Your Beginner's Guide to Forex Trading

Forex Market Outlook on Majors

2008-01-01T02:29:00.001-08:00

INTRA-DAY GBP/USD OUTLOOK: 1.9955

Updating time :30 Dec 2007 22:23 GMT

Cable's rebound after Friday's cross-inspired
retreat fm 2.0023 to 1.9903 suggests further choppy
consolidation wud be seen, however, a rise abv 1.99
97/00 is needed to signal the upmove fm 1.9753 to
retrace early decline has resumed to 2.0023/31.

Below 1.9903 wud bring weakness twds 1.9880
but reckon 1.9850 (prev. res) wud remain intact...

Range Forecast
+1.9955 / 1.9985+

Resistance/Support
R: 1.9979/2.0000/2.0023
S: 1.9903/1.9880/1.9850

Forex Market Outlook on Majors

2008-01-01T02:29:00.000-08:00

EUR/USD daily outlook

2007-12-29T09:10:00.000-08:00

Recommended trades: Long in the 1.4615 area, stop at 1.4585, objectives at and above 1.4665. Extended objectives may aim towards 1.4700 if 1.4660 will be tested and it won't hold.

The Euro continued its recovery and climbed higher, breaking the resistance formed in the middle of the 1.45 area and established support near the 1.4600 mark. Support is now seen at 1.4590 backed by 1.4560, 1.4515 and 1.4475. Resistance starts at 1.4640 followed by 1.4660, 1.4700 and 1.4740. Bullish momentum is now seen on the daily charts and the hourly studies are positive as well. The Euro recovery is likely to continue, the pair aiming towards the mid-term resistance at 1.4740. If the said resistance will be broken, then we will start to look higher once again focusing on the all-time highs in the 1.49 area. On the other side, on a potential retracement the Euro will face support at 1.4560 which is also the 50% fib retracement of yesterday's upward move from 1.4475 to 1.4640. Although the upside is favored nowadays we must be careful on potential retracements aiming towards the first two support levels at 1.4590 and 1.4560. Current quote is 1.4635 @07:12 GMT

2007-12-29T09:09:00.000-08:00

FXDREAM EUR/USD
Date: Thu, 27 December 2007 13:10:05
Resistance levels: 1.4550/1.4600/1.4640
Support levels: 1.4520/1.4470/1.4410
Merry Christmas!!!!
EUR/USD has bounced further towards 1.4600 over the last trading session on thin volumes as US Durable Goods Orders numbers came out much below expectations Further upmove towards 1.4640 is likely to be seen over today and tomorrow First immediate Resistance comes at 1.4600. On downside below 1.4470 turns price back towards 1.4410 in mid term First Support comes in the 1.4520-15 area
Strategy-neutral.

FXDREAM GBP/USD
Date: Thu, 27 December 2007 13:10:04
Resistance levels: 1.9950/2.0000/2.0070
Support levels: 1.9850/1.9750/1.9700
GBP/USD has broken beyond 1.99 first Resistance earlier today on thin volumes The break above 1..99 first strong Resistance may reverse price towards 2.0070 over today and tomorrow and 2.0280 in longer term First Resistance comes around 1.9950 On the other side, a break below 1.9850-45 area is needed for resuming the dontrend towads 1.9750 bottom
Strategy-neutral.

FXDREAM USD/JPY
Date: Thu, 27 December 2007 13:10:03
Resistance levels: 114.80/115.30/115.70
Support levels: 114.00/113.20/112.80
USD/JPY has bounced to 114.70 high earlier today before US data Release No change in our view. The uptrend remains intact for test towards 114.80 and 115.70 in longer term. On the other side, first Support comes at 114.00 Below eases price back towards 113.20 later today. The key one remains at 112.80.
Strategy-neutral.

FXDREAM USD/CHF
Date: Thu, 27 December 2007 13:10:02
Resistance levels: 1.1500/1.1580/1.1640
Support levels: 1.1400/1.1370/1.1300
USD/CHF has dropped below 1.1500-1490 previous Support area earlier today after disappointing US data The break below 1.1500 reverses the bias for pullback towards 1.1370 stronger one in mid and longer term. First target is at 1.1400 On the upside, a break above 1.1490-1.1500 region again is needed for reversal towards 1.1580 and higher.
Strategy-neutral.

FXDREAM EUR/JPY
Date: Thu, 27 December 2007 13:10:02
Resistance levels: 166.50/167.30/167.60
Support levels: 165.40/165.00/164.10
The Cross has hold above 165.40 first important Support over the last trading session bouncing towards 166.50 next target In mid and longer term further upmove towards 167.30 and 167.60 is not ruled out.First Resistance comes around 166.50 On downside, below 165.40 first crucial Support resumes the downtrend towards 164.00 Support
Strategy-neutral

Forex Market Outlook on Majors

2007-12-27T01:13:00.000-08:00

INTRA-DAY GBP/USD OUTLOOK: 1.9887

Updating time :27 Dec 2007 05:56 GMT

As cable has risen after finding renewed buying
abv 1.9850 (now sup), suggesting the rise fm this
week's low at 1.9753 to retrace recent decline wud
extend to 1.9905/10 n possibly twds 1.9928 but over
bought condition shud cap upside below 1.9950.

Buy on dips with stop as indicated n only below
1.9828 wud abort intra-day bullishness...

Range Forecast
1.9870 / 1.9895

Resistance/Support
R: 1.9895/1.9928/1.9985
S: 1.9850/1.9828/1.9805

USD/JPY Daily Outlook

2007-12-24T15:48:00.001-08:00

INTRA-DAY USD/JPY OUTLOOK: 114.09

Updating time :23 Dec 2007 22:21 GMT

Friday's rally abv 113.60 (prev. res, now sup)
confirms recent uptrend fm 107.22 has 'finally' re-
sumed n further gain to 114.40/50 is now envisaged
after minor consolidation but near term o/bot condi
tion shud cap price below 114.75/80.

Incline to buy dlr on dips as only below 113.60
wud signal a temp. top is made n risk 113.27...

Range Forecast
113.90 / 114.21

Resistance/Support
R: 114.21/114.50/114.79
S: 113.60/113.27/112.74

Forex Market Outlook on Majors

2007-12-24T15:47:00.000-08:00

INTRA-DAY GBP/USD OUTLOOK: 1.9834

Updating time :24 Dec 2007 04:30 GMT

As cable has recovered after testing good sup
at 1.9810 in Asia, further consolidation abv there
is seen with mild upside bias n marginal gain abv
1.9845 (Aust.) can't be ruled out but 1.9895 shud
remain intact n yield another retreat.

Sell on further rise n only below 1.9810 wud
confirm decline has finally resumed, 1.9770/80...

Range Forecast
1.9820 / 1.9845

Resistance/Support
R: 1.9845/1.9895/1.9928
S: 1.9810/1.9748/1.9660

EUR/USD Daily Outlook

2007-12-24T15:46:00.000-08:00

INTRA-DAY EUR/USD OUTLOOK: 1.4384

Updating time :24 Dec 2007 04:28 GMT

Although euro has moved higher fm 1.4368 (Aust.)
due to cross buying n consolidation with mild up-
side bias is seen, abv 1.4411 is needed to extend
the corrective rise fm last week's low at 1.4310
twds prev. res at 1.4436 later.

Buy on dips with stop below 1.4348 (Friday's NY
low), break risks 1.4325/30 but 1.4310 shud hold...

Range Forecast
1.4370 / 1.4395

Resistance/Support
R: 1.4411/1.4436/1.4482
S: 1.4368/1.4348/1.4310

Daily Forecast by FXDream

2007-12-22T13:10:00.000-08:00

FXDREAM EUR/USD
Date: Fri, 21 December 2007 13:10:05
Resistance levels: 1.4400/1.4450/1.4520
Support levels: 1.4350/1.4310/1.4270
Happy Christmas!!!
EUR/USD has held above 1.4350 first Suport earlier today on thin volumes before Christmas US Core PCE Index came out the same as consensus at 0.2% The bias remains bearish as long as price is below 1.4450 for retest of .4310 lows and even lower towards 1.4270 in mid term First minor Support comes at 1.4350. On the other side, a break above 1.4450 is needed for reversal back towards 1.4520 and 1.4580 .In short term as long as price is above 1.4350 further recovery to 1.4450 is not ruled out later today
Strategy-neutral.

FXDREAM GBP/USD
Date: Fri, 21 December 2007 13:10:04
Resistance levels: 1.9900/1.9950/2.0000/2.0070
Support levels: 1.9810/1.9740/1.9700
GBP/USD has remaimed below 1.9900 first Resistance over the last trading sessions despite stronger than expected UK Retail Sales numbers We have booked 60 pip profit for the first part and 120 pip for the rest of our Short position. The bias remains bearish for further downmove towards 1.9810 yesterday bottom and even 1.9740 in longer term First immediate Support comes at 1.9810 On the other side, a break above 2.0070 strong Resistance is needed for reversal towards 2.0200 and 2.0280 in longer term First Resistance comes around 1..99
Holding GBP/USD Short at 1.9950,Stop-loss-1.9950( up from 1.9990) ,Take profit-1.9890( 1.9830)

FXDREAM USD/JPY
Date: Fri, 21 December 2007 13:10:03
Resistance levels: 113.60/114.00/114.80
Support levels: 112.80/112.20/111.50
USD/JPY has bounced towards 113.50-60 up boundery of the 112.80-113.50-60 previous high range Below 112.80 first immediate Support may cause pullback down to 112.20 and even 111.50 bottom in longer term On the other side, further upmove towards 114.00 over the next trading sessions and even 115.70 in longer term may be seen First Resistance comes in the 113.50-60 region
Strategy-neutral.

FXDREAM USD/CHF
Date: Fri, 21 December 2007 13:10:02
Resistance levels: 1.1575/1.1600/1.1640
Support levels: 1.1500/1.1450/1.1370
USD/CHF has made pullback towards 1.1500 Support in Asia No change in our view. The bias remains positive for further upmove towards 1.1600 and 1.1650 in mid term and longer term First Resistance comes around 1.1580 yesterday highs . On the other side, first important Support comes at 1.1500 Below reverses the bias for pullback towards 1.1370 stronger one in mid and longer term. We prefer to stay aside for now
Strategy-neutral.

FXDREAM EUR/JPY
Date: Fri, 21 December 2007 13:10:01
Resistance levels: 163.50/164.00/164.60
Support levels: 162.40/161.70/161.20
The Cross has risen further towards 163.50 important Resistance level earlier today No change in our view. On the upside, a break above 163.50 first Resistance again is needed for reversal towards 164.00 and 165.30 previous high in longer term .First Resistance comes around 163.50 now On downside, below 162.40 resumes the downtrend towards 161.70 yesterday lows and 161.20 bottom in longer term
Strategy-neutral

Daily Market Comments

2007-12-22T12:25:00.001-08:00

forex, currency trading,
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real time trading, real time currency exchange rate, forex trading system,
forex news, spot forex, forex traders, online currency trading.

Economic Indicator Forecast

2007-12-22T11:46:00.000-08:00

2007-12-15T12:56:00.000-08:00

FXDREAM EUR/USD
Date: Fri, 14 December 2007 13:10:05
Resistance levels: 1.4520/1.4580/1.4670
Support levels: 1.4430/1.4370/1.4320
EUR/USD has dropped sharply down below 1.4520-15 our target area earlier today as US Core Consumer Price Index came out better than expected .The bias is bearish with next target at 1.4370 maybe next week and even 1.4300 On the other side, first important Resistance comes at 1.4520, however , a break abive 1.4580 is needed for reversal back towards 1.4670.
Strategy-neutral.

FXDREAM GBP/USD
Date: Fri, 14 December 2007 13:10:04
Resistance levels: 2.0280/2.0350/2.0450
Support levels: 2.0180/2.0100/2.000
GBP/USD has dropped sharply down to 2.0180 key Support and previous bottom after stronger than expected US CPI earlier Below 2.0180 opens territory for test of 2.00 maybe next week. Next down target comes at 2.0100. On the other side, first Resistance comes at 2.0280. However, a break above 2.0350 is needed for upmove towards 2.0450 and higher
Strategy-neutral

FXDREAM USD/JPY
Date: Fri, 14 December 2007 13:10:03
Resistance levels: 113.40/114.00/114.80
Support levels: 112.50/112.00/111.50
USD/JPY has found important Support in the 111.50-45 area yesterday and rebounded for test of 113.40 target over the last trading sessions as it was suggested in our previous reports . The bias remains bullish for test of 114.00 and 114.80 over the next trading sessions next week. First immediate Resistance comes around 113.40 highs On the other side, first important Support comes around 112.50 ahead of 111.50-45 key one
Strategy-neutral.

