What are the best forex trading indicators and how do you use them to make your forex trading strategy succeed? Here we will look at how to do just that.
Firstly, there is no such thing as a best forex trading indicator on its own, as no indicator works all of the time however if you combine the right Forex trading indicators you can build a robust forex trading strategy and seek currency trading success.
Here we are going to give you a subjective view, of the best forex indicators and how to combine them for success.
When trading forex markets, we always like to use simple bar charts and see support and resistance as the initial paint on the canvas. We can see support and resistance and the direction of the market clearly and then decide with our indicators areas of value to buy and sell.
Here are some indicators we have been applying for 25 years and have made money with and the some advantages we think they give to any trader.
Simple Moving Averages
We all know prices come back to an average and we find the most useful the 40 day MA, for defining the biog long term trends and in strong trending markets, we like to buy or sell back to the 20 day MA, to enter fresh positions in the direction of the trend.
Bollinger Bands
Gives you the volatility of the market and they are a great help in determining the standard deviation of the market from the norm. This of course gives you clues to overbought and oversold scenarios, entry points and targets.
Anyone who trades forex, needs to be aware of volatility and standard deviation, so make it part of your essential forex education and use Bollinger Bands.
While you can see trends support and resistance and volatility, this is just setting up areas to trade now you need to do market timing. You should never predict a move, you should always confirm it with momentum indicators to get better market timing.
Here are two great forex trading indicators to do this.
Relative Strength Index
A great indicator you can use it to time entries if the RSI is in your favour and strong, in existing trends - or when it diverges from trends ( particularly when its over bought or over sold) to enter contrary trades.
Stochastic
We love the RSI - But our ultimate indicator to trigger trades is the stochastic; it's simple and very effective. We always use crossovers to confirm any move we are looking at. In contrary trades we love stochastic crosses with bullish or bearish divergence ( from over bought or oversold areas) against the prevailing trend.
A Great Toolbox Of Indicators for Any Forex Trader
So there you have our best forex trading indicators and they can be used for trend followers, contrary trading or swing trading. We can't give you every advantage of them here but look them all up and study them and you can blend them, into a powerful forex trading strategy for profit.
12/9/08
Finding Forex Trading Strategies That Works
Many Forex traders are looking for a way to gain an edge in the currency market but the truth is that there are very few real trading strategies that are proven and effective. Well, that is about to change here and now. I want to show you how to effectively trade in the currency market, using the best Forex trading strategies:
1. Go long on the trade when the two hundred day moving average is above and trade short the currency when the two hundred day moving average is below. The main reason for the success of trading with the two hundred day moving average is due to the fact that large institutions use this guide, that is why I use it quite successfully I might add.
2. Use the Relative Strength indicator (RSI). This is a great complimentary Forex trading indicator to the two hundred day moving average. It is also quite simple to use. When the RSI of a specific currency goes above 80 it is time to go short and when the RSI goes below 20 it is a great time to go long. The idea behind the Relative Strength Indicator is that of a currency being oversold or being overbought. Obviously, if you see a currency in an oversold state then it should be moving up soon.
These two simple Forex trading strategies are incredibly helpful and a great combination of Forex trading tools for anyone that wants to be a winner in the currency market.
If you want to find a truly all-in-one Forex training hub and the best Forex trading strategies then be sure to check out our site (www.supreme-forex.com).
1. Go long on the trade when the two hundred day moving average is above and trade short the currency when the two hundred day moving average is below. The main reason for the success of trading with the two hundred day moving average is due to the fact that large institutions use this guide, that is why I use it quite successfully I might add.
2. Use the Relative Strength indicator (RSI). This is a great complimentary Forex trading indicator to the two hundred day moving average. It is also quite simple to use. When the RSI of a specific currency goes above 80 it is time to go short and when the RSI goes below 20 it is a great time to go long. The idea behind the Relative Strength Indicator is that of a currency being oversold or being overbought. Obviously, if you see a currency in an oversold state then it should be moving up soon.
These two simple Forex trading strategies are incredibly helpful and a great combination of Forex trading tools for anyone that wants to be a winner in the currency market.
If you want to find a truly all-in-one Forex training hub and the best Forex trading strategies then be sure to check out our site (www.supreme-forex.com).
12/5/08
Make money with Forex Strategies
It is important for me to share some of my forex strategies that work. You may have noticed that forex isn't quite as easy as most people tell you it is. They tell you that you just literally throw money into the market and you'll get even more in return. I wish things were that easy, but it isn't. Most new traders end up losing all their money, so I hope that makes you a little more cautious. The reality is that you need to learn how to protect money before you learn to make it because it is very easy for a bad trade to bleed away all your money. I'm going to show you my forex strategies that work.
Probably, you're going to be given a demo account at whatever broker you sign up with. These demo accounts can be a nightmare or the best tool you get, depending on how you use them. If you intend to try out "get rich" trading strategies on it, you're going to lose out big time. The proper way to use a demo account is to become aware of the actions that make up good trading. The things you're watching, the signs you're reacting too, these are the things that count.
Personally my favorite forex strategies is to use a margin account. We all know the way to make money is to have lots of money invested. If you only have a hundred to invest, you're not going to make much. A margin account lets you leverage some of the brokers money in trades, so you'll get to invest a thousand dollars or more instead. This isn't free money though. If you lose your original deposit amount, you'll be cut off.
Probably, you're going to be given a demo account at whatever broker you sign up with. These demo accounts can be a nightmare or the best tool you get, depending on how you use them. If you intend to try out "get rich" trading strategies on it, you're going to lose out big time. The proper way to use a demo account is to become aware of the actions that make up good trading. The things you're watching, the signs you're reacting too, these are the things that count.
Personally my favorite forex strategies is to use a margin account. We all know the way to make money is to have lots of money invested. If you only have a hundred to invest, you're not going to make much. A margin account lets you leverage some of the brokers money in trades, so you'll get to invest a thousand dollars or more instead. This isn't free money though. If you lose your original deposit amount, you'll be cut off.
