Should I be Forex Trading?

Never trade with money that if lost would adversely affect your life. One of the great dangers of this business is that over the years some rather unscrupulous people have portrayed foreign currency trading as a very lucrative way to turn a modest sum of money into a fortune with ease….If only you had their training or their system. “It’s like having your own personal ATM machine”, and other such outlandish claims of riches with ease. In fact I originally entered the Forex arena with just such beliefs. The reality is that trading foreign currencies is far from easy and is not best suited to everyone. Whilst it is possible to make a lot of money relatively quickly, it is also possible to lose part or all of your investment with the same speed.

Most people who are highly successful in any endeavour start off with a desire to do the work. As their knowledge of the subject grows, and their passion for the subject intensifies, they find that their level of success also increases.

It is rare indeed for anyone to achieve success in any field if all they entered that enterprise for was easy money. The only way to attempt to turn a modest sum of money into a large amount very quickly is to take some very big risks – not at all what Forex trading is really about. If you want to take some hefty risks, then it might be far better to go to the roulette wheel and place all of your money on Red or Black and then cross your fingers. I am not trying to persuade anyone to not trade the Forex market, but I do want you to be aware that there is considerable risk regardless of what trading system you may decide to use. On the upside, you can practice Forex trading with a demo account which is funded with “virtual money” and practice the craft in simulated real conditions. The charts will be live and real time and you can win or lose your “virtual money” in exactly the same way as if you were Forex trading for real, except that at the end of each Forex trading session you have actual not put any of your real money at risk. By practicing in this way, every “would be” Forex trader has the opportunity to see first-hand whether Forex trading would be suitable for them, and bear in mind that one’s own personality, emotional control and level of self discipline will have a major impact on the way that one trades. The secret to success in this business is to have a solid and reliable system that you have learned to trust. Then you must follow it to the letter through both wins and losses, using strict money management principles, knowing that the system, over time, generally produces more and bigger wins than losses.

Forget much of the nonsense that you may hear in the forums about setting goals of “just10 pips a day” etc. Trading does not necessarily work in that way. The market moves with no respect whatsoever for your goal.

You have to learn to take what is on the table, and at exactly what point in the move. Some days there will be lots of profit to be made. Some days there will not be much profit. Some days the market will take YOUR money. Some days will be NO TRADE days and you will need to have the discipline and emotional control to sit and wait and smile through them all. For all of these types of days are what go to make up a traders working life.

Forex trading can be one of the most rewarding business activities on the planet. It has all the elements of high success and high failure. It is demanding and has an above average level of risk which all adds to the appeal. But it is not a business to jump into with your life savings clutched in your hand and a burning desire to be rich.

If you have a couple of thousand dollars in cash and a family to feed and the car needs fixing and the rent or mortgage is due – Then it is highly likely that the Forex markets will just part you from your money. In fact one of the biggest reasons for failure in this business is an under-funded trading account coupled with an urgent need to make some fast cash If you have a few thousand dollars or more put aside that if lost would not adversely affect you or your family, and if you have the time and inclination to learn how to trade first, then you may be able to turn that money into a worthwhile sum……..OVER TIME. In that case, Forex trading might be the line of investment business for you. Remember though!!! There are no guarantees of success in this business.

Source: Martin Bottomley

The Best Forex Trading Platforms Tips and Guide

Most of the Forex trading platforms are powered with unique analysis and strategy-testing features to test all buy and sell rules. The best Forex trading platforms will be considered to help the investor in executing the trading most successfully by employing strategies to maximize the return. You can modify your trading strategies without incurring losses base on them.

To take the advantage of the liquidity of the market, the best Forex trading platform always comes with fully automated real-time online streaming data from the market. The best Forex trading platform connects your monitor to the markets. To handle transaction of heavy data and information traffic, the best Forex trading platform should provide the robust backbone.

More than one type of account must be offered by the best Forex trading platform, like mini account, standard account or institutional account. The best Forex trading platform should offer:

• Tight spread on major currency pairs with cutting-edge trading technology

• Trading history and print out any reports

• Constant margin requirements in all volatile market condition

• Performance, Security, Simplicity and Transparency

• Real time margin and position monitoring.

• Authentic market news and economic calendar

• Technical analysis for all demo and live accounts

You can control when you are away from your computer with advanced mobile Forex trading platforms. You can access and trade your Forex account from anywhere with your mobile phone with the best Forex-trading platform with facilities of mobile trading.

Use of stops in forex trading – the key to staying in the game

The recent fall in the dollar has highlighted the need to trade with stops. My focus is the forex market so I can only speak from this perspective but what I say is applicable to not only forex trading but all trading. If you want to stay in the game, trade with stops. I cannot say it any clearer. The purpose of this article is to use the current forex market trends as an example of why a trader needs to be disciplined and use stops.

It feels like déjà vu whenever a trend emerges. I get calls from traders asking what they should do with a long or short position that is deep underwater. I ask the same question I always ask, “Where was your stop?” The usual answer is I didn’t use one. I just don’t get it.

Why don’t traders use stops? There is no clear answer but one reason may be a reluctance to take a loss even though taking losses is part of the business and a pillar of proper money management. This is why “hedging” has become popular on retail forex trading platforms although essentially it is a flat position and more often than not an excuse not to book a loss. This is a topic for a future discussion.

Another reason may be that the currency market often trades in ranges, even during trends when there is consolidation. These ranges can last for days, weeks or months. During these periods, range trading works and hanging on to a position, even one that is underwater, often gives a chance to recover the loss or even make a profit. The problem is when ranges break and trends take over. In these breakout periods there is often no turning back as a market runs away from the range trader. Those who employ a range strategy and trade with stops should be okay. It is the undisciplined trader who trades without a stop that faces disaster, especially in a market, such as forex, that trades with leverage.

Take the current market as an example. Since the start of July and after peaking at 1.6744 on June 30, GBP/USD, with exception of a brief one-day break of 1.60, traded in a 1.60-1.66 range with most of the activity within 1.63-1.66 since the middle of July. This was a good market for range traders as there was a lot of volatility within this range. However, the market broke the top of the range on the last day of July and continued to climb at the start of August to reach 1.7005 on August 4. For those trading a range from the short side and using a stop, this was part of the strategy as ranges do not last forever. For those trading a range from the short side without a stop, the result could be fatal and the trading account wiped out. Even if you managed to stay afloat despite not using a stop and the market eventually came back to your entry level, the emotional and opportunity costs were not worth the risk.

I assume there are skilful traders who do not use fixed stops but use dynamic stops or other techniques to manage a position. However, there is no trader I know of who has stayed in the game without employing prudent money management. For the retail forex trader, this means using stops.

Source: Jay Meisler

How good forex traders manage their actions?

Trading in the financial markets is surrounded by a certain amount of mystique because there is no single formula for trading successfully. Think of the markets as being like the ocean and the trader as a surfer. Surfing requires talent, balance, patience, proper equipment and astute discrimination. Would you go into the water if there were sharks swimming all around you or dangerous rip tides? Hopefully not.

