http://www.investors-journal.com and is an occasional
contributor to several other websites, including
http://www.onlinebusinessgazette.com.
Source: http://www.isnare.com
Permanent Link:
http://www.isnare.com/?aid=101810&ca=Business+Management
Saturday, November 15, 2008
Psychology of forex trading or how your emotions can mess you up
Most sites that offer advice on succeeding in the Forex market are going to point out to you that the biggest enemy you face is not the market itself, but rather your own emotions. This is true in just about any activity that involves financial risk. It is really not all that different from playing poker. If you go into it afraid of losing, then most likely you are going to lose. It is pretty much accepted that most human beings have an innate desire to prosper. This desire is what makes failure so frightening.
Regardless of how you make your decisions you need to proceed with confidence tempered with caution. Whether you use technical analysis or fundamental analysis or flip a coin, it really doesn't matter as much as developing your own investment strategy, and proceeding with it until you are sure it is working or failing. Do not take council of your fears, and bounce around with no pattern, overreacting to every setback. Nor should you grow overconfident and let a small temporary success lead you into foolishness. Remain constant and stick with your plan.
The Forex market has some peculiar emotional landmines that you need to be aware of, and need to avoid. You are dealing with the currency of foreign countries and how they are going to be valued against the currency of other countries, one of which is your own country. It is important to keep things in perspective. If you find yourself rooting for the USA and booing Japan like they are your alma mater's football team and its biggest rival, then you should not be investing in this market, but saving for tickets to the next Olympic Games.
Investment of any kind takes self control, and emotional stability, and Forex is no exception.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Regardless of how you make your decisions you need to proceed with confidence tempered with caution. Whether you use technical analysis or fundamental analysis or flip a coin, it really doesn't matter as much as developing your own investment strategy, and proceeding with it until you are sure it is working or failing. Do not take council of your fears, and bounce around with no pattern, overreacting to every setback. Nor should you grow overconfident and let a small temporary success lead you into foolishness. Remain constant and stick with your plan.
The Forex market has some peculiar emotional landmines that you need to be aware of, and need to avoid. You are dealing with the currency of foreign countries and how they are going to be valued against the currency of other countries, one of which is your own country. It is important to keep things in perspective. If you find yourself rooting for the USA and booing Japan like they are your alma mater's football team and its biggest rival, then you should not be investing in this market, but saving for tickets to the next Olympic Games.
Investment of any kind takes self control, and emotional stability, and Forex is no exception.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Technical Analysis in The Forex Market
Technical analysis is considered to be the opposite of fundamental analysis. Technical analysis looks at the past performance and history of an investment. It relies on data showing this history and current trends and patterns to make predictions of future market activity. It ignores the intrinsic value of the investment in favor of its statistical abstract.
The Forex market lends itself to technical analysis rather well. The history of the value of currency pairs is a matter of statistical record and can be easily accessed. Its supporters claim it is the only sure way of understanding the market and predicting its future. This is especially true in the Forex market. Fans of technical analysis say that the economies of modern nations are so very complex that they can not be accurately predicated. It is only in the study of the past history of the currency and the trends that are revealed that a possible glimpse of the future be found.
To better understand the difference between fundamental analysis and technical analysis consider this example. If you were interested in determining what flavor of ice cream was the best to buy, the fundamental analyzer would go into the ice cream store and try several different types. He seeks its intrinsic value. The technical analysis man would sit outside the store and take notes on the flavors others are buying to decide which was the most popular and therefore most likely the best. He does not look at the intrinsic value, but relies on the data he gathers from others to make his decision. Of course, in the end, it is going to be his own preference that settles the question, and this is true of the market. Both fundamental analysis and technical analysis are mere tools that help you make the decisions that in the end only you can make.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The Forex market lends itself to technical analysis rather well. The history of the value of currency pairs is a matter of statistical record and can be easily accessed. Its supporters claim it is the only sure way of understanding the market and predicting its future. This is especially true in the Forex market. Fans of technical analysis say that the economies of modern nations are so very complex that they can not be accurately predicated. It is only in the study of the past history of the currency and the trends that are revealed that a possible glimpse of the future be found.
