When 95% of traders lose money, what makes you think you can win? To see your chances of succeeding as aForex trader, here is a checklist for you to see and become one of the elite traders, who make tremendous long term profits.
Following are a few ways to lose money. You may wish to change your mind immediately if you are thinking of trying any of them. Do this to avoid losses and continue your Forex education!
1. Following a Forex Robot With Simulated Gains-You can apparently achieve success without any effort as promised by these. You are asked to accept their track records simulated going backwards. Your equity will get destroyed by trying them.
2. Day Trading and Scalping-Due to the random short term volatility, simply doesn't work. Like the robots, even people selling these always have simulated track records.
Many more of these all fall into the same category of trying to find someone else to give you success. This does not work in Forex markets.
Apart from needing a trading edge, you also have to understand ways and reasons of it leading yo9u to success. Let's look at this in detail.
SUCCESS COMES FROM WITHIN
The combination of a simple robust helping you to understand and trade with discipline is what Forex trading is all about.
You need to know what you are doing to trade with discipline. This translate into having confidence, which you definitely don't get from someone telling you what to do. You get confidence from your own knowledge and learning.
DISCIPLINE AND LOSSES
As you have to keep executing trading signals through losing periods, discipline is hard. This has to be continued till you hit a home run, even when the market is fooling you and taking your money.
A TRADING EDGE
What separates out from your Forex system from the 95% losers is your trading edge. You can answer what is your trading edge and how it will help you beat the majority. You don't have one if you don't know what it is.
Few succeed in the simple simpleForex trading. These elements are present in the winners' Forex trading strategy:
Using simple robust Forex trading system
-Having solid grounding in the basics of Forex trading
-Knowing exactly why their system will lead them to success
-Having confidence and discipline to stick with their plan
Knowing that only they are responsible for their Forex trading success
You have to stand alone, be confident of your actions and be disciplined to follow your plan in Forex trading.
SUCCESS IS IN YOUR HANDS
Sounds simple, however it actually depends on your approach to Forex trading-with the right mindset and getting the right education. The trader beats him or herself, rather than the market beating the trader in Forex trading.
Learn the basic fundamentals I have laid out here for you, get a suitable system, become confident in your knowledge. get an edge and be disciplined. Do all of these to enjoy currency trading success.
Wednesday, October 29, 2008
Saturday, October 25, 2008
FOREX TRADERS: THE NEED TO BE OBJECTIVE
Needless to say it is difficult for Forex traders to realize that the currency market is extremely unpredictable. As new traders spend a long time trying to learn the mechanics of the foreign exchange trade and focus their time and energy on trying to find a method for predicting movements, they naturally expect there to be rules governing the movement of the market. This not being the case, many traders find themselves at a disadvantage.
While Forex traders have a number of tools at their disposal, which allow them to judge the right time to open or close a position, many prefer to rely mostly on one tool. So, having opened a position, they watch their favorite indicator and, to a large extent, base their trading decisions solely on it , ignoring the others.
This works well enough until that indicator starts telling them something different from what the others are. Traders caught in an open position which their favorite tool is telling them to hold, will often do so, despite the fact that other tools are telling them to close and get off the market, and end up losing money.
The basic problem, of course, is that the trader is not looking at the market as is, but through the lenses of his or her own expectations about it and further using their favorite indicator to reinforce those ideas instead of looking at the bigger picture. And encouraged by the fact that his or her chosen indicator is forecasting the profit he or she wants, the trader is focusing more on the money than on the market.
If the Forex market was not unpredictable, it would collapse because all traders would profit all the time. There are many tools that can help traders predict the direction of the market and they usually do an efficient job. But even in the hands of the most experienced traders, the best tools occasionally fail to predict the market's movements correctly.
Losing in trade because of predicting the market wrongly is an innate part of Forex trading and traders need to accept it. Besides, they need to avoid getting in a position where they do not have many choices.
For this, the trader needs to accept the fact that the foreign exchange market pretty much has a mind of its own and the traders have to follow its movements instead of trying to make it go in the direction they want.