The attitude to trading in the markets is no different to that required for surfing. By blending good analysis with effective implementation, your success rate will improve dramatically and, like many skill sets, good trading comes from a combination of talent and hard work. Here are the four legs of the stool that you can build into a strategy to serve you well in all markets.

Leg No.1 – Approach

Before you start to trade, recognize the value of proper preparation. The first step is to align your personal goals and temperament with the instruments and markets that you can comfortably relate to. For example, if you know something about retailing, then look to trade retail stocks rather than oil futures, about which you may know nothing. Begin by assessing the following three components.

1. Time Frame

The time frame indicates the type of trading that is appropriate for your temperament. Trading off of a five-minute chart suggests that you are more comfortable being in a position without the exposure to overnight risk. On the other hand, choosing weekly charts indicates a comfort with overnight risk and a willingness to see some days go contrary to your position.

In addition, decide if you have the willingness and time to sit in front of a screen all day or if you would prefer to do your research quietly over the weekend and then make a trading decision for the coming week based on your analysis. Remember that the opportunity to make substantial money in the markets requires time. Short-term scalping, by definition, means small profits or losses. In this case you will have to trade more frequently.

2. Methodology

Once you choose a time frame, find a consistent methodology. For example, some traders like to buy support and sell resistance. Others prefer buying or selling breakouts. Yet others like to trade using indicators such as MACD, crossovers etc.

Once you choose a system or methodology, test it to see if it works on a consistent basis and provides you with an edge. If your system is reliable more than 50% of the time, you will have an edge, even if it’s a small one. If you back test your system and discover that had you traded every time you were given a signal and your profits were more than your losses, chances are very good that you have a winning strategy. Test a few strategies and when you find one that delivers a consistently positive outcome, stay with it and test it with a variety of instruments and various time frames.

3. Market (Instrument)

You will find that certain instruments trade much more orderly than others. Erratic trading instruments make it difficult to produce a winning system. Therefore, it is necessary to test your system on multiple instruments to determine that your system’s “personality” matches with the instrument being traded. For example, if you were trading the USD/JPY currency pair in the Forex market, you may find that Fibonacci support and resistance levels are more reliable in this instrument than in some others. You should also test multiple time frames to find those that match your trading system best.

Leg No.2 – Attitude

Attitude in trading means ensuring that you develop your mindset to reflect the following four attributes:

1. Patience

Once you know what to expect from your system, then have the patience to wait for the price to reach the levels that your system indicates for either the point of entry or exit. If your system indicates an entry at a certain level but the market never reaches it, then move on to the next opportunity. There will always be another trade. In other words, don’t chase the bus after it has left the terminal; wait for the next bus.

2. Discipline

Discipline is the ability to be patient – to sit on your hands until your system triggers an action point. Sometimes the price action won’t reach your anticipated price point. At this time you must have the discipline to believe in your system and not to second-guess it. Discipline is also the ability to pull the trigger when your system indicates to do so. This is especially true for stop losses.

3. Objectivity

Objectivity or “emotional detachment” also depends on the reliability of your system or methodology. If you have a system that provides entry and exit levels that you know have a high reliability factor, then you don’t need to become emotional or allow yourself to be influenced by the opinion of pundits who are watching their levels and not yours. Your system should be reliable enough so that you can be confident in acting on its signals.

4. Realistic Expectations

Even though the market can sometimes make a much bigger move than you anticipate, being realistic means that you cannot expect to invest $250 in your trading account and expect to make $1,000 each trade. Short-term time frames provide less profit opportunities than longer term, but the risk with longer-term time frames is higher. It’s a question of risk versus reward.

Leg No.3 – Discrimination

Different instruments trade differently depending on who the major players are and why they are trading that particular instrument. Hedge funds are motivated differently than mutual funds. Large banks that are trading the spot currency market in specific currencies usually have a different objective than currency traders buying or selling futures contracts. If you can determine what motivates the large players then you can often piggy-back them and profit accordingly.

• Alignment

Pick a few currencies, stocks or commodities and chart them all in a variety of time frames. Then apply your particular methodology to all of them and see which time frame and which instrument is most responsive to your system. This is how you discover a “personality” match for your system. Repeat this exercise regularly to adapt to changing market conditions.

Leg No.4 – Management (Implementation)

Since there is no such thing as only profitable trades, no system will trigger a 100% sure thing. Even a profitable system, say with a 65% profit to loss ratio, still has 35% losing trades. Therefore, the art of profitability is in the management and execution of the trade.

• Risk Control

In the end, successful trading is all about risk control. Take losses quickly and often if necessary. Try to get your trade in the correct direction right out of the gate. If it backs off, cut out and try again. Often it is on the second or third attempt that your trade will move immediately in the right direction. This practice requires patience and discipline but when you get the direction right you can trail your stops and almost always be profitable at best, or break even at worst.

The Bottom Line

There are as many nuanced methods of trading as there are traders. There is no right or wrong way to trade. There is only a profit-making trade or a loss-making trade. Warren Buffet says there are two rules in trading: Rule 1: Never lose money. Rule 2: Remember Rule 1. Stick a note on your computer that will remind you to take small losses often and quickly – don’t wait for the big losses.

Forex Trading – How Can I Start?

The market of Forex currency trading has one of the biggest potentials for people to make money from it. As a result many people are currently interested in Forex trading and there are all sorts of information on the internet and in books and programs to learn about it.

While all this information is essential to your understanding of the market and how you can personally achieve wealth through it, you should keep certain strategies and tips in mind that overall summarize any information you will learn about this new business opportunity. You should invest a lot of time and energy studying in addition to reading articles like this one.

I would argue that the only proper way to do forex trading would be to first wait for the economy to stabilize, as the global economy right now is in turmoil and countries can suddenly increase or decrease their wealth which completely changes the Forex market at the time. Also be careful to keep your life in order. Any form of trading is a risky venture. It ALWAYS involves a risk of losing money, so keep that in mind when you invest, that you should never put your job or house on the line for something like this.

1. The first step to starting a successful career is to build a base of knowledge from which you can find your niche in the market and exploit it to your advantage. If you don’t know the basic strategies you will waste thousands of dollars and hours of your time on things that could have been avoided. You can choose automated Forex robots, or choose to go by yourself by learning from books or internet programs. Remember however that even if you use a automated software program you still need to learn the basics in order to tailor your robot to do exactly what you want it to do. An automated program is only as good as the one using it.

2. Manage your life before you manage your forex trading. Don’t be rash and believe in all of those get rich quick schemes, they are only playing off of your inability to make calm, calculated decisions when you’re infatuated with the idea of making money quickly. You need to have a plan laid out before you spend any money, you need a stable income to pay your rent, and DO NOT expect to suddenly make as much money as they advertise, give it at least 6 months before you can turn a profit.