To better understand the difference between fundamental analysis and technical analysis consider this example. If you were interested in determining what flavor of ice cream was the best to buy, the fundamental analyzer would go into the ice cream store and try several different types. He seeks its intrinsic value. The technical analysis man would sit outside the store and take notes on the flavors others are buying to decide which was the most popular and therefore most likely the best. He does not look at the intrinsic value, but relies on the data he gathers from others to make his decision. Of course, in the end, it is going to be his own preference that settles the question, and this is true of the market. Both fundamental analysis and technical analysis are mere tools that help you make the decisions that in the end only you can make.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Fundamental Analysis in The Forex Market
Fundamental analysis is considered to be the opposite of technical analysis, and both are used in the Forex market. Fundamental analysis considers the intrinsic value of an investment when making a decision as to its future activity. There are some who feel that this is an excellent method of making decisions in the Stock market as a lot of data can be gathered and studied concerning the value of a Company. But, they ask, how can a Nation have an intrinsic value?
The answer is fairly simple. The economy of a country goes through a basic business cycle, and there are a lot of indicators available to the investor to measure where a particular economy is at any given time. The analysis would involve matching the stage of the cycle with its impact on the value of its currency. The normal economic cycle consists of periods of inflation and deflation with peaks and troughs in between. Certain indicators such as the Gross National Product (GNP), and current prime interest rates can give a good idea of the stage of the economy at any given time.
Each of these indicators would tend to impact currency valuation in different ways, and sometimes would even vary from country to country. In the United States, rising interest rates are normally associated with currency deflation, for example, and it is factors such as this that are the heart of fundamental analysis. This analysis can become quite detailed, but the focus remains on the country and its economy. Every factor that impacts the country and its economy can play a role in the value of the currency, and understanding these factors are the tools the fundamental analyzers uses to guide their investment strategy.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The answer is fairly simple. The economy of a country goes through a basic business cycle, and there are a lot of indicators available to the investor to measure where a particular economy is at any given time. The analysis would involve matching the stage of the cycle with its impact on the value of its currency. The normal economic cycle consists of periods of inflation and deflation with peaks and troughs in between. Certain indicators such as the Gross National Product (GNP), and current prime interest rates can give a good idea of the stage of the economy at any given time.
Each of these indicators would tend to impact currency valuation in different ways, and sometimes would even vary from country to country. In the United States, rising interest rates are normally associated with currency deflation, for example, and it is factors such as this that are the heart of fundamental analysis. This analysis can become quite detailed, but the focus remains on the country and its economy. Every factor that impacts the country and its economy can play a role in the value of the currency, and understanding these factors are the tools the fundamental analyzers uses to guide their investment strategy.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
How to select a Forex Broker
The decision of which brokerage firm is best for you is as important in the Forex market as it is in the Stock Market. The way of evaluating the various firms differs slightly between the two markets, however. Forex trades do not involve commissions, but they do have what are known as spreads, which is the difference between the price a currency can be purchased and the price for which it can be sold at a given point in time. This spread (which is expressed in "pips") is how the brokerage makes its money, so it serves the same purpose for them as a commission. You can be pretty certain that the spreads vary between brokerage firms just as widely as commissions do in the Stock Market, so investigate this carefully before making your selection.
Most brokerages dealing with the Forex market are involved with large financial institutions where the funds are available to provide sufficient leverage for their clients. It is still important to make sure your firm is reliable. They should be registered as a FCM (Futures Commission Merchant), and regulated by the CFTC (Commodity Futures Trading Commission).
Most firms offer widely varied packages of tools that assist you in making trading decisions and understanding the market better. They provide information and research that is available to you in many different formats. It is wise to take a little time to study these tools, and to find the ones that are most helpful to you. They are going to end up being very important and you need to be comfortable with them.
Look for a firm with a wide variety of account and leverage options. The ability to use the Forex market's advantages in leverage is one of the things that makes it the most attractive to you as an investor, and you want to have the maximum flexibility here. Although there are a few unethical firms operating, a few references and inquires should be able to identify them. This selection process is worth a little effort and an investment of time. It is an investment that is going to the most likely to pay off.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Most brokerages dealing with the Forex market are involved with large financial institutions where the funds are available to provide sufficient leverage for their clients. It is still important to make sure your firm is reliable. They should be registered as a FCM (Futures Commission Merchant), and regulated by the CFTC (Commodity Futures Trading Commission).
Most firms offer widely varied packages of tools that assist you in making trading decisions and understanding the market better. They provide information and research that is available to you in many different formats. It is wise to take a little time to study these tools, and to find the ones that are most helpful to you. They are going to end up being very important and you need to be comfortable with them.
Look for a firm with a wide variety of account and leverage options. The ability to use the Forex market's advantages in leverage is one of the things that makes it the most attractive to you as an investor, and you want to have the maximum flexibility here. Although there are a few unethical firms operating, a few references and inquires should be able to identify them. This selection process is worth a little effort and an investment of time. It is an investment that is going to the most likely to pay off.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Advantage of Forex over Stock and Commodity Markets
When one begins to discuss the advantages of investment in the Foreign Currency Exchange Market (Forex) over the Stock or Commodity Market, it is quite easy to sound like a cheerleader and with the same kind of bias. The Forex market offers so many advantages that it is not hard to understand its popularity.