FXDREAM USD/CHF
Date: Fri, 14 December 2007 13:10:02
Resistance levels: 1.1540/1.1600/1.1650
Support levels: 1.1450/1.1370/1.1300
USD/CHF has bounced further to 1.1540 ( beyond our next target at 1.1480) earlier today as it was suggested after stronger than expected US CPI We have booked 55 pip profit over the first part and 110 pip for the rest of our Long position The bias remains positive for further upmove towards 1.1600 and 1.1650 next week First Resistance comes at 1.1540 . On the other side, first Support comes at 1.1450 now ahead of 1.1370 stronger one
Holding USD/CHF Long at 1.1370,Stop-loss-1.1370( up from 1.1330) ,Take profit-1.1425( 1.1480)

FXDREAM EUR/JPY
Date: Fri, 14 December 2007 13:10:01
Resistance levels: 164.00/164.60/165.30
Support levels: 163.20/163.00/162.40
The Cross has fallen down to 163.25-20 area Support earlier today as it was suggested in our previous report . Below 163.20 reverses the bias towards 162.40 and 162.00 next week. On the upside, a break above 164.00 first Resistance again is needed for reversal towards 165.30 previous high.
Strategy-neutral

Forex Strategy Building

2007-12-08T14:43:00.001-08:00

FOREX Trading Strategies
The world of trading and investment can be as frustrating as it can be rewarding! And Forex (Foreign Exchange) is no exception - often described as risky, profitable and complicated.

How To Loose Everything - The Worst Forex Trading Strategy Ever That You Might Be Using
You may be wondering, `Why would David Jenyns write about the worst Forex trading strategy around?`

Choosing A Forex Strategy
Technical analysis and fundamental analysis are the two basic areas of strategy in the FOREX market which is the exact same as in the equity markets.

Forex Trading: The Perfect Forex Trading System
Trading the Forex market has became very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market?

Trying Forex Trading with the Best Strategy and Approach
With the day things are today, more people are getting interested in investing their money to make them grow faster.

Your Guide to Learning a Forex Trading System
There are a great number of people in America that are interested in investing in order to make a tidy profit.

Why You Need To Develop Your Own Trading System
There are many trading systems and strategies out there. There are many free ones printed in trading articles, journals, books and on trading-related websites.

Profitable Forex Strategies and Techniques
This article is mostly for people that already know what the Forex market is and at least know the basic concepts.

Forex Forecasts - You Never Know What You Will Benefit From
Possible risks and profits to be made can always be predicted if traders would only have more accurate Forex forecast to base their trade and decisions upon.

How I became a successful part time trader
I am Joe Chalhoub, a computer engineer, Forex trader and strategy builder. I began trading currencies 3 years ago. The first 3 months trading were complete failure, I remember I lost all my money and I was about to quit, but I couldn't, I felt if I quit now maybe I am missing the chance of having my own business.

Forex-Forecasting
This article provides insight into the two major methods of analysis used to forecast the behavior of the Forex market. Technical analysis and fundamental analysis differ greatly, but both can be useful forecast tools for the Forex trader

Forex General Tips

2007-12-08T14:15:00.001-08:00

5 Things You Must Do If You Want To Attain Financial Freedom Through Forex Trading
With the amazing growth of the forex market, you are going to see an astounding amount of traders lose all their money.

Real Forex Traders Learn to Like Losses
As a forex trader you have to learn how to take losses. Period. Don't be a crybaby. Learn how to take losses.

Forex Trading Guide- How to deal with Forex Trading
Buying and selling of different currencies of the world is known as forex trading. Forex or foreign exchange market is the largest trading market in the world.

Forex Trading Tips
Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

Day Trading Forex Market Behaviour
Technology advances like the internet have spawned a new craze, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market.

Managing The Forex Accounts For You
Managed forex accounts are a boon for those who don't have the time to devote to the foreign exchange dealing.

The Trading Teacher
When I studied the principles of investing in university, I was taught that the price of a share reflected the value of the company.

Forex Training: Deadly Forex Mistakes That Assure Failure
Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

Boost FOREX Trading Profits Using These 3 Simple Guidelines
Forex trading is nothing more than direct access trading of different types of foreign currencies.

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.

How The Matrix Will Boost Your Forex Profits?
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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?

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.

Forex Trading Phsychology

2007-12-08T13:33:00.000-08:00

Forex: Why Psychiatrists Make Better Traders Than Expert Economists?
It should be noted that millionaire traders, Elder, Williams and some others are in fact professional psychiatrists.

Emotions And Forex Trading Don't Mix
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Forex Market Trading And The Mind Games
Mind Games defined: Mind Games are a kind of social interaction where participants try to screw with one anothers' heads.

Forex: No psychological limitations
Back when I first started learning about investing, I decided to start from the beginning and read basic books on personal finance as well as "guides" for understanding all of the investment world in a nut shell. Most of these authors were very knowledgeable and informative, but their investment advice was far too conservative for my taste.

Trading Psychology: Mistakes in a Trading Environment
When it comes to trading, one of the most neglected subjects are those dealing with trading psychology.

Forex Trading: The Fear Factor
Market knowledge and ability to understand analysis will only get you so far in forex trading, but without the nerve to actively compete risking your own money in the process you can never become a successful trader.

FOREX trading psychology: Learn to see the line between the trading plan and your emotional impulses
The vast majority of Forex education organizations fail to address the only true characteristic of a market place, the human nature.

Your FOREX trading potential can be predicted by looking at your daily emotional behavior
As hundreds and thousands of articles have been written on the subject of trading the markets, and with the emergence of new financial instruments every day, I feel compelled to put together a dissertation on the most important element of trading, the emotional effect.

Forex : How To Handle A String Of Investment Losses
Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing

Why do the best trading systems fail?
Why do Forex Traders fail? I have a theory.

Forex Money Management

2007-12-08T13:06:00.001-08:00

The Sneaky Way To Managing Losses In Your Forex Trading
One of the cardinal rules of Forex trading is to keep your losses small. With small Forex trading losses, you can outlast those times the market moves against you, and be well positioned for when the trend turns around.

Money Management Tips For Trading On The Forex
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FOREX - Dealing With Your Losses
One of the most important rules of Forex trading is to keep your losses as small as you possibly can.

The Costs Of Trading
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FOREX: Exiting positions at a right time
The presented article covers one of the most important (in author's opinion) aspects of trading in general and Forex trading in particular - managing of orders and positions.

Protective Puts
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Forex Technical Analysis

2007-12-08T12:32:00.000-08:00

Pivot Points in Forex: Mapping your Time Frame
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What's Fibonacci Forex Trading?
Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques.

What's the .382 Fibonacci Ratio in Forex Trading?
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How To Read Forex Charts: 5 Things You Must Know
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Forex Traders Need To Know About Crossing Currency
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Forex Trading Indicators and the Ever Changing Market Conditions
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Relative Strength Analysis In Forex Trading
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Trading Trend And Ranges In Today's Forex
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Better Understand Technical Analysis and Some Indicators
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Gann Angles - A Unique Powerful Tool For Trading Profits
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Discover Some Magic to Beat The Forex: The Elliott Wave Theory for Forex Markets
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Forex Information: How To Draw DeMark Trendlines
When searching for Forex information on the internet you are likely to find articles relating to trendlines and trendline analysis.

2007-12-05T04:28:00.001-08:00

FXDREAM EUR/USD
Date: Tue, 4 December 2007 13:10:05
Resistance levels: 1.4780/1.4850/1.4900
Support levels: 1.4700/1.4630/1.4580
EUR/USD has broken above 1.4710 first Resistance that results in a rapid move towards 1.4780-85 next Resistance area No important fundamental news tomorrow No change in our view. The uptrend remains intact for retest of 1.4900-10 highs and even 1.4965 record highs in longer term A break above the Resistance around 1.4780 is needed for resuming the uptrend towards 1.4850 and 1.4900. On the other side, first Support comes around 1.4700 ahead of 1.4630 yesterday bottom. .
Strategy-neutral.

FXDREAM GBP/USD
Date: Tue, 4 December 2007 13:10:04
Resistance levels: 2.0650/2.0700/2.0840
Support levels: 2.0520/2.0450/2.0420
GBP/USD has remained ranged around 2.0600 over the last trading sessions Unfortunately, our Long position has been stopped at 2.0620 earlier today with small 30 pip loss . On the upside, a break above 2.0680 first Resistance is needed for resuming the uptrend towards 2.0840 up target. In short term On the other side, as long as price is below 2.0680 ease back to 2.0550-20 area later today and even 2.0450 in mid term may be seen .
Strategy-neutral.

FXDREAM USD/JPY
Date: Tue, 4 December 2007 13:10:03
Resistance levels: 110.20/110.70/111.20
Support levels: 109.50/109.00/108.30
USD/JPY has broken 110.20 previous Support earlier today, falling further towards 109.50 stronger Support as it was suggested in our previous reports On downside, first important Support comes around 109.50 now . Below 109.50 causes reversal in the bias towards 109.00 and even 108.30-25 area On the upside,a break above 110.15-20 first Resistance area is needed for resuming the upmove towards 111.20 and 111.70.
Strategy-neutral.

FXDREAM USD/CHF
Date: Tue, 4 December 2007 13:10:02
Resistance levels: 1.1250/1.1320/1.1350
Support levels: 1.1150/1.1100/1.1070
USD/CHF has broken below 1.1250 down towards 1.1160-50 area as it was suggested in our previous report after failing to penetrate above 1.1320 previous high and key Resistance earlier today . Above opens territory for further upmove towards 1.1400 and 1.1450 in longer term First important Resistance comes at 1.1250. On downside, first Support comes around 1.1160 daily lows. Below may ease price further towards 1.1070 over the next trading session
Strategy-neutral.

FXDREAM EUR/JPY
Date: Tue, 4 December 2007 13:10:01
Resistance levels: 162.00/162.60/163.80
Support levels: 161.50/161.00/160.30
The Cross has fallen to 161.00Support and our next target over the last trading session. as it was suggested . The up target remains at 164.30 in longer term First immediate Resistance comes around 162.40 now . A break again above 162.40 is needed for resuming the upmove towards 163.80 highs . On downside, as long as price is below below 162.00 retest of 161.00 and even 160.30 is not ruled out
Strategy-neutral

Forex-Forecasting

2007-12-05T04:12:00.000-08:00

This article provides insight into the two major methods of analysis used to forecast the behavior of the Forex market. Technical analysis and fundamental analysis differ greatly, but both can be useful forecast tools for the Forex trader. They have the same goal - to predict a price or movement. The technician studies the effect while the fundamentalist studies the cause of market movement. Many successful traders combine a mixture of both approaches for superior results.

Technical analysis

Technical analysis is a method of predicting price movements and future market trends by studying charts of past market action. Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.
Technical analysis is built on three essential principles:

1. Market action discounts everything ! This means that the actual price is a reflection of everything that is known to the market that could affect it, for example, supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes.

2. Prices move in trends Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. Also, there are recognized patterns that repeat themselves on a consistent basis.

3. History repeats itself Forex chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time.

Forex charts are based on market action involving price. There are five categories in Forex technical analysis theory:

Indicators (oscillators, e.g.: Relative Strength Index (RSI)
Number theory (Fibonacci numbers, Gann numbers)
Waves (Elliott wave theory)
Gaps (high-low, open-closing)
Trends (following moving average).

Some major technical analysis tools are described below:

Relative Strength Index (RSI):
The RSI measures the ratio of up-moves to down-moves and normalizes the calculation so that the index is expressed in a range of 0-100. If the RSI is 70 or greater, then the instrument is assumed to be overbought (a situation in which prices have risen more than market expectations). An RSI of 30 or less is taken as a signal that the instrument may be oversold (a situation in which prices have fallen more than the market expectations).

Stochastic oscillator:
This is used to indicate overbought/oversold conditions on a scale of 0-100%. The indicator is based on the observation that in a strong up trend, period closing prices tend to concentrate in the higher part of the period's range. Conversely, as prices fall in a strong down trend, closing prices tend to be near to the extreme low of the period range. Stochastic calculations produce two lines, %K and %D that are used to indicate overbought/oversold areas of a chart. Divergence between the stochastic lines and the price action of the underlying instrument gives a powerful trading signal.