3. Go slowly, walk, do not run. If you go all out chances are you’ll make some simple mistake that all beginners do and ruin your chances of slowly building a fortune, or you will quickly get discouraged and stop trading all together.

4. Currency will be around forever, unless of course aliens come and make everyone unite in peace and happiness. So until that day you have the opportunity to trade on the Forex exchange market. Spend your time being careful and plan everything out. Just like any new opportunity in your life, don’t rush into it headfirst and leave your back exposed, cover yourself, and don’t risk everything.

Major Forces That Affect the World’s Currencies

There are many economic and political forces that can significantly affect the way a currency moves. And typically, they are not fleeting events. They are often massive, long-term, global megatrends that can persist for many months and even years.

Below is a list of some of the key fundamental driving forces behind the long-term trends in the currency market.

Interest Rates

No matter what country a currency is issued in it will have an associated interest rate which, in the short term at least, is largely determined by that country’s central bank. And because interest rates are strongly linked to currency values, changes in interest rates can have an immediate impact on the strength or weakness of a currency.

Interest rate hikes typically have a positive impact on a nation’s currency. Higher rates attract foreign investors, who, in turn bid up the value of a currency. Then, as the currency gains strength, it can attract even more investors seeking the opportunity to make a profit.

Conversely, if a country’s interest rate falls, it will generally put downward pressure on the value of its currency.

Trade Deficits

Typically, a large trade deficit is very negative for a currency’s value.

Not long ago, for example, Brazil was running a trade deficit. That meant Brazilian businesses were importing a lot more than they were exporting. It meant they had to buy huge amounts of goods abroad. And to do so, they had to sell their own currency and buy foreign currencies. The more they sold their currency in exchange for foreign currencies, the more their currency fell in value.

The only world currency that has seem to be immune from a large trade deficit has been the U.S dollar. The primary difference is that the U.S dollar has been the world’s predominant currency for international transactions. And the U.S stock and bond markets have been the primary “home away from home” for international invertors.

And as long as they continue to recycle their dollars back to U.S. investments, America’s day of reckoning will be continually postponed, despite the largest trade deficits in history.

With just about any other country in the world, this would be almost impossible. The United States and the U.S. dollar has been an exceptional case only because of its special status in the world economy.

Economic Growth

When a country’s economy is among the strongest in the world, it tends to attract more investment capital, helping to drive up the value of its currency.

Plus, economic growth typically brings a greater probability of inflation and heightened concern by the government to do something to contain it. How? By raising interest rates. And as we just discussed, higher interest rates are likely to attract more international investors.

Between the strong economy, high interest rates and foreign investments, the country’s currency enjoys greater demand.

Solid economic growth is fundamentally bullish for a country’s currency. Weaker growth or recession are fundamentally bearish for the currency.

Inflation

Higher interest rates aren’t a pure magnet for international money, however. They act through filter- inflation.

For example, if Australian banks pay invertors 6% but inflation rate in Australia is 8%, international investors may say: “What good is 6%yield if it’s being wiped out by the declining purchasing power of the money?” They know that when a currency falls in value domestically, it’s also bound to fall in value internationally.

Meanwhile, if the Euro pays, say 4%, but has an inflation rate of only 1%, the attitude of international investor is likely to be: “The yield may be lower. But the purchasing power of Euro is declining far less. So I’ll accept the lower yield and continue to invest in euros.

Interest rates may impact short-term moves in a currency. But long term, the biggest factor is real rate of interest – the interest rates less the inflation rate.

Political Stability

If you look at fluctuations myopically on a day-to-day basis, it may appear that the foreign exchange market react greatly to spot political disturbances.

But if you look at the market from a broader perspective, you’ll see that it’s the sustainable , long-term economic forces that are the true driver

The one exception: If a country suffered from sustained, chronic political instability.

Market Psychology

An interesting aspect of any market is the way that market psychology can affect it.

In many cases, expectations alone can drive a market up or down.

Greed, fear and other emotions all play a factor how investors react to news, rumours, and expected announcements. And the reaction may – or may not – be in line with reality of the situation.

Forex Pips Explained

If you are interested in the great money making opportunity that is forex trading, you need to understand forex pips. The word pip stands for percentage in point and so pips are also sometimes called points.

A pip is the measure of rise or fall of a currency pair. You may wonder why this is not measured in dollars and cents. The answer is that the dollar is not always the quote currency and sometimes is not involved in a trade at all. If you were trading the British pound against the Euro for example, it would make no sense to have your profits and losses expressed in US dollars.

A pip is the smallest increment of a quoted currency. Most currencies are usually quoted to four decimal places so one pip is 0.0001 units of the quote currency. What this means in practice is that if you see EUR/USD quoted at 1.4143 and a few minutes later it has moved to 1.4144, it has risen one pip.

In the case of currency pairs like EUR/USD where the dollar is the quote currency, one pip will be $0.0001 dollars or 0.01 of a cent. This does not sound like much but even in a mini forex trading account you will probably be trading in lots of $10,000 so that would be $10 on that position size.

If you want to work out your profits for a currency pair where the dollar is the base currency (the one that is given first), you need to divide 0.0001 by the exchange rate. So for example if the current exchange rate for USD/CAD is 1.1182, one pip will be CAD 0.0001. To convert to USD you divide by 1.1182 giving one pip a value of 0.0000894. This equates to US $8.94 on a $10,000 lot.

When the Japanese yen is the quote currency the position is a little different. There can be around one hundred yen to the dollar, so the quote is normally only given to two decimal places. For example you might see USD/JPY quoted at 93.72. In this case one pip is JPY 0.01. Dividing by the exchange rate gives us the value in USD of 0.0001067 per pip or $10.67 on a $10,000 lot. So having the quote to only two decimal places gives yen pairs a pip value that stays in the same ball park as the other currency pairs.

You will usually find that you do not need to do all of these calculations yourself because most brokers will provide a tool to convert your pips into profit and loss figures for the dollar (or whatever currency your funds are held in). However, sometimes you may want to work out a trade on paper and in that case you will find you need to know how to work it out for yourself. You can set up the formula in a spreadsheet so you do not have to pull out your calculator every time you want to know the value of forex pips.

Forex Trading for Beginners – 10 Common Beginners Mistakes

This article is all about forex trading for beginners and mistakes NOT to make and the fact is most new traders do make them. Avoid them at all costs here they are…

1. Trusting a Forex Robot

You will make money for life by paying $100.00 for a forex robot. Does anyone believe this?

Yes thousands of traders – but what they really need to look at are the track records there all simulated in hindsight and not real and anyone can do that.

If you really want to wipe yourself out, using a 100 buck forex robot is a good place to start.

2. Day Trade or Scalping

This method is doomed to failure you can’t win because you can’t get the odds on your side and all short term volatility is random.