The Forex Market operates 24 hours a day. It is a truly world wide market, and when the sun goes down in one trading center, it is coming up in another. The Forex market, although it has its trends and cycles, is not locked in the Bear vs. the Bull market mentality of the Stock Exchange. Since all Forex trades involve the exchange of one currency for another, one currency's hard times opens the door for a profit in another currency. The market is not adversely affected by rising interest rates. When a nation raises rates, generally the currency is strengthened, while rising interest rates tends to depress the stock market.
The combined number of different stock issues on the NYSE and NASDAQ exchanges totals 8000. That is a lot of stocks and it is time consuming to keep up with even a portion of them. There are four major currencies, and only about 34 second tier currencies, to consider in the Forex. Brokerage firms do not stand between you and profit in the Forex. Not only are the brokerage and commission fees almost non-existent, but analysts in the Forex tend to actually analyze in the currency market and not dictate or control the rise and fall of the market.
When the two markets are compared, the Forex certainly looks like the better investment choice.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The Forex Market operates 24 hours a day. It is a truly world wide market, and when the sun goes down in one trading center, it is coming up in another. The Forex market, although it has its trends and cycles, is not locked in the Bear vs. the Bull market mentality of the Stock Exchange. Since all Forex trades involve the exchange of one currency for another, one currency's hard times opens the door for a profit in another currency. The market is not adversely affected by rising interest rates. When a nation raises rates, generally the currency is strengthened, while rising interest rates tends to depress the stock market.
The combined number of different stock issues on the NYSE and NASDAQ exchanges totals 8000. That is a lot of stocks and it is time consuming to keep up with even a portion of them. There are four major currencies, and only about 34 second tier currencies, to consider in the Forex. Brokerage firms do not stand between you and profit in the Forex. Not only are the brokerage and commission fees almost non-existent, but analysts in the Forex tend to actually analyze in the currency market and not dictate or control the rise and fall of the market.
When the two markets are compared, the Forex certainly looks like the better investment choice.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Introduction to Forex Trading
Although most people outside of the financial world consider the New York Stock exchange to be the pinnacle of financial trading, it is the Foreign Exchange Market that is the true leader. The Forex Market, as this currency exchange is known, has a volume of around 1.5 trillion United States dollars daily. This staggering amount is over one hundred times larger than the volume of the NYSE.
The market is world wide. It is what is known as an “interbank” market where trades are conducted OTC (over the counter), which means they take place directly between the parties involved in the trade rather than through a central exchange. The main centers for the Forex market are located in Sydney, New York, Tokyo, Frankfurt and London. This allows the market to operate virtually 24 hours a day.
Put simply, the Forex market is based on trading the currency of one country for the currency of another country. The ratio of the value of one currency to the other rises and falls, and this ratio is what fuels the market. The trades consist of the simultaneous buying of one currency, for example, United States Dollars (USD), and the selling of another, i.e. The European Euro (EUR).
The most important market in Forex trading is called the “spot market” because trades are executed at once, or "on the spot". There are other elements of Forex trading, such as futures trading, and Forward Outrights, which are slightly more complex than spot trading.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The market is world wide. It is what is known as an “interbank” market where trades are conducted OTC (over the counter), which means they take place directly between the parties involved in the trade rather than through a central exchange. The main centers for the Forex market are located in Sydney, New York, Tokyo, Frankfurt and London. This allows the market to operate virtually 24 hours a day.
Put simply, the Forex market is based on trading the currency of one country for the currency of another country. The ratio of the value of one currency to the other rises and falls, and this ratio is what fuels the market. The trades consist of the simultaneous buying of one currency, for example, United States Dollars (USD), and the selling of another, i.e. The European Euro (EUR).
The most important market in Forex trading is called the “spot market” because trades are executed at once, or "on the spot". There are other elements of Forex trading, such as futures trading, and Forward Outrights, which are slightly more complex than spot trading.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The Top-Ten Mistakes FOREX Traders Make
You are ready. You’ve done your homework. You have read the all right trading books, watched all the right professional trading videos and attended a few of the right live seminars presented by big-name professional traders. You’ve researched your brokers, did your trials of various electronic trading platforms, and have your trading account ready to go. It’s day one of your new career—hopefully the one that will finally send you down the road to financial freedom. Congratulations, you are now a FOREX Trader.