Moving Average Convergence Divergence (MACD):
This indicator involves plotting two momentum lines. The MACD line is the difference between two exponential moving averages and the signal or trigger line, which is an exponential moving average of the difference. If the MACD and trigger lines cross, then this is taken as a signal that a change in the trend is likely.

Number theory:
Fibonacci numbers: The Fibonacci number sequence (1,1,2,3,5,8,13,21,34...) is constructed by adding the first two numbers to arrive at the third. The ratio of any number to the next larger number is 62%, which is a popular Fibonacci retracement number. The inverse of 62%, which is 38%, is also used as a Fibonacci retracement number.

Gann numbers:
W.D. Gann was a stock and a commodity trader working in the '50s who reputedly made over million in the markets. He made his fortune using methods that he developed for trading instruments based on relationships between price movement and time, known as time/price equivalents. There is no easy explanation for Gann's methods, but in essence he used angles in charts to determine support and resistance areas and predict the times of future trend changes. He also used lines in charts to predict support and resistance areas.

Waves
Elliott wave theory: The Elliott wave theory is an approach to market analysis that is based on repetitive wave patterns and the Fibonacci number sequence. An ideal Elliott wave patterns shows a five-wave advance followed by a three-wave decline.

Gaps
Gaps are spaces left on the bar chart where no trading has taken place. An up gap is formed when the lowest price on a trading day is higher than the highest high of the previous day. A down gap is formed when the highest price of the day is lower than the lowest price of the prior day. An up gap is usually a sign of market strength, while a down gap is a sign of market weakness. A breakaway gap is a price gap that forms on the completion of an important price pattern. It usually signals the beginning of an important price move. A runaway gap is a price gap that usually occurs around the mid-point of an important market trend. For that reason, it is also called a measuring gap. An exhaustion gap is a price gap that occurs at the end of an important trend and signals that the trend is ending.

Trends
A trend refers to the direction of prices. Rising peaks and troughs constitute an up trend; falling peaks and troughs constitute a downtrend that determines the steepness of the current trend. The breaking of a trend line usually signals a trend reversal. Horizontal peaks and troughs characterize a trading range.

Moving averages are used to smooth price information in order to confirm trends and support and resistance levels. They are also useful in deciding on a trading strategy, particularly in futures trading or a market with a strong up or down trend.

The most common technical tools:

Coppock Curve is an investment tool used in technical analysis for predicting bear market lows.

DMI (Directional Movement Indicator) is a popular technical indicator used to determine whether or not a currency pair is trending.

Unlike the fundamental analyst, the technical analyst is not much concerned with any of the "bigger picture" factors affecting the market, but concentrates on the activity of that instrument's market.

Fundamental analysis

Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. In practice, many market players use technical analysis in conjunction with fundamental analysis to determine their trading strategy. Fundamental analysis focuses on what ought to happen in a market. Factors involved in price analysis: Supply and demand, seasonal cycles, weather and government policy.
Fundamental analysis is a macro or strategic assessment of where a currency should be trading based on any criteria but the movement of the currency's price itself. These criteria often include the economic condition of the country that the currency represents, monetary policy, and other "fundamental" elements.

Many profitable trades are made moments prior to or shortly after major economic announcements.

by Easy Forex

2007-12-01T13:03:00.000-08:00

FXDREAM EUR/USD
Date: Fri, 30 November 2007 13:10:05
Resistance levels: 1.4780/1.4850/1.4900/1.4965
Support levels: 1.4710/1.4680/14660
EUR/USD has retested 1.4780 first immediate Resistance earlier today Today focus will be on US Core PCE Index at 13:30 GMT The consensus is at 0.2% No change in our view. The uptrend remains intact for retest of 1.4900-10 highs and even 1.4965 record highs in mid term A break above first Resistance around 1.4780 is needed for resuming the uptrend towards 1.4850 and 1.4900. On the other side, further downmove towards first important Support at 1.4710 and even 1.4675 key one may be seen later today.
Strategy-neutral.

FXDREAM GBP/USD
Date: Fri, 30 November 2007 13:10:04
Resistance levels: 2.0700/2.0750/2.0840
Support levels: 2.0600/2.0520/2.0450
GBP/USD has found Resistance at 2.0700 earlier today after weak UK Consumer Confidence numbers Below 2.0600 key Support reverses the uptrend towards 2.0550-20 bottom area later today and even 2.0450 in mid term . First Support comes around 2.0600. On the upside, a break above 2.0700 again is needed for resuming the uptrend towards 2.0840 and 2.0880 up targets. Hold cautious Long for squeeze above 2.0700 later today
Holding GBP/USD Long at 2.0665,Stop-loss-2.0625,Take profit-2.0725( 2.0800)

FXDREAM USD/JPY
Date: Fri, 30 November 2007 13:10:03
Resistance levels: 111.00/111.70/112.00
Support levels: 110.20/109.50/109.00
USD/JPY has reached our target at 110.70 earlier today as it was suggested No change in our view. As long as price holds above 109.00 key Support further recovery towards 111.70 may be seen over the next trading sessions First Resistance comes at 111.00 . On downside, first minor Support comes around 110.20 ahead of 109.50 key one. Below 109.50 causes reversal towards 109.00 and even 108.30-25 area
Strategy-neutral.

FXDREAM USD/CHF
Date: Fri, 30 November 2007 13:10:02
Resistance levels: 1.1200/1.1230//1.1300
Support levels: 1.1100/1.1070/1.1020/1.0960
USD/CHF has retested 1.1200-30 strong Resistance area earlier today . Above 1.1200 first Resistance may lead price further towards 1.1300 later today and on Monday . On downside, below 1.1150 first immediate Support turns price back towards 1.1070 key one .In longer term, however, the bias remains bearish for retest of 109.60 and 108.90 bottoms.
Strategy-neutral.

FXDREAM EUR/JPY
Date: Fri, 30 November 2007 13:10:01
Resistance levels: 163.80/164.30/165.00
Support levels: 162.60/162.00/161.00
The Cross has risen beyond 163.60 previous high and our target earlier today after the break above 163.00 as it was suggested in our previous report.. The up target remains at 164.30 in mid term First Resistance comes at 163.80 daily highs . On downside, there is important Support around 162.00 now Below turns price back to 161.00 key one and even towards 160.00 and 159.60 in mid term First minor Support is at 162.60
Strategy-neutral.

How I became a successful part time trader

2007-12-01T11:33:00.000-08:00

Introduction

I am Joe Chalhoub, a computer engineer, Forex trader and strategy builder. I began trading currencies 3 years ago. The first 3 months trading were complete failure, I remember I lost all my money and I was about to quit, but I couldn't, I felt if I quit now maybe I am missing the chance of having my own business. So I stopped trading and began observing, studying, analyzing and practicing.

Observing: I began observing the market, what causes movement, reaction, ranging and trading.

Analyzing: I began working with technical and fundamental analysis; how each analysis can predict and redirect the market and how I can use them both for my own benefit. I will talk about these analyses in the following paragraph.

Reading: I bought Forex Trading Books and read them, books explaining different strategies and tactics used by experienced traders.

Practicing: I created free accounts and began trading virtually and each technique I invent I tried it and monitored its performance and validity.

After one year of studies, analysis and practicing trading techniques and after many failure and frustration I reached my own strategy and it is working very well and each month my profit is positive.

Implementation

I reached my targets and I built a successful strategy, but that's not enough; to make profit I must not miss any opportunity and forex market is full of opportunities because it is the most active market in the world, for that reason I must sit all time and watch and detect opportunities all day long from Monday to Friday.

How to resolve this problem, I can't sit and observe the market hours and hours, I have my career and my family, so I thought I must program my strategy, let the Information Technology do the hard work for me, and nobody is discipline as a software, so I created an artificial intelligent software which collects data from the market and implement my strategy on this data and detect opportunities 24/24.

This program analyses fundamental and technical data and generates forex signals which are forwarded automatically to my broker platform where the signals are executed automatically and forwarded also to my website members. All this is done without my interfering, I just run the program, it analyses and makes its decisions (Buying, Selling or stay aside).

How to succeed in Forex Trading

Five over hundred traders succeed in this business, what differentiate those five successful from the 95 others is one thing, it is the HARD WORK. Forex trading is not an easy business, and who tells you that he can make you rich in one night is one of those 95. Only one thing can make you a successful trader, HARD WORK, and nothing else. Don't rely on other traders or advisors to help you, rely and have confidence on yourself.

Don't begin trading quickly, the forex market will not go anywhere, it will stay forever, give yourself 6 to 12 months of studies, analysis, readings, practice and build your own strategy before begin real trading, it will take a lot of time and dedication but at the end you will reach your target.

Strategy

I will not reveal my full strategy but I will reveal some techniques I use which help traders in their trades.

My strategy follows the following tips and techniques:

1 - Discipline: Put criteria for your trades, watch the market and only trade when criteria are met, if they are not met do not trade. My program is the most disciplined trader, it takes care of all of this, it monitors the market and only trade if only criteria are met, and the second advantage of this is the elimination of the fear factor, it enters a trade when it sees it is good to enter and fear nothing.

2 - Money management: It's the main key for good trading, I exit all trades and stop trading for a specific day if I lost -60 pips, in the other hand I put stop loss for my trades if I reached +25 pips profit, in that case profit will not get under +25 pips and it has open target, and all I have to do is go out and have fun.

3 - No trades for now: The most important thing in trading is sometime not to trade, I take this decision after looking to my charts and see that there is not enough volatility or there is no enough reports will be released for today and it is better to wait until market is more volatile. I advise traders not to trade during the first days of the month, personally I begin trading at the first Friday of the month when the "NonFarm payroll" report will be released.

4 - Analysis: I use fundamental and technical analysis while trading. Fundamental defines the trend of the market and the technical analysis is used after the definition of the trend. I trade the news by analyzing programmatically the released data for a specific report and generate signals which are executed immediately on the trading platform and forwarded simultaneously to my members.

Fundamental and technical analysis must be used together, if one is used without the other this will lead to failure.

5 - Technical indicators: In the forex market there is a lot of indicators which are used by many traders. I use ADX, Bollinger Bands to identify trends and volatility; RSI to identify an over bought or sold and Moving Average to identify a signal. And the most important technique is FIBONACCI, I advise traders to implement this technique and use it to confirm trades.

Finally, I must say that Forex is not easy, and many times we feel that someone is doing a conspiracy on us to take our money, but the truth is nothing is impossible, and others successful traders are not more intelligent than us and they are not genius from other planet, the fact is the more you work the more you become closer to become good trader. Do not quit quickly because this business deserves hard work and dedication.

By Joe Chalhoub

Forex Forecasts - You Never Know What You Will Benefit From

2007-12-01T11:27:00.000-08:00

Possible risks and profits to be made can always be predicted if traders would only have more accurate Forex forecast to base their trade and decisions upon. Forex forecasts are only one way of keeping up with the volatile Forex market. Success will depend the most in knowing what and who will affect the rate changes.

The Forex market has already been through a lot of ups and downs that even fortune tellers would have difficulty guessing what will be its next movement. Making a Forex forecast can be helpful but can also be too risky. Besides, doing it is not that easy also.

In Forex forecasts, nothing specific is given. The traders are not made to hope high and expect more. If you have seen or heard a Forex forecast, be sure to check on some projected rate fluctuations whenever and wherever possible so you would have an idea it the Forex forecast shows a likely possibility to be true or not.

Staying in touch and up-to-date with the latest news and happenings around the globe and information about the Forex currency can help traders determine when is the best time to buy, sell and stay away from a particular market. All these things are important in the performance of your trade. Take note of some Forex forecasts if only to serve as guide whenever you are in a situation that you find hard to make a decision upon.

How can one benefit from Forex forecasts?

There are some companies that are offering Forex forecast information as a subscription that traders can avail of. For those who do not have enough patience and browse for information in the internet, this Forex forecast information would be their alternative.

No one said that there is a 100% accuracy in these Forex forecasts. And no one told traders that they should also believe them 100%. If you want to have more degree of accuracy in the Forex forecast, you could always find one with the most accurate percentage rate.

You could look for something or someone that offers free information or a trail period for you to test the degree of their ability to give accurate forecast about the Forex market. There are also some sites that send out Forex forecast to emails that you may want to try out just so you will choice to choose from if you decide to avail the services of some of them.

