Why Newbies Should Stay Away from Automated Forex Software

Trading in the Forex market isn't an easy process. You'll have to learn a lot about fundamental and technical analysis and about various nuances of trading and Forex market in particular. The automated Forex software won't help you at this. It's a rather bad way to learn, especially if you are new to Forex. The expert advisor, even if profitable, should be configured adequately and optimized according to the new market conditions often. A Forex newbie simply isn't capable of doing it without enough experience.

Setting correct input parameters depending on the currency pair, timeframe and conditions you are trading on is very important. A Forex expert advisor (robot) should be able to function in 100% accordance with the market. Adding it to different pairs will also require a tuning of the parameters but will lead to more gains.

For a new trader it always looks attracting to set up the Forex robot to trade on all currency pairs present in the platform, but the more pairs it will trade the more optimization and fine-tuning it will require. And the Forex newbies aren't usually capable of following so many currency pairs at a time. Experts recommend focusing on one or a maximum of two currency pairs at a time to get more understanding of how the Forex trading works.

Another problem is introduced by the Forex brokers. Not all brokers technically accept automated Forex trading, while some of them simply don't allow it and others limit the functionality offered by such software. If at some point you decide to start trading with some automated expert advisor you'll need to do a thorough research on Forex brokers, finding the one that will accept Forex robot with its method of trading.

The majority of the Forex robots on the market is paid and is sold by the not-so-honest marketing people. They promise a lot but usually deliver a little (with a lot of cases of a complete account balance loss). Spending money on such Forex software is an outright waste. If you are sure that you need to get some automated expert advisor for currency trading it's always better to opt for a free one. Anyway, paid Forex robots are almost always based on the free versions - their "authors" just attach a good-sounding name to it and a price tag.

If you actually decide to start your automated Forex trading - be it with a free robot or a paid one - it's always better to test it on a demo trading account first. With a demo account you don't lose real money, but you'll be able to see how your Forex robot performs. Although the trading execution can be different on real accounts of your broker, the demo trading will give you some basic hint on the matter.

The last, but not the least in its importance, problem of using the automated software for Forex trading is that such programs should be running constantly without any interruptions. For that you'll probably need a dedicated server called VPS because your home PC will probably require rebooting and restarting from time to time. VPS can be pretty expensive and also require some experience to use. For a new trader it will be a very difficult (or too expensive) task to set up a Forex VPS with a working expert advisor running on it.

by Andriy Moraru

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Tips to Make Money Fast in Forex

This is all about making a fortune with Forex. Most traders just go with the flow and make average gains, with this article you will learn what makes some traders stand out and a lot richer than others!

We are going to assume that you know how to trade, and has quite an experience in trading.

With simple changes in your trade selection, money and risk management, and mindset, you can change that average gains into larger ones!

Fast money is in Forex, it is a lifestyle. here is it how its done.

Tip 1 . Embrace Changeability and Risk With a Smile

Forex systems have instability.

If you cannot manage and calculate your risk, then don't ever think about trading in Forex. Many traders back away from forex because of this ( why do you even traded in the first place?). But taking manageable risks has its rewards.

It's just simple, you know what your losing if ever it doesn't work out, yet what you gain is unpredictable but sure is high! That is what I call excitement, my friend.

To a well-educated Forex trader, this is something you shouldn't be afraid of, might as well embrace it.

Tip 2. Trade Less, gain more

Most traders think that if they don't trade, another door has closed, or miss some move. The tendency, they trade frequently. Most of the trades that come big come a few times in a year. Focus on the trades that make the really big gains. Be alert, and informed.

Tip 3. Diversify is a no-no

Most Investors accept the fact that diversification can make money fast - in reality it does exactly the opposite.

Tip 4. Money and Risk Management

This article has been concentrating on the Big gains, because this is your money, so every penny should be controlled, this is where money management kicks in.

Control your risks, but increase your chances of success:

- Give yourself staying power by buying options at or in the money, this prevents you from getting stopped out. Many traders lose not by the market direction, but because they were stopped out by a instable move, and options will give you staying power.

- Keep your stop in its original position - until the move is well in profit, before moving it up.

- Trading fast and selectively - have the courage to trade when you feel it is good. and enjoy the cash.

Tip 5. Compound growth has its benefits

The way to make money fast in forex, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years.

Break the norm, and gain more. Follow some of these tips and make your way into the big gains!

by Ryan Joseph Ferrer

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Making Forex Day Trading Successful

If you're serious about Forex day trading, where open positions are usually only held for one day, then you'll need to set aside a chunk of time each day to make it happen. Many day traders might try to balance their regular full-time job with Forex trading, but it can be difficult to juggle both endeavors. However, it can be done if you plan it right and make the necessary time commitment and thoroughly try to keep abreast of the latest Forex trading news and offerings.

Scheduling your time

Just like anything else that you're serious with, you'll need to keep set hours for day trading. If you work a 9 am - 5 pm job, you can easily day trade from 7 pm - 10 pm since the Forex market is open 24 hours a day, six days a week. You can even day trade on Sunday, when you don't have to worry about your other job. That extra day can really give you the opportunity to study the latest Forex market trends.

Online resources

Online Forex trading offers some of the sleekest and most impressive total package offerings. Many sites provide the latest Forex news in daily online journals where you can keep current with the latest happenings. You can read about such news items as projected interest rate cuts in Europe or the weakening of a certain country's currency due to the political climate. Not only are daily news articles available, but also fundamental and technical news alerts. These alerts can be sent to you around the clock, up to five or six times per day, so you get the latest information before you make that trade. Online Forex trading systems can send these all-important alerts via your email or even mobile phone, so that you have this information at your fingertips wherever you're located. You don't have to wait until you come home to open your account to see the latest happenings. It gives you a real heads-up on the market so you'll be able to make that day trade decision even that much quicker.

Another invaluable resource to make your day trading that much more successful are the online Forex seminars. It can help you brush up on your overall Forex knowledge and give you invaluable trading strategies for your Forex investments.