But the odds are against you. You know that. You’ve read the statistics and heard the critics; but you are confident you won’t be the one to fail. You have the best trading system and you have planned for every contingency you can think of. Your charts, analysis and research are up-to-the-minute and instantly ready for every market you are going to trade. It’s go time. You take a deep breath and click the mouse…your first trade is LIVE; you’re in the game.
Fast forward six months. Your account balance is lower than when you started. Sure—you had some great trades and looking back, your analysis of most of the markets you traded was correct; but where is the profit you could have had? How did this happen? How do you get back on track?
I’ll tell you how it happened—because it happened to me; more than once. It happened because the real world of trading and the textbook world of trading are two completely different things. You need to be ready for that reality or you run a very big risk of being the one who makes part of the statistics.
If you want to read the whole story of how I got to be a professional FOREX and Futures trader pick up a copy of The Art of the Trade (Wiley & Sons publishing August 2008). I think you will be surprised to learn what is really required to be successful. In fact, I bet you are downright shocked to discover what is required.
If you would rather not read another book and simply want to get down to making your fortune, then I would encourage you to at least take the next few pages very seriously. Find a way to keep the thoughts you find here at your fingertips and consider them equally or more important than all your pre-trade preparation and analysis. If you seriously want to avoid the worst that could happen; then take some advice from someone who knows.
Before we get to The Top Ten Mistakes FOREX Traders Make, I want to give you some perspective. I started my career at a time when the markets were only just beginning to see the growth and public interest that they have today. The technology you and I take for granted today hadn’t even been invented yet. It took me years to learn what I needed to learn to be successful, without any of the help you have available FOR FREE anytime you want. You need to accept one very critical thing: the most important part of lasting trading success has nothing to do with the markets. It’s all in your head. All this FREE stuff is not going to offer you an easy road.
If you are willing to consider that the human element—the way you think and how you behave—is the REAL variable to lasting trading success; then I think you will get where you want to go a lot faster and with a lot less headache. If you are ready to get serious about your personal trader psychology then please come to my twice daily FOREX training sessions. If you really want to avoid the disasters you have read about then take my advice; don’t make these mistakes.
So let’s get’s started…
MISTAKE # 10
PAPER TRADING TOO LONG
Paper trading is hypothetical trading. If you have never traded anything before, you will probably do some paper trading. The benefit of paper trading is that it will help the new trader become acquainted with the basics of interfacing with the markets. This is often a “demo” account with a broker or clearing firm that provides real-time market data but provides a hypothetical balance. You are allowed to buy and sell as much as you want, just like in a “live” or “real” account. Your hypothetical gains and losses are accrued against your hypothetical account balance over time. As time goes on, most traders find that they can gain quite a surprising amount of paper-profits in a very short period of time. These traders are now completely convinced that they can easily duplicate those hypothetical results in real time with real money. They open their real trading account and POW! Within about three to four weeks they are down usually more than 50% of their equity. This is not my opinion—this is actual fact. Ask any broker in the industry what happens to “paper-traders” who open a real account. The ratio of “paper-traders” to “winning traders” is about one in ninety.
Why does this happen?
Because there was never any real risk to the trader.
Let me illustrate by telling you a story:
I am a private pilot. I soloed on my 17th birthday. In 1979 I was an Air Force academy appointee. I have flown a T-38 Jet fighter in extreme conditions. Just knowing that, I think most people would agree that I probably have a certain amount of experience flying airplanes.
Here in the suburbs outside of Chicago there is a small airport that has a “Fighter Pilot for a Day” program. This is where you fly co-pilot with a retired military pilot in high-performance aircraft. You are allowed to fly the aircraft (with the real pilot’s hands on the controls) in an attempt to “shoot down” an “enemy” fighter; which is another co-pilot flying another airplane with HIS retired military pilot. You are awarded a “kill” if your laser guns hit your opponent. It’s like a very expensive high-stakes game of laser-tag.
I went for a day to have some fun. As it turned out, I was flying against a complete novice. Of course, I didn’t tell him I had some Air Force training. I asked my adversary what kind of training he had. He very confidently told me that he was the top scoring “ace” from his on-line club and various other national methods of playing of high-tech video games. He told me that he could “out-fly” almost anyone in the Microsoft Flight Simulator in both the F-16 Falcon and F-15 Eagle. I agreed that his credentials were very impressive and proceeded to blow him out of the sky no less than six times in 20 minutes. To start with, this novice had never flown in aerobatic conditions so he spent most of his time trying not to throw-up. He stalled and spun most of the other time. If he wasn’t flying with someone he’d be dead. In the end he had to quit early because he simply couldn’t take the physical punishment. To add insult to injury, I have never played Microsoft Flight Simulator (ever). I do the real thing. BIG DIFFERENCE between the two as you can see.