Relying only on one Forex forecast is not the thing to do. You should at least have some more choices in the process of making an investment decision. Try to get more Forex forecast from sources that are rampant online and offline so you would not stick to just one.

The thing to remember is that your investments are your future and you have already worked too hard to just let it all down the drain. Do not put the future of your Forex trade into the hands of only person. Try to get several Forex forecast and choose the best one that you think has great ounces of accuracy up their sleeves.

Before putting the future of your investments into the hands of those offering Forex forecasts, make it a point to check out the latest that is happening in the Forex trading and see if the trend is likely to go with what the predictions are telling about.

If you think more about it, people doing Forex forecasts would not be out there giving bad forecasts because their reputation is the one at stake there. They surely would not want to ruin the image they have by giving false predictions about things that they know people will listen to, would they?

Like they say, traders should not believe all that is written in Forex forecasts. Some but not all. There are still decisions to be made that will be based upon the trader itself and no amount or accuracy of Forex forecasts can make that decision for them.

Just to be on the right side of things, always make sure and do your own research that will back up the Forex forecast you actually think is going to work. You never know what it will lead to...

by Kevin Anderson

Profitable Forex Strategies and Techniques

2007-12-01T11:24:00.000-08:00

This article is mostly for people that already know what the Forex market is and at least know the basic concepts. If you have no clue about what this market is or you have never heard about it, I will give you a very brief explanation bellow.

Forex is the acronym for Foreign Exchange Market. This is the biggest and most liquid market of the entire world today. One to three trillion dollars exchange hands at Forex every day. That's a huge amount of money. No stock market exchange of any country come close to this.

This market is huge. It is a sea of money full of sharks and dangerous waters, but it is also the only market where you at least hypothetically can make $1,000,000 in two weeks starting with only $1,000.

I say hypothetically because what happens often is that people blindly gamble their money at Forex without knowing anything about it and they lose their shirt. That's why I say to you: be careful! This market is profitable, but you need to learn the basics well, do your homework and demo trade a lot.

Just remember that 95% of traders lose money, 5% make it and less than 1% become rich at Forex. The nice thing about this market is that you can make money without creating any product or service, selling anything, nor advertising. You just trade some cash and get paid depending on your knowledge and expertise.

This is the market where banks, transnational corporations and individual traders exchange one currency for another. I am talking about the spot Forex market. You can trade at huge leverage as much as 400 to 1, meaning that for every dollar that you have for trading you can trade 400. For example if you have $1,000 on your account you can trade as much as $400,000.

This is dangerous. Most experienced traders won't use such a high leverage. In the other hand, high leverage can be good if you learn how to use it in your favor. Anyway, that's enough for the basics. If you want to learn more about how this market emerged, its history and so, then read my other articles.

Now let's talk about the strategies and how some traders make money at Forex. Let's start by saying that what works for me may not necessary work for you. Trading currencies is risky. That's a fact. But ultimately I discovered a few strategies that could give novice traders a winning edge.

Trading Forex is not as easy as most people think. Today you may be earning a lot and tomorrow you are losing 40% of your starting capital. Novice traders often make the same mistakes over and over again. I will enumerate a few of them bellow.

1. Do not look for a holly grail of trading.

This is for people who are afraid to lose or are too greedy and want to get rich quick. Even when it seems so, The Forex Market is not the place to get rich quick. Yes, you can make a lot of money over time and yes you don't have to sell anything, nor create or advertise any products. Still you have to learn a whole lot about what makes this market tick and what moves the price of the currencies plus how to manage your money effectively so you don't lose your shirt.

Many novice traders spend a LOT of time searching a perfect strategy that will allow them to always win-win and never lose. They want to have guaranteed profits because they can't stand to lose and/or they want to make too much (millions) quick so they can retire fast and buy a mansion in a far distant beautiful tropical island. It doesn't happen.

Don't waist your time. A trading strategy that allows you to have guaranteed profits do not exist. Trading is very risky. That's why it is so profitable. Remember: "no risk, no reward." So, do not try to always win on every trade. It is simply not possible. There is no way to get rid of the fact of uncertainty. What I mean is that no matter how effective your trading strategy may be, sometimes it will fail and you have to be ready to face this fact.

By not trying to find a perfect strategy that turns you into a millionaire fast, you will just save a ton of your own time and efforts. It doesn't exist. If you find it, please don't tell me about it. First I won't believe you. Second I don't need it. You will find out bellow why I say that I won't need it.

2. Use technical analysis and fundamental analysis.

When I started trading I didn't believe in this. I wanted to find a strategy which consisted of money management alone (which I explain bellow). This is not good! Money management is important but you still need the other two. You define ("predict") where the market is heading to depending on how effective your technical and fundamental strategies are.

Mastering technical analysis is the ability to predict future price movements by analyzing past price data and graphical patterns. You get a graphic of certain currencies. Check the data that you observe and based on your knowledge of technical analysis you "predict" with certain degree of accuracy where the market is going.

Many brokers allow you to add technical indicators to the graphs while you are trading. You can try this on a demo account and see how well you are able to define the future price movement of the currencies you plan to trade. One of those brokers is www.oanda.com.

There are many technical indicators. I can't tell which one will be more effective for you. Every trader is different. This is something that you will have to discover by yourself. There is not a hidden secret or magic formula for trading Forex. It is what you do every minute when you are in front of the graphics and checking the news what really counts.

The secret is in your overall knowledge and your decisions. This comes with experience and practice. If you open an account with one of these online brokers you can trade on paper before you trade with real money, so you can learn and practice before you risk any capital.

Let me tell you about a few technical indicators that you can use. You can use the MACD (Moving average convergence divergence), the Bollinger Bands, Pivot Points, RSI, Stochastic, Fibonacci, EMA, Elliot Waves and many others. There are in fact many technical indicators but these are among the most widely known and used.

When you add technical indicators to the graphic the brokers software will automatically perform mathematical calculations to reveal interesting facts and patterns about the graphics that you can't readily see without said indicators. You can use the technical indicators to create your own technical systems.

These systems will never work 100% of the time, but if they work 70% - 80% it may be enough. That's because you can control your risks with money management techniques as I describe bellow.

To further increase your probability of winning and reduce your probability of losing on every trade you can use fundamental analysis. I think that most traders choose one or the other but many traders use both.

Fundamental analysis is to trade the news. What is going on with the countries's economies of the currencies that you are trading? What is the unemployment index? Did something suddenly happen that could drastically affect the price of the currencies?

Trading the news is another effective way to "predict" where the market is going. Many online brokers offer you a link with important financial news. For example www.oanda.com has this feature. You can also find financial news on the following websites:

a) www.bloomberg.com

b) www.businessweek.com

c) www.economist.com

d) money.cnn.com

e) markets.ft.com

f) www.reuters.com

g) www.fxstreet.com

3. Use money management strategies.

You need money management techniques. This is what makes you or breaks you. Put it this way, most traders invest far too much of their trading capital on every trade. It is as follows . . . "Expect to make too much and you will make too little, expect to make little and you will make a lot."

What does it mean? It means that if you try to make a fortune on every trade you will lose your shirt. If you expect to make a little on every trade and you compound your profits, you may make a lot of money over the long run.

The first rule of money management says that you should not risk more than 1% of the money that you have on your account. You control this risk with stop loss and limit orders. When you start trading this may seem as little profits specially if you start with little trading capital. In the other hand if you compound some or all of your profits you may increase your account exponentially over time.

The magic of compound interest is amazing! This is the way that most fortunes are created on the financial markets, little by little. If you gamble your money you may lose it fast.

Many traders do exactly the opposite. Imagine that you open an account with $5,000 and you enter a trade for $1,000. Let's say that the market moves against you and you lose those $1,000. Now you have $4,000 on your account. You think that the price for the currencies is too low, so it should recover. In fact you are pretty sure that it will come back.

Then you invest $1,500 to recover from the previous loss plus realize a $500 profit. The market moves again against you. It kept going in the same direction, something that you didn't expected. What happens? Now you have $2,500 on your account. That's 50% of your initial trading capital. It will be very hard for you to recover from that loss.

In the other hand, if you risk 1% of your money on every trade, you will have $4,900 on your account after that initial loss. It will be much easier for you to recover from those trades.

The second rule of money management is to expect always to receive more profits than the money that you risk to lose. This can be accomplished through limit and stop orders as well as trailing stops.

For example if you expect to make a 25 pips profits on every trade, then you put the stop order at 15 pips bellow or above your entry price. A better way to have a greater expectancy ratio is to use trailing stops as I describe above. A trailing stop allows you to cut the loses short and let your winners ride.

These are the basic techniques that a successful trader should use to generate consistent profits at the Forex Market. This is basic information, but I realize that many people out there don't even know what Forex is, so I didn't want to get into more complex strategies here. You will find information about complex and advanced Forex strategies on my website.

by Nathaniel Tabares

Why You Need To Develop Your Own Trading System

2007-12-01T11:22:00.001-08:00

There are many trading systems and strategies out there. There are many free ones printed in trading articles, journals, books and on trading-related websites. You can buy them as software or you can subscribe to them periodically.

Novice traders say they do not have the time, the aptitude, the talent nor the brains to work out how to trade properly. They would rather purchase a program or subscribe to a trading system for hundreds - or in some cases - thousands of dollars. They say they do not have to do anything except be told what to buy, when to buy and how much of it you need to buy. Some ask me if this strategy or approach is advisable for trading the financial markets. To answer this question, I am then forced to consider the advantages and disadvantages of using such an approach to trading.

There are reasons why a trader would use a system or strategy that someone else developed and tested:

1. It is easy. A novice trader does not need to study how the market works and how he interacts with that market. He does not need to educate himself: he does not need to bother with books and seminars. He does not need to test the system, since the seller has already done that for him and reported promising hypothetical or actual results.

2. A novice trader hopes to get a trading system at a 'bargain' price: sometimes even for free.

Hazards of trading a system or strategy developed and tested by someone else are the following:

1. Faulty Systems

There are many faulty systems out there. They may be faulty because their assumptions and their mechanisms may no longer be true, accurate or valid. As a novice trader, how can you distinguish between the good systems and the bad systems if you don't know how trading systems are built?

2. Discipline and confidence

All systems have drawdown periods. Some good systems may not make money for six months or an entire year. Even if it was a good system, can you continue to follow it even if it gives you a loss after a loss after a loss? How can you follow it if you do not have confidence in it? How can you be confident if you do not know the ins and outs of the system and if you have not tested it yourself?

I do not believe that people would blindly follow a system even if they were told that it would bring them riches. I can give someone a trading system, I can supply him with exceptional hypothetical or actual results and still, he would not be able to follow it.

I remember giving my dad a fully-mechanical trading system I developed. I told him a few simple rules and I told him not to question them. All he had to do was to follow them. We both traded it for two months, I grew my small account by roughly 50% (it happened to be a good two months), but he was losing. He wondered why. I asked to see his trading records. When I looked at his trading records, I found that he kept disobeying the rules. When I asked him why he disobeyed them, he wanted to improve the results after it had a couple of losing trades. He was trying to improve the results. According to him, the system asked him to do what he thought was not right during certain market conditions, so he did not follow it. I found simple errors too, including opening trades at market price instead of waiting for buy and sell stop orders at support and resistance levels to get triggered. I also asked that he executes trades at the close, but oftentimes he traded two hours before or after the close at his discretion. There were many more rules he breached. He is a smart man: a former civil engineer and now a manager for a big organisation. Why could he not follow instructions? It is simple. He did not know the reasons behind the rules I had set and so he did not appreciate them. His money was on the line and after a series of losses, he lost faith in the system easier than I did because he did not develop and test it himself.

To overcome the hazards above, I see no way except for a trader to learn how to develop his own trading methodology. This is the only way a trader can know if a particular system or strategy is good or not.

Once a trader learns how to develop systems and strategies, he can then be better equipped to test them as well. By this point he might even find that he is better off using the system he created, because it becomes increasingly difficult to find another system more suited to his profit objectives while operating within his risk tolerance levels. It is likely that once he develops this level of competence, he will simply acquire other systems only to dissect them, grab the parts he likes and add them to his own system. To me, the irony is that for a trader to know which system to purchase, he must first learn how to create a system. And after knowing how to create a system, he will no longer have the need to buy one.