by Harman Gilly

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133 Trading Tips

1. Learn the basics of Forex trading. It's amazing how many people simply don't know what they're doing. In order to compete at the highest level in the trading business and be one of the few truly successful participants you must be well-educated about what you are doing. This does not mean having a degree from a well-respected university - the market doesn't care where you were educated.
2. Forex trading is a zero sum game. For every long there is also a short. If 80% of the traders are on the long side, then the remaining 20% are on the short side. This means further that the shorts must be well capitalized and are considered to be strong hands. The 80%, who are holding much smaller positions per trader, are considered to be weaker hands who will be forced to liquidate those longs on any sudden turn in prices.
3. Nobody is bigger than the market.
4. The challenge is not to be the market, but to read the market. Riding the wave is much more rewarding than being hit by it.
5. Trade with the trends, rather than trying to pick tops and bottoms.
6. Trying to pick tops and bottoms is another common fx trading mistake. If you're going to trade tops and bottoms, at least wait until the price action actually confirms that a top or a bottom has been formed before you take a position in the market. Trying to pin-point tops and bottoms in the foreign exchange market is very risky, but exercising a little patience and waiting for a proven top or bottom to form can increase your odds of profiting and somewhat reduce your risk.
7. There are at least three types of markets: up trending, range bound, and down. Have different trading strategies for each.
8. Standing aside is a position.
9. In uptrends, buy the dips; in downtrends, sell bounces.
10. In a Bull market, never sell a dull market, in Bear market, never buy a dull market.
11. Up market and down market patterns are ALWAYS present, merely one is more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped out time and again. Select trades with the trend.
12. A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.
13. Let profits run, cut losses short.
14. Let your profits run, but don't let greed get in the way. Once you've already made a nice profit on a trade, consider taking either some or all of the money off the table and move on to the next trade. It's natural to hope that one trade will end up as your "winning lottery ticket" and make you rich, but that is simply not realistic. Don't hold the position too long and end up giving all your well-deserved profits back to the market.
15. Use protective stops to limit losses.
16. Use appropriate stop-loss orders at all times to cut your losses and never, ever sit back and let your losses run. Almost every trader at some point makes the mistake of letting his or her losses run in hopes that the market will eventually turn around in his or her favor but, more often than not, it simply leads to an even greater loss. You win some, you lose some. Simply learn to cut your losses, take your occasional lumps and move on to the next trade. And if you made a mistake, learn from it and don't do it again. To avoid letting your losses run, get into the habit of determining an acceptable profit target as well as an acceptable risk tolerance level for each and every Forex trade before entering the market. Then simply place a stop-loss order at the appropriate price - but not so tight (close to the market) that the stop could quickly take you out of the position before the market has a chance to move in your favor. Using a stop is always the smart move.
17. Avoid placing protective stops at obvious round numbers. Protective stops on long positions should be placed below round numbers (10, 20, 25, 50,75, 100) and on short positions, above such numbers.
18. Placing stop loss is an art. The trader must combine technical factors on the price chart with money management considerations.
19. Analyze your losses. Learn from your losses. They're expensive lessons; you paid for them. Most traders don't learn from their mistakes because they don't like to think about them.
20. Stay out of trouble, your first loss is your smallest loss.
21. Survive! In Forex trading, the ones who stay around long enough to be there when those "big moves" come along are often successful.
22. If you are a new trader, be a small trader (mini account) for at least a year, then analyze your good trades and your bad ones. You can really learn more from your bad ones.
23. Don't trade unless you're well financed... so that market action, not financial condition, dictates your entry and exit from the market. If you don't start with enough money, you may not be able to hang in there if the market temporarily turns against you.
24. Be more objective and less emotional.
25. Use money management principles.
26. Money management increases the odds that the trader will survive to reach the long run.
27. Diversify, but don't overdo it.
28. Employ at least a 3 to 1 reward-to-risk ratio.
29. Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.
30. Don't trade impulsively; have a plan.
31. Have specific goals and objectives.
32. Five steps to build a trading system:
    • Start with a concept
    • Turn it into a set of objective rules
    • Visually check it out on the charts
    • Formally test it with a demo
    • Evaluate the results
33. Plan your work and work your plan.
34. Trade with a plan - not with hope, greed, or fear. Plan where you will get in the market, how much you will risk on the trade, and where you will take your profits.
35. Follow your plan. Once a position is established and stops are selected, do not get out unless the stop is reached or the fundamental reason for taking the position changes.
36. Any successful trading system must take into account three important factors: price forecasting, timing, and money management. Price forecasting indicates which way a market is expected to trend. Timing determines specific entry and exit points. Money management determines how much to commit to the trade.
37. Don't cherry-pick your system's set-ups. Trade every signal.
38. Trading systems that work in an up market may not work in a down market.
39. Establish your trading plans before the market opening to eliminate emotional reactions. Decide on entry points, exit points, and objectives. Subject your decisions to only minor changes during the session. Profits are for those who act, not react.Don't change during the session unless you have a very good reason.
40. Double-check everything.
41. Always think in terms of probabilities. Trading is all about thinking in probabilities NOT certainties. You can make all the "right" decisions and the trade still goes against you. This does not make it a "wrong" trade, just one of the many trades you will take which, through probability, are on the "loosing" side of your trading plan. Don't expect not to have negative trades - they are a necessary part of the plan and cannot be avoided.
42. The place to start your market analysis is always by determining the general trend of the market.
43. Trade only with a strategy that you've proven to yourself.
44. When pyramiding (adding positions), follow these guidelines:
    • Each successive layer should be smaller than before.
    • Add only to winning positions.
    • Never add to a losing position. One of the few trade management rules that we can state we never break is 'Never add to a losing trade'. Trades are split into winners and losers, and if a trade is a loser, the chances of it turning right around and becoming a winner are too small to risk more money on. If indeed it is a winner disguised as a loser, why not wait until it shows it's true colors (and becomes a winner)before you add to it. If you do this you will notice that nearly always the trade ends up hitting your stop loss and does not look back. Sometimes the trade turns around before it hits your stop and becomes a winner and you can count yourself very fortunate. Sometimes the trade hits your stop loss and then turns around and becomes a winner and you can count yourself unlucky.
    • Whatever the result, it is never worth adding to a loser, hoping that it will become a winner. The odds of success are just too low to risk more capital in addition to the initial risk.
    • Adjust protective stops to the breakeven point.
45. Risk Control
    • Never risk more than 3-4 percent of your capital on any trade
    • Predetermine your exit point before you get into a trade
    • If you lose a certain predetermined amount of your starting capital, stop trading, analyze what went wrong, and wait until you feel confident before you begin trading
46. Don't trade scared money. No one ever made any money trading when they had to do it to pay the mortgage at the end of the month. Having a requirement to make X dollars per month or you will be financially in trouble is the best way I know to completely mess up all trading discipline, rules, objectives, and leads quickly to disaster. Trading is about taking a reasonable risk in order to achieve a good reward. The markets and how and when they give up their profits is not under your control. Do not trade if you need the money to pay bills. Do not trade if your business and personal expenses are not covered by another income stream or cash reserve. This will only lead to additional unmanageable stress and be very detrimental to your trading performance.
47. Know why you are in the markets. To relieve boredom? To hit it big? When you can honestly answer this question, you may be on your way to successful Forex trading
48. Never meet a margin call; don't throw good money after bad.
49. Close out losing positions before the winning ones.
50. Except for very short term trading, make decisions away from the market, preferably when the markets are closed.
51. Work from the long term to the short term.
52. Use intraday charts to fine-tune entry and exit.
53. Master interday trading before trying intraday trading.
54. Don't trade the time frame. Trade the pattern. Reversal patterns, hesitation patterns and breakout patterns appear often. Learn to look for the pattern in any time frame.
55. Try to ignore conventional wisdom; don't take anything said in the financial media too seriously.
56. Always do your homework and stay current on global events. You never know what's going to set off a particular currency on any given day.
57. Learn to be comfortable being in the minority. If you are right on the market, most people will disagree with you. (90% losers,10% winners).
58. Technical analysis is a skill that improves with experience and study. Always be a student and keep learning.
59. Beware of all tips and inside information. Wait for the market's action to tell you if the information you've obtained is accurate, then take a position with the developing trend.
60. Buy the rumor, sell the news.
61. K.I.S.S - Keep It Simple Stupid, more complicated isn't always better.
62. Timing is especially crucial in Forex trading.
63. Timing is everything in Forex trading. Determining the correct direction of the market only solves a portion of the trading problem. If the timing of the entry point is off by a day, or sometimes even minutes, it can mean the difference between a winner or a loser.
64. A "buy and hold" strategy doesn't apply in Forex trading.
65. When you open an account with a broker, don't just decide on the amount of money, decide on the length of time you should trade. This approach helps you conserve your equity, and helps avoid the Las Vegas approach of "Well, I'll trade till my stake runs out." Experience shows that many who have been at it over a long period of time end up making money.
66. Carry a notebook with you, and jot down interesting market information. Write down the market openings, price ranges, your fills, stop orders, and your own personal observations. Re-read your notes from time to time; use them to help analyze your performance.
67. Don't count profits in your first 20 trades. Keep track of the percentage of wins. Once you know you can pick direction, profits can be increased with multi-plot trading and variations in using your stops. In other words, now is the time to get serious about money management.
68. "Rome was not built in a day," and no real movement of importance takes place in one day.
69. Do not overtrade.