Do you see the point I’m getting at? PRETENDING to do something is never the same as actually doing it. Yes, it is helpful up to a certain point to simulate certain things but that can only take you so far. In the case of air-to-air combat, PRETENDING to be a fighter pilot will likely get you killed if you ACTUALLY go up against a trained fighter pilot. In fact, the US Army Air Corps learned this the hard way back in WWI. They sent young men into combat with oftentimes less than 10 hours of actual flying time. Imagine how fast those men were killed when they went man-to-man with Richthofen, Boelke and Immelmann. Everyone concluded flying was “dangerous” when in fact it was the lack of training that was “dangerous”
I’m not trying to impress you with my flying skills. I’m trying to impress on you that paper-trading is exactly like playing Microsoft Flight Simulator. It is pretending to be something you are not while convincing you that you know what you are doing. Paper trading hides from you the need for real skills. Paper-trading will get you killed because when you go up against real traders with real money it’s not a game anymore. If you make the wrong move you lose equity. There is no “do over” button. If you stall your F-16 in the simulator, you get another chance; stall your F-16 in combat and you die. Lose money in your paper-trading account; just sign up for another trial account. Lose money in your real account and you go home broke.
Paper-trading is a waste of time because paper-trading will never give you the real skills you need to trade. All paper-trading can do is help you learn how to use the functions of your trading platform. In fact, that is a good thing. But once you learn the functions of your platform and your account is ready to trade, everything you learned paper-trading goes out the window because NOW IT IS DO OR DIE. There are no second chances.
Don’t make mistake #1; don’t think you know what you are doing because you pretended to trade without taking any real risk.
HOW TO MAKE THIS MISTAKE WORSE: Continue paper-trading for more than 30 days and/or go back to paper-trading if you have lost money in your first real account.
SOLUTION: Open the absolute smallest account your broker will allow and trade for 90 days the absolute smallest size possible. If you are ahead, increase your equity size and your trade size by a factor of 20%. If you are losing, stay with the real thing; it’s the only way to learn.
MISTAKE # 9
NOT HAVING A TRADING PLAN
Suppose you called your 401K manager this afternoon. Suppose you asked him “What is your plan for the next six months?” Suppose he told you “Oh—whatever. I just try to get on the right side and if I don’t I just get out”
How long would that guy be managing your retirement money if you had any say in the matter?
Many traders take the same attitude with their daily work habit and many don’t even know they do it. Not having a clear and concise plan for your daily trading presence is a serious mistake and you need to address it. The best way to describe a sound plan is to let you read one from a professional full-time trader. This is an actual trade plan form a friend of mine who is an E-mini trader:
2006 Trading Plan
My goal is to earn 100% on my trading equity before the end of the year. To maintain my focus I will set a near term goal every quarter to be at a 25% gain and I will plot my equity daily. If I reach my quarterly goal ahead of the last trading day of the quarter I will take a two-day break. I will hold any open positions that are at a profit but any open trade losses I will close at that point before I take a break.
If my open trade gains continue into the new quarter I will add to those winning positions by a factor of 25%. I will move my protective stops up to reduce my exposure on the entire position.
If I am behind on my trade goal for the quarter, I will take a five-day break. I will re-evaluate my trade system and ask the question: “Has my market quality changed to something my system is not able to perform at best?”
During the year I will not trade more than three markets. I have learned I cannot focus well on more than three markets at a time.
If I have more than four losing trades in a row in any of my three markets I will take a trading break for five days. Again, I will leave open position winners alone in the other markets but close all losing positions. I will again roll protective stops to reduce my risk.
When I take a trading break, I will enter resting limit orders in the open trade winners to take the objective profit should I be unavailable and the market gets to those levels during my break.
If I am ahead of my plan for the year at any point I will take a break. I will take 30% of the new equity out of my account and place that into a secure place. If I am behind I will not add equity under any circumstances. If I reach a 40% drawdown from my high equity I will quit for the year.
I will record my daily trade activity in my trading log and review this weekly. I will know my ratios and results; I will look to improve them by 5% each week.
I will trade only from the bull side because my analysis tells me that all three of the markets I have selected have more than a year of solid bullish fundamentals. I will learn how to use options this year because I see from last year I could have protected more trades if I had a solid grasp of when to use options and when not to. I will invest two-hours a week on option knowledge.