In conclusion then, I would have to say that if you are not inclined to learn how to develop your own trading methodology, then perhaps you should consider giving your money for someone else to invest. Give it to someone who is trading a system that he developed and tested himself because he is more likely to have the confidence and courage to follow his own set of rules.

by Marquez Comelab

Your Guide to Learning a Forex Trading System

2007-12-01T11:21:00.001-08:00

There are a great number of people in America that are interested in investing in order to make a tidy profit. There are many ways to invest and many ways to make profits by investing. One method that has been gaining in popularity is that of the Forex trading system. If you are unsure of what this is, let me explain. Forex stands for foreign exchange. A Forex trading system is defined as the simultaneous exchange of one countries currency for another countries currency. If you would like more information, please let this be your guide to learning a Forex trading system.

The Forex trading system involves trading some of the world's most major currencies. These are: the dollar, yen, British pound, Swiss franc, and the Euro. The way the exchange rates of these types of currencies change is based on economic growth. An example: Sometimes the Dollar is worth more than the British pound because the United States was in a period of economic growth while Britain was on the decline. This can be because the unemployment rate was declining in the United States, while on the rise in Britain. Another example: the export rate is up in Asia so the yen is worth more than the Swiss franc where the export rate is down. Economic growth changes daily, so the value of these currencies changes daily. You need to learn to watch for these changes in order to make any money with the Forex trading system.

The Forex Trading system is much larger than that of all U.S. stock markets combined. In fact, the Forex Trading system makes about 1.9 trillion dollars each year. This is 30 times larger than the U.S. stock markets. Also, Forex trading is done throughout the entire world, so it is available 24 hours a day, unlike the U.S. stock markets.

You can learn the Forex trading system for free online at various websites. Many websites offer a free demo account and free Forex trading System training. This way you can practice everything you learn for free, without investing or losing any real money. Then when you get a feel for the Forex trading system, many websites offer a free 30 day trial or free trades to new investors. It is best to utilize some of this free training and the free demo accounts before you start investing your own money.

Now that you understand the Forex trading system a little better, you may wish to get out there and start investing. There is a lot of money to be made, or lost. Be careful and make sure you get the proper training first. With the right frame of mind, you may be able to make some healthy sums of cash through the Forex trading system!

by Morgan Hamilton

Trying Forex Trading with the Best Strategy and Approach

2007-12-01T11:19:00.001-08:00

With the day things are today, more people are getting interested in investing their money to make them grow faster. The problem is, not too many people are willing to take the risk of investing it because of the risks, so some of them just let their money rut in banks. Not that there's anything wrong with banks, it's just that they have low rates and the money takes a long time to grow. If you want real money, you have to have the guts to risk it. Making money needs money; risks are always involved if you want to have money fast and big.

One of the largest arenas wherein you can invest your savings is the Forex. Forex trading has been around for decades already and is regarded as the largest financial forum in the whole world with an estimated 3.1 trillion dollars of volume everyday. The Forex (Foreign Exchange) trading is open 24 hours and never sleeps. Transactions are done all over the world via telephones and computers, money exchanges hand in the number of millions in just mere seconds. The Forex Trading is composed of thousands of banks and individual Forex trading companies that monitors development all over the world, developments that may influence the value of their currency. Forex trading deals with the exchange of currencies from different countries. The idea is to determine the rise and fall of the value of a certain currency and trade when it is deemed advisable.

For small Forex trading transactions, managed accounts are the ideal, they are for the cautious because they have the least risky participation. Here you entrust your investments along with others to a reliable, honest and ethical seasoned Forex brokers. These Forex brokers use their extensive knowledge and lengthy experience and use their strategy to make your money grow, for a fee of course.

With the rise of the internet, Forex trading can be done in a click of the mouse. Money travels through space and wires all the time. The computers have done a big help in the growth of Forex trading, transactions can now be done anytime anywhere. Since somebody is up at a given time everyday anywhere in the world, you will never lose someone to trade with.

There are two basic and fundamental ways to analyze and evaluate foreign exchange trading. There is the technical analysis and the fundamental analysis. There is a huge difference between the two. In Fundamental analysis, Forex analyzers and brokers watch out for causes to market fluctuation. These causes may include the political condition of the country, their laws and legislations, financial policies, their growth rate and other factors as well. Technical analysis of Forex trading includes graphs, charts and other method of measuring past data to see the indication of the rise and fall of currencies. They get all the information they need and use them to calculate and forecast the possible direction of a certain currency.

There are lots to learn about Forex trading; even the seasoned broker learns something new everyday. Forex trading has huge returns in an instant if you catch the right moment and transaction. But always remember there is till the risk, Forex trading can be quite a gamble, especially if your forecast is wrong. Before investing your money in any firm, try to investigate about its record and history in Forex trading.

by Sara Jenkins

Forex Trading: The Perfect Forex Trading System

2007-12-01T11:17:00.000-08:00

Trading the Forex market has became very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.

Most Forex trading systems are made off technical indicators (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.

There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as "the MA crossover made the price go up," but it happened the other way around, the MA crossover signal occurred because the price went up. Where I'm trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn't want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.

Don't get me wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?

First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.

Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.

Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

by Raul Lopez

Choosing A Forex Strategy

2007-12-01T11:14:00.000-08:00

Technical analysis and fundamental analysis are the two basic areas of strategy in the FOREX market which is the exact same as in the equity markets. However, technical analysis is by far the most common strategy that is used by individual FOREX traders. Here is a brief overview of both forms of analysis and how they directly apply to forex trading:

Fundamental Analysis

If you think it's hard enough to value one company, you should try valuing a whole country instead. Fundamental analysis in the forex market is often an extremely difficult one, and it's usually used only as a means to predict long-term trends. However it is important to mention that some traders do trade short term strictly on news releases. There are a lot of different fundamental indicators of the currency values released at many different times. Here are a few of them to get you started:

* Non-farm Payrolls

* Purchasing Managers Index (PMI)

* Consumer Price Index (CPI)

* Retail Sales

* Durable Goods

You need to know that these reports are not the only fundamental factors that you have to watch. There are also quite a variety of meetings where you can get some quotes and commentary that can affect markets just as much as any report. These meetings are often brought out to discuss any interest rates, inflation, and other issues that have the ability to affect currency values.

Even changes in how things are worded when addressing certain issues such as the Federal Reserve chairman's comments on interest rates; can cause a volatile market. Two important meetings that you have to watch out for are the Federal Open Market Committee and Humphrey Hawkins Hearings.

Just by reading the reports and examining the commentary, it can help FOREX fundamental analysts to get a better understanding of any and all long-term market trends and also to allow short-term traders to be able to profit from extraordinary happenings. If you do decide to follow a fundamental strategy, you will want to be sure to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with real-time access to this kind of information.

Technical Analysis

Just like their counterparts in the equity markets, technical analysts of the FOREX trading market analyze price trends. The only real difference between technical analysis in FOREX and technical analysis in equities is the time frame that is involved in that FOREX markets are open 24 hours a day.

Because of this, some forms of technical analysis that factor in time have to be modified so that they can work with the 24 hour FOREX market. Some of the most common forms of technical analysis used in FOREX are:

* The Elliott Waves

* Fibonacci studies

* Parabolic SAR

* Pivot points

A lot of technical analysts have a tendency to combine technical studies to make more accurate predictions on your behalf. (The most common method for them is combining the Fibonacci studies with Elliott Waves.) Others prefer to create trading systems in an effort to repeatedly locate similar buying and selling conditions.

Choosing Your Strategy

Most successful traders will develop a strategy and perfect it over a specific period of time. Some people will focus on one particular study or calculation, while still some others use broad spectrum analysis as a means of determining their trades. Most experts would likely suggest that you try using a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. Of course, in the end, it is the individual trader who has to decide what works best for him.

When you are ready to get started in the FOREX market, you should open a demo account and paper trade so that you can practice until you can make a consistent profit. Many people who fail have a tendency to jump into the FOREX market and quickly lose a lot of money because of a lack of experience. It is important to take your time and learn to trade properly before you start committing capital.

You also need to be ale to trade without emotion. You can't keep track of all stop-loss points if you don't have the ability to execute them on time. You must always set your stop-loss and take-profit points to execute automatically, and don't change them unless you absolutely have to. Make your decisions and stick to them. Otherwise you will drive yourself and your brokers crazy.

You should also realize that you need to follow the trends. If you go against the trend, you are just messing with your money because the FOREX market tends to trend more often than anything else and you will have a higher chance of success in trading with the trend.

The FOREX market is the largest market in the world, and every day people are becoming increasingly interested in it. But before you begin trading, make sure your broker meets certain criteria, and take the time to find a trading strategy that works for you.

by Giles Windholm

How To Loose Everything - The Worst Forex Trading Strategy Ever That You Might Be Using

2007-12-01T11:11:00.000-08:00

You may be wondering, `Why would David Jenyns write about the worst Forex trading strategy around?`

There are a couple of reasons:

First, to warn you about the worst Forex trading strategy, because you really don`t want to end up using this system.

Second, because once you know the worst possible Forex trading strategy, the one that is designed to maximize your losses over the long run, then you can reverse it to craft a strategy which does the exact opposite.

With what you learn from the worst Forex trading strategy, you will be able to create a system that will produce some tremendous long-term gains. The worst Forex trading strategy I`m referring to, which is simply the worst Forex trading strategy I have ever encountered, is known as averaging down. This horrifying Forex trading strategy is the process of buying more shares that you had previously acquired, as the price drops.

Traders often purchase shares this way in an effort to reduce their initial entry price.

Only bad investors average down by buying shares of a sinking assests to decrease their overall average price per share. This Forex trading strategy is hardly ever effective, and is often like throwing good money after bad. It also magnifies a trader`s loss if the share keeps dropping. Remember, just because a share is cheap now that doesn`t mean it`s not going to get any cheaper. However, let`s examine how this devastating Forex trading strategy works. Say you bought one thousand shares at $40.

The novice investor may not have a stop loss in place, and the share price falls to $30 dollars. Here comes the stupidity of this Forex trading strategy - to average down the novice trader might by another thousand shares at $30 to lower the average cost per share that he`d already purchased. So, his average cost per share would now be $35.

Unfortunately, the share price may fall even further, and the novice trader will again buy more shares to reduce the average cost per share. They end up buying more and more into a share that`s losing their money.

Now, imagine this Forex trading strategy being applied to a portfolio of assets. In the end, all the capital will automatically be allocated to the worse performing assets in the portfolio while the best performing assets are sold off. The result is, at best, a disastrous underperformance versus the market.

If a trader uses an averaging down system and uses margins, their losses will be magnified even further. The biggest problem with this Forex trading strategy is that a trader`s gains are cut short, and the losers are left to run. My advice is - never average down. The process of buying a share, watching it fall, and then throwing more money at it in the hopes that you`ll either get back to break even or make a bigger killing is one of the most misguided pieces of advice on Wall Street. Never be faced with a situation where you`ll ask yourself, Should I risk even more than I originally intended in a desperate attempt to lower my cost and save my butt?`

Instead, design a simple, robust system with good money management rules. I can practically guarantee the results will be better than averaging down.

by David Jenyns

FOREX Trading Strategies

2007-12-01T11:05:00.000-08:00

The world of trading and investment can be as frustrating as it can be rewarding! And Forex (Foreign Exchange) is no exception - often described as risky, profitable and complicated.

Forex is the largest trading market in the world.

Forex is the worldwide market for buying and selling currencies. These markets were developed to cater for the supply and demand of different currencies by governments, companies and individuals - for international trade and assisting importers and exporters.

Therefore those who trade in this market include consumers, businesses, investors, speculators and the banking industry.

Different countries use different currencies - which vary in their values against each other. Forex trading invovles the buying and selling of two currencies - trading pairs - you are selling one and buying another eg you may use the US dollar to purchase British pounds - if the supply of the pound lessens - it will cost more dollars to buy pounds - the Forex trader hopes to sell their pounds at a higher price than the purchase price.

A speculator in Forex is someone who accepts the possibility of adverse exchange-rate movements in the hope of making a profit from favourable movements in currency.

As a speculator you should always start trading with a small amount and have a trading system - which tells you when to get in and out of the market. It is a favourite option for currency traders as you can trade the Forex market 24 hours per day and the transaction costs are minimal.

This market - because of its sheer size - is hard to be manipulated - which stocks can be - it is more likely to be influenced by global news or events. Hence, the opportunity for 'insider trading' is eliminated.

However - beware -Forex brokers estimate that 90% of traders lose their money; 5% break even and only 5% achieve profitable results!

by Gay Redmile

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

2007-12-01T10:56:00.000-08:00

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

Secrets To Potentially Making Money In The Forex Markets

2007-12-01T10:54:00.000-08:00

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

How The Matrix Will Boost Your Forex Profits?