Sure, you hear day trading system vendors say they make money – but like robots above its simulated profit and you can’t spend simulated profits

3. Predicting Prices in Advance

A great way to lose. Prediction is another word for hoping and guessing and that won’t get you far in life, let alone forex trading.

Trade price action as you see it and not as you think it might be otherwise your predictions will end up as accurate as your horoscope.

4. Trading Forex News

The problem is prices don’t move to the fundamentals, they move to how traders perceive them and sentiment and you can’t trade news events. That’s why market crash when there most bullish and rally when there most bearish.

5. You wont get Weeks of Losses

Yes you will and you may even get months. That doesn’t mean you can’t win, you can but you have to lose to win. Many traders believe all the nonsense they read about trading with scientific accuracy and making a regular monthly income, well that’s not forex trading!

6. Over Leveraging

A very common error just because a broker gives you 200:1 leverage doesn’t mean you need to use it.

Most traders leverage up to high and a small move sees there stop hit and there trades wiped out. Use lower leverage, if you want to win.

7. Not Understanding the Odds & Money Management

Most traders simply don’t understand the odds of success and a fatal errors is to think the risk reward of a trade is the profit target – the stop its not.

We don’t have time to discuss this in greater detail here, just look up our other articles. If you don’t get your money management right, you will never win.

8. Not Knowing Your Trading Edge

If you ask most traders what their trading edge is you will be met with a blank expression but you need to know it and have confidence in it to lead you to success!

Your edge is why you will succeed when 95% of traders fail. If you don’t know what your trading edge is – continue your forex education until you do.

9. Lack of Discipline

If you don’t have a trading edge and know why you are going to succeed then you won’t have discipline.

Discipline is vital to currency trading success. You need the discipline to take losses short term and stay on track, to hit the winners and make overall profits. If you don’t have the discipline to follow your forex trading system, you don’t have one

10. Forex Trading is Easy!

Partially right it’s easy to learn but far harder than most people think to make money at and that’s why 95% of traders wipe themselves out quickly.

The Good News is

If you can get the right forex trading education and adopt the right mindset, you can learn currency trading the right way and make a great second or even life changing income in just 30 minutes or less a day.

The key is to work smart not hard, avoid the myths and losing traits and focus on being a winner.

6 Reasons To Trade The Forex Market.

More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds and commodities and building their fortunes in the foreign exchange (Forex) marketplace.
The reason why they are turning to the all electronic world of Forex trading is its numerous advantages over any type of investments.
Even if you are an experienced Stocks or Commodities trader you will discover how powerful the Forex is.
You can make $200 to $3000 in less than 30 minutes of work everyday.
Forex Trading is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.
Why should you trade the Forex market?
Here are the reasons why…

• The Forex market is open 24 hours, it never sleeps. You can enter a position, or exit whenever you want, whenever you are six days a week. You do not need to wait for the opening bell like if you was trading stocks. it is excellent for you as you choose the best time for you to trade.

• The daily trading volume of the Forex is around $1.5 trillion dollars. It is 30 times larger than the combined volume of all U.S. equity markets. This means that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock would have daily!

• You profit in both raising and falling market. You have equal potential to profit in both a rising or falling market, because it’ s up to you to buy a currency, or to sell it, after you determined the market trend tendency.

• You can trade from anywhere. If you like to travel, this is a dream business, you just take your lap top with you and that’ s it, you can make money from anywhere in the world, all that you need is to be sure that you can access an Internet Connection.

• The leverage is considerable. In fact, you don’ t need a lot of money to trade Forex, it is recommended to start with $2000, but you can start with $300, then if you have a proved strategy, your investment will grow consequently, as you can trade up to 200 times your investment. You can trade 100,000- unit currency lots with as little as 1% margin, or $1,000. there is no comparison with the stock market where you need a big amount of money to start, if you want to see real profits. And beside that, you need to post 50% margin.

• Price Movements Are Highly Predictable. Price movement or highly volatile in the Forex, however, the foreign currencies market is moving in trends, and you can identify these trends – as they repeat in cycle- with the technical analysis.

• No commission fees. Unlike the stock market, brokers don’ t take commission on transaction.

To trade Forex, you don’ t need to have a lot of money to start; you can trade at any time, from anywhere, with a Internet connection, you will not have an order pending because of lack of liquidity, you will not have to work all during the day.
The forex market has many advantages over the other traditional investments, and for sure, it will give you more freedom, and more money.

Creating Profitable Forex Trading Systems in Five Easy Steps

One rule of thumb that every aspiring entrepreneur should consider is that to make colossal profits, you should be knowledgeable about how to do it by yourself—and not rely on other’s efforts. Being autonomous from other people will help you determine what things are best for your business.

Such rule applies on all types of investments, including foreign currency trading, or generally known as Forex trading. It cannot be denied that Forex is the biggest existing market around the globe, which is estimated to have an excess of 2 trillion U.S. dollars worth of foreign currencies are traded every day. It is larger than the magnitude of the New York Stock Exchange, which is approximately 50 billion U.S. dollars. Thus, Forex market exceeds all combined equity markets around the world.

With such colossal wealth circulating around the Forex market, one of your financial aims is to grab a main slice of that $2 trillion average each day turnover in the market. How you will be able to get a large portion of that average turnover if you do not know how you will manage your Forex business? Although you cannot live in the market alone (you need business partners and/or financial advisers to help you along), only you can decide what the best Forex business there is for you.

To get colossal profits out of your Forex trading career, you need to create your own beneficial system—a trading system that will bring your not just hundreds but thousands of dollars worth of Forex revenues. Such trading system is available on the market, but as previously mentioned, you need to be autonomous—and you need to have your own Forex trading system that will help you achieve your financial goals.

For new traders, it is tough for them to device their own trading system since they do not have too much knowledge about the Forex market. However, even a neophyte trader can device a trading system that will fit on his personal preference and needs—in just five easy steps!

Before we talk about the five trouble-free steps towards a profitable Forex trading system, you need to learn firstly the three main characteristics of a thriving Forex trading system. These are as follows:

1. A successful Forex trading system is easy. There is no need for a complicated trading system with too many rules. It is a proven truth that plain systems work better than difficult ones, and they have higher chances of success despite of the “brutal” characteristic of Forex trading.

2. A thriving Forex trading system cuts losses and runs profits. Remember that you need a trading system that gets the colossal possible profits and eliminates losses rapidly, if not at once.

3. A thriving Forex trading system follows long-term trends. You will never cover your losses if you are just generating small profits. Consider that the Forex market is worth $2 trillion U.S. dollars, thus there is no point in trading in exchange for just small profits if you have the chance to make trades for larger revenues. Focus on long-term trends and you will be able to see better results.

Now, here are the five easy steps in building a gainful Forex trading system:

1. As previously mentioned, your trading system must be as easy as possible. Incorporate few yet important rules and an extensive investment management system.

2. Always look for long-term trends (preferably on a weekly basis), then shift to daily charts and to time entry. This will help you analyse market trends efficiently.