70. Have two accounts. One real account and the other a demo account. Learning doesn't stop when trading real dollars begins. Keep the demo account and use it to test alternative trades, alternative stops, etc.
71. Patience is important not only in waiting for the right trades,but also in staying with trades that are working.
72. You are superstitious; don't trade if something bothers you.
73. Technical analysis is the study of market action through the use of charts, for the purpose of forecasting future price trends.
74. The charts reflect the bullish or bearish psychology of the marketplace.
75. The whole purpose of charting the price action of a market is to identify trends in early stages of their development for the purpose of trading in the direction of those trends.
76. The fundamentalist studies the cause of market movement, while the technician studies the effect.
77. Rising commodity prices generally hint at a stronger economy and rising inflationary pressure. Falling commodity prices usually warn that the economy is slowing along with inflation.
78. The longer the period of time that priced trade in a support or resistance area,the more significant that area becomes.
79. There are three decisions confronting the trader -whether- to go long, go short or do nothing. When a market is rising, the best strategy is preferable. When the market is falling, the second approach would be correct. However, when the market is moving sideways, the third choise - to stay out of the market - is usually the wisest.
80. Channel lines have measuring implications. Once a breakout occurs from an existing price channel, prices usually travel a distance equal to the width of the channel. Therefore, the trader has to simply measure the width of the channel and then project that amount from the point at which either trendline is broken.
81. The larger the Pattern, the Great the potential. When we use the term "larger", we are referring to the the height and the width of the price pattern. The height measures the volatility of the pattern. The width is the amount of time required to build and complete the pattern. The greater the size of the pattern-that is, the wider the price swings within the pattern (the volatility ) and the longer it takes to build - the more important the pattern becomes and the greater the potential for the ensuing price move.
82. The breaking of important trendlines. The first sign of an impending trend reversal is often the breaking of an important trendline. Remember however, that the violation of a major trendline does not necessarily signal a trend reversal.The breaking of a major up trendline might signal the beginning of a sideways price pattern, which later would be intedified as either the reversal or consolidation type.Sometimes the breaking of the major trendline coincides with the completion of the price pattern.
83. The minimum requirement for a triangle is four reversal points. Remember that it always takes two points to draw a trendline.
84. The moving average is a follower, not a leader. It never anticipates; it only reacts. The moving average follows a market and tells us that a trend has begun, but only after the fact.
85. Shorter term averages are more sensitive to the price action, whereas longer range averages are less sensitive.In certain types of markets, it is more advantageous to use a shorter average and, at other times, a longer and less sensitive average proves more useful.
86. When the closing price moves above the moving average, a buy signal is generated. A sell signal is given when prices move below the moving average.
87. A buying signal on a two-moving average combination occurs when the shorter term of two consecutive averages intersects the longer one upward. A selling signal occurs when the reverse happens, and the longer of two consecutive averages intersects the shorter one downward.
88. Shorter average generates more false signals, it has the advantage of giving trend signals earlier in the move. The trick is to find the average that is sensitive enough to generate early signals, but insensitive enough to avoid most of the random "noise".
89. Cutting losses is painful for every trader. The ability to cut one's losses in time is the sign of a seasoned trader.
90. A channel breakout suggests a target for the currency price equal to the width of the channel.
91. Long term charts provide important information regarding long-terms or cycles. The trader can get a correct perspective regarding the real direction of the market in the long run, the strength or direction of the current trend occurring within that trend, or the possibility of a breakout from the long-term trend.
92. Common Points All Of Reversal Patterms
    • The first signal of an impending trend reversal is often the breaking of an important trendline
    • The larger the pattern,the greater the subsequent move
    • Topping patterns are usually shorter in duration and more volatile than bottoms
    • Bottoms usually have smaller price ranges and take longer to build
93. The head-and-shoulders formation is confirmed only when the completion of the three rallies and their reversals is followed by a breach of the neckline. The failure of the price to break through the neckline on closing prices basis puts on hold or negates the validity of the formation.
94. The double-top formation is confirmed only when the full completion of the two rallies and their respective reversals is followed by a breach of the neckline (the closing price is outside the neckline). The failure of the price to break through the neckline puts on hold or negates the validity of the formation.
95. The flag formation is a reliable chart pattern that provides two vital signals: direction and price objective. This formation consists of a brief consolidation period within a solid and steep upward trend or downward trend. The consolidation itself tends to be sloped in the opposite direction from the slope of the original trend, or simply flat.
96. A Breakaway gap provides the direction of the market.
97. The runaway or measurement gap provides the direction of the market. This gap confirms the health and velocity of the trend.
98. The runaway or measurement gap is the only type of gap that provides a price objective. The price objective is the previous length of the trend, measured from the runaway gap, in the same direction as the original trend.
99. The exhaustion gap provides the direction of the market.
100. Near the beginning of important moves, oscillator analysis isn't that helpful and can be misleading. Toward the end of market moves, however, oscillators become extremely valuable.
101. When the oscillator reaches an extreme value in either the upper or lower end of the band, this suggest that the current price move have gone too far too fast and is due for a correction of some type.
102. The oscillator is most useful when its value reaches an extreme reading near the upper or lower end of its boundaries. The market is said to be overbought when it is near the upper extreme and oversold when it is near the lower extreme. This warns that the price trend is overextended and vulnerable.
103. A divergence between the oscillator and the price action when the oscillator is in an extreme position is usually an important warning.
104. Oscillator - the crossing of the zero line can give important trading signals in the direction of the price trend.
105. Because of the way it is constructed, the momentum line is always a step ahead of the price movement. It leads the advance or decline in prices, then levels off while the current price trend is still in effect. It then begins to move in the opposite direction as prices begin to level off.
106. RSI is plotted on a vertical scale of 0 to 100. Movements above 70 are considered overbought, while an oversold condition would be a move under 30. Because of shifting that takes place in bull and bear markets, the 80 level usually becomes the overbought level in bull markets and the 20 level the oversold level in bear markets.
107. The first move of RSI into the overbought or oversold region is usually just a warning. The signal to pay close attention to is the second move by the oscillator into the danger zone. If the second move fails to confirm the price move into new highs or new lows, a possible divergence exists. At that point, some defensive action can be taken to protect existing positions. If the oscillator moves in the opposite direction, breaking a previous high or low, then a divergence or failure swing is confirmed.
108. Stochastics simply measures, on a percentage basis of 0 to 100, where the closing price is in relation to the total price range for a selected time period. A very high reading (over 80) would put the closing price near the top of the range, while a low reading (under 20) near the bottom of the range.
109. One way to combine daily and weekly stochastics is to use weekly signals to determine market direction and daily signals for timing(it depends from the type of the trader). It's also a good idea to combine stochastics with RSI.
110. Most oscillator buy signals work best in uptrends and oscillator sell signals are most profitables in downtrends. The place to start your market analysis is always by determining the general trend of the market. Oscillators can then be used to help time market entry.
111. Give less attention to the oscillators in the early stages of an important move, but pay close attention to its signals as the move reaches maturity.
112. The best way to combine technical indicators is use weekly signals to determine market direction and the daily signals to fine-tune entry and exit points. A daily signal is followed only when it agrees with the weekly signal (daily-weekly, 4 hour-daily, 4 hour-1 hour).
113. The failure of prices to react to bullish news in an overbought area is a clear warning that a turn may be near. The failure of prices in an oversold area to react to bearish news can be taken as a warning that all the bad news has been fully discounted in the current low price. Any bullish news will push prices higher.
114. -Elliot Wave Theory- A complete bull market cycle is made up of eight waves, five up waves followed by three down waves.
115. -Elliot Wave Theory- A trend divides into five waves in the direction of the longer trend.
116. -Elliot Wave Theory- Corrections always take place in three waves.
117. -Elliot Wave Theory- Waves can be expanded into longer waves and subdivided into shorter waves.
118. -Elliot Wave Theory- Sometimes one of the impulse waves extends. The other two should then be equal in time and magnitude.
119. -Elliot Wave Theory- The Finobacci sequence is the mathematical basis of the Elliot Wave Theory.
120. -Elliot Wave Theory- The number of waves follows the Finobacci sequence.
121. -Elliot Wave Theory- Finobacci ratios and retracements are used to determine price objectives. The most common retracements are 62%, 50% and 38%.
122. -Elliot Wave Theory- Bear markets should not fall below the bottom of the previous fourth wave.
123. -Elliot Wave Theory- Wave 4 should not overlap wave 1.
124. Support and resistance are the most effective chart tools to use for entry and exit points. For purposes of placing stop loss, support and resistance levels are most valuable.
125. One of the commodities most effected by the dollar is the gold market. The prices of gold and the U.S. dollar usually trend in opposite directions.
126. The Yen is sensitive to changes in the price or structure of the raw material markets.
127. The commodity-producing countries (Canada, Australia, N. Zealand ) are more dependent on Japan than the other way around.
128. The Yen is sensitive to the fortunes of the Nikkei index, the Japanese stock market and the real estate market.
129. The majority of the pound transactions take place in London with a volume decreasing significantly in the U.S. market, and slowing down to a trickle in Asia. Therefore, in the New York market, many banks have to stop quoting the pound at noon.
130. Swiss Franc has a very close economic relationship with Germany, and thus to the euro zone.
131. The major markets are London, with 32 percent of the market,New York with 18 percent and Tokyo with 8 percent. Singapore follows with 7 percent, Germany has 5 percent and Switzerland, France and Hong Kong have 4 percent each.
132. Don't use the markets to feed your need for excitement.
133. Don't be too greedy or too cautious.