2007-12-01T10:53:00.000-08:00

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

The 7 Undeniable Rules of Forex Trading

2007-12-01T10:51:00.000-08:00

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

Boost FOREX Trading Profits Using These 3 Simple Guidelines

2007-12-01T10:48:00.000-08:00

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

Forex Training: Deadly Forex Mistakes That Assure Failure

2007-12-01T10:43:00.000-08:00

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.

If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.

Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.

Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.

Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.

Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.

By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

by Author:
http://www.straightforex.com

The Trading Teacher

2007-12-01T10:42:00.001-08:00

When I studied the principles of investing in university, I was taught that the price of a share reflected the value of the company. With fundamental analysis, there are many methods on how one can analyse the financial statements of companies to find out whether a share is a good or a bad investment. You can conduct horizontal and vertical analyses on standardised financial statements, which are just fancy terms for comparing numbers. You can calculate certain financial ratios to get a better understanding of a company's liquidity, working capital management, its ability to remain in business over the long term, and its profitability.

I applied these concepts when I started trading the stock market. Soon I found that if I wanted to trade shares in a timeframe of less than three months, decisions based on these analyses were not useful. I did not want to buy shares only to receive dividends. I wanted to trade for capital gains.

I was dissatisfied with my knowledge, the tools and the methods that I had to trade the markets. With my desire to trade a timeframe shorter than three months and my strengthening belief that emotions greatly impact on trading, I began to search for different approaches to buying and selling shares.

I went back to one of my textbooks in university. I wanted to know how else I could analyse the markets. From the passage I read, I learned that one can analyse the markets in one of two ways: fundamental analysis and technical analysis.

I bumped into a newspaper ad one day for a trading seminar. While reading through the ad I saw the words: technical analysis. An expert trader was going to speak on the exact topic I was interested in learning. It was a free seminar and everybody was welcome to come along. So I called a friend of mine and I asked if he would be interested in attending this trading seminar. He was.

The seminar was organised by a business selling trading courses: courses to instruct people on how to trade the share market. When we arrived, we were led into a small room. There were about thirty people. The spokesman was apparently a veteran trader who wrote two books on trading. Let's call him Bauer for the purpose of this article. Bauer had a very strong presence. He was a huge, tall man with a clean-shaven head.

I was on the front row seat trying to listen and understand every word this man said. It was his teachings that planted the seeds of how I eventually grew as a trader over the years. Many times, I heard his voice in my head, reminding me of the lessons I learnt from his books and the lessons I learnt from him that day. I will try to enumerate the lessons I learnt from this man to help you the way they helped me.

This man had my attention from the very beginning. "The share market is a game where people try to steal money from other people. That is the objective of the game and it is legal", he began. I wondered what the professionals in Wall Street would have thought about that statement if they heard it. I smiled. I liked him already.

He continued: "If you are going to join this game, you are essentially given permission to steal money from other people and in exchange, you are okay with them stealing your money also. Some of the brightest people in the world will be playing with you. Therefore, if you are going to war and fight an army with real weapons, you better make sure you do not go there with a plastic gun."

He said that people rush to the markets to lose their money. It sounded laughable but I guess it was the only conclusion one can draw from the fact that most people begin trading without sufficiently preparing and educating themselves. Of course, most of us do not put on a trade with the hope of losing our money; however, that is what we are effectively doing when we trade without adequate preparation.

"They just cannot wait to lose their money. They do not bother learning about the market first. They think it is easy. Most people know that they need training before they can fly a plane or perform surgery, but I do not know why they think it is easy to make money trading", he exclaimed. He was quite emotional about it.

"Trading is hard", he declared. Only about 5% of people know how to trade profitably. And so the probability of finding someone else who knows what they are doing is very, very small. "Do not rely solely on the advice of your brokers, your fund managers or whoever else. Your best hope for success is to educate yourself. The sooner you do that, the better off you'll be."

"When it comes to buying and selling shares, there is no such thing as investing. What people normally refer to as investing means long-term trading to me". When people hold on to their investments for five or more years with the intention to sell later, then all they are effectively doing is trading:just with a longer time frame.

"Do not buy shares solely for the dividend payments. They offer you measly rewards", he said. "Do trade only with the purpose of making money from capital gains. Buy low, sell high and that's how you should make your profit."

At the time, I was juggling between the concepts of short-term trading or investing for the long-term. I did not know whether I was taking the right approach by attempting to make short-term profits. He made his stance on the matter strongly.

He asked us if we knew what drove prices up or down. Remembering what my lecturer said in university, I responded, "the price moves up and down close to the intrinsic value of the share".

He turned his attention to me and asked, "What share are you trading?"

"XYZ (I changed the name for the purpose of this article)", I replied quite happily. Perhaps I could squeeze a tip or two from him about the stock.

"Do you know what the intrinsic value of XYZ Company is", he asked.

I nodded my head sideways and muttered, "no".

"I'll tell you what the value of XYZ is: it is zero!" He barked.

I was taken aback by his response. Zero? Then what are we paying money for when we buy a share? I thought. Then he clarified himself.

"Price is only a perception - it is people's perception of what they think the value of the share price is".

"The key to success in trading is psychology", he continued. Psychology? I thought. How did psychology get involved in this? "The stock market is like an opinion poll. It is a measure of what people think is going to happen. If they think the price will go up, you will see an upward movement on the chart because there are more buyers so the sellers increase their price because some of these buyers are willing to buy at higher prices", he explained.

He then used an example to explain a typical trader's behaviour when he trades without a system. As he explained it, I recognised my own behaviour in his demonstration.

This was all a revelation for me. When I was buying and selling shares I wondered what type of people were on the other side of the trade because collectively, they were pretty smart. Now I know. It was people like Bauer who were on the other side of those transactions, doing the exact opposite of what I was doing, using similar methods like the ones he was using. They were looking at the share market with a philosophy and an approach that were completely alien to me. Traders like him were making all the money and traders like me were losing.

I shook my head in disbelief that other people saw things the way they did. I felt excited knowing that there was another alternative, another approach in analysing the markets.

"What you need, is to develop your own trading system." He exclaimed to everybody in the entire room. "Without a trading system, you will fail. I guarantee you. This trading system must be something that is suited for you and you only. Even if I give you my trading system I am certain that you will fail to make money, because my system is not designed for you. It is designed for me. That is why you need to learn how to use the tools and acquire the skills needed to be a trader".

I accepted his advice without fully understanding this concept of matching a trading system to suit the trader's own personality. It lingered in my mind for a long time. The wisdom of his advice became apparent to me as I slowly learnt more about the nature of trading.

Bauer diverted our attention to the charts on the screen projected from his laptop. All I saw were lines, curves, rectangular boxes and more squiggly lines. The tools of a professional trader: I thought. I was being shown the tools that my market 'adversaries' have been using to 'clobber' me with all this time. My heart was beating faster than usual. I was in awe. I wanted those tools.

I asked Bauer what program he used to analyse the markets. He told me. I also asked him how many indicators he used. I had read enough about technical analysis by that time to know that technical analysts use indicators to analyse share prices. There are many indicators to choose from so I wanted to know how many of those are used by professional traders. He started counting his fingers. 'Seven', he said.

I think many people there had not really read up on technical analysis but I had done my homework and by that time, I was pretty much the only person in dialog with him, asking him questions. I wanted to gain as much knowledge and wisdom he was willing to give me.

Then I heard one of the most important lessons I've learnt which minimised my losses during my early years of trading: "Trade so small that it is almost a waste of your time. Assume the next trade is going to be the first out of a thousand trades you are going to be making in your life. Even though your profits are smaller, your losses are smaller too. There is no need to rush. Do not worry about getting rich too quickly."

He was suggesting that novices like me should trade using small position sizes. That means to buy small number of shares at the start. I was intrigued. I did not know a person should trade that 'small'.

Eventually, the seminar ended. I grabbed the booklets and brochures given out by some of the staff. In one of these brochures was the name of the program he uses. They were selling the software with the courses they were offering. I could not afford the entire package but I knew I had to buy the same charting software Bauer used. I decided to learn as much as I could about how to use charts and graphs to analyse the market. I needed to develop my own trading system.

As for my friend, he said he had a car loan to take care of first. He would look into trading shares later when he had a little more money to set aside.

A couple of days later, I got a call from the organiser of the seminar, telling me that based from the questions I had been asking that night, I was the type of person that would most benefit from their education package. Bauer was asked to demonstrate the need for trading education because he traded the markets. In the process, he was selling the courses well. Bauer seemed knowledgeable and experienced. He has enlightened me and probably several other people in that room about how much there was to learn. I was sold. I just could not afford the courses at the time but I wanted them so badly that I asked the sales person on the other end of the line if I could work for them in exchange for the course.

I did not get to do the course but I bought the software from a different distributor at a cheaper price. I also bought the two books Bauer wrote. I figured that I could acquire the skills and wisdom through self-education. I learnt a lot from those two books and from using the software. Having that opportunity to attend that seminar was a 'gift from the heavens', as far as I was concerned. Wherever you are, Bauer, I thank you. You - and others like you -- have made me recognize the value of passing on knowledge and experience for others to follow.

by Marquez Comelab

Managing The Forex Accounts For You

2007-12-01T10:39:00.001-08:00

Managed forex accounts are a boon for those who don't have the time to devote to the foreign exchange dealing. It's also for those who don't have the expertise to deal in the foreign exchange markets. Professionals are there for managing forex accounts. Management of these forex accounts is a very serious and a competitive business. Many investors like to allocate a portion their funds to forex accounts managed professionally. It helps them to diversify their risks and also mitigate any losses that may arise from other portfolios such as stock and bond market. Since forex transactions is a ball game separate from that of the stock markets, their profits and losses are also separate.

Therefore these currency-trading accounts can enhance one's portfolios in a great way. The forex exchange accounts that are managed professionally must be able to provide the following, irrespective of which forex trading manager or account that you choose

A currency trading account not tied to the stock market operations

The forex managed account should be able to provide a better return than the treasury bonds and other such money market instruments

Professional expertise is a must. The firm should have good standing in the market and have professionals who have experience in dealing in foreign exchange accounts. Most foreign banks and transnational firms employ the best and have constantly out performed others. It's not necessary that your forex account manager should be a Harvard Grad but in most cases it, they are better trained.

The firms that professionally handle forex accounts and forex trading must be able to leverage to give maximum profits.

The forex trading manager must be able to book profits in both the falling and rising currency markets.

Should provide for monthly / weekly reporting of the forex transactions as well as real time reporting if need be.

The forex accounts should be such that they are liquid in nature. They should give ease of withdrawal (of money) to the investors at particular time intervals and in cases of emergency too.

Depending on the firms that one chooses, there are various kinds of currency trading accounts that one can invest under. They may be called by several names such as Global forex accounts, aggressive forex accounts, and high value forex accounts etc.

For example the Global forex accounts might deal in many foreign currencies, many of which may not be the liquid currencies such as the Soviet Rouble or The Indian Rupee. Other accounts such as the aggressive forex accounts may deal in the most liquid of the accounts such as the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

The forex trading accounts also differ on another account, that of the initial investment that is required. Some forex trading accounts may need an initial investment of US$ 10,000, others US$ 50,000, still others might require an initial investment of US $100,000.

Being professionally managed, the forex trading account managers make use of various statistical analysis tools to give the optimum and maximum results and profit. Therefore considering the factors as given, choose the currency-trading fund best suited for your needs.

by Gary Berg

Day Trading Forex Market Behaviour

2007-12-01T10:38:00.000-08:00

Technology advances like the internet have spawned a new craze, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market.

Just as a day trader will closely track stock price movements on the Dow Jones Industrial Average, all over the world forex traders monitor currency fluctuations in a similar fashion.

Forex traders have the aim of using the smallest amount of one currency, say the US dollar, to purchase another currency like the British Pound. If supply of the pound lessens in a busy market, it will cost more dollars to buy pounds, and the forex trader hopes to sell their pounds at a higher than their purchase price. In many respects, this type of trading behaviour is very similar to trading in stocks, where the aim of nearly all traders is to buy low and sell high.

The trading process works under a bid/ask system. In the above example, a forex trader might bid 10 dollars in return for 5.7 British pounds, and the seller of the pounds could be asking 11 dollars for the same amount of pounds. If the seller accepts the bid, the trader then hopes the pound continues to increase in price, so that when time comes to sell, they can get in excess of the 10 dollars initially paid.