3. The best way of trading foreign currencies is through breakout manner.

4. Every time watch for any break that you will note on your chart, which is normally confirmed by stochastic crossed with bearish divergence. This will be your great timing tool whether you will enter a particular deal or not.

5. You must add effective time management within your system. Time is gold and is one of your precious resources. Design a trading system that is time capable—where you can make best use of the potential of your time resources to generate huge profits.

Get away with difficult systems; it will just ruin your entire Forex trading career. Create a simpler one and see for yourself how lucrative it is.

Know Your Forex Terms – The PIP

If you plan to go into Forex trading and learn Forex basics, one of the first Forex terms you will be introduced to will be the Forex Pip. As you get more involved in Forex currency trading, you will continually encounter it, so you will essentially have to know and understand this important term, and many others like it, in order to learn how to trade Forex successfully.

PIP is the acronym for Percentage In Point, or Price Interest Point, which is used to measure profits and losses in Forex Trading. This is comparable to the term used in the stock market referred as a “point”. Basically, the PIP is the unit of measurement for the smallest value (price) change of a currency.

The PIP serves as an easy alternative for measuring the rise of fall foreign exchange currency values in the form of a percentage number. Forex spreads, or the difference between the bid and ask price (buy and sell quote), is measured in PIP’s, and is the major cost of Foreign currency trading. This amount is also used to pay the broker facilitating the trade. A lower spread means a lower the payment for the broker, and the trader gets to keep more profits.

The PIP is used in currency trading since the values in foreign exchange is not based on a universal currency, and its monetary value changes accordingly to the currencies involved with each individual trade. The dollar (USD), even though considered to be the most widely traded currency, is not and cannot be involved in all currency trades. For example, if there is trading of two common currency pairs such as the EUR/GBP, the profit and loss margins cannot be measured against the USD, simply because it does not make sense. Thus, Forex trade utilizes the PIP to simplify matters.

Most of the major Forex currencies are marked or quoted to the fourth decimal point, except the Japanese Yen. As an example, let’s assume you are quoted a bid for the EUR/USD quoted at 1.0090 and the ask price is 1.0095, the spread is 0.0005 or 5 PIP’s. In percentage terms, a PIP is 0.01% of a lot. Take for example the lot size of $100,000, 1 PIP is then worth $10. This is the value of PIP’s when using the USD is used as the quote currency.

Trading in one Forex pair, such as the EUR/USD is advisable if you’re a beginner. As you get more adept doing this, you’ll get a clearer picture of how the PIP measures your gain or losses.

Source: Bart Icles

Best Forex Indicators

Forex is defined as the foreign exchange market where professionals trade currencies in an attempt to make money. Many traders, most notably George Soros, have made a ton of money in this way. By exploiting the fluctuations in the price of currencies relative to one another, traders can effectively buy low and sell high many times over and make money on the difference.

While Forex trading can be a highly risky proposition, there are certain fundamental things about the market as a whole that help Forex traders try to predict what the price of currencies will do. These are called indicators, and while they don’t predict the future 100% of the time, many times these events play out as expected and are a big help to the trader.

One such indicator is the Simple Moving Average (SMA). This indicator was developed early on, and it’s still one of the most widely used gauges today. A moving average is a set of data, in that for each day, the average price of the currency is calculated over a previous number of days. So for example, to calculate a 10 day moving average, today’s average is calculated by averaging the prices for the previous 10 days. Yesterday’s average is then calculated by taking the average price for the 10 days before yesterday, and so on. Each average is then plotted to where the set of data becomes a line on a graph of prices. In effect, this line “smoothes” the market action, taking out a lot of the daily fluctuations that can confuse the trader. This makes it much easier to notice the overall trend of which direction the currency price is headed.

Another widely used indicator is the Relative Strength Index (RSI). This number is found by calculating the ration of the number of up moves to the number of down moves of the currency price over a given period. Simply put, an up move is when the price rises that day, and a down move is when the price closes lower than where it opened. A RSI of 70 or over tells the Forex trader that the currency may be overbought, and might be due for a price drop. Likewise, a RSI of 30 or below can indicate an oversold currency, which may be due for a jump in price.

The Moving Average Convergence Divergence (MACD) is another indicator that is referenced a lot by traders. This one is a bit more complicated than the previous two, although the moving average is one component of the calculation. This indicator makes use of two lines, the first being a 26 day exponential moving average minus a 12 day exponential moving average. The other line, known as the “trigger line”, is usually a 9 day moving average. These two lines will continuously cross each other as the price of the currency fluctuates, and when the MACD line crosses above the trigger line, it’s considered a good time to buy the currency. When the trigger line then crosses above the MACD line, this indicates a good time to sell.

By making use of these and many other indicators, technical Forex traders can give themselves a better chance to make money than the average person. While trading in currency is not without a great deal of risk, it is these indicators that can give the trader a leg up and also make Forex trading an enjoyable experience.

Forex Trading Strategies

Forex trading strategies are essential for a trader to know exactly when to sell or buy a currency pair. The time of purchase or sale of foreign currency pairs is the most important point of a trade. The better that the trader is able to determine the time of entry / exit, the more profitable is a potential transaction. This can be achieved with sound Forex trading strategies.

Forex trading strategies in combination with technical analysis is usually used, especially to determine the time of entry / exit. Most often, a decision is made within seconds or hours.

Main Forex trading strategies are:

1. Support and Resistance

Sound Forex trading strategies, similar to this one, remain profitable, even though they started to be used long ago. When Resistance is broken, it can serve as a good sign to buy. This new position can be secure with the aid of a stop-loss placed directly below the level of a break. The level of a break now will become a level of support. New positions can also be opened, when in a descending trend the prices rise up to the Resistance line. New positions can also be opened, when in an uptrend the prices fall down to the Support line.

2. Scanning for the intersection of trend-lines

If you are very confident in a particular trend line (i.e., if you checked it many times), the intersection of this line by prices would be a perfect time to enter into a trade or to get out of it sooner. And, of course, do not forget about the other technical indicators. In the case where the trend-line is used as Support and Resistance: buy, when prices reach an upward trend line; sell, when prices reach a downward trend-line. This can become one of your Forex trading strategies, based on the intersection of the trend-lines.

3. Trading in the break

Three Forex trading strategies for trade at the time of breaks:

- Open a position in advance, in the anticipation of a break;

- If you see an unfolding break, open your position at the time of its occurrence;

- Wait for the inevitable roll-back after the break, because in the market after a break, there is usually a correction.

There is also a 4th option for Forex trading strategies based on break – open position in each of the phases described above. One position – before a possible break, second position – immediately after this break and the third position should be traded in the hope of the expected price correction, which is likely to happen.

4. Trading with positions of various time frames

1). Forex trading strategies, based on long positions, i.e., ranging from several days to several months. It is best to use this tactic in the presence of strong trends. At the same time, analyze short-term scales. Be sure to use in addition to technical analysis also the fundamental analysis, which is perfectly suited for long timescales.