FOREX TRADING TOOLS
there is no one single super smart Forex trading tool which gives you profit, profit and more profit. The only possible solution is to use a combination of different tools to identify the favorable market forces to get a maximum number of high probability trades over a period of time. Trend lines are the most popular and reliable Forex trading tool which many successful traders give their testimonial for.
THE THREE TREND LINE STRATEGY
Trend lines are an important tool for trend identification and confirmation in technical analysis. It is a straight line that connects two or more price points and then extends into the future to guide you.
There will be lines drawn across significant lows for an uptrend, and significant highs in a downtrend. To roughly classify trend lines, we can divide them into three, short term trend lines, medium term trend lines and long term trend lines.
1. Short Term Trend Lines
Draw these lines across the most recent two lows for an uptrend or across most the recent
two highs for a downtrend. Best observations are found on a smaller time frame such as a
15 minute or 30 minute chart.
2. Medium Term Trend Lines
These are best observed on a higher time frame like a 60 minute chart. It either connects
the nearest significant low to current price action to the previous significant low in an
uptrend or the nearest significant high to current price action to the previous significant
high in a downtrend.
3. Long Term Trend Lines
It uses higher time frames such as the 4 hour chart or the daily chart to draw long term trend
-lines using the same method of Medium Term Trend lines. The long term trend line is
considered as an effective Forex trading tool. The daily chart is used mostly by traders of big
institutions who do not usually engage in small moves on an intra day level.
By drawing a trend line on a daily chart you can graphically analyze where price is and where it is likely to bounce. But employ trend lines as a Forex trading tool with caution and discretion.
Covering your charts with every trend line possible will result in confusion and blurry analysis.
It is not a good idea to rely completely on a short time trend line. They merely give you a defined picture of current price action. These are broken often during the course of a day. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
If you notice price coming back to test a trend line on the higher time frames, look at the other factors. Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
While Forex traders have a number of tools at their disposal, which allow them to judge the right time to open or close a position, many prefer to rely mostly on one tool. So, having opened a position, they watch their favorite indicator and, to a large extent, base their trading decisions solely on it , ignoring the others.
This works well enough until that indicator starts telling them something different from what the others are. Traders caught in an open position which their favorite tool is telling them to hold, will often do so, despite the fact that other tools are telling them to close and get off the market, and end up losing money.
The basic problem, of course, is that the trader is not looking at the market as is, but through the lenses of his or her own expectations about it and further using their favorite indicator to reinforce those ideas instead of looking at the bigger picture. And encouraged by the fact that his or her chosen indicator is forecasting the profit he or she wants, the trader is focusing more on the money than on the market.
If the Forex market was not unpredictable, it would collapse because all traders would profit all the time. There are many tools that can help traders predict the direction of the market and they usually do an efficient job. But even in the hands of the most experienced traders, the best tools occasionally fail to predict the market's movements correctly.
Losing in trade because of predicting the market wrongly is an innate part of Forex trading and traders need to accept it. Besides, they need to avoid getting in a position where they do not have many choices.
For this, the trader needs to accept the fact that the foreign exchange market pretty much has a mind of its own and the traders have to follow its movements instead of trying to make it go in the direction they want.
FOREX TRADING TOOLS
there is no one single super smart Forex trading tool which gives you profit, profit and more profit. The only possible solution is to use a combination of different tools to identify the favorable market forces to get a maximum number of high probability trades over a period of time. Trend lines are the most popular and reliable Forex trading tool which many successful traders give their testimonial for.
THE THREE TREND LINE STRATEGY
Trend lines are an important tool for trend identification and confirmation in technical analysis. It is a straight line that connects two or more price points and then extends into the future to guide you.
There will be lines drawn across significant lows for an uptrend, and significant highs in a downtrend. To roughly classify trend lines, we can divide them into three, short term trend lines, medium term trend lines and long term trend lines.
1. Short Term Trend Lines
Draw these lines across the most recent two lows for an uptrend or across most the recent
two highs for a downtrend. Best observations are found on a smaller time frame such as a
15 minute or 30 minute chart.
2. Medium Term Trend Lines
These are best observed on a higher time frame like a 60 minute chart. It either connects
the nearest significant low to current price action to the previous significant low in an
uptrend or the nearest significant high to current price action to the previous significant
high in a downtrend.