My son is leaving for Europe in May. I will not trade the week before he leaves or the week after. I plan to join him in the fall for Oktoberfest for one week and will not trade the three days before I leave or when I get back. I know I suffer from jet-lag so the week after I am back I am not at my best. I have blocked out these times on my trade calendar so I will not be tempted to trade anyway.
If you read between the lines you will notice that his trade plan included all the things that were in his control—NOT things outside of his control; like the markets. If you want to get serious about writing a solid trading plan pick up a copy of my first book Trading Rules That Work: the 28 essential lessons every trader must master (Wiley & Sons Publishing, October 2006). I also teach about trading plans in my daily broadcasts and in my Psychology of Trading course. Please see my website for details.
HOW TO MAKE THIS MISTAKE WORSE: Base your trading plan on hypothetical profits or on how well you did paper-trading, Ignore your personal emotional needs when compiling a plan, Ignore your family while making a plan, keep thinking you can trade everyday or all the time, average your potential over a period of time and think results will equal a daily amount.
SOLUTION: Ask a professional trader to show you his daily/weekly/monthly or annual trading plan. Ask yourself if you can make a plan that addresses similar things. If the professional you have selected can’t show you or won’t show you his plan then ignore what he has to say. If he isn’t using a plan then he is likely unable to assist you in building wealth. There are resources for writing trade plans on my site; please use them.
MISTAKE # 8
TRADING TOO LARGE FOR YOUR ACCOUNT
The fastest way to go broke is to bet it all—all the time. Most traders don’t learn this lesson until they have had at least one blow-out; by that I mean they have lost all their equity quickly and have had to start over.
For some reason, there is a tendency for traders of all age and experience levels to trade too large for the actual cash in their account. This is a symptom of a larger problem and unless you are willing to consider that you personally might have this problem already you most likely will be trading too large for your account right now today.
What is this larger problem?
GREED, BABY—GREED
It is unrealistic for you to believe you are going to make a killing on THIS ONE TRADE RIGHT NOW. Sure, you might be on the right side of a large move but that will take time and evidence to see. For this moment, any trade you have on has the potential to run the other way against you and if you are trading too large, your potential to lose a lot on only a few trades is huge. No matter your age, education, skill or experience level you are not going to make 100% winning trades. Therefore a certain percentage of your trades will simply not work. Those trades cannot be so large that you lose a significant portion of your equity in the process.
To beat the greed habit you need to make a few changes to both your equity management and more importantly to your thinking.
First, trading is a business. You need to treat it like one. There are certain things every business needs to run effectively and the first thing is liquidity. Simply put, if you run out of cash to play you can’t remain open.
Second, if you had a reasonable plan in place already then it is a good guess that your plan calls for only a reasonable amount of percent gain on your equity regularly. If you were to use some basic mathematics while creating a sound trading approach one of the things you would be looking for was a realistic “risk-to-reward” ratio. That means for every dollar you lose you expect to make a certain number of dollars and out of every 100 trades a certain percent will be winners and some will be losers.
If you put this all together and asked the “what-if?” questions you get this base-line number that statistically will be a winning set of results:
42% winning trades out of 100 taken
Two dollars out for every dollar you give back
This is not my opinion, this is the Probability of Ruin Matrix and you can research it yourself if you have time. Of course, if you have higher percentages of winners and take more out on those winners you make money a lot faster but the point is if your results are at least this good consistently you are on your way to success. I teach more about that in Trading Rules that Work and in my Psychology of Trading course.
It’s great to be on the high side of the matrix but most of us didn’t start there and that is why you have to TRADE SMALL at first. To protect yourself from being greedy about your trading and to help you stay focused on long-term success it is important to make your trade size small enough so that it won’t leave you in a position of not being able to play at all should you have a string of losses all at once. I found that limiting your risk/reward ratio to a factor of about 1.5% on any one trade is a great way to stay focused and not get greedy.
This means that for any one trade you take, no matter how you think of the trade or how certain you are of a win; you will not risk more than 1.5% of your account balance at any one time. This means that if you are trading so that your average loss is 3-5% of your account balance at any one time—you are trading TWO to THREE TIMES TOO LARGE for your account size. In that case, the Probability of Ruin Matrix will work against you and you will likely run out of capital before you make money with your approach.
If you are the greedy trader right now and you are guilty of making this mistake; If this means you have to drop your trading size down a few notches then you had better call your broker today and fix it—because if you don’t you are an accident waiting to happen. It only takes making this mistake THREE TIMES IN A ROW to drop your account balance 15% or more in a heartbeat; especially if you are day trading!
HOW TO MAKE THIS MISTAKE WORSE: Convince yourself you are so good at trading that this couldn’t possibly happen to you, convince yourself that your analysis is good enough to help you find 80-90% winning trades all the time, trade without a stop-loss order “just this once”, double-up on the next trade after taking a large loss.