11/19/08
Forex Risk
Currency trading has gained much popularity in recent years. Once thought to be the playground of the rich investor, it has become apparent lately that the currency trading market is accessible by investors of all levels.
Forex has now become an often-used term as opposed to just a few years ago when most people had never heard it. Now, the advantages of Forex trading are readily appreciated as more and more investors devote the major portion of their investing activity to the Forex market. The trading of currency involves simultaneous purchasing of one currency and selling of another.
It is the world's largest market, with trades every day totaling over three trillion dollars, a staggering amount. It's no wonder then that investors have flocked to it given the enormous amount of money changing hands and the opportunities presented by that volume.
One of the best things about this arena is that one can practice at will and play games online to improve skills and knowledge. Pretend, or phantom trading is referred to as 'the game' in the Forex field. This, of course, allows you to risk no funds while you thoroughly learn techniques through constructive practice.
To locate sites that supply practice training simply do a Google search for 'Forex Trading' and many sites will be presented. By the way, the term 'Forex' is derived from the formal name of the trading type, Foreign Exchange. The trading practice is also sometimes referred to as just 'FX'.
For a complete overview of the Forex market, visit my web site through the link in my resource box below.
A major difference in this market, as opposed to the stock market, is that trading is not accomplished through a central point, such as the New York Stock Exchange. Trading in the Forex market is done on a direct basis, that is, between the two parties who are making the trade. Another major difference is that trading takes place twenty-four hours a day, through trading centers all over the world. The market trades continuously from Sunday night at 20:00 GMT to Friday night at 22:00 GMT. That gives investors a chance to make trades based on financial developments in the news without having to wait for a market to open the next day.
Many times, trades are done without commissions coming into play, a distinct advantage over the stock market. Still another advantage is the liquidity of the market, which translates into a constant supply of sellers and buyers, so there's always a trade in the making around the clock. The market is constantly in flux and presents trade opportunities no matter whether a particular currency is moving up or down. The Forex market also offers the investor great leverage. An investor can control a position that is as much as one hundred to one more than his margin deposit.
Currency trading is a fascinating field and one that should be looked into if you are searching for an opportunity to invest and a chance to seriously increase your net worth. Check it out carefully and do practice investing before you make the plunge. And, of course, never risk money you can't afford to lose.
Forex has now become an often-used term as opposed to just a few years ago when most people had never heard it. Now, the advantages of Forex trading are readily appreciated as more and more investors devote the major portion of their investing activity to the Forex market. The trading of currency involves simultaneous purchasing of one currency and selling of another.
It is the world's largest market, with trades every day totaling over three trillion dollars, a staggering amount. It's no wonder then that investors have flocked to it given the enormous amount of money changing hands and the opportunities presented by that volume.
One of the best things about this arena is that one can practice at will and play games online to improve skills and knowledge. Pretend, or phantom trading is referred to as 'the game' in the Forex field. This, of course, allows you to risk no funds while you thoroughly learn techniques through constructive practice.
To locate sites that supply practice training simply do a Google search for 'Forex Trading' and many sites will be presented. By the way, the term 'Forex' is derived from the formal name of the trading type, Foreign Exchange. The trading practice is also sometimes referred to as just 'FX'.
For a complete overview of the Forex market, visit my web site through the link in my resource box below.
A major difference in this market, as opposed to the stock market, is that trading is not accomplished through a central point, such as the New York Stock Exchange. Trading in the Forex market is done on a direct basis, that is, between the two parties who are making the trade. Another major difference is that trading takes place twenty-four hours a day, through trading centers all over the world. The market trades continuously from Sunday night at 20:00 GMT to Friday night at 22:00 GMT. That gives investors a chance to make trades based on financial developments in the news without having to wait for a market to open the next day.
Many times, trades are done without commissions coming into play, a distinct advantage over the stock market. Still another advantage is the liquidity of the market, which translates into a constant supply of sellers and buyers, so there's always a trade in the making around the clock. The market is constantly in flux and presents trade opportunities no matter whether a particular currency is moving up or down. The Forex market also offers the investor great leverage. An investor can control a position that is as much as one hundred to one more than his margin deposit.
Currency trading is a fascinating field and one that should be looked into if you are searching for an opportunity to invest and a chance to seriously increase your net worth. Check it out carefully and do practice investing before you make the plunge. And, of course, never risk money you can't afford to lose.
11/7/08
Enlarge your Forex Portfolio
One of the most frequent advice that is given out to novice forex traders is the advice to begin small in their trading activities. By doing so, you as a new forex trader will not suffer adversely if you make some mistakes along the way. This is because you are also recommended just to trade based on 2 % of your investment capital. The rationale is as you gain more experiences, your confidence level will be boosted.
This is an excellent advice for the novice Forex trader as they limit the exposure to risk. However the very same advice will also limit a novice forex trader to expand their horizon. The word "small" is equated to "safe" and this will stop you actually from building up your confidence level. To be confident you will need something to show for it and it is extremely difficult to built up an impressive portfolio if you trading account has only $500 to show for it.
Trying to achieve higher confidence level just with theoretical studies of investment techniques is nearly impossible. You must actually be practically involved in the building of your own success level in your trading. And as the level of success increased, you will also increase your confidence level.
By limiting your trading activities, you are actually limiting your potential to earn more and higher profits. So to overcome that, you need to trade more with a higher exposure level. And to do that will require more than a $500 trading account. Most forex trading advisers recommended that to be professional traders, you need at least $100,000. So how would you go about that to reach that target?
Persistence small profitable trading
As you'd expect, there's really no quick, guaranteed way to do this. They best ways is to start with small trades and keep working your way up slowly but surely. Keep in mind that doesn't mean you need to spend all day making lots of trades. Your goal here is accuracy, not quantity.
Venture into trading on other currency pairs
The advice for you to specialize in just one currency pairs is good advice so that you can focus. However, the advice will only hold turn for so long in your trading career. You cannot hope to build up an impressive portfolio by just sticking with only one pair of currency to trade. Therefore in order to grow the portfolio you will need to venture with another pair of currency in order to maximize your investment opportunity.