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Stop Loss?? I Don't Want To Use It.

Last week I was reviewing a website which has a trading signal program for those investors who prefer to not being involved in confusing market analysis and I respect them because such services normally will bring them more time to do other important things in their daily life. But the interesting thing was the most of signalers did not actually place a stop loss point on their recommendations. Is that so because they know they are right all the time? Or that's because they did not lose half of their trading account in an unexpected slump of 200 hundred points and a single trade.

 

However, the answer is most of them have something between -1000 to -5000 pips of open trades on their signal board and they actually trapped in desperately while they could cut the losing trades and ran another one instead. Also I should mention that there are some other types of system trading that called "Hedge Fund" and I don't actually want to argue if they are right or wrong. I am definitely talking to day traders who get into challenge with big bear every day.

 

Sometimes, I don't understand why a trader could be convinced of not having a Stop Loss while we see almost every month an unexpected uncounted impulse (I would call it Best of the Test for whom with less of the rest) in the market.

 

There is no specific rule as to where you should place the stop loss, so consider the below mentioned tips as the general rules and ask your mentor to fit reliable Stop loss rules just for you and your trading system(If you have one?).

 

• Many loser traders do place the same stop loss for all the trades they execute without even trying to measure market environment.
• Don't be scared of placing a stop loss while it is for your gain and you must know what your profit objective is.
• Stop Loss should not be too close to the current price while most of the stop loss enemies have ruined their trading accounts already just by using very close ones.
• Stop Loss should not be too far from the point you get into trade while it's better to not placing any Stop Loss rather taking an unreachable, fictional protector.
• Try to not to risk more than the points of your profit goal. Pro traders recommend to only take those trades which have at least 2 points of potential profit per 1 pip of potential lose, but I would say it is completely depends on the money management system that you use, as different money management systems has different recommendations for Risk & Reward.
• Sometimes a trading system does not work if you risk less than recommended %7 to %10 of your total account balance. It means you trade oversize or you just entered the market when everyone else getting out of the market. In this case this is not your fault as it has a clear message for you "don't trade this way anymore and ask an expert to solve the problem".
• If you are convinced enough that you can make up 1 million dollar out of your 10000 dollars account by not using stop losses as you may think you are the one who knows the price will be back on its way to you instead of hitting new highs, well, simply you are wrong.
• Remember, there are no sky limits for the price of any of currencies in FOREX market.
• If you don't like to place a pre defined Stop Loss on your trades, please ask someone to show you how to follow a wining trade by using "Trailing Stop".
• Be sure it is better to have one or two losing trades with 100 points of lose, instead of being desperate with sinking into -1000 pips of dizziness.
•  

How to Define the Best Stop Loss point?

 

Try these tools to define the most accurate stop loss points easily:

 

• Use 10 pips over/below the first Parabolic SAR spot(dot) appeared over/below the price candles for Short/Long Trades.
  Note#1: Remember you just can use 10 pips above the parabolic SAR dots as an Stop Loss point when you have a Short trade and Vice Versa.
  Note#2: You realized that the Stop Loss obtained from SAR is too far from the point which you want to enter the market. OK, this means you are about to enter the market very late so better to not do it.
• Use 10 pips over/below the day before yesterday's HIGH and LOW and in the case of the market has moved a lot far, use 10 pips over/below the yesterday HIGH and LOW as a Stop Loss point for your Short/Long trades.
• Use two Moving Averages of 55 EMA and 144 MA. You may place your stop loss just 10 pips below/above one of those two MAs depending on how do you set up the profit/loss game for your Long/Short trades.
  Note#: If you trade on the range market break out be aware of this kind of Stop Loss setting, and it is quite safer to use another way.
• Place the Stop Loss 10 pips over/below Bollinger Bands Upper/Lower band for Short/Long trades.
• If you use Elliot Waves theory to analyze the market:
  # Place the Stop Loss just 10 pips below the lowest point of the Second (2) wave in bullish trend when you LONG on Wave 3.
  # places the Stop Loss 10 pips below the lowest point of the 4th Wave when you go for LONG on 5th Wave.
  # Place the Stop Loss right above/below the top/low of the previous wave when you go for SHORT/LONG based on A-B-C correctional waves.

 

Notes:

 

• Aforementioned suggestions are based on 4Hours chart.
• Those ways of defining Stop Loss points has worked for me, but It does not necessarily works for you, so ask your mentor or an expert friend to do evaluate the probability of fitting those suggestions to your trading strategy.
• 10 pips are because sometimes price hit the important support or resistance levels by more than a touch.
• Please don't forget, the Stop Loss issue is not actually a game. It is not even an option for you; it is a "MUST" and will save you when you can do nothing, so refresh your mind in this case.

by S.A Ghafari

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Too Many Strategies, But Still Frustrated?

It is not too long ago when veteran traders used to draw trend lines using pencil and paper. Market data was sent by physical mail to them and there was no computer and trading desk. Were they really not able to perform by not using super analytical charting platforms? Were they all losers? I bet they were not only doing great, but compared to my fellow traders (Including me) they were absolutely sophisticated traders. I don't want to undermine anyone as we have many legend traders and hundreds of good traders who actually make money around the globe on daily basis. My argument is merely pointed at those traders who think that broken accounts is a result of them not really having the best strategy to trade in a safe and secure manner while at the same time having a one year outlook for reaching 1 million dollar, through a 10000 buck trading account.