As only registered traders have access to this auction process, most online speculators will trade through a bank or broking house. Such brokerages charge a commission for facilitating the trades, and forex traders should consider these transaction costs when calculating their selling offer when time comes to exit their position, as this will influence their profit margin.

The global foreign exchange market can trade in excess of a trillion dollars a day. Sheer market size means there is considerable money to be made, and lost, through miscalculation. It is neither a guaranteed, nor easy path to riches, so traders should be educated in how to play the market. Instructional packages are available, and should be carefully reviewed as they can easily range in quality and price.

by Jay Moncliff

Forex Trading Tips

2007-12-01T10:37:00.002-08:00

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.

Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.

The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.

Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.

Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.

Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:

Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);

Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.

Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.

No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.

Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.

The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.

Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.

Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.

Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.

Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.

Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.

Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.

Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.

Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.

Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.

Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.

Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.

Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.

The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.

Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.

Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.

Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.

Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.

Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.

Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.

Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.

Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).

One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.

Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.

Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.

by Fiorenzo Fontana

Forex Trading Guide- How to deal with Forex Trading

2007-12-01T10:37:00.001-08:00

Buying and selling of different currencies of the world is known as forex trading. Forex or foreign exchange market is the largest trading market in the world. Forex trading market deals with more than US$2 trillion everyday. It has become favorite option for currency traders. Foreign exchange market is extremely different from stock exchange market. Currency trading is always done in pairs like USD/EUR or USD/GBP etc. Forex trading market works 24 hours a day.

Several investors and traders are joining forex trading every day. First time investors should keep in mind that forex trading works on certain principles. They should remember that it is an investment not an income. Currency can fluctuate at any time so right time investment is the best investment in forex trading. You should have another source of income while dealing in forex trading. If you are a first time investor don't believe in demo trading because it can be dangerous in long run. After getting all information about broker's system you can start forex trading with small amounts. You should always invest that amount for which you can bear profit or loss.

Sometimes forex trading is a risky business but the trader can reduce the risk by following best trading strategy. Trader should know the right time to enter and exit the market. Forex trading is an easy and simple trading business. You can do forex trading while sitting in your home. It requires a PC with Internet connection and a bit of time. You can perform all the transactions online with a small fee and the best thing of forex trading is that you don't have to pay large amounts to professional. Forex trading market offers a large number of online options for currency trading. Before joining it you've to search for the best option to achieve your goals.

Beginners can use forex trading software programs to track and analyze market conditions. These programs will help you in finding the best investment opportunities. Forex trading software enables you to make right decisions about investments. Beginners shouldn't try to predict the forex trading markets because currency fluctuation may occur anytime. You can handle forex trading by using trading system and money management strategy.

Don't be emotional in forex trading. You should behave like a businessman that can efficiently test the market data. Testing system and best money management strategy lets you to invest your capital in the best way. While paying minor attention to the ups and downs of the forex trading market you can easily maximize your profits. You can make profitable trades by focusing on the hours when market generally makes their biggest moves.

With some research, a lot of skill and a bit of luck you can enjoy forex-trading market completely. You've to be smart at the time of making choices and taking risks. The trading process is so simple and can be done with a small amount. You don't have to wait for the opening and closing of stock market because it works for twenty-four hours. Several trading companies are providing free information online. You can search for required information before making any decisions. Some companies also offer free trail periods; you can also check it out.

by Gagandeep Dhaliwal

Real Forex Traders Learn to Like Losses

2007-12-01T10:36:00.001-08:00

As a forex trader you have to learn how to take losses. Period. Don't be a crybaby. Learn how to take losses.

Learning how to take losses is one of the most important lessons you must learn if you want to survive as a trader. Nobody is 100% right all the time.

Losses are inevitable. Even Michael Jordan and Tiger Woods lose sometimes and they're considered the best in their field.

There will be trading streaks where you'll have a number of successful consecutive trades, but that will eventually come to an end you will take a loss.

As that point it's very important not to lose your head, you must remain in control of yourself. Don't have a cow man.

Take a break. Calm down and relax. Take a chill pill dude.

Until you've regained a clear mind and an ability to think logically again, stay out of the market.

Don't whine about your loss and never carry a prejudice against a loss.

The key to manage losses is to cut them quickly before a small loss becomes a large one.

I repeat. The key to manage losses is to cut them quickly before a small loss becomes a large one.

Never ever think that you will never lose. That's just ludicrous. Losses are just like profits, it's all part of the trader's universe.

Losses are unavoidable. Get over the loss and move on to the next trade.

by Scottie Pippin

5 Things You Must Do If You Want To Attain Financial Freedom Through Forex Trading

2007-12-01T10:35:00.000-08:00

With the amazing growth of the forex market, you are going to see an astounding amount of traders lose all their money. Unfortunately, they haven't followed the simple steps I have laid out for you. Go through these steps and give yourself the greatest opportunity to achieve your goals.

1. Have Faith In Yourself

To reach the level of elite forex trader, you must trust in yourself and your forex trading education. You must be willing to make all your trading decisions, instead of relying on someone else's thoughts or ability (or lack of). Of course, you will prepare yourself fully before every risking any money.

2. Accept Your Learning Curve

Unless you are a veteran trader, you will lose money trading the Forex market. This is a near certainty. I don't say this to talk you out of trading. In fact, quite the opposite. You will be trading against others that fall to this reality day in and day out. You, however, will not risk a dime until you have learned the skills you need to make money trading the forex.

3. Decide What Type of Trader You Are

There are many ways to trade the forex. They range from very active to very patient. You must decide which style suits you best. The best time to learn this about yourself is while you are trading a demo account. There is no need to allow your learning curve to cost you money.

4. Get Educated

Education is the shortest path to elite forex trading. Regardless of your ultimate goals, you will reach them quicker with a great forex trading education. Take some time to review different options before deciding on who to trust with your forex trading education needs. A forex seminar will help shorten your learning curve drastically.

5. Continue to Get Educated

In order to achieve and retain elite forex trading skills, you must constantly be adding to you knowledge base. Your education should never end. In fact, one of the key points to look for in an elite forex trading course is ongoing education. It's nice to have an ongoing relationship with the person/people helping you to achieve your goals.

What separates an elite forex trader from all others is their desire and ability to be independent. Many traders are willing to follow signals, systems, strategies, or anything else you may call them. By taking this approach, however, these traders are only as good as the people they follow.

An elite forex trader will lead. Their decisions will be calculated and analyzed to near perfection. They will make decisions with no hesitation, and handle the growth of their account in a predetermined, intelligent fashion. Take your trading to their level and you will never look back.

by Eddie Yakubovich

Why do the best trading systems fail?

2007-12-01T10:32:00.002-08:00

Why do Forex Traders fail? I have a theory.

At the time I decided to start forex trading (2 years ago) the Forex Boom was just starting. I really did think I had stumbled on that legendary pot of gold, and that I would soon be on easy street.

Here was a multi-trillion dollar online business where a smart guy like me couldn't fail to make lots of easy money.

I'd read that over 90% of forex traders fail, but hey - that wouldn't happen to me - I've got a college degree! If I learned the best forex trading techniques and studiously avoided the pitfalls, I'd be a top forex trader in no time!

So I invested in the best forex training course I could find, almost entirely dvd-based training, and it cost me more than $4000. It came on 10 dvds, with 14 hours of top quality forex education, and several pieces of software, including free forex signals software which was already set up with passwords etc... and ready to go. I even got a forex spread-betting account. Mmm... better still, now I can trade forex tax-free!

I also received access to the author's web site and could see his daily forex trades. Every evening I could review his trades and listen to his commentary, and see how many pips he had made or lost. Most days he made about 20 - 30 forex pips - mostly in the GBP/Dollar market.

This was going to be be easy!

The course covered all aspects of trading including preparation, record keeping, paper trading, even the phsychology of forex trading. I watched the entire dvd set over a couple of days. Then I re-watched the dvds covering actual FX trades and particular forex techniques - he was a technical trader.

I coudn't wait to get started. So I opened my spread betting account (another $5,000 but what the hell....). Oh, and I sent for the latest Mercedes and Ferrari literature - it wouldn't be long now....

That was nearly 2 years ago.

So do I have the Mercedes or the Ferrari? Nope! Have I made my fortune? Not yet!

In fact I've lost money - lots of money!

I haven't lost my confidence in the forex market as a way to make money online, I've seen and met too many traders who make good money trading the forex markets. I know it's possible, I've seen it done.

So it must be my system! So I invested even more money.

I bought the very best online forex trading systems - but only after I had carefully checked their testimonials and ensured that people were making serious money with them. I also bought books - lots of books. Books on forex training, books on forex trading, books to compare forex trading systems. I also bought downloadable forex courses and forex guides, I studied day trading systems versus long term trading systems - I was determined to succeed and make money in forex trading.

So am I making money now? Not really!

But at last I know where the problem is and why I have failed. It hurts to admit it, but...

The problem is ME.

Yep- me! I'm the problem.

I now know that my approach, my style, my methods, were all letting me down. Even when using a proven winning trading system, I would lose money.

And for a long (and very costly) time, I hadn't even realized it. It wasn't because I didn't invest enough money either.

I now accept that I can purchase a winning forex trading system online for very little, and that a top forex course will cost very little too. Indeed, there are a whole range of very affordable forex resources and training out there.

I can quickly and easily be ALMOST fully equipped to make money on the forex markets. Almost?

So what's the missing link? What's the difference between the winners and the losers? Who else should I consult to be the complete forex trader?

Well - me... It's me!

I've identified a whole load of personal traits and deficiencies that have prevented my success - (and very uncomfortable reading they make too). Words like self-discipline, concentration, resolution, dedication and honesty come to mind.

I've also learned that MOST available forex tutorials fail to cover this topic adequately - probably because their writers are successful forex traders who already possess the vital ingredient that the rest of us lack. They just don't realize it's a problem.

What's the problem?

In a sentence - "Most forex traders are incapable of sticking to the systems they have learned". That's why most forex traders fail.

So now I have written "The Missing Link, the other successful forex trading strategy". It's nothing to do with entry or exit points, or technical analysis, or news trading. It's everything to do with attitude and mind-set- and provides a totally different set of trading rules without which even the most successful forex trading strategy can fail.

by Christopher Temple

Forex : How To Handle A String Of Investment Losses

2007-12-01T10:32:00.001-08:00

Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing.

Bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible.

What are the destructive patterns?

If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health.

Ask yourself the following question: during drawdown periods do I find myself over-indulging in these activities:

Food (especially junk food - e.g. chocolate, ice-cream, chips)?

Sex (includes viewing pornography)?

Alcohol?

Drugs (includes excessive smoking)?

Laziness (find it difficult to wake up in the morning)?

Entertainment?

All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!).

These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do?

Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT!

You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*.

Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain; you are experiencing the emotional pain, now it is time to find the error and therefore your growth.

Begin Your Review

The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie:

"YOUR SYSTEM" CHECKLIST

Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to program your system into back testing software)?

Did you test with out-of-sample data?

Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable??

Is your system's code correct?

Did you over-optimize your system? (What have we discussed about over-indulging?)

Did you paper trade your system prior to placing capital on it?

Did you trade with a small amount of capital prior to placing the rest of your funds on it?

Do you know the system's limitations?

Did you properly drill your system? (See our blog article on why I am the system designer from hell)

"YOU" CHECKLIST

Is the current drawdown you are exhibiting with your system normal?

Are you comfortable with your system's historical drawdown performance?

Are you fully aware of the risks involved with your system and the instrument(s) you are trading?

Are you trading with funds that you are comfortable risking?

Are you relying too heavily on your performance?

Have you set realistic goals?

As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance.

Your Answers = Change = Your Growth

What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors.

If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person.

Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it

by Amy Goodmann

Your FOREX trading potential can be predicted by looking at your daily emotional behavior

2007-12-01T10:30:00.002-08:00

As hundreds and thousands of articles have been written on the subject of trading the markets, and with the emergence of new financial instruments every day, I feel compelled to put together a dissertation on the most important element of trading, the emotional effect.

Before detailing the key elements, I will offer to you the thoughts of two prominent individuals. They do not need any introduction, as their work is known and appreciated all over the world. I am sure you will love their insight into the human psyche.