Trading with your own money
Sometimes because we wish to have additional capital to trade with, we try to borrow from friends or family members. This is a very unwise move as you might end up losing all the money that you borrowed. The reason is that borrowed money will cause you additional mental stress because of the fear of losing it. This will result in you curtailing your trading abilities which will ultimately result in losses. Therefore you are highly recommended to abstain from trading in borrowed money.
In summary, to build up your investment portfolio to an impressive level, you need to trade regularly, take more calculated risks diversify your currencies portfolio when possible. By abiding to these steps, you will slowly reach the level that you can be proud off.
Find out which forex trading software and forex trading systems actually make you the money. Stop wasting time and effort on systems that don't deliver results.
This is an excellent advice for the novice Forex trader as they limit the exposure to risk. However the very same advice will also limit a novice forex trader to expand their horizon. The word "small" is equated to "safe" and this will stop you actually from building up your confidence level. To be confident you will need something to show for it and it is extremely difficult to built up an impressive portfolio if you trading account has only $500 to show for it.
Trying to achieve higher confidence level just with theoretical studies of investment techniques is nearly impossible. You must actually be practically involved in the building of your own success level in your trading. And as the level of success increased, you will also increase your confidence level.
By limiting your trading activities, you are actually limiting your potential to earn more and higher profits. So to overcome that, you need to trade more with a higher exposure level. And to do that will require more than a $500 trading account. Most forex trading advisers recommended that to be professional traders, you need at least $100,000. So how would you go about that to reach that target?
Persistence small profitable trading
As you'd expect, there's really no quick, guaranteed way to do this. They best ways is to start with small trades and keep working your way up slowly but surely. Keep in mind that doesn't mean you need to spend all day making lots of trades. Your goal here is accuracy, not quantity.
Venture into trading on other currency pairs
The advice for you to specialize in just one currency pairs is good advice so that you can focus. However, the advice will only hold turn for so long in your trading career. You cannot hope to build up an impressive portfolio by just sticking with only one pair of currency to trade. Therefore in order to grow the portfolio you will need to venture with another pair of currency in order to maximize your investment opportunity.
Trading with your own money
Sometimes because we wish to have additional capital to trade with, we try to borrow from friends or family members. This is a very unwise move as you might end up losing all the money that you borrowed. The reason is that borrowed money will cause you additional mental stress because of the fear of losing it. This will result in you curtailing your trading abilities which will ultimately result in losses. Therefore you are highly recommended to abstain from trading in borrowed money.
In summary, to build up your investment portfolio to an impressive level, you need to trade regularly, take more calculated risks diversify your currencies portfolio when possible. By abiding to these steps, you will slowly reach the level that you can be proud off.
Find out which forex trading software and forex trading systems actually make you the money. Stop wasting time and effort on systems that don't deliver results.
10/25/08
Forex Trading Software Secrets Exposed
Talking about Forex trading the type of Forex software you go for is quite important. The many companies out there are all trying to get you to trade with them and the correct software will help with the difficult task ahead. Most Forex software products offer live online trading platforms and many other amenities depending on the software itself.
Forex Software must have a few essentials to in that should be standard amenities to the program. The most important aspect of the software you choose is in the security it provides you as you trade and enter your important personal information. It should offer at least 128 bit SSL encryption that will stop hackers from getting to any of your personal information to include your balance, history of transactions and account numbers.
For your better use of the software, you will also need round the clock technical support as trading in other countries does not stop when you go to sleep. If there is a problem, you need someone right away to help you so you do not loose a bundle in profits. You should be provided with daily backups of your information and a security system that is tight enough to keep unwanted visitors from accessing it. You might even find some that offer you fingerprint identification or smart card technology for their employees to enter these high security areas.
What type of time will the software be down each week? The software needs to be reliable and be ready for use 24 hours a day/7days a week. The technical support you receive should be fast and efficient. It should be safe but easy to use no matter what time of day or night it is being utilized. These features are what makes the Forex software you choose so important and helps make you successful in the Forex trading arena.
If you want to trade daily and earn serious money on the Forex market visit our site at the recommended programs and choose the one that fits you in order to make money automatically and successfully for life. Visit http://www.supreme-forex.com
Forex Software must have a few essentials to in that should be standard amenities to the program. The most important aspect of the software you choose is in the security it provides you as you trade and enter your important personal information. It should offer at least 128 bit SSL encryption that will stop hackers from getting to any of your personal information to include your balance, history of transactions and account numbers.
For your better use of the software, you will also need round the clock technical support as trading in other countries does not stop when you go to sleep. If there is a problem, you need someone right away to help you so you do not loose a bundle in profits. You should be provided with daily backups of your information and a security system that is tight enough to keep unwanted visitors from accessing it. You might even find some that offer you fingerprint identification or smart card technology for their employees to enter these high security areas.
What type of time will the software be down each week? The software needs to be reliable and be ready for use 24 hours a day/7days a week. The technical support you receive should be fast and efficient. It should be safe but easy to use no matter what time of day or night it is being utilized. These features are what makes the Forex software you choose so important and helps make you successful in the Forex trading arena.
If you want to trade daily and earn serious money on the Forex market visit our site at the recommended programs and choose the one that fits you in order to make money automatically and successfully for life. Visit http://www.supreme-forex.com
10/21/08
Forex Trading Strategy – Generate your signals with Forex Killer!
Some traders believe the market can be predicted and charts move to some higher force - their wrong. Others believe the fundamentals drive prices and their wrong too - if you want to win with your forex trading strategy you need to understand the key factor which is...
Forex Market signals
Market signals is the views of all the traders added up and it equals price and many people totally misunderstand its importance.
Most of us have the same facts to look at - but we all draw our own conclusions about what they mean and this is the price. So the fundamentals are NOT important, it's what traders think of them en-masse which is and this is why you can't trade breaking news.