 

Where a trading strategy is introduced as a reliable method of making money for traders, there are some questions that must be asked, to evaluate the accuracy of the given strategy:

 

• Is it a trend or a range market based strategy?
• If it works as a trend based strategy, what can the strategy offer to trade around range markets, and vice versa for the range market based strategy?
• Is it a day trading strategy or planned to signal longer term trading signals?
• If it is an Intraday trading strategy, how many hours are required and when exactly should I sit down and watch the screen?
• If it is a long term strategy, what is the estimated possible drawdown in pips?
• Is there any historical performance of trading using the given strategy in real accounts and if the answer is "YES" for how long? (don't rely on less than one year)
• Are there any money & risk management rules attached that are specifically tested on this particular strategy?
• What is the average/highest/lowest risk to award ratio of the last year's trades?
• Is there anyone who has used the strategy on a real account? (Be aware of marketing tactics and ask someone who is honest).
• What is the outcome of the trades for the above mentioned trader? Even if positive, don't necessarily trust that exact approach for yourself, because one cannot fit a common strategy with the same characteristics to every trader. In this case you need to test it yourself.
• Ask the developer about the psychological pressures that may come upon you while using that strategy on real accounts (We recommend to ask your mentor to analyze the strategy)
• Does it have an Exit and Stop Loss rule for different market situations?
• Ask the developer if you can get back to him occasionally to ask questions about some points that you don't really understand (don't make it 100 times a week cause he/she won't sell any strategy to you).

 

However, I know a couple of guys who experienced real damage and disappointment where they tried to believe the strategy given to them from the first day. So I am being serious when I say don't ever try to apply a new strategy on your real account, unless you have met an expert and he has given you the green light, or if you have just passed one year of continuous testing.

 

Final Words:

 

You may ask for how long? One year... it's too much...I can't wait...!! Well then you can try it, but count on it as a gamble...You know the gamble...Too many jack pots, nothing Hot Shots.

 

Let science make you wealthy step by step. Don't ever think you are smarter than any other trader because no one knows what is going to happen next. So it's better to be next to those wise traders who win, because they are disciplined and have spent a long time practicing before doing anything real on their money. Try to admit it if you are not sure enough about your ability, and try to solve the problems with patience and remember it is worth it if you make that million dollars three or even five years later, instead of losing what you got from hard work within just a couple of days. 

 

by S.A Ghafari

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FOREX Education — Thinking Of Buying FOREX Advice? Read This First

There is a huge amount of FOREX Education you can buy but before you buy it read this, as in excess of 90% of it will ensure you lose.

So you ensure you get the right FOREX Education follow the guidelines below.

1. Never buy a day trading system!

Most novice traders are enticed by the theory of making money everyday, with low risk and high rewards, but this is not the reality of day trading.

The reality of day trading is:

A quick wipe out of equity — why?

Quite simply, all short term moves are random and using support and resistance as day traders do is destined to failure.

If you don't believe me try this simple test when buying any FOREX Education from a vendor:

Ask for the real time track record of profits and you won't get one from a day trader.

At best you will get a hypothetical track record, but that's done in hindsight, knowing the closing prices and if we know the closing prices its not hard to make money.

If you want to make money don't day trade!

2. Real time profits

A real time track record is an essential requirement on ANY FOREX education you buy, not just day trading systems.

The fact however is, most FOREX education is sold by failed brokers, or people who have never traded in their lives.

If these people have not had the confidence to trade their own money on their own system why should you?

3. Understand the FOREX Education

Even if you are lucky enough to find a system that does have a track record of real FX Profits you need to be mindful of the following:

You need to fully understand the method and not follow it blindly.

If you don't understand why a method works you won't have confidence to follow it through inevitable periods of losses.

Not only must you understand it to follow it with discipline, you must also check it fits your trading personality.

Some traders can take big drawdowns or losses, other traders find them hard to take, so pick a system with a risk to reward you can handle emotionally.

4. The best FOREX education

There is a huge amount of FOREX education and FOREX advice free on the web, so use it.

In other articles we have shown how to build a system that makes profits from free info and it's a lot easier to learn FOREX Trading this way than many people think.

You can also get some great FOREX education at nominal cost from your local bookstore this FOREX advice is from:

Traders who don't just talk the talk — they have walked the walk and made money.

Great books to look at are Jack Schwager's excellent Market Wizards and New Market Wizards — which interview some of the best traders of all time.

Trader Vic — Victor Sperandeo a great all round book and there are many more.

Rather than buying a e-book from someone without a track record, get your FOREX Education free on the net and get some classics from legendary traders.

Most of the courses and systems on the web are over priced, don't work and you can frankly, do better on your own with the above advice.

by Sacha Tarkovsky

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Secrets To Potentially Making Money In The Forex Markets

How would you like to be able to potentially make money trading currencies in the Forex markets? Better yet, how would you like to be able to potentially do this within strict risk control parameters? Even better yet, how would you like to potentially do it with a minimum of effort on your part? I'm talking about only10 minutes a week. Well, I am here to tell you a few key principles or secrets to potentially make it happen.

 

Secret #1

 

The Forex markets are heavily advertised as being a great way to make money, which is very misleading. The unwary would-be Forex trader is led to believe all she has to do is open a Forex account to gain access to one of the many excellent Forex trading platforms, begin trading and then become rich in no time. So what's the secret? The Forex market is a highly liquid, potentially profitable market to trade, sure enough, but only if you have a winning edge methodology that you can apply to these markets. Without such a methodology, the hapless trader will quickly lose money trading the Forex as they would any market.

 

Secret #2

 

The Forex markets are heavily advertised as commission-free. True, but unlike the futures market, entering and exiting positions in the Forex markets is done by buying at the high end of a rather wide bid/ask spread and selling at the low end. So the difference in the spread is your cost of doing business. This cost may be acceptable for swing and long term traders, but may not be acceptable for day traders. So if your goal is to make money, you may not wan to day trade the Forex markets.

 

Secret #3

 

While swing trading could be potentially profitable trading the Forex markets, there is potentially greater opportunity trading the long term trends. Currencies have always moved in long sweeping mega-trends that potentially offer low risk entry points and the potential opportunity to ride a long money making trend (sometimes for several months). The following wisdom from legendary stock trader Jesse Livermore is equally applicable to the Forex markets:

 

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying and selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine — that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."

 

Secret #4

 

Potentially the best way to trade for the longer term is to trade off of the weekly charts, thus avoiding the day-to-day volatility that wreak havoc on one's account or at a minimum shake you out of your position prematurely and potentially missing a big money move altogether. By definition, then, a potential winning edge methodology based on a weekly chart only requires analysis once a week after the futures markets close for the week each Friday. You then simply update your chart, determine the following week's entry, trailing stop loss and profit target orders, which should be placed before the futures market opens on Monday. A clarification is in order here, even though we are trading the Forex market, we can use the weekly futures markets charts for determining exit and entry orders that can then be executed in the Forex market. And these same signals, by the way, are equally executable in the futures markets. It becomes a matter of which market platform you prefer to trade the currencies.

 

It should be clear from this discussion that there is no magic to trading the Forex or currency futures markets. The magic is in the potential winning edge methodology that you apply to these markets that makes the money.

by Bill Poulos

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Two Timeless Rules in FOREX Investing

RULE #1) ~ Cut your losers; let your winners ride.

 

One important thing that every new trader must know before entering this highly profitable business is that life is not perfect, even in Forex land, and you should always know one fact: YOU WILL HAVE LOSING TRADES.

 

Every Forex trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW(based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).

 

All traders have to face it — you can't turn a donkey into a ferrari. You can't change the strips of a zebra and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies you can learn in my website will be your best indicator for just what a "right" trade really is).

 

Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.

 

RULE #2) ~ Thou Shall Not Trade the Forex Without Placing a Stop Loss Order.

 

When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.

 

Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.

 

Show me a Forex trader who doesn't use stop loss orders and I'll show you someone who loses a lot of money.

 

by Adrian Pablo

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How The Matrix Will Boost Your Forex Profits?

Perhaps you remember one of the most impactful movies of our time, the Matrix? Morpheus believed totally in Neo to the point where he almost sacrificed his life to save him. Yet Neo did not believe in himself at the beginning, he was most uncertain about whether he was the One or not. So when he went to see the Oracle, she told him that being the One is like being in love, nobody tells you that you are in love, you just know it. The Oracle pointed to a sign hanging on the door: "Know Thyself"...