3. Long Term Trend Lines
It uses higher time frames such as the 4 hour chart or the daily chart to draw long term trend
-lines using the same method of Medium Term Trend lines. The long term trend line is
considered as an effective Forex trading tool. The daily chart is used mostly by traders of big
institutions who do not usually engage in small moves on an intra day level.
By drawing a trend line on a daily chart you can graphically analyze where price is and where it is likely to bounce. But employ trend lines as a Forex trading tool with caution and discretion.
Covering your charts with every trend line possible will result in confusion and blurry analysis.
It is not a good idea to rely completely on a short time trend line. They merely give you a defined picture of current price action. These are broken often during the course of a day. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
If you notice price coming back to test a trend line on the higher time frames, look at the other factors. Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
Wednesday, October 22, 2008
FOREX TRADING PRICE MOVEMENTS-HOW AND WHY MARKETS MOVE AND HOW TO PROFIT
Understanding expense trends of Forex is not easy at all. Businessmen often get wrong ideas and make agendas based on them and suffer losses. The following can help you understand the trends:
YOU PREDICT THE FOREX EXPENSE TRENDS
Businessmen observe a certain level and jump on it thinking that it's stable. However, this is simply based on assumption and that never works in Forex business. There is no accurate prediction.
If winning is the goal, you have to base the business on the sure shot expense trends. Related to this, there are certain factors given below.
THE MARKET OBEYS SCIENTIFIC LAWS
There is a notion, which believes that market trends are based on logic. Some believers are Gann, Elliot and the followers of Fibonacci.
However, if everybody knew everything, prices would never have been a surprise and markets would be non-existent. The layman would accept these ideas and their fantastic suggestions. However facts say otherwise.
BUSINESS CAN BE MADE OF NEWS
It is not advisable as news is actually insignificant. The way news is supposed, is what decides the movements. Let's see how trends occur.
ACTUAL EXPENSE TRENDS
Basics + Individual Insight into them = Forex Market Trends
People are seldom rational. They often function emotionally, which is why logical reasoning does not always hold true. The real human psychology is consistent but these matters have no logic:
1. People make costs move to extreme and these passing points can be used profitably.
2. Carry on with business. Don't get carried away with guessing.
WIN THE COMPETITION
Forex is a sport and competition is based on chances. You may not be able to determine chances but you will never lose.
That applies not for every instance, but try it out on big probabilities and you will surely take the cake with very few losses, get huge proceeds in due course of time.
Voracity and panic fluctuate costs, creating points that are visible on Forex schedules and can be used gainfully.
It's a game so when prices fluctuate on your side, get to business. Control your finances well and be a winner.
BE IMPERFECT BUT NEVER A LOSER
Forex markets teem with those who attempt guessing and try to get a non-existent undisclosed trend cipher. Even though Forex expense trends seem disordered, basing your business on cost fluctuations will never make you a winner.
It may not be an ideal business for many, however if done right, you can make a lot of money through Forex trading.
YOU PREDICT THE FOREX EXPENSE TRENDS
Businessmen observe a certain level and jump on it thinking that it's stable. However, this is simply based on assumption and that never works in Forex business. There is no accurate prediction.
If winning is the goal, you have to base the business on the sure shot expense trends. Related to this, there are certain factors given below.
THE MARKET OBEYS SCIENTIFIC LAWS
There is a notion, which believes that market trends are based on logic. Some believers are Gann, Elliot and the followers of Fibonacci.
However, if everybody knew everything, prices would never have been a surprise and markets would be non-existent. The layman would accept these ideas and their fantastic suggestions. However facts say otherwise.
BUSINESS CAN BE MADE OF NEWS
It is not advisable as news is actually insignificant. The way news is supposed, is what decides the movements. Let's see how trends occur.
ACTUAL EXPENSE TRENDS
Basics + Individual Insight into them = Forex Market Trends
People are seldom rational. They often function emotionally, which is why logical reasoning does not always hold true. The real human psychology is consistent but these matters have no logic:
1. People make costs move to extreme and these passing points can be used profitably.
2. Carry on with business. Don't get carried away with guessing.
WIN THE COMPETITION
Forex is a sport and competition is based on chances. You may not be able to determine chances but you will never lose.