When you look the charts reflect the bullish or bearish signals to a degree - they show you the reality of what traders think - but they don't give you clues to the future of what humans may do next - that's why all the clever, mathematical, predictive theories DON'T work.
Well how do you judge and trade signals?
There is a great tool you can use and it's free and it's called Forex Killer. It gives you an idea of what traders are doing in currency futures but is also applicable to cash. It gives you all the signals from what the traders think and play in the forex market at any time and it is totally and mathematically true!
Follow the Smart Software without any dubt. Its real advantage is it gives you free access to what the smart money is doing and this is a huge advantage in making your forex trading strategy work.
When you see big extremes you know a break is coming and the Forex Killer confirms or if you are wrong it says it to you.
The way to use the Forex Killer is to spit your set up and then move to your charts for confirmation. The Forex Killer gives you the set up which indicates when prices have moved to far from fair value. You then wait for the indication of a turn on your forex charts - then hit it.
Normally, once the market eases the speculators will get shaken out quickly, as they scramble to get out governed by their emotions, triggering a counter trend.
The signals are the smart money and if you want to win, you need to look at their actions - they will tell you when a market has moved and you need to make a trade.
You can then hit the big contrary trades for big profits.
It's a simple, free tool that gives you an insight into signals and its an extremely powerful addition to your forex trading strategy.
Forex Market signals
Market signals is the views of all the traders added up and it equals price and many people totally misunderstand its importance.
Most of us have the same facts to look at - but we all draw our own conclusions about what they mean and this is the price. So the fundamentals are NOT important, it's what traders think of them en-masse which is and this is why you can't trade breaking news.
When you look the charts reflect the bullish or bearish signals to a degree - they show you the reality of what traders think - but they don't give you clues to the future of what humans may do next - that's why all the clever, mathematical, predictive theories DON'T work.
Well how do you judge and trade signals?
There is a great tool you can use and it's free and it's called Forex Killer. It gives you an idea of what traders are doing in currency futures but is also applicable to cash. It gives you all the signals from what the traders think and play in the forex market at any time and it is totally and mathematically true!
Follow the Smart Software without any dubt. Its real advantage is it gives you free access to what the smart money is doing and this is a huge advantage in making your forex trading strategy work.
When you see big extremes you know a break is coming and the Forex Killer confirms or if you are wrong it says it to you.
The way to use the Forex Killer is to spit your set up and then move to your charts for confirmation. The Forex Killer gives you the set up which indicates when prices have moved to far from fair value. You then wait for the indication of a turn on your forex charts - then hit it.
Normally, once the market eases the speculators will get shaken out quickly, as they scramble to get out governed by their emotions, triggering a counter trend.
The signals are the smart money and if you want to win, you need to look at their actions - they will tell you when a market has moved and you need to make a trade.
You can then hit the big contrary trades for big profits.
It's a simple, free tool that gives you an insight into signals and its an extremely powerful addition to your forex trading strategy.
10/11/08
How to Become a Professional Forex Trader and make money at the Same Time
If you want to learn how to trade the Foreign Exchange Markets (Forex or FX) has never been as easy as it is today with the spread of the internet. It is quit simple to learn Forex trading online with many fantastic free and commercially available recourses available which are growing each and every day. After becoming educated in the finer methods of trading, the next step is to start the experimentation processes and refine the techniques you have been taught in a customized approach with meets your individualized goals related to realizable profits.
Most the people that ask me for advice think that is a long, tedious, expensive and complicated process to become a rich professional Forex trader. WRONG, WRONG, WRONG! Do I need to say it any more times? Do you know that if you played basketball in the NBA and made 50% of your shots you would be considered one of the greatest shooters of all time?
When you are trading Forex you are guaranteed to make 50% of your shots, that's right you will make winning trades 50% of the time even if you just flip a coin when attempting to decide which currency to pick. So how hard can it really be? Not to difficult is the answer!
If it is so easy then why do so many novice traders never make it to the next level and become professional traders? This can be answered with one word, GREED. What they don't understand is your not going to make a million dollars your first week of trading, but they are going to try anyway. The financial killer to most beginning FX traders is the MARGINS offered by the brokerage firms.
If there were no margins one would simply need to make more money than the commissions charged by the brokerage firms to make money. After all, you are GUARANTEED to be correct 50% of the time when entering a trade. There are only two paths a currency can go, UP or DOWN. They can't go any other ways, all though some of us in the profession for a long time sometimes think they do.
So where do you learn about controlling your margins? I will first tell you where you don't and that is the FOREX BROKERAGE FIRMS. Of course it is not in there interest to explain the financial snake pit you are about to enter. To learn Forex trading online and how to RULE margins and NOT let them RULE you then you are going to need to sign up for a commercial available course.
If you knew nothing about the Forex markets at all, but you fully understood the concept of margins and how to make them work FOR you as opposed to AGAINST you then you would not be reading this article, but sipping frozen banana and rum drinks under an umbrella on a beach in Tahiti. Just sit back and think about for yourself a little bit, if you are guaranteed to make winning trades 50% of the time exactly how can you not make money at this?
Most the people that ask me for advice think that is a long, tedious, expensive and complicated process to become a rich professional Forex trader. WRONG, WRONG, WRONG! Do I need to say it any more times? Do you know that if you played basketball in the NBA and made 50% of your shots you would be considered one of the greatest shooters of all time?
When you are trading Forex you are guaranteed to make 50% of your shots, that's right you will make winning trades 50% of the time even if you just flip a coin when attempting to decide which currency to pick. So how hard can it really be? Not to difficult is the answer!
If it is so easy then why do so many novice traders never make it to the next level and become professional traders? This can be answered with one word, GREED. What they don't understand is your not going to make a million dollars your first week of trading, but they are going to try anyway. The financial killer to most beginning FX traders is the MARGINS offered by the brokerage firms.
If there were no margins one would simply need to make more money than the commissions charged by the brokerage firms to make money. After all, you are GUARANTEED to be correct 50% of the time when entering a trade. There are only two paths a currency can go, UP or DOWN. They can't go any other ways, all though some of us in the profession for a long time sometimes think they do.