 

Still Neo didn't believe in himself but when agent Smith captured Morpheus and a member of his crew suggested to pull the plug so the agents of the Matrix won't get access to Zion, something in Neo changed and he began to believe...

 

A little further down the path of the One, Neo "accomplished miracles" because he learned how to believe in himself fully and completely. And remember Neo had a mentor who believed in him beyond any doubt and who taught him how to use his mind to defeat the Matrix and its dangerous agents. Neo's mentor, Morpheus, showed him the path and helped him empower his mind, yet Neo walked the path to his own success after he started believing in himself and mastered his own mind.

 

Perhaps you were wondering, yes and what has this to do with trading the Forex market?

 

"Know Thyself"

 

Forex trading or any trading for that matter is a mind game in the first place. Some people spend a lot of time and efforts perfecting certain trading skills and knowledge like reading the charts and data, entry and exit skills but any normally intelligent person can learn these skills, they are the easiest part of the trading game. They are no doubt necessary tools to your Forex success but they don't make the biggest difference between a really successful Forex trader and the one who is not successful. So what does make the difference?

 

Let's ask the question: what is your goal in trading the Forex? It is to make money. Period! Surely while you're making the money and great profits you can have fun too and you should but what you need are specific mental attitudes and strengths, that is if you want to be a successful Forex trader. These mental states are an asset that will help you in many other situations and contexts of your life.

 

As my Forex mentor told me, the major three mental and emotional frames of mind that characterize the majority of successful FOREX traders are:

 

1.Discipline & Passion 2.Confidence & Courage 3.Patience & Smart Persistence

 

We'll touch upon all three briefly to make it as clear as crystal to you so you succeed in the Forex market.

Like trading a Pair of Currencies these mental and emotional mindsets go hand in hand.

 

Discipline & Passion

 

Discipline, say the most successful Forex traders, is really important! It helps you be more effective in planning your trades and in sticking to the good plans you established before entering the trade. Always have an action plan for stop and limit levels for the trade before you enter it, your analysis should cover up the expected upside and downside.

 

Passion means commitment and love for what you do. It is your passion for something that keeps you going, improving, constantly learning (willing to buy excellent Forex courses from experienced and successful traders, remember Morpheus mentoring Neo) and persist beyond the ups and downs of the business. You need to know why you are trading the Forex because it is an awesome opportunity that you have to take, so develop a passion for it. Simply do what it takes to be successful, learn from the best.

 

A word of Caution: Never mistake your "Forex passion" for emotion that you might feel while trading the Forex, when trying to enter a trade without using clear and sound entry/exit indicators and rules. Have fun, learn, and stay tuned for future developments and grow as a person in strength and character in "your Forex business" while remaining emotionally detached when you get in and out of a trade. If you do, you are bound to incredible success in the Forex trading business.

 

Confidence & Courage

 

Successful Forex traders believe in themselves and their abilities to learn and grow, to acquire more competence learning from a mentor. There is no reality only perception, the Matrix can trick you but you can have your own special Matrix inside your mind that empowers you with an unwavering belief in yourself!

Have the confidence and courage to stick to your plan and stay with your rules even if others are doing the opposite. Keep your vision (end result) that you can make it in the Forex market in your mind until you are successful in it.

 

If you experience a situation where you know exactly how a currency pair will go and have a sound trading plan, go for it! Sometimes people fail to follow their own good plans because all sorts of emotions get in their way, emotions like greed and fear. Stay calm and act with confidence and courage otherwise your planning, analyzing and information gathering will be totally useless to you.

 

You become more competent when you educate yourself about the markets and learn from successful traders. Self develop: "Know Thyself", get into the habit of monitoring your emotions and questioning your limiting beliefs so that your mind works for you and not against you. Don't take things too personally, if you make a mistake then consider it to be valuable feedback so you become more successful, never a failure!

 

Patience & Smart Persistence

 

An Indian wisdom says: "Life is always right!" we say: "the market knows much better than you do!"

Learn to listen and read the signs the Forex market is giving you. Learn how to wait, observe and only enter a trade when it is the right time to do so, before you can reap the profits.

 

It can be hard to wait before your Forex trading screen and not jump into action but The successful FOREX trader will enter a trade according to the direction of the prevailing trend or will wait until a new trend shows up and establishes itself. The waiting ranges from a few hours to days or even weeks before a winning trend appears.

 

even if you day trade and are not a long-term or position trader, you still are well advised to keep impatience from ruining your profit chances. Also be patient means you stick with winning trades. But be most impatient with losing trades.

 

Practice "Know Thyself" and continue learning your Forex trading from the best and we are sure you will be a successful Forex trader. You will be on the path of Neo, the One himself!

by Karima Begag

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The 7 Undeniable Rules of Forex Trading

Before we go into 7 rules of Forex Trading, that have been approved by a number of full time and successful traders, I'd like to narrate this story.
 
There was a lion, a donkey and a fox all keen to go out rabbit hunting together. After a productive day of hunting, the three of them sit around the pile of rabbits and the lion asks the Donkey, "Mr Donkey, would you please divide the pile into equal shares for the 3 of us?". The Donkey obliges and counts the rabbits into three equal piles for each of them. The Lion immediately roared and pounced him. He then piled all the rabbits on top of the donkey and asked the Fox "Mr Fox, would you please divide the rabbits up evenly between us?".
 
The Fox takes out 1 scrawny rabbit from the pile and puts it in a pile for himself then say "There you go, Mr Lion, that's your pile" pointing to the large pile of rabbits. The lion says "Mr Fox, where did you learn to divide so equally?" and the fox says "The Donkey taught me."
 
The moral of the story is to learn from others' mistakes. Now we proceed to our 7 rules. These are for you benefit as mentioned earlier, from experienced, successful traders.
 
Rule #1 Never risk any more than you can afford to lose, you will lose money, all traders do, make sure you're not sacrificing anything else important in the process
 
Rule #2 Never risk any more than 2% of your margin trading account on a simple trade. For mini account holders, 2% of $300 would be $6 so realistically you would need around $15 so you can make this 5%. As soon as your account size is big enough, make this 2%.
 
Rule #3 Always use a stop loss order. If you haven't figured out where your stop loss order and limit order should be at the start of your trade then you shouldn't be trading.
 
Rule #4 Know your exit point before you enter a trade.
 
Rule #5 Demo Trade First: Become successful with paper trading when there's nothing on the line before you open a real account.
 
Rule #6 Take a breather when your equity has taken a dive.
 
Rule #7 Don't let your emotions call the shots: Stay cool, calm and collected. Patience and a clear head will win the game.

by Sorna Devadas

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Boost FOREX Trading Profits Using These 3 Simple Guidelines

Forex trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was mostly limited to large banks and institutional traders. Recent technological advancements have made it so that small traders can also take advantage of the many benefits of Forex trading by using the various online trading platforms.

 

Forex markets possess unique attributes that offer unmatched potential for profitable trading in any market or any stage of the business cycle. For starters, Forex trading boasts a 24-hour market, giving traders the chance to take advantage of profitable market conditions anytime. Secondly, the Forex market is the most liquid market in the world. Forex traders can enter or exit the market whenever they want, during almost any market condition. There also exist minimal execution barriers or risk and no daily trading limits.

 

For all the advantages of the Forex market, one glaring weakness emerges. The Forex market is seen as unregulated although the operations of major dealers, like commercial banks in money centers, are regulated under the banking laws. The daily operations of retail Forex brokerages are not regulated under any laws or regulations specific to the Forex market. Many of these types of establishments in the United States, don't even report to the I.R.S. To make the most of the explosive potential of successful Forex trading, individuals should follow these guidelines.