That applies not for every instance, but try it out on big probabilities and you will surely take the cake with very few losses, get huge proceeds in due course of time.
Voracity and panic fluctuate costs, creating points that are visible on Forex schedules and can be used gainfully.
It's a game so when prices fluctuate on your side, get to business. Control your finances well and be a winner.
BE IMPERFECT BUT NEVER A LOSER
Forex markets teem with those who attempt guessing and try to get a non-existent undisclosed trend cipher. Even though Forex expense trends seem disordered, basing your business on cost fluctuations will never make you a winner.
It may not be an ideal business for many, however if done right, you can make a lot of money through Forex trading.
Thursday, October 16, 2008
THERE ARE FOUR MAIN TYPES OF ORDERS IN FOREX MARKET
There are many kinds of orders which traders can place to transact in the F0rex market, for making money out of it.
MARKET ORDER
The market order is the most simple and common kind of order. Here, the trader buys and sells the currency at the rate prevailing in the market at the time of placing the order.
Due to the huge size of the market and high volatility trends can reverse at any instant, so traders prefer placing orders at the market price to guard themselves against any adverse trend.
LIMIT ORDER
In this case, the trader specifies a price at which he or she may wish to buy or sell the currency.Suppose a trader has bought GBP against the USD at 1.970, then he or she can place a sell order at 1.9725, when the exchange will execute the order and he or she will profit from it. The order will get cancelled if the target price is not achieved during the course of the day.
STOP LOSS ORDER
Now, due to the volatility, stop losses are essential. They determine the maximum loss a trader is willing to endure. let's suppose in the above instance, the risk-taking ability of the trader is low, then he or she may place a stop loss at 1.9705, at which level the exchange will book losses for the trader, and he or she won't be affected by any fall below 1.9705.
ENTRY ORDER
Such an order is filled only when certain conditions are met in the market, which the order specifies. The entry order can be a limit entry order or even a stop entry order.
-LIMIT ENTRY ORDER
As an example, let's assume that the current market price for GBP/USD is 1.9705-10. This implies that the trader can transact at these levels. Here, a trader can put a limit entry order to sell his or her holdings at a price higher than the market price, say 1.9715. His or her order would be executed only if that price is attained. In the similar, he or she can place an order for buying at the level of let's say 19700, and his or her order would remain pending till the price falls to that level.
-STOP ENTRY ORDER
Such an order is generally used when the trader has sufficient grounds to believe that the currency is trading in a fixed range and believes that it is on the verge of a breakout from that range. He or she might want to buy at a price higher than the market price or sell at a lower price than the market price. In the same example, the trader may go ahead and buy at 1.9720 or sell at 1.9690, where he or she believes that once these levels are attained, the currency will only go up or fall further, as the case may be. A trader has reasonable grounds to believe that there will be sharp movements in the currency rates in the Forex market.
MARKET ORDER
The market order is the most simple and common kind of order. Here, the trader buys and sells the currency at the rate prevailing in the market at the time of placing the order.
Due to the huge size of the market and high volatility trends can reverse at any instant, so traders prefer placing orders at the market price to guard themselves against any adverse trend.
LIMIT ORDER
In this case, the trader specifies a price at which he or she may wish to buy or sell the currency.Suppose a trader has bought GBP against the USD at 1.970, then he or she can place a sell order at 1.9725, when the exchange will execute the order and he or she will profit from it. The order will get cancelled if the target price is not achieved during the course of the day.
STOP LOSS ORDER
Now, due to the volatility, stop losses are essential. They determine the maximum loss a trader is willing to endure. let's suppose in the above instance, the risk-taking ability of the trader is low, then he or she may place a stop loss at 1.9705, at which level the exchange will book losses for the trader, and he or she won't be affected by any fall below 1.9705.
ENTRY ORDER
Such an order is filled only when certain conditions are met in the market, which the order specifies. The entry order can be a limit entry order or even a stop entry order.