So where do you learn about controlling your margins? I will first tell you where you don't and that is the FOREX BROKERAGE FIRMS. Of course it is not in there interest to explain the financial snake pit you are about to enter. To learn Forex trading online and how to RULE margins and NOT let them RULE you then you are going to need to sign up for a commercial available course.
If you knew nothing about the Forex markets at all, but you fully understood the concept of margins and how to make them work FOR you as opposed to AGAINST you then you would not be reading this article, but sipping frozen banana and rum drinks under an umbrella on a beach in Tahiti. Just sit back and think about for yourself a little bit, if you are guaranteed to make winning trades 50% of the time exactly how can you not make money at this?
10/1/08
Are you a greedy gambler or a panic man?
A few years ago I designed a day trading system for the forex based on the following assumptions:
Bulls favor an orderly, steady march higher.
This can be seen in
a. Smaller daily ranges as the market climbs.
b. Declining volatility. (less daily variance).
c. Declining put/call ratio. (less desire to purchase downside insurance)
With time, complacency shifts to greed. Bulls are less likely to buy currencies for fear of giving up top end growth. The television's pundits tell us why "This bull is different." Any unknown investor feels secure enough to enter individual positions directly. The rising tide of the market begins to float all issues.
Wide ranges and exceptional volatility create mass confusion.
This can be seen in
a) Large daily ranges as the swings from positive to severely negative.
b) Expanding volatility. (large daily variance) c) Rising put/call ratio. (strong willingness to protect what equity is left)
Open interest in currencies begins to rise. Investors try to protect their money through the purchase of other currencies as the market declines. These purchases are made in an increasingly volatile market and are marked up. Ultimately, panic sets in and we get some kind of flush where currencies are dumped, investors head to the sidelines and currencies are purchased in a rush. This creates the common "spike" bottom. A single day's events can create the reversal necessary to set the bull/bear cycle in motion again.
The interest in today's article comes from the wide range of data now available to us. I've spent some time analyzing the option data. Finally, I can track open interest on different currencies as well as volume. I was interested to find out which component was more important; volume or, open interest. Is daily activity a better predictor of market direction or, am I better off tracking the movement of currencies?
Would this data be the better predictor? As it turned out, the volume of traders generated by panic, combined with the direction of the market's volatility was still the single one, two indicator of future short-term stock market direction. The correlation between open interest and market direction was random, at best.
Frequently, very frequently, the process of analysis bears very little tangible proof. Seemingly logical and fundamental truths of market behavior produce no better than random results when subjected to the rigors of quantifiable testing methodologies. Thus, a robust system in place for several years has withstood another attempt at, "improvement."
Bulls favor an orderly, steady march higher.
This can be seen in
a. Smaller daily ranges as the market climbs.
b. Declining volatility. (less daily variance).
c. Declining put/call ratio. (less desire to purchase downside insurance)
With time, complacency shifts to greed. Bulls are less likely to buy currencies for fear of giving up top end growth. The television's pundits tell us why "This bull is different." Any unknown investor feels secure enough to enter individual positions directly. The rising tide of the market begins to float all issues.
Wide ranges and exceptional volatility create mass confusion.
This can be seen in
a) Large daily ranges as the swings from positive to severely negative.
b) Expanding volatility. (large daily variance) c) Rising put/call ratio. (strong willingness to protect what equity is left)
Open interest in currencies begins to rise. Investors try to protect their money through the purchase of other currencies as the market declines. These purchases are made in an increasingly volatile market and are marked up. Ultimately, panic sets in and we get some kind of flush where currencies are dumped, investors head to the sidelines and currencies are purchased in a rush. This creates the common "spike" bottom. A single day's events can create the reversal necessary to set the bull/bear cycle in motion again.
The interest in today's article comes from the wide range of data now available to us. I've spent some time analyzing the option data. Finally, I can track open interest on different currencies as well as volume. I was interested to find out which component was more important; volume or, open interest. Is daily activity a better predictor of market direction or, am I better off tracking the movement of currencies?
Would this data be the better predictor? As it turned out, the volume of traders generated by panic, combined with the direction of the market's volatility was still the single one, two indicator of future short-term stock market direction. The correlation between open interest and market direction was random, at best.
Frequently, very frequently, the process of analysis bears very little tangible proof. Seemingly logical and fundamental truths of market behavior produce no better than random results when subjected to the rigors of quantifiable testing methodologies. Thus, a robust system in place for several years has withstood another attempt at, "improvement."
9/24/08
Is There a Way That You Can Make Money in Forex?
Constantly you are hearing about ways to make money from home and you already know 99% of these claims are hype. Is there any legitimate business which can really help you to make money fast and easy? Is there any business which can help you to make real big money? The single answer to all these questions is FOREX.
Forex trading is a good opportunity to make money. You can make a lot of money in forex right from your home, just by having an internet connection and a pc.
How much you can earn in forex? That depends but you can surely make a living!
That’s up to you. The earning potential is limitless in forex because it is the biggest market in the world with 3 billon dollars in daily transactions.
You can make money fast and easily in forex. Forex is foreign exchange market. It involves buying and selling of currencies.
People from all walks of life are trading forex. You don’t have to a financial geek to trade forex. Anybody can trade forex. It’s very simple.
And you don’t have to put a lot of money as investment; you can start with as little as possible.
But when you look out for training course to learn forex then you will come across by courses raging from $300 to $5000. This discourages many people from learning forex.
To overcome this problem we have developed an e-learning free video course to teach forex in simple manner and in your own pace. There is none of the people that work with us that do not make money from Forex on a daily basis.
We teach you how to make 100-300$ daily but surely and with little or no risk! We do not want to tell you that in one day you will make 1000$ or 10.000$ because we prefer the security of our people’s actions and not a “rich quick” plan.
Forex trading is a good opportunity to make money. You can make a lot of money in forex right from your home, just by having an internet connection and a pc.
How much you can earn in forex? That depends but you can surely make a living!