 

1.Determine the quality of the broker institution you choose. Unlike equity brokers, Forex brokers are usually attached to large banks or lending institutions because of the large amounts of capital that is required. Forex brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Future Trading Commission (CFTC)

 

2. Request a free trial. Before you commit to any broker, be sure to request free trials so that you can test their different trading platforms. Brokers usually provide technical as well as fundamental commentaries, economic calendars and other research as a means of assisting you. Basically, a quality broker will provide everything one needs to succeed.

 

3.Monitor two financial meetings to provide insight into the upcoming Forex market. Two important meetings Forex traders should watch for are the federal Open Market Committee and the Humphrey Hawkins Hearings. By reading the reports and examining the commentary, Forex fundamental analysts can get a better understanding of any and all long-term market trends it also allows short-term traders to be able to profit from extraordinary happenings.

 

Http://FreeForexTips.blogspot.com provides free commentary and up-to-date information on the Forex currency exchange market. Http://FreeForexTips.blogspot.com

 

by Roxanne Manning

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Day Trading Tips for Dummies

When primitive people have invented money, all they have in mind is to find some means to solidly show the actual exchange of goods or services between two persons or groups. Since then, any exchanges of goods have been centered on money, bearing the most tangible form of trade.

 

As time pass by, trading has significantly evolved in different industries where money is not the primary agent. Trading becomes a profitable venture; and had created a remarkable spot in the economy.

 

Today, there are many kinds of trading. Every type of trading depends on the kind of exchange that will take place. For instance, Forex or foreign exchange trading focused on foreign currencies.

 

Among the many trading types, day trading has slowly etched a name in the industry. With its remarkable turn of profits, day trading has quite gained a good reputation.

 

What is Day Trading?

 

Day trading generally stands for the system of selling and buying financial tools such as bonds or stocks throughout the day.

 

In other words, day trading is a series of material exchanges that all happens within the day. Hence, in day trading, every piece of stock bought has its corresponding sale. The profit or deficit is identified on the discrepancies between the goods and the trade price.

 

The main concept of day trading is based on the premise that all of the transactions are carried out within the day to ensure that there are no changes on the current closing price.

 

Changes usually take place overnight, where the preceding closing price will be changed depending on the result of the day's trading activities.

 

Sounds easy? Guess again.

 

Day trading may not sound complicated and may not even look perilous to one's financial status. However, trading experts say that more people tend to lose during the day trading. Statistical reports show that nearly 90% of day traders spend more money without gaining something in return.

 

For this reason, it is important that every day trader should know how to deal with the matter intelligently. It takes some wits and quick thinking just to overcome any probable loss in day trading.

 

Here are some day trading tips for dummies:

 

1. Chop down shortfalls quick

 

The secret is to regain back what you have lost. Try to handle the situation positively and maneuver the condition to a constructive one. There is no use to cry over spilled milk. What you need to do is to reduce the losses with quick, sharp moves.

 

2. Go with the flow

 

Like traffic, taking the counter flow is not advisable in day trading. It would be better if you will just go with the flow. This means that you have to focus on the high-selling stocks and sell those that fall under "short-selling" stocks.

 

This is based on the belief that the development of stocks will continue to rise. Luckily, 8 out of 10 day traders find this strategy effective.

 

3. Control your emotions

 

Some day traders tend to be emotionally involved with their dealings.

 

In reality, day trading can really create hype. Hence, emotional people tend to act on impulse. Any good news will immediately alert day traders to expect a positive turnover of stocks. Hence, if you are too emotional, you may get excited and act without even evaluating the situation.

 

To avoid trouble, it would be better to control your emotions and analyze each condition first before making a move. If you lost, analyze the situation and identify where you have been wrong.

 

Do not take your defeats seriously. Keep in mind that an open mind is important to overcome problems encountered in day trading. This will help you achieve the profits that you want.

 

by Tim Lee

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Is There Such A Thing As Hedging In The Forex Market

Just like hedging your bet at the horse track you can hedge your trading in the Forex Market.

 

What is the Forex Market: The Forex and the stock market have some similarities, in that it involves buying and selling to make a profit, but there are some differences. Unlike the stock market, the Forex has a higher liquidity. This means, a lot more money is changing hands everyday. Another key difference when comparing the Forex to the stock market is that the Forex has no place where it is exchanged and it never closes. The Forex involved trading between banks and brokers all over the world and provides twenty-four hour access during the business week.

 

For those who are not familiar with the Forex market, the word "hedging" could mean absolutely nothing. However, those who are regular traders know that there are many ways to use this term in trading. Most of the time when you hear this phrase it means that you are trying to reduce your risk in trading. It is something that everyone who plans to invest should know about. It is a technique that can protect your investments to some degree.

 

While hedging is a popular trading term, it is also one that seems a little mysterious. It is much like an insurance plan. When you hedge, you insure yourself in case a negative event may occur. This does not mean that when a negative event occurs you will come out of it completely unaffected. It only means that if you properly hedge yourself, you won't experience a huge impact. Think of it like your auto insurance. You purchase it in case something bad happens. It does not prevent bad things from happening, but if they do, you are able to recover a lot better than if you were uninsured.

 

Anyone who is involved in trading can learn to hedge. From huge corporations to small individual investors, hedging is something that is widely practiced. The manner in which they do this involves using market instruments to offset the risk of any negative movement in price. The easiest way to do this is to hedge an investment with another investment. For example, the way most people would deal with this is to invest in two different things with negative correlations. This is still costly to some people; however, the protection you get from doing this is well worth the cost most of the time. When you begin learning more about hedging, you start to understand why not many people completely know what it is all about. The techniques used to hedge are done by using derivatives. These are complicated instruments of finance and most often only used by seasoned investors.

 

When you decide to hedge, you must remember that it comes with a cost. You should always be sure that the benefits you get from a hedge should be more than enough to make it worth your while. You should make sure the expense is justified. If it is not, then you should not hedge. The goal of hedging is not to make money. You will not make large gains by hedging yourself. You have to take some risks in order to gain. Hedging is intended to be used to protect your losses. The loss cannot be avoided, but the hedge can offer a little comfort. However, even if nothing negative happens, you will still have to pay for the hedge. Unlike insurance, you are never compensated for your hedge. Things can go wrong with hedging and it may not always protect you as you think it will.

 

Keep in mind that most investors never hedge in their entire trading careers. Short-term fluctuation is something that the majority of investors do not worry with. Therefore, hedging can be pointless. Even if you choose not to hedge however, learning about the technique is a great way to understand the market a bit more. You will see large corporations and other large traders use this and may be confused at why they are acting this way. When you know more about hedging you can fully understand their strategies.

 

Whether you decide to use hedging to your advantage or not, you will benefit from learning more about it. You can use it like an insurance policy when trading. You should remember however that hedging can be costly. Always check to make sure the costs of hedging will not run against any profits you may or may not make. Be sure those costs are realistic and that your need for hedging is realistic as well. You will be able to use hedging to help cut your potential losses, however hedging will never guard against the negatives altogether. Learning about it will give you a better understanding at how large traders work the system however, which can in turn make you a better player in the trading game.

 

Remember that hedging should be left to the Pros of the industry unless you are playing the forex market as a hobby and don't have a lot invested in it.

 

by David Mclauchlan

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Day Trading, Forex Or Currencies Back Testing — A Way To Improve Your Trading Score

You can draw some useful parallels between running a business and Day Trading, Forex or Currencies trading. For instance, most successful businesses keep statistics on everything from their conversion rate, to their average dollar sale, to the number of people that come in the door. Businesses do this to keep on top of how they are doing on a day to day basis and businesses must first take score before begining to improve on that score. Using a Day Trading, Forex or Currencies back testing plan in your trading works exactly the same way.