2). Holding a position of a medium length – a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both – technical and fundamental analysis.

3). Holding a short position – minutes or hours (the least safe of all the Forex trading strategies, based on time-frames). The advantage of short positions is that they have virtually no risk on the impact of fundamental news, as well as the price will not change while you were absent because you’ll be watching the prices the whole time. The disadvantage is that the risk of loss is great, as well as you have to constantly monitor prices during trading until closing. To make the right decisions, it is best to be armed with data on the volume of sellers and buyers. This will allow you to much more precisely determine the subsequent direction of the market. Such ultra-short-term trading can also be used at the time of breaks as well as in the rollback of prices after the break. Basically, such positions are better suited for traders with extensive experience, while for beginners such positions hold too much risk. The second strategy (trading in medium-term trends, with duration of up to several days) is most suitable for the novice trader.

Forex trading strategies based on technical analysis indicators will help you achieve the best results. Forex trading strategies are especially useful for choosing the right time to enter and exit the trades.

Source: Steve Maenshel

Forex Market: Currency Pairs and Forex Quotes

If you are new to the forex market, you might find forex quotes confusing. Do not allow yourself to be overwhelmed with forex quotes. In fact, reading forex quotes can be quite easy.

In reading forex quotes or currency pairs, there are two important things that you must keep in mind. First is that the currency being quoted first is what we refer to as the base currency. Second is that the value of base currency always equals to 1.

The centrepiece or focus of the forex market is the US Dollar. It is also often quoted as the base currency for a lot of pairs. A currency pair that has the US Dollar as the base currency is what we call “major”. Examples of major currency pairs are USD/JPY, USD/CAD, and USD/CHF. In major currency pairs, quoted currencies are expressed as the US Dollar, specifically, one (1) US Dollar for every, or a fraction of the, unit of the second currency quoted in the pair.

As an example, let us take the US Dollar and the Swiss Franc. In the currency pair USD/CHF, the base currency is the US Dollar. In the quote USD/CHF = 1.0806, one unit of the US Dollar is equivalent to 1.0806 units of Swiss Francs.

If a currency goes up, you must take note of the base currency. In the aforementioned pair, the US Dollar is the base currency. If the quote goes up, it simply means the value of the US Dollar has increased compared with the value of the Swiss Franc. If the quote goes down, then one can easily conclude that the value of the US Dollar has depreciated to a certain degree.

There are cases when the US Dollar is not the base currency. We often see the US Dollar as the quoted currency when it is paired with the Australian Dollar (AUD), British Pound (GBP), and Euro (EUR). Let us take the AUD/USD currency pair quoted at 0.8044. This shows that one unit of Australian Dollar is equivalent to 0.8044 or less than one unit of US Dollar. One can conclude that the Australian Dollar is weaker than the US Dollar. If the quote goes up, then it means that the US Dollar has weakened against the Australian Dollar.

Currency pairs do not always involve the US Dollar. These currency pairs are referred to as cross currencies. Examples of which are EUR/AUD, EUR/JPY, CHF/JPY, and EUR/SGD. Let us take the currency EUR/SGD pair quoted at 2.0373. This shows that one unit of Euro is equivalent to more than two units of Singapore Dollar or 2.0373 Singapore dollars.

Source: Bart Icles

Forex Option Trading to Diversify Your Forex Trading

Forex option trading is a hedging instrument, used not only by big financial institutions, but also by many individual Forex traders. Forex option trading is a great tool for implementing both, hedging and speculating strategies. Forex options are among the most liquid options in the world. The buyer in this case becomes a holder of a foreign currency option. The seller becomes the writer, or the granter.

The forex option holder receives the right to exchange a predefined amount of currency at a predefined date and price. The option buyer is obligated to pay a premium to the seller of the option. In fact, this is the only liability of the buyer, making Forex option trading a field with very limited liabilities. The forex option seller has two ways to precede with his/her option – to buy the contract back or to hold it until its expiration.

Forex option trading requires buying at a fixed price, in a fixed amount as well as at a fixed expiration date. All of this unties you from the dangerous market fluctuations.

Do Forex options always get exercised? As a matter of fact, most of the time the options are not exercised by their purchaser with the Forex option trading; options are often offset until they expire. If the option gets exercised, a spot position is assigned to the option holder. There also is a threat of an option expiring worthless, if at the expiration time the strike price is lower than the purchase price.

As mentioned above, you only pay a fixed price for the transaction when you buy a Forex option. Forex option trading will safeguard you against losing more than you have invested into the option. In the event of the final strike price on the market being higher than the purchase amount, you will instantly profit. In the event of the final strike price on the market is lower than the purchase price, you will lose. However, you will never lose more money due to this fixed price, in case your transaction becomes worthless.

Forex option trading is applied strictly at the international exchanges, since it is a hedging instrument. While being probably riskier than regular Forex trading due to its uniqueness, Forex option trading is also potentially much more profitable.

There are two types of options in Forex option trading- call options and put options. Call options give the right to buy currency, and put options give the right to sell currency. Both these options generally change in respond to the change in volatility, i.e. if the volatility falls, the prices of both options also fall. There are common and customized Forex options, respectively called “plain vanilla” and exotic.

In order to shield yourself from potential losses, it is better to follow general safety with Forex option trading:

1. Do not place a large chunk of your total capital into Forex option trading.

2. Do not try to trade at all times. It is better to patiently wait for the proven signals.

3. Trade on a Forex option trading demo account prior starting to trade live.

Forex option trading is a good way to learn and understand more about the Forex market. Forex option trading is a risky but also potentially very profitable Forex trading instrument.

Source: Steve Maenshel

Forex Markets

The five most traded currencies in the world are US Dollars, Japanese Yen, British Pound, Swiss franc and the Euro. Country specific scenarios like unemployment, higher inflation, and political uncertainties in a country usually cause a decline in the value of the currency of that country. The US Dollars participation in more than eighty percent of world transactions makes it undoubtedly the most significant currency in forex markets.

Currency Markets

The fluctuation in the value of a currency is solely based on demand and supply parameters. For example, the more the number of transactions made with a currency, the more it becomes valuable. So a currency having less demand would devalue fast, and that would have an impact on its rate value. Of course all this depends on a country’s economic standing i.e. whether the people have the most employment, and whether there are more needs for commodities and supplies. If a currency is valuable, it definitely attracts other investors to take a chance on buying it. Therefore a powerful currency would have a consistent price rate that doesn’t devalue for a long period of time.

With the advent of globalization, currency exchanges constitute some of the biggest transactions in the world money markets. To understand the value of a home currency you would have to compare it with another currency foreign to it. For example, you could express 1 US $= 0.694 British Pound Sterling at current values.