That’s up to you. The earning potential is limitless in forex because it is the biggest market in the world with 3 billon dollars in daily transactions.
You can make money fast and easily in forex. Forex is foreign exchange market. It involves buying and selling of currencies.
People from all walks of life are trading forex. You don’t have to a financial geek to trade forex. Anybody can trade forex. It’s very simple.
And you don’t have to put a lot of money as investment; you can start with as little as possible.
But when you look out for training course to learn forex then you will come across by courses raging from $300 to $5000. This discourages many people from learning forex.
To overcome this problem we have developed an e-learning free video course to teach forex in simple manner and in your own pace. There is none of the people that work with us that do not make money from Forex on a daily basis.
We teach you how to make 100-300$ daily but surely and with little or no risk! We do not want to tell you that in one day you will make 1000$ or 10.000$ because we prefer the security of our people’s actions and not a “rich quick” plan.
9/17/08
Manage your money in Forex
If you could put three newbie traders in front of the screen, provide them with your best high-probability set-up, and for good measure, have each one take the opposite side of the trade. More than likely, both will wind up losing money. However, if you take two pros and have them trade in the opposite direction of each other, quite frequently both traders will wind up making money - despite the seeming contradiction of the premise. What's the difference? What is the most important factor separating the seasoned traders from the amateurs? The answer is money management.
You can compare money management with dieting and working out, it is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success.
A trader would have to earn 100% on his or her capital - a feat accomplished by less than 3% of traders worldwide - just to break even on an account with a 50% loss. At 75% drawdown, the trader must quadruple his or her account just to bring it back to its original equity!
Even though most traders are familiar with the figures above, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.
Traders begin their trading career, whether consciously or subconsciously, visualizing "The Big Bucks" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets. But the cold hard truth for most retail traders is that, instead of experiencing the "Big Win", most traders fall victim to just one "Big Loss" that can knock them out of the game forever.
Most traders can avoid this fate by controlling their risks through stop losses. Never risk more than 1% of total equity on any trade. By only risking 1%, I am indifferent to any individual trade. This is a very good approach. A trader can be wrong 20 times in a row and still have 80% of his or her equity left.
If we could think straight, the reality is that very few traders have the discipline to practice this method consistently. Not unlike a child who learns not to touch a hot stove only after being burned once or twice, most traders can only absorb the lessons of risk discipline through the harsh experience of monetary loss. This is the most important reason why traders should use only their speculative capital when first entering the forex market. When novices ask how much money they should begin trading with, one seasoned trader says: "Choose a number that will not materially impact your life if you were to lose it completely. Now subdivide that number by five because your first few attempts at trading will most likely end up in blow out." This too is very sage advice, and it is well worth following for anyone considering trading FX.
There are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses. The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)
The method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.
Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.
- Equity Stop
This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%.
One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.
- Chart Stop
Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.
- Volatility Stop
A sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed.
One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.
- Margin Stop
Perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions.
This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires). So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.
You can compare money management with dieting and working out, it is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success.
A trader would have to earn 100% on his or her capital - a feat accomplished by less than 3% of traders worldwide - just to break even on an account with a 50% loss. At 75% drawdown, the trader must quadruple his or her account just to bring it back to its original equity!
Even though most traders are familiar with the figures above, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.
Traders begin their trading career, whether consciously or subconsciously, visualizing "The Big Bucks" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets. But the cold hard truth for most retail traders is that, instead of experiencing the "Big Win", most traders fall victim to just one "Big Loss" that can knock them out of the game forever.
Most traders can avoid this fate by controlling their risks through stop losses. Never risk more than 1% of total equity on any trade. By only risking 1%, I am indifferent to any individual trade. This is a very good approach. A trader can be wrong 20 times in a row and still have 80% of his or her equity left.
If we could think straight, the reality is that very few traders have the discipline to practice this method consistently. Not unlike a child who learns not to touch a hot stove only after being burned once or twice, most traders can only absorb the lessons of risk discipline through the harsh experience of monetary loss. This is the most important reason why traders should use only their speculative capital when first entering the forex market. When novices ask how much money they should begin trading with, one seasoned trader says: "Choose a number that will not materially impact your life if you were to lose it completely. Now subdivide that number by five because your first few attempts at trading will most likely end up in blow out." This too is very sage advice, and it is well worth following for anyone considering trading FX.
There are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses. The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)
The method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.
Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.
- Equity Stop
This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%.
One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.
- Chart Stop
Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.
- Volatility Stop
A sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed.
One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.
- Margin Stop
Perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions.
This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires). So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.
9/8/08
Do you want to implement a good Forex Strategy?
You can ask most traders, and they will tell you about some moving average or combination of indicators or a chart pattern that they use. This is, as the more experienced trader knows, an entry point and not a strategy.
Every trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.
There is one other vital ingredient that many traders forget - and that is to fully understand the "personality" of what you trade. Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares. Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.
In my opinion: You absolutely MUST specialise.
I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!
Many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.
I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which. WHY?
Because every share, index or commodity has it’s own "personality".
Some will be volatile intra-day, some will follow their sector or the main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!
No matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. I would go so far as to say that a strategy that works well for Bovis Homes, for example, is likely NOT to work for BT Group - they have very different "personalities".
Let’s return to our question: What makes a good trading strategy? Let me answer with a series of ten questions that you need to find answers to, in order to build a REALLY GOOD strategy.
1. What do you want to trade (share, index, commodity, currency, etc)? If your answer is shares (plural) I would urge you to pick one typical share at this stage to really specialise. You can add more later.
2. What "personality" does that share, index etc have?
3. What entry system is the most reliable for that share?
4. What stop loss system is the most effective for that share?
5. What average risk will a typical trade carry?
6. What exit system works well for that share?
7. What is your trading personality (attitude to risk, losses, discipline, how much do you worry etc) and can you trade that strategy without overriding it?