 

Now that you`re looking at Day Trading, Forex or Currencies trading as a business, you need to learn some valuable statistics about your system so you can improve it`s performance. You would use a Day Trading, Forex or Currencies back testing method. You can`t improve your system unless you have something to measure it against. How could you expect to improve your trading unless you knew what it was you were looking to improve? You can discover these measurements and other valuable information about your trading system, by using a Day Trading, Forex or Currencies back testing plan.

 

There are two ways that you can use a Day Trading, Forex or Currencies back testing plan to back test a system. You can do it manually, which can be a drawn out and labour intensive process, or you can do it with the aid of some software packages. Unfortunately, I recommend you do it by hand when you first start out. You`ll get a much better feel for your system, and you`ll understand exactly how using a Day Trading, Forex or Currencies back testing plan works in all its intricacies. Once you have the Day Trading, Forex or Currencies back testing plan and the in depth knowledge, you could look at finding a software package that does it for you.

 

There are a few major statistics on your Day Trading, Forex or Currencies back testing plan that you need that you will uncover through back testing. The first statistic you need to become familiar with is the R multiple principal. R stands for risk, the risk you take on any trade when you enter the market. The R multiple of a trade is the ratio of the profit or loss compared to the amount of money risked to make the profit or loss.

 

Therefore, if you risk $200 dollars in your initial purchase, and you make a profit of $1,000, you have made five times the amount you risked in the trade. You have an R multiple of five. This statistic gives you a good idea of the relative size of your profits to your losses. You can compare the average size of your winning trades with the average size of your losing trades.

 

The next statistic you`ll find useful is your win to loss ratio. This is how many times you get a winning trade in proportion to how many times you get a losing trade. For example, if you had ten trades, four of those trades were winners, and six were losers, your win to loss ratio is simply four to six. This is your hit rate; you`ll get 40% of your trades correct.

 

With these two simple statistics, you can calculate the average size of your profits and of your losses, multiply these figures with your win to loss ratio, and calculate on average how much money you make with every dollar you risk.

 

For those of you who think this sounds like a too much work, particularly using a Day Trading, Forex or Currencies back testing plan that you need to do to uncover these statistics, consider this scenario: Imagine yourself trading a system that you knew had a win to loss ratio of 60/40. You made profit on every six trades and lost one out of every four. How do you think you would feel, where would your confidence level be, after you traded the system for a little while and you received a string of 11 losses in a row?

 

Now, you know that this system has a win to loss ratio of six to four. Would you have the confidence to open another trade if your system brought up another buy signal after getting 11 trades wrong?

 

Unless you use Day Trading, Forex or Currencies back testing plan to back tested your system, I doubt that your confidence level will remain high. That trading system may be a fantastic profitable system. However, since you didn`t use your Day Trading, Forex or Currencies back testing plan to back test it, you don`t know that historically this system received up to 13 losses in a row, but was still profitable.

 

Here`s another point you may not have picked up unless you used your Day Trading, Forex or Currencies back testing plan. Once you`ve set your money management rules and you begin to trade, you will likely experience a string of losses. Countless times, I`ve had clients who get disheartened by this fact because they don`t understand the nature of setting good management. If you`re adhering to the rules of cutting your losses short and letting your profits run, because you`re cutting your losses short, those trades are going to last for a shorter amount of time.

 

This means once you begin trading the odds of getting losses early in the game are much higher than getting a winning trade. This is particularly true when you consider that many successful trading systems run on a 40/60 win to loss ratio. However, you will never know the intricacies of your system unless you use a Day Trading, Forex or Currencies back testing plan and back test it.

 

Using a Day Trading, Forex or Currencies back testing plan, will help you to understand what works and what doesn`t. It will give you the statistics to gauge the effectiveness of your trades. It fills in your scorecard, and allows you to make improvements. But, you shouldn`t simply believe everything I`ve told you. Instead, you need to prove it to yourself by using some Day Trading, Forex or Currencies back testing plans and back test your system.

 

by David Jenyns

 

http://forexcurrencytradingsystems.com/index.php

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Learn By Hands On Forex Trading: Demo Accounts Vs Mini Accounts

If you are new to Forex, you are likely overwhelmed by the sheer amount of information you are finding about currency trading. Although the concept of trading the currency markets is simple to understand, the actual trading methodologies and understanding of how, why and when trades are executed can be hard concepts to grasp and fully understand. If you aren't aware by now, forex trading is not without substanial risks.

 

There are several schools of thought on how a new trader should progress from learning to actual live trading. In this article we will discuss the best ways for a new trader to learn how to trade the forex and make their first live trades.

 

To start out, I can not stress enough the need for hands on trading. This is why you will often hear it recommended that new traders start trading with a demo account. What is a demo account? Many online forex brokers offer something known as a "demo account" which is a fake account that you can trade until you feel comfortable trading your own funds. Demo accounts behave just like real accounts, the only difference is that the money you are trading is not real and no actual trades are ever executed.

 

The purpose of using a demo account if you are new to Forex trading is to get you comfortable making trades and to help you become familiar with the brokers trading platform. You can cut your proverbial teeth so to speak without risking any of your own funds. This makes demo accounts good for a brand new trader who just wants to see how trading works. There are some drawbacks however to using demo accounts to learn Forex trading.

 

The biggest downside to using a demo account is that you will likely only be able to trade standard size accounts with a demo account. If you intend to trade mini accounts, as many beginning forex traders do, a standard size demo account is going to behave differently than a mini account. Your margins are very different for a standard account versus a mini account. If you become accustomed to trading a standard size account, your trading methodologies will show it. This is because the larger margins offered on standard size accounts allow you to take greater profits from smaller movements in currency prices.

 

The other major downside to trading with a demo account for learning forex is that as a trader, you need to carefully manage the emotional aspects of trading real money. Since a demo account is fake money, detachment is easy to come by. Once you start trading your actual funds, you might just find that your tolerance for risk is much more conservative. Ideally, as you are learning to trade you are also learning how to manage your risks most effectively.

 

So what is a beginning trader to do? What is the best way to learn to trade the Forex, hands on?

 

Once you have read, studied, and completed any courses on Forex trading that you may be taking, you are ready for probationary live trading. The single best way to trade the Forex is to just Do it. Now, this does not mean to jump in and trade a full size account with real money, this would be an enormous risk for a new trader and not a very smart move indeed. What you can do is to find a broker that offers mini accounts. Mini accounts typically start at $200 and typically give you 100:1 leverage. That said, as of this writing, there is one broker (Easy-Forex) that allows you to trade a live mini account for as little as $25.

 

For less than you paid for any of your books, courses or training materials, you can actually try live trading. You will be amazed at how after just a few trades, the stubborn concepts seem to start making sense and you begin to understand Forex trading.

 

Now, if you do decide to begin your trading with one of these tiny mini accounts, you should start by making several very small trades. You should also be trading with the same system or methodology that you are trying to perfect. Your profits will likely only be a few dollars since you are trading on a small margin. This is good, however because the reverse is true as well, you are only ever risking a few real dollars. If you happen to have a series of loosing trades and wipe out the funds in your demo account, you can consider it the least expensive education you could possibly get in actual forex trading. Much better than loosing large sums of funds, and more realistic than trading a demo account. Just learn from the experience, and consider it a good deal on a valuable lesson.

 

Once you are comfortable trading your mini account, you can always have it converted to a regular account (with an additional deposit) if you choose. Overall, it cant be stressed enough, the best way to learn the Forex is to have experience with live hands on trading. This article showed you ways that you can do this at a minimal cost and with the smallest amount of risk.

 

by Amber Lowery

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