One way of understanding forex markets better is by comparing it with the stock markets. Just as you would buy stocks of different companies in the stock market and make a profit when the prices rise, in forex markets the only difference is that you buy currencies and book a profit when the currency becomes more valuable. You could become a small investor in the forex market with a capital as little as $1000 or invest big, because there are a wide variety of forex brokers to cater to all your needs.

There are many kinds of trading methods that will help you analyse current market conditions so that you could predict future trends. To be successful, you have to predict the trends before it occurs, so you could buy currencies and sell them when the prices rise. In some cases, it would mean buying a currency that was dropping in value and then profit from the currency when it takes an upward trend. What does all this mean? It simply means you have to always keep abreast of what is happening in forex markets, by analysing the markets thoroughly.

As explained in earlier articles, there are two ways to analyse forex markets in terms of trends and make a prognosis on future opportunities. These methods are known as technical analysis and fundamental analysis.

A person using fundamental analysis would look at the current economic climate, political events and a variety of economic indicators to try and predict currency moves. Generally it is the large institutional players who look to fundamentals for predicting price moves. As a day trader you should be looking at technical analysis more. However technical analysis which uses historical price patterns in economic data to predict future moves takes into reckoning three major assumptions.

They are:

The fact that all market forces are taken into account in price movement. In other words, technical analysis does not take into account economic conditions, because it presumes that the market has already accounted for that.

It presumes that currency price movements form market patterns that follow predictable paths.

It further presumes that there are historical trends in price movements. What this means is that, when circumstances are similar the same pattern would likely be repeated.

Is technical analysis necessary?

Yes for a day trader it is very important provided he learns to supplement it with fundamental analysis. The greatest advantage of technical analysis is, it could be used for a wide range of currencies and markets in different parts of the globe almost simultaneously. Although it may look complicated to a beginner, technical analysis is a very important tool for the day trader.

How does technical analysis go about doing what it does?

Technical analysis goes about its business by interpreting charts that are constantly updated in real time and could be viewed in different ways—as for example, you could see in the charts price movements over certain periods in time, interfaced with analytical features that help you predict future trends. Most often the charts are to be found in the broker’s online trading platform. Truly there is no substitute for charts in forex trading.

Learn To Day Trade Forex

The most important thing that you should make very clear and understand is that Forex is not a get rich quick scheme. Skilled Forex Traders can and in fact do make good profits in Forex Trading. However like any other business whether small or big, success just doesn’t happen overnight, in a few weeks or in a few months. You should use this great formula for success: Profits = Patience+Practice+Persistence.

As they say there is no substitute for hard work and diligence. Practice trading on a demo account and pretend that virtual money is your own real money. Do not open a live trading account until you become profitable on your demo account. Stick to the plan and you can be successful.

In the beginning, just choose two major currency pairs that you will trade. It becomes very difficult to keep tab on the all four. You need to start with a major currency pair because the spread is the best and they are the most liquid. The EUR/USD pair is the most commonly traded pair and usually has the best spread because of its liquidity.

The USD/CHF is the most volatile and moves the most during the trading week. The USD/JPY moves a lot on the news out of Japan. GBP/USD is the most stable of the above three pair.

You should follow and understand the daily forex news and analysis of the professional currency analyst. It is important for you to get a birds eye view of the currency markets and the news that affects the prices of the major pair that you want to trade. You should also know and understand what the key technical support and resistance levels are in the currency pair that you want to trade.

Support is the predicted level when buying pressure overcomes the selling pressure. It is at this point the currency pair moves up on the charts. Buy at the support level. Resistance is the predicted level when selling pressure overcomes the buying pressure. It is where the currency pair moves down on the charts. Sell on the resistance level.

All the best forex news and analysis is available freely online. Most of the forex brokers provide this information on daily basis if you open an account with them. Read the technical news and analysis. Write down on a piece of paper the direction the analyst is saying about the currency pair you are trading. Also note the key support and resistance level for that pair.

Learn how to use technical indicators and always trade with stop losses. It is worth your time to be patient and learn how to use technical indicators on the charts that you will be reading shortly.

Learn to be disciplined when you are trading. Avoid emotions in trading! Stick to a good system and a plan. Depending on your risk appetite and strategy, set your stop losses accordingly when you trade. Try not to trade your gut feeling.

10 Forex Trading Tips to Help You to Succeed in Currency Trading

So many people fail in trading Forex. But you don’t have too, some people ask me if there any rules to become a successful trader. When I think about my trading I clearly see 20 rules that if followed can make you consistently profitable trader. Some of them you probably know. The only thing is left is to implement them in your trading.

1. Plan your trades and trade your plan.

It is absolutely necessary to have a plan so you know what you will do in such and such market situation. In fact the lack of planning ahead probably the biggest reason of failure of most traders.

2. Fear and hope are the two worst enemies for trader.

You need learn to control your emotions. Not to get rid of them. They are actually engines that keep you going. However engines that go out of control are very dangerous.

3. Always keep the records of the results for your trading.

If you want to repeat your successful trades over and over, if you want to avoid failure you went through, then you need to keep track of your decisions and actions. That’s why you need to record all your trading results.

4. Keep the positive attitude regardless of the results of your trading.

Result of a single trade mean very little. The long term result is what you are looking at. Therefore keeping the positive attitude no matter what the result of a current single trade will help you to move over it to the next more profitable one.

5. Think about Forex only when you are trading.

In order to succeed in FX you need to learn to focus. Whatever you do focus on it. That means if you are not trading focus on whatever you do and forget about the market.

6. Stop-loss is the key to your success in trading. Always cut your losses.

The golden rule of traders states: never-ever trade without stop loss orders. If you do it’s a surest way to lose your trading account entirely.

7. Always devote your time to study the market.

Set up aside certain amount of time to go through the price charts and economic news to better understand the price movement.

8. Always set your profit limit in each trade.

The same as with stop loss orders you need to know your profit target for each trade. I had so many potentially winning trades that turned into a losers just because I didn’t have a clear plan for taking profit.

9. Trust your own opinion before entering the market.

Facts are priceless. Opinions are worthless. Those who follow so called “gurus” in trading will never be able to make a significant profit. Take the full responsibility for your actions don’t hunt for opinions just because you are afraid to act upon your own opinion.

10. Keep your stop losses untouched during the trade.

It comes back to the rule number one. Once you have planned your potential risk and placed the stop loss, don’t touch it until price reaches the profit target or stop loss. By moving the stop loss you are changing a significant parameter of your trading system. That is the way to turn a winning into a losing one.

Everyone knows that currency trading is a good opportunity to make significant amount of money. At the same time it is the best opportunity to lose even bigger amount of money. I hope the above tips will help you to preserve your trading capital and gradually to grow it.

13 Quick Tips for Forex Trading Success

#13: Back-test, but be logical. Back-testing a given strategy can prove priceless when done correctly, but remember to take the results with a grain of salt. Be especially wary of trade results shown on websites claiming astronomical gains since most of these results simply are not attainable under live market conditions for many reasons.