8. What timescale do you want to trade? (Using intra-day or end of day data)
9. How much data do you keep on past trades to help identify strategy weaknesses?
10. How does all this fit with your trading objectives?
Everytime you have an answer to each question you need to do one final thing. Make sure all those things fit together and complement each other. For example, if the ideal stop loss position represents a big average risk and conflicts with your own attitude to risk, you need to start again. If you will override your exit point because greed makes you hang in for more, you need to think again. Perhaps you shouldn’t trade that stock in the first place - look for one with a different "personality" which will lead to a strategy you can trade comfortably.
Every trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.
There is one other vital ingredient that many traders forget - and that is to fully understand the "personality" of what you trade. Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares. Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.
In my opinion: You absolutely MUST specialise.
I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!
Many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.
I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which. WHY?
Because every share, index or commodity has it’s own "personality".
Some will be volatile intra-day, some will follow their sector or the main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!
No matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. I would go so far as to say that a strategy that works well for Bovis Homes, for example, is likely NOT to work for BT Group - they have very different "personalities".
Let’s return to our question: What makes a good trading strategy? Let me answer with a series of ten questions that you need to find answers to, in order to build a REALLY GOOD strategy.
1. What do you want to trade (share, index, commodity, currency, etc)? If your answer is shares (plural) I would urge you to pick one typical share at this stage to really specialise. You can add more later.
2. What "personality" does that share, index etc have?
3. What entry system is the most reliable for that share?
4. What stop loss system is the most effective for that share?
5. What average risk will a typical trade carry?
6. What exit system works well for that share?
7. What is your trading personality (attitude to risk, losses, discipline, how much do you worry etc) and can you trade that strategy without overriding it?
8. What timescale do you want to trade? (Using intra-day or end of day data)
9. How much data do you keep on past trades to help identify strategy weaknesses?
10. How does all this fit with your trading objectives?
Everytime you have an answer to each question you need to do one final thing. Make sure all those things fit together and complement each other. For example, if the ideal stop loss position represents a big average risk and conflicts with your own attitude to risk, you need to start again. If you will override your exit point because greed makes you hang in for more, you need to think again. Perhaps you shouldn’t trade that stock in the first place - look for one with a different "personality" which will lead to a strategy you can trade comfortably.
9/3/08
The Inner Game of Trading
The first thing you have to do it to change your mental attitude first from a normal person to that of a speculator. Almost all traders I have met, except a few successful ones who really made millions and billions trading in the market, simply waste all their time trying to learn the easiest part in perfection, like about how to read data and charts, and trying to perfect entry and exit skills, etc. Trading is a mind game and without having a right frame of mind, it is a losing game even before it starts. Training a trader’s mind is the first step for any successful trader but almost all new traders neglect that part and that explains why more than 95% of traders are a failure in the long run.
Seeking and finally acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired one’s proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)
A trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.
I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.
Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.
Important thinks to consider
All the markets, either it is real estate market nor forex market, is all about transferring money from the masses to a few lucky ones in the long run. In most real property speculation cases, the masses make money ,a lot of money, but the money stays as paper profit and evaporate before they realize their paper profit into real hard cash. In most forex speculation cases, the masses barely survive a few years thanks to lack of knowledge of the market and the deadly leverage. But both types of speculators all serve their useful purposes in investment food chain contributing their hard earned money to the market in exchange for a dream.
The fact is that for any prospective traders, hope this is not in anyway a discouragement. Trading is a hard mind game and not everyone is suitable to be engaged in such a hard game. Most have neither frame of mind nor mental fortitude to survive in this hard game. Mastering TAs or numbers or options business are at best a first tentative step into the right direction with no guarantee to any success. Training a right frame of mind is the most difficult but absolutely necessary part for success and most are simply not ready to go through that hard stage of the learning process because it is a very painful process. Trading is essentially about pain-taking-process in the end although most do not realize it. The process of overcoming fear, greed and mastering tranquility of mind in this hard school of speculation. Fwiw.
All traders should find his/her method/system which suits his/her own situation and personality. And that system/method must be the one that has proven to be able to make some money through trials. So, if Tom, the medium-term trader, revealed his money making method of last three decades, it may not have the same effect for Dick and Harry, the day traders, and vice versa. Agree that most fail for lack of system/method and/or lack of discipline to follow through.
To succeed in trading is all about making as much as one can when one is right and losing as little as possible when one is wrong. That is the essence of this business. So, any theory or system which looks after the above is a good one.
The system is a weapon of a soldier in this market. You must have one as soon as possible. Otherwise, it will be like fighting well-armed Forex robbers with a handbag. Best one is a self-made one because you can never feel comfy in borrowed shoes although borrowing good ideas from others is a good idea. Good luck.
A trader cannot make a dime unless follow the herd or trend most of the time. It is just that one has to be cautious when overbought/oversold region is approaching and know how to turn at inflection point for the opposite trend. Following herd needs average intelligence and courage but identifying inflection points and taking a necessary action needs not only intelligence but also a lot of courage. Again, fortune favors the brave.
In money management is where most traders go wrong in almost all cases leaving only a few as the winner at the end of the day. Money management and discipline of mind is what makes or brakes a trader at the end of the day, not the elementary entry and exit method.
Seeking and finally acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired one’s proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)
A trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.
I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.
Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.
Important thinks to consider
All the markets, either it is real estate market nor forex market, is all about transferring money from the masses to a few lucky ones in the long run. In most real property speculation cases, the masses make money ,a lot of money, but the money stays as paper profit and evaporate before they realize their paper profit into real hard cash. In most forex speculation cases, the masses barely survive a few years thanks to lack of knowledge of the market and the deadly leverage. But both types of speculators all serve their useful purposes in investment food chain contributing their hard earned money to the market in exchange for a dream.
The fact is that for any prospective traders, hope this is not in anyway a discouragement. Trading is a hard mind game and not everyone is suitable to be engaged in such a hard game. Most have neither frame of mind nor mental fortitude to survive in this hard game. Mastering TAs or numbers or options business are at best a first tentative step into the right direction with no guarantee to any success. Training a right frame of mind is the most difficult but absolutely necessary part for success and most are simply not ready to go through that hard stage of the learning process because it is a very painful process. Trading is essentially about pain-taking-process in the end although most do not realize it. The process of overcoming fear, greed and mastering tranquility of mind in this hard school of speculation. Fwiw.