SOLUTION: Immediately reduce your account balance; take 20-30% of your cash home. Trade position sizes that are no more than 300% as valuable as your account balance. In other words, if your account size is $10,000, don’t trade anything that has a total contract value larger than around $30,000. If that means trading mini’s instead of big-board you had better do it.
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We hope you’ve enjoyed the first few mistakes that traders make, and that it opens up your eyes to the Forex markets a little more! This is a mini version of our TOP 10, which we like to spread around for your overall knowledgebase, and to show you the quality you get with the Forex Brotherhood. Once you become a member with us, you get the rest of this guide, two daily live webinars/broadcasts, two daily hot reports, an automatic EA, a VIP forum to mingle at, and obviously a learning curve that will be shortened 10 fold with our curriculum and premiums.
Please consider me a friend in the business. I have many products and services available to you that have been created from my hard-won experience. They are all designed to help you do two things: Stay focused on what really matters when trading FOREX and stop making costly mistakes. I hope you will consider joining me and my online community for my twice-daily internet FOREX broadcasts. All the details are on the website at http://www.forexbrotherhood.com
Good luck and Good Trading
How to Formulate a Profitable Trading Plan
There is no magic formula that ensures profit on any type of investment. The forex market is no exception to this, but there are some steps you can take when devising your own personal investing plan that will not only make profit a more likely result, but will insulate you somewhat from disaster.
* Select Your Term: There are three basic time frames within the forex market dealing with the length of time a position in a certain currency is held. They are long term, medium term, and short term. Each has its advantages and disadvantages. The short term position holder, sometimes known as a scalper, will be making rapid fire trades often exchanging currencies back and forth within a single day. The long term trader will hold on to his currency for months or even years. The medium term trader usually holds his positions for a few days or a week. The advantage of the medium term is that it requires the least amount of capital to realize profit. Leverage is only needed to boost that profit, whereas in both long and short term trading, it is needed to both protect the investment, and insure any chance of profit. Although medium term is recommended for the beginning investor, and involves less risk, you need to identify which is right for your personal plan, and stick to it. A plan that tries to use all three at once will most likely lead to confusion.
* Learn to Use Technical Analysis: The forex market lends itself very well to statistical analysis. Trend following is an example of a type of analysis that can guide the investor in making profitable decisions. Technical analysis of the market includes monitoring price movement as well as a large number of indicators. There are programs available where this large amount of data can be crunched in any way that fits your own individual plan and your own needs. You are going to need to find the right way to access and organize the data required for the execution of your own individual investing strategy.
* Learn to Perfectly Time Your Trade: One of the features of the forex market is the ability of the investor to insulate himself from drastic market swings. This is partly because of the 24 hour nature of the market. With the exception of weekends, there is a forex market operating somewhere day and night. A good trading plan should include both "stop loss" and "take profit" orders. These are simply instructions to change your currency position when either your profit or your loss reaches a certain point. The stop loss order is more easily understood. This is simply bailing out before things get too bad. The take profit approach usually meets with more resistance, and it is true such an order might prevent you from making even more profit should a volatile change keep propelling the value upward. Volatile is volatile, however, and what goes up fast may come down faster. As you can not monitor your account twenty four hours a day, you want to know that if your profit point is reached while you are soundly sleeping, at least your expected level of profit will be realized.
One of the biggest advantages of the internet age regarding forex trading is the ability to freely use demo accounts - which are basically virtual forex games. These programs give you a chance to invest virtual money and see how well you do. Once your personal trading plan is formulated, execute it using a demo account. By doing this you will get a chance to see how it works, iron out any bugs, and fine tune your entries and exits, before you risk a single penny.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
* Select Your Term: There are three basic time frames within the forex market dealing with the length of time a position in a certain currency is held. They are long term, medium term, and short term. Each has its advantages and disadvantages. The short term position holder, sometimes known as a scalper, will be making rapid fire trades often exchanging currencies back and forth within a single day. The long term trader will hold on to his currency for months or even years. The medium term trader usually holds his positions for a few days or a week. The advantage of the medium term is that it requires the least amount of capital to realize profit. Leverage is only needed to boost that profit, whereas in both long and short term trading, it is needed to both protect the investment, and insure any chance of profit. Although medium term is recommended for the beginning investor, and involves less risk, you need to identify which is right for your personal plan, and stick to it. A plan that tries to use all three at once will most likely lead to confusion.