#12: Always analyse similar pairs in the forex market before placing any trade. Similar pairs can be defined as any tradable currency pair containing 1 of the 2 currencies you are about to trade. For example, by looking at no less than 4 US Dollar pairs before trading, one can determine if the pair will be moving based mostly on the US Dollar or the opposing currency. This can easily be done with the Japanese Yen and others as well.

#11: Be wary of trade ideas coming from other individuals or groups in the many online trading forums, blogs, or chat rooms. Only evaluate trade recommendations from trusted parties who have a proven track record of success. Remember this is your business, and to have a consistently profitable business, you need to execute reproducible trades based on your own strategies and ideals. Don’t build your house on sandy soil; lay a good foundation of continuing education and the rewards will come many times over.

#10: Longer-term charts (ie. monthly, weekly, daily) have logarithmically more importance upon technical analysis than shorter-term charts (ie. 1 minute, 5 minute, 15 minute). For example, a support or resistance level on a daily chart will hold much more importance than a similar line than a 5 minute chart. Most reputable traders will recommend trading on longer term charts, especially for those who are new to trading or have limited time to trade due to other commitments. Find your comfort zone and stick with it until you become consistent; even a slight edge in this market can set you free financially.

#9: Do not use any trading robots, expert advisors, or other “black box” automated trading software until you learn how to trade on your own first. Educating yourself is the key to success; deep roots will equal a tall tree that can weather any storm.

#8: Trade with a friend, group, partner, or mentor when you begin your journey of learning the forex market. Many of the glamorous ideologies of forex traders showered in riches come from high-risk, difficult to reproduce strategies. The way to often become most profitable in this market is to have consistency, be disciplined, and to repeat this over and over and over again. Forex trading, done properly, is not intended to be flashy.

#7: Be sure to use a forex broker with great service and support, along with low spreads. With the recent regulations we are much more protected against possible broker-related issues, but many traders are still paying much higher spreads than average when placing trades. Do your research on forex brokers to analyse not only the safe, financially sound companies, but also those that allow the lowest fees. Paying the bid/ask spread in the forex market is just one of the costs of doing business, but with the extreme level of competition in today’s marketplace there is no need to accept paying even 1 pip more than you should elsewhere.

#6: Have a backup power supply and internet access available at all times when you are trading. This can be as simple as a battery-powered laptop with a wireless access card. Don’t rely solely on the phone number of your broker as if there is a company-related trading issue; their lines will likely be slammed busy. Bottom line: be sure to have some redundancy incorporated into your trading plan; treat this like a true business and it will reward you like one.

#5: Break your trade order into 2 or 3 smaller orders to give yourself more control, both actual and psychological. As most forex brokers do not charge commissions to trade this market, they earn their fees through the bid/ask spread; you have no extra cost of placing 3 small orders rather than 1 single large one. Doing this allows you to place tighter stops on some orders, while adjusting the profit taking on others. Closing part of an order will give the same effect, but by having a few live at the same time, it is easier psychologically to set them and let them run.

#4: Trading profit comes from 1/3 psychology, 1/3 money management, and 1/3 trading strategy. It’s easy to get caught up in the “next best thing” or the potential of finding a “holy grail” system, but remember that most of your profits come from learning the things that are not quite as exciting. Trading psychology and money management are critical to any success in the forex market; without them you will be grouped with the 95% of those who lose their capital time and time again. Money management is the key to unleashing potential for compounding profits; it is an absolute necessity to learn. Do your research on the most highly coveted trading psychology texts and dig in ASAP.

#3: Be aware of world news releases. Even if you prefer to not trade news events, be certain to know when the major events are planned to take place. As a second line of asset protection to your business, a good live news feed is also recommended when you are trading. Knowing what is going on in the world is one of the most critical keys to forex trading success; without this knowledge, your chances of success are limited.

#2: Always use a well planned stop loss when placing any trade and never, ever, move it further from your entry point for any reason. Although it is a simple rule to put on paper, it’s often difficult to follow…always follow this rule.

#1: Always trade any new strategy in a demo account before going live in a real money account. Many traders simply become gamblers by placing trades live without the proper testing and education necessary to place the odds in their favour. It is also all too common for traders to have excellent results in a demo account or with paper trading, then lose all their capital once they go live in a real money account. Be realistic and treat your demo trades as real funds; that is the only way for a demo account to work over time. If you begin to have a winning pattern in the demo account, be 100% certain to follow all the rules exactly in your live account. Often, a good transition is to begin with a demo account, then go to a live mini or micro account where very little capital is risked before trading your regular sized account. Many times one can make the transition in trading psychology from demo to live when taking the added step of testing the proven system by trading very small lot sizes first.

Although these few trading “nuggets” are only the tip of the iceberg, I hope that they can pique your interest enough to warrant further research and attention. I wish you the best in your trading!

Source: Jason Gospodarek

Advantages of Forex Trading

Foreign exchange trading involves buying and selling different currencies. It works on the theory that is similar with share market. As we know that to make the profit, you have to buy at lower price and sell at higher price, or we can also sell at higher price first and buy at lower price. But its not as easy as it sounds. By studying certain market conditions, you can actually make profits in forex. All you have to do is to analyze the forex in a correct way and do the good trade.

Why to go for Foreign exchange trading? There is an option to invest in stock market also but here are a few important advantages of currency trading over stock market.

24-hour Trading

Forex trading is done on 24-hours basis. This market is open throughout day and night as somewhere in the world, there must be this buy and sell trading is going on. Traders involved in forex trading strategy can always get that first hand information and can act accordingly. The currency rate is actually run through telecommunication all over the network of banks 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. There are ECNs (Electronic Communication Networks) which bring together buyers and sellers.

Greater Liquidity

There is a superior liquidity in the market as there are always buyers and sellers to purchase and sell foreign currencies. Forex trading market size is 50 times bigger than the New York Stock Exchange and liquidity of such large market ensures price stability. Forex trading stop orders could be carried out more simply. This makes Forex trading signal more liquid and permits Forex traders to take benefit of trading opportunities as they happen rather than waiting for the market to open the next day.

100:1 High Leverage in forex trading

100 to 1 leverage is commonly available from online forex dealers, which substantially exceeds the common 2:1 margin offered by equity brokers. This gives them a huge leverage in their trading and presents the potential for extraordinary profits with relative small investments. Leverage can also go the opposite way and may lead to huge losses if you are not careful.

Forex trading transactions have no commissions. Forex Brokers can earn money by fixing their own speculation between what a currency could be bought at and what it could be sold at. In difference, Forex traders have to pay a commission fee or brokerage fee for every futures transaction they come in to the view. The forex market is so large that no one individual, bank, fund or government body can influence it for a long period of time. In forex trading strategy, you can trade between seven currencies but not everyone trade in all.

There are certain trading signals that give indications to the trade. These forex signals are delivered by email, instant messenger or direct to your desktop.