All traders should find his/her method/system which suits his/her own situation and personality. And that system/method must be the one that has proven to be able to make some money through trials. So, if Tom, the medium-term trader, revealed his money making method of last three decades, it may not have the same effect for Dick and Harry, the day traders, and vice versa. Agree that most fail for lack of system/method and/or lack of discipline to follow through.
To succeed in trading is all about making as much as one can when one is right and losing as little as possible when one is wrong. That is the essence of this business. So, any theory or system which looks after the above is a good one.
The system is a weapon of a soldier in this market. You must have one as soon as possible. Otherwise, it will be like fighting well-armed Forex robbers with a handbag. Best one is a self-made one because you can never feel comfy in borrowed shoes although borrowing good ideas from others is a good idea. Good luck.
A trader cannot make a dime unless follow the herd or trend most of the time. It is just that one has to be cautious when overbought/oversold region is approaching and know how to turn at inflection point for the opposite trend. Following herd needs average intelligence and courage but identifying inflection points and taking a necessary action needs not only intelligence but also a lot of courage. Again, fortune favors the brave.
In money management is where most traders go wrong in almost all cases leaving only a few as the winner at the end of the day. Money management and discipline of mind is what makes or brakes a trader at the end of the day, not the elementary entry and exit method.
How to Choose the Best Forex Software
When we are talking about forex trading the forex software you choose is very important. There are so many forex trading software companies all trying to do business with you, they tell you that choosing the right forex software can be quite a difficult task so they promote theirs. Some of the forex software products available offers live online forex trading platforms but what other components are vital when it comes to your forex software.
Key Elements For Your Forex Software:
- It must be used by professionals & be easy to use for beginners alike with no experience whatsoever.
- You must be able to start with any real forex account or learn the ropes on a demo account without risking any real money at all.
- It must works with all trading platforms because it is should be an independent program. You just have to feed it with market data and follow it's trading advice.
- It should work in any country and with any broker.
- It must be a highly profitable system that lets you earn thousands of dollars each day.
- It must applies to each and every currency pair and any financial market.
- Reliable and consistent. Stand-alone software!
- It can be tested without having to risk any trading capital!
- Can be used anywhere at any time because the market is always open!
- Breathtakingly simple. It must easily and quickly be understood by the average independent trader as well as newbies!
- The company should give you Free Updates for life. They must constantly tweak the software for maximum efficiency
Before purchasing any forex software there are a few essential items that should be included. The most important is the percentage of success this program has and how this software is designed in order to make the right trading signals. This is a task that so should test over and over again!
Providing the best software solution for your forex trading will include a company that provides 24 hour technical support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and yearly new versions of the software for free.
Another important factor when it comes to choosing your forex software is to check what the company’s downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and can work with any trading platform. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.
Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.
Key Elements For Your Forex Software:
- It must be used by professionals & be easy to use for beginners alike with no experience whatsoever.
- You must be able to start with any real forex account or learn the ropes on a demo account without risking any real money at all.
- It must works with all trading platforms because it is should be an independent program. You just have to feed it with market data and follow it's trading advice.
- It should work in any country and with any broker.
- It must be a highly profitable system that lets you earn thousands of dollars each day.
- It must applies to each and every currency pair and any financial market.
- Reliable and consistent. Stand-alone software!
- It can be tested without having to risk any trading capital!
- Can be used anywhere at any time because the market is always open!
- Breathtakingly simple. It must easily and quickly be understood by the average independent trader as well as newbies!
- The company should give you Free Updates for life. They must constantly tweak the software for maximum efficiency
Before purchasing any forex software there are a few essential items that should be included. The most important is the percentage of success this program has and how this software is designed in order to make the right trading signals. This is a task that so should test over and over again!
Providing the best software solution for your forex trading will include a company that provides 24 hour technical support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and yearly new versions of the software for free.
Another important factor when it comes to choosing your forex software is to check what the company’s downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and can work with any trading platform. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.
Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.
The first meeting with Forex trading
People have started getting into Forex trading. The foreign exchange market is considered to be one of, if not the, most liquid market today and one of the largest.
What exactly is Forex? What is known as Forex or simply FX, is a term used to refer to the trading of the different currencies of the world. This term caters to the Forex market - which is the biggest market in the world, trading more than 1.7 trillion dollars every single day.
Usually most of trading is speculative, with just a percentage of activity corresponding to governments and companies conversion needs.
Forex trading, unlike trading in the stock market, is not carried out through a central exchange, but instead conducted through an interbank market. This interbank market is mostly described as an over the counter market wherein trading of currencies takes place between two correspondents making a trade directly, either over the phone or through electronic networks worldwide.
Trading for the foreign exchange market has its main centers of activity in
In forex trading, some of the most frequently traded currencies are the major currencies such as the EURUSD, USDJPY, USDCHF, and GBPUSD. The spot market is the most vital market since it contains the largest volume. This market is called as such since trades done in this market are settled immediately - which means settlement within two banking days.
With other ways to earn money and trade, why consider forex trading? Forex trading has certain advantages over other forms of market trading. One of its major advantages is the 24-hour trading window, giving traders an opportunity to instantly react to news that affects the market as it happens. Market liquidity is also a factor. There will always be sellers and buyers to conduct transactions with. This liquidity, which comes from banks that provide liquidity from investors, institutions and other market players, also helps in ensuring the stability of prices. The absence of commissions makes forex trading a very attractive opportunity for investors who want to make deals frequently.
The abundance of opportunities for trading is also another advantage of forex trading. Due to the constant movement of the market, trading is always an option - whether a currency is weakening or gaining strength against other currencies. Trading in this manner ensure that the different currencies work against each other, thereby ensuring the presence of more opportunities to make deals.
There are a lot of gains from forex trading, however, it is important to know as much about the market and the practices before embarking on your first deal.
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