-LIMIT ENTRY ORDER
As an example, let's assume that the current market price for GBP/USD is 1.9705-10. This implies that the trader can transact at these levels. Here, a trader can put a limit entry order to sell his or her holdings at a price higher than the market price, say 1.9715. His or her order would be executed only if that price is attained. In the similar, he or she can place an order for buying at the level of let's say 19700, and his or her order would remain pending till the price falls to that level.
-STOP ENTRY ORDER
Such an order is generally used when the trader has sufficient grounds to believe that the currency is trading in a fixed range and believes that it is on the verge of a breakout from that range. He or she might want to buy at a price higher than the market price or sell at a lower price than the market price. In the same example, the trader may go ahead and buy at 1.9720 or sell at 1.9690, where he or she believes that once these levels are attained, the currency will only go up or fall further, as the case may be. A trader has reasonable grounds to believe that there will be sharp movements in the currency rates in the Forex market.
Monday, October 13, 2008
IMPORTANCE OF FOREX TRADING
Foreign Exchange[Forex] involves exchanging of different foreign currencies for a profit. Also the reason for buying the currency of another country may be the need to buy some commodity of the said country as well, besides making money through the exchange rates.
In the latter case, people buy currency of a foreign country when the rate in the market is low,and sell it off when the rates go up. Currency trading is usually done between the central banks, the government, speculators and MN Cs. Nations can not trade with each other without the presence of a foreign market.
Systematically, a huge amount of money is daily traded in the Forex market, though the amount invested by an individual may be very low.Not one person individually can have any influence on the Forex fluctuations,not even the government. So it can easily be concluded that the level of the currency reflects the strength or weakness of the economy of a country. So this makes the Forex market a good place for competition.
The government and the central bank do try to stabilize the currency of their perspective countries by speculating, by buying and selling currencies at the appropriate times. So they can influence the market if they conduct a trade in large volumes, though. To buy its own currency, however, the government or the central bank must have huge reserves of foreign currency with them. So it is virtually impossible to inflate the currency value artificially.
Banks trade a lot in foreign currencies and this forms a chunk of volume in the Foerx market. They buy currencies not only as individual bodies, but also on behalf of their clients. They trade in lots of futures. Till a few years back, the brokers could influence the volumes of trading in the Forex market. But due to availability of electronic services now, the service of brokers is not required. It's easy to operate electronically.
Again trading with international countries is possible only with the existence of Forex markets. When there is no Forex market, there is no common currency between two countries, so you can not evaluate the value of one currency with respect to the other.
The buyer pays the seller in the formers currency. With the money so received, the seller buys goods in the buyer's country and sells those goods in his[seller] country.
Only then is he able to learn how much he or she has earned through the export. In the presence of a Forex market, though it is very easy for a seller to know of his or her earnings at the very instant that he or she conducts an export trade. In the same manner, the buyer too will have a thorough knowledge of the cost he or she will have to incur to buy goods from an international country.
In the latter case, people buy currency of a foreign country when the rate in the market is low,and sell it off when the rates go up. Currency trading is usually done between the central banks, the government, speculators and MN Cs. Nations can not trade with each other without the presence of a foreign market.
Systematically, a huge amount of money is daily traded in the Forex market, though the amount invested by an individual may be very low.Not one person individually can have any influence on the Forex fluctuations,not even the government. So it can easily be concluded that the level of the currency reflects the strength or weakness of the economy of a country. So this makes the Forex market a good place for competition.
The government and the central bank do try to stabilize the currency of their perspective countries by speculating, by buying and selling currencies at the appropriate times. So they can influence the market if they conduct a trade in large volumes, though. To buy its own currency, however, the government or the central bank must have huge reserves of foreign currency with them. So it is virtually impossible to inflate the currency value artificially.
Banks trade a lot in foreign currencies and this forms a chunk of volume in the Foerx market. They buy currencies not only as individual bodies, but also on behalf of their clients. They trade in lots of futures. Till a few years back, the brokers could influence the volumes of trading in the Forex market. But due to availability of electronic services now, the service of brokers is not required. It's easy to operate electronically.
Again trading with international countries is possible only with the existence of Forex markets. When there is no Forex market, there is no common currency between two countries, so you can not evaluate the value of one currency with respect to the other.
The buyer pays the seller in the formers currency. With the money so received, the seller buys goods in the buyer's country and sells those goods in his[seller] country.