"When dealing with people, remember you are not dealing with creatures of logic but creatures of emotion". Dale Carnegie (1888-1955)

"Let's not forget that the little emotions are the great captains of our lives and we obey them without realizing it". Vincent Van Gogh (1853-1890)

In a world apparently dominated by logic, it is very interesting to find such "heretic" ideas. There is nothing more debilitating than the thought of us acting not on our heavily trained conscious, but rather on the unknown subconscious impulses.

I would like to add just one more fact to my presentation, in order for you to fully grasp the importance of this new approach to trading and in general to any business activity.

The Institute for Health and Human Potential, with offices in U.S.A., Canada and Australia is a research and learning organization that uses Emotional Intelligence to leverage performance and leadership. Fortune 500 companies, the world's top business schools, professional athletes and Olympic medallists seek their expertise.

According to their studies, "Research tracking over 160 high performing individuals in a variety of industries and job levels revealed that emotional quotient was two times more important in contributing to excellence than intellect and expertise alone"

Shocking? Not at all. It is our way to act on impulse, without questioning the triggers. .

It is well known already that the two emotions dominating trading are GREED and FEAR. What is less grasped is the extent to which these emotions influence our decisions.

While amateur traders are greedy when they lose and fearful when they win, professional operators have an exactly opposite attitude, being fearful when losing and greedy when winning.

While simple psychological training could help you discipline your impulse reactions, it is the experience you get "in the ring" that makes you understand how to play with these primal emotions.

We all hate to lose, not necessarily money. The sentiment is very powerful. ALL professional operators are well versed in dealing with it day in and day out. Although they have been through tense moments due to financial losses, they have learned the most important rule in trading the markets: losses are the COST OF DOING BUSINESS. They have a high emotional management procedure and are trained to implement it no matter how hard their "ego" may suffer.

This is easier said than done, as emotions kick in and all theory crash and burn together with any trading plan.

Here you have some easy steps to help you start taming your emotional horses.

- What you see is NOT what you get, as opposed to what you have been taught all your life. The way you act is just a consequence of years and years of education and interaction with others and not your genuine attitude. You are the product of an outside education, not necessarily positive.

- In the long run, your Forex business is just PART of your whole life, together with your family, friends, hobbies, long-term projects and various other activities. I personally use a very powerful "mantra" when in pain following a loss. LIVE TO FIGHT ANOTHER DAY!

- Never lose sight of the general picture. That is your primary goal. For a professional Forex operator, the primary goal is the PROTECTION of his or her trading capital. Keep a trading journal and learn from your mistakes.

- If you want to get a pretty accurate picture of your trading prospects, take a look at your daily emotional decisions. Most of the time, you will repeat all emotional behavior in your professional life.

If you take your time to sit back and observe your daily routines, the picture will emerge with greater clarity, helping you foresee hurdles along your trading career. Do you have a swinging mood? Do you change your mind very often? Are you capable of keeping a commitment? Do you lose your temper easily? Are you on the "half-full glass" or "half-empty glass" side of life?

These traits will not change just because you start trading. That is why you have to be very careful with your expectations. Base them both on your assets as well as liabilities, in order to obtain an accurate picture.

That is just the beginning, but a very resourceful one on a journey few of us have started yet.

I have seen traders taking NLP (Neuro-Linguistic Programming) lessons, practicing the Tai-Chi art or simply meditating. They try to get in touch with unseen forces at work deep inside, vectors of influence that rule our inner world.

The way to succeed in life has infinite variations but one common start, superbly crystallized in the following aphorism, inscribed in golden letters at the entrance to the Temple Of Apollo at Delphi and attributed to Socrates, among several other ancient Greek philosophers: NOSCE TE IPSUM,(Know yourself).

The magic of success is within our grasp. We just need to find the wand!

by Bogdan Vasile

FOREX trading psychology: Learn to see the line between the trading plan and your emotional impulses

2007-12-01T10:30:00.001-08:00

The vast majority of Forex education organizations fail to address the only true characteristic of a market place, the human nature.

You can easily find loads of charts, pivot points, moving averages, trend lines and all sorts of Fibonacci ratios, together with the latest in trading automation. Any Forex website publishes some or all of these data, along with myriads of other details, interviews and opinions.

You may even get entry and exit signals, support and resistance levels, all of which could appear as sufficient in the decision making process.

I was under the same impression as a beginner, I was at the same level as an intermediate trader and only heavy losses and low risk/reward decisions made me look for a different approach to trading.

If you are aware of the importance of having a trading plan for each trade you plan to initiate, then you must be familiar with moments of doubt, when following the opening of the trade, the market goes awry, together with your emotions and self-esteem.

Do you feel frustrated? Join the vast club of frustrated professional Forex traders.

When you see the market moving against all odds and logic, your emotional self cries for an immediate position reversal (SHORT from LONG and vice-versa), in a complete disregard of your own trading plan.

On the other hand, all your training books, videos and mentors have pumped the "trading plan supremacy" into your brain.

While the viable solution seems to reside in the robotic way of trading the plan, a professional operator must learn to listen to his or her "hidden partner", the subconscious.

Our brain is capable of storing immense quantities of data, without us being aware of it. Our five senses perceptions are in constant use and they permanently add to our overall life experience. While our subconscious is capable of dealing with all this seamlessly, the conscious mind has only a very limited operational capacity, primarily used to help us dealing with our daily tasks.

As we trade, ALL our experiences are deposited deep within our brain, slowly building up what I call the unseen analyst. This is what you may call the sixth sense or the instinct traders develop as they progress.

As the name of the game with Forex trading is VOLATILITY and 80% of all trades do not last more than 2-3 days, with the vast majority of them being daytrades, it is easy to accept that conditions can and will change in a heartbeat, rendering most trade plans obsolete.

The only way to alleviate the contradictions between your emotional self and the heavily trained brain is to learn how to give them priority over time.

As a beginner, you simply cannot have the emotional experience to "feel" anything related to the market processes and therefore it is advisable to rely completely on the mechanisms of a trading plan.

At this stage, take your time to learn how to interpret the charts, prepare yourself according to the daily economic calendar and how to construct a comprehensive trading plan. Once you took a trading decision, stick with it, no matter what. At this stage, you are a robot, implementing a trading strategy.

Your emotional weight should be nonexistent in the economy of the trade.

As you progress along the path of becoming a professional Forex operator, your unseen analyst will start adjusting your trading decisions, silently participating in your trading decision process.

It is now the time to make room to your "feel", to accommodate your growing sentiment of "feeling the market".

Your emotional weight should now become an accepted presence.

You will soon learn how to adjust this "mix" in a way to achieve the optimal trading performance.

by Bogdan Vasile

Forex Trading: The Fear Factor

2007-12-01T10:26:00.000-08:00

Market knowledge and ability to understand analysis will only get you so far in forex trading, but without the nerve to actively compete risking your own money in the process you can never become a successful trader.

Wagering huge volumes of money in a market as susceptible to change is liable to cause a whole range of opposing emotions; fear, excitement and anxiety just to name a few. Battling against your emotions in order to complete a successful deal is one of the major hurdles, which must be overcome if you are to become a trader able to close huge deals and earn vast sums of money. If you can overcome or even use these emotions to make trades on the Forex then a successful career may be beckoning, but failure to do so will almost certainly cost you a substantial amount of money and end any lingering desires to progress in the busy world of exchange rate trading.

Initiating and closing a trade at the right times are the backbone of becoming a successful Forex trader. If a person cannot execute these deals at the right times, the psychological and financial damage can be crippling. Missing a huge trend or sitting too long on a good price, can be a demoralising experience, but one that many will encounter during a career in Forex trading.

Entering at the right time is just one thing that must be done correctly, but if you are unable to leave at the right time or hold your nerve during the course of the trade, the implications are potentially severe. For example accepting a small loss just before the market rises can lead to a horrendous huge profit/loss ratio margin. Similarly sitting on a currency price that is plummeting for too long could be financially crippling. Understanding the Forex market and having faith in your ability to judge a trend will pay dividends if you hold your nerve, backing out at the wrong time can prove to be a catastrophic misnomer.

The fear generated by investing your own personal money is the main thing that must be overcome. It is the culprit in so many failure stories, people who just couldn't overcome their anxiety investing unwisely, pulling out at the wrong time, missing a rise completely, all result in failure and are caused by fear. Accepting this fear, and using it to your potential will make you a stronger trader, able to trade freely and enjoy the thrill of the exchange. Fighting it will get you nowhere, understanding and overcoming it are the best remedies to this baseless emotion.

Trading strategies will help you ride out the rough times and capitalize on the good ones. Sometimes just taking a step back and accepting a few losses will give you the energy and the knowledge to attack the Forex with renewed vigour, and make some serious profits. Accepting that sometimes you will lose out, you need to be able to take the hits and roll with a punch, there are no guarantees in the trading market, so being able to move on and start again is a skill that is paramount to generating success.

Analysis and charts can only get you so far. You must first master these things, and be able to correctly interpret the figures that are represented in order to spot the trends and make your move. But this all means nothing if you don't have the courage of your convictions. If you are too afraid to buy and not sure when to sell then a glittering career in market trading is likely to elude you. 'The trend is your friend' but it means nothing if you firstly can't spot it and secondly don't have the courage to back it. Knowledge, strategies and overcoming fear may well be the 3 best ways to become to unlock the door to becoming a successful trader. Without all 3 you will more often than not become unstuck, so prepare, practice and evaluate everything before taking the plunge in the complicated world of Forex trading.

by Michael J Campbell

Trading Psychology: Mistakes in a Trading Environment

2007-12-01T10:23:00.000-08:00

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. Don't get us wrong, it is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

In the trading environment, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, "There must be something wrong with my system", or "I knew it, I shouldn't have taken this trade" (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

When it comes to trading the Forexa market as well as other markets, only 5% of traders achieve the ultimate goal: to be consistent in profits. What is interesting though is that there is just a tiny difference between this 5% of traders and the rest of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes THE big difference.

Mistakes in the trading environment

Most of us relate a trading mistake to the outcome (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios:

First scenario: The system signals a trade.

1. Signal taken and trade turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: Its good to follow the system, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the system. Mistake made: None.

2. Signal taken and trade turns out to be a loosing trade. Outcome of the trade: Negative, lost money. Experience gained: It is impossible to win every single trade, a loosing trade is just part of the business; our raw material, we know we can't get them all right. Even with this lost trade, the trader is proud about himself for following the system. Confidence in the trader is gained. Mistake made: None.

3. Signal not taken and trade turns out to be a profitable trade. Outcome of the trade: Neutral. Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self. Mistake made: Not taking a trade when the system signaled it.

4. Signal not taken and trade turns out to be a loosing trade. Outcome of the trade: Neutral. Experience gained: The trader will start to think "hey, I'm better than my system". Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the system because deep in his or her mind, his or her "feeling" is more intelligent than the system itself. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence to the system. The confidence on the trader turns into overconfidence. Mistake made: Not taking a trade when system signaled it

Second Scenario: System does not signal a trade.

1. No trade is taken Outcome of the trade: Neutral Experience gained: Good discipline, we only need to take trades when the odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the system. Mistake made: None

2. A trade is taken, turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: This mistake has the most catastrophic effects in the trader self, the system and most importantly in the trader's trading career. You will start to think you need no system, you know better from them all. From this point on, you will start to trade based on what you think. Confidence in the system is totally lost. Confidence in the trader self turns into overconfidence. Mistake made: Take a trade when there was no signal from the system.

3. A trade is taken, turned out to be a loosing trade. Outcome of the trade: negative, lost money. Experience gained: The trader will rethink his strategy. The next time, the trader will think it twice before getting in a trade when the system does not signal it. The trader will go "Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success". Confidence is gained in the system. Mistake made: Take a trade when there was no signal from the system

As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this could be the beginning of the end of the trader's career. As we have already stated, mistakes must only be related to the violation of rules a trader trades by.

All these mistakes were directly related to the signals given by a system, but the same is applied when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more.

Most mistakes can be avoided by first having a trading plan. A trading plan includes the system: the criteria we use to get in and out the market, the money management plan: how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are certain about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don't have to worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic results in our trading career.

How to deal with mistakes

There are many possible ways to properly manage mistakes. We will suggest the one that works better for us.

Step one: Belief change. Every mistake is a learning experience. They all have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself "ok, I did something wrong, what happened? What is it?

Step two: Identify the mistake made. Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again. More than often you will find the answer where you less expected. Take for instance a trader that doesn't follow the system. The reason behind this could be that the trader is afraid of loosing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the mistake is not in the surface. You need to try as hard as you can to find the real reason of the given mistake.

Step three: Measure the consequences