* Learn to Use Technical Analysis: The forex market lends itself very well to statistical analysis. Trend following is an example of a type of analysis that can guide the investor in making profitable decisions. Technical analysis of the market includes monitoring price movement as well as a large number of indicators. There are programs available where this large amount of data can be crunched in any way that fits your own individual plan and your own needs. You are going to need to find the right way to access and organize the data required for the execution of your own individual investing strategy.
* Learn to Perfectly Time Your Trade: One of the features of the forex market is the ability of the investor to insulate himself from drastic market swings. This is partly because of the 24 hour nature of the market. With the exception of weekends, there is a forex market operating somewhere day and night. A good trading plan should include both "stop loss" and "take profit" orders. These are simply instructions to change your currency position when either your profit or your loss reaches a certain point. The stop loss order is more easily understood. This is simply bailing out before things get too bad. The take profit approach usually meets with more resistance, and it is true such an order might prevent you from making even more profit should a volatile change keep propelling the value upward. Volatile is volatile, however, and what goes up fast may come down faster. As you can not monitor your account twenty four hours a day, you want to know that if your profit point is reached while you are soundly sleeping, at least your expected level of profit will be realized.
One of the biggest advantages of the internet age regarding forex trading is the ability to freely use demo accounts - which are basically virtual forex games. These programs give you a chance to invest virtual money and see how well you do. Once your personal trading plan is formulated, execute it using a demo account. By doing this you will get a chance to see how it works, iron out any bugs, and fine tune your entries and exits, before you risk a single penny.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
Tuesday, November 11, 2008
Advantage of Trend-Following System
Trend following systems in forex trading work much like the old rule of physics: A body in motion tends to remain in motion until acted upon by an outside force. When applied to currency, this is also thought to be true. If price is going up, it tends to continue going up, and profits can be made by investing on this trend. The trend can be upward, or it can be downward, and sometimes there's no obvious trend, but the principle remains the same. If you can see the trend then you can invest with the belief that it will continue.
The forex market lends itself very well to technical analysis. Since a country is such a big and complex entity, it is difficult to put an intrinsic value on it. Yet there are a large number of elements, both fundamental and technical, that can be used to establish trends. They include the GDP, CPI, prime interest rates, export and import figures, and even the unemployment level. All of these can be translated to charts showing the historical data going back decades. When they are charted, trends can be seen rather easily. When an investor becomes skilled in reading these charts and interpreting the trends, he will be able to use this information to guide his currency trading strategy.
Trend following is not always that simple. Indeed, it is quite a complex method of analysis. It can reveal historical turning points or levels where the trend tends to change direction. This can lead to investments known as "bucking the trend" trades. Although highly speculative in nature, they also present some tremendous profit potential. In essence, you are going to be betting that the trend is going to change direction while the majority of investors are betting it is going to continue.
Regardless if you are planning on bucking trends, or merely investing in the hope they continue in the same direction, understanding and identifying them is going to be the key element to successful investing strategy. This is one of the things that makes forex trading so appealing to the statistical minded and computer orientated investor of today. The facts are all out there, and the ability to gather and organize them has never been better. In the past, it was necessary to seek advice, and usually you had to pay dearly for it. While there are still plenty of financial advisors willing to give you their interpretations of trends, you are able today to do that pretty much for yourself.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
The forex market lends itself very well to technical analysis. Since a country is such a big and complex entity, it is difficult to put an intrinsic value on it. Yet there are a large number of elements, both fundamental and technical, that can be used to establish trends. They include the GDP, CPI, prime interest rates, export and import figures, and even the unemployment level. All of these can be translated to charts showing the historical data going back decades. When they are charted, trends can be seen rather easily. When an investor becomes skilled in reading these charts and interpreting the trends, he will be able to use this information to guide his currency trading strategy.
Trend following is not always that simple. Indeed, it is quite a complex method of analysis. It can reveal historical turning points or levels where the trend tends to change direction. This can lead to investments known as "bucking the trend" trades. Although highly speculative in nature, they also present some tremendous profit potential. In essence, you are going to be betting that the trend is going to change direction while the majority of investors are betting it is going to continue.
Regardless if you are planning on bucking trends, or merely investing in the hope they continue in the same direction, understanding and identifying them is going to be the key element to successful investing strategy. This is one of the things that makes forex trading so appealing to the statistical minded and computer orientated investor of today. The facts are all out there, and the ability to gather and organize them has never been better. In the past, it was necessary to seek advice, and usually you had to pay dearly for it. While there are still plenty of financial advisors willing to give you their interpretations of trends, you are able today to do that pretty much for yourself.
To learn an amazing breakthrough system that can skyrocket your trading profits, go here:
Trend Forex System
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