Only then is he able to learn how much he or she has earned through the export. In the presence of a Forex market, though it is very easy for a seller to know of his or her earnings at the very instant that he or she conducts an export trade. In the same manner, the buyer too will have a thorough knowledge of the cost he or she will have to incur to buy goods from an international country.
WHAT IS FOREX TRADING?
For the most part Forex trading involves dealing with international currencies Here, you can sell currency of one country to buy that of another. The trader deals in Foreign Exchange[Forex] at the most appropriate time to make a lot of money from the transaction.A good ability to forecast plays a vital role here. One may wonder how Forex can be such a lucrative earning opportunity since fluctuations in exchange is so little.
Remember, when done in such large volumes, a minor fluctuation can mean a lot. There are many non-monetary advantages to it as well. Anyone who wants to deal in Forex can do so, since only the basic knowledge is all that is required to get started.
Forex can help you earn a lot of money. But there are certain conditions that you must follow before you begin trading in Forex. To begin with, you must have a thorough knowledge about the trends in the stock market, the basics of trading and risk-taking ability. You can get all the help you need for attaining these conditions very easily.
There are many sites on the Internet which can help you clarify your basics and help you brave rough weather. A good reason why Forex trading can be considered is the fact that there are frequent fluctuations in currencies, though in percentage terms it may be small.
You gain if the fluctuation favors you and reverse is true as well. No one can predict accurately the trend of the currencies. Liquidity is another reason why Forex trading is so popular.
For the most part and most important, in Forex, you can make huge sums of money even if your initial investment is on the lower side. You can invest as little as $50,000. The wealthy have no upper cap the the amount of their investment. So remember that even with a nominal investment, the earning potential is undoubtedly huge.
I've said all this to say that most of the great and large businesses are connected to the world of the Internet today. Forex trading is no exception. You can deal in foriegn currencies on your home PC or from your Laptop while on the go. In fact it is fully conducted online. You have the liberty to choose when you want to trade, and you don't need to meet any deadlines.
Basically, you can be your own boss. The processof online trading is fairly simple for anyone to understand. You just need to open an account for forex trading with a recognized and do your homework and they will complete the rest of the formalities for you. the only bit you need to do is get ready with your investment.
So again I have said all this just so it is clear that forex trading can be one of the best businesses to earn money in. Though there is a level of risk attached to it, but it can be avoided with due diligence and an alert mind.
Remember, when done in such large volumes, a minor fluctuation can mean a lot. There are many non-monetary advantages to it as well. Anyone who wants to deal in Forex can do so, since only the basic knowledge is all that is required to get started.
Forex can help you earn a lot of money. But there are certain conditions that you must follow before you begin trading in Forex. To begin with, you must have a thorough knowledge about the trends in the stock market, the basics of trading and risk-taking ability. You can get all the help you need for attaining these conditions very easily.
There are many sites on the Internet which can help you clarify your basics and help you brave rough weather. A good reason why Forex trading can be considered is the fact that there are frequent fluctuations in currencies, though in percentage terms it may be small.
You gain if the fluctuation favors you and reverse is true as well. No one can predict accurately the trend of the currencies. Liquidity is another reason why Forex trading is so popular.
For the most part and most important, in Forex, you can make huge sums of money even if your initial investment is on the lower side. You can invest as little as $50,000. The wealthy have no upper cap the the amount of their investment. So remember that even with a nominal investment, the earning potential is undoubtedly huge.
I've said all this to say that most of the great and large businesses are connected to the world of the Internet today. Forex trading is no exception. You can deal in foriegn currencies on your home PC or from your Laptop while on the go. In fact it is fully conducted online. You have the liberty to choose when you want to trade, and you don't need to meet any deadlines.
Basically, you can be your own boss. The processof online trading is fairly simple for anyone to understand. You just need to open an account for forex trading with a recognized and do your homework and they will complete the rest of the formalities for you. the only bit you need to do is get ready with your investment.
So again I have said all this just so it is clear that forex trading can be one of the best businesses to earn money in. Though there is a level of risk attached to it, but it can be avoided with due diligence and an alert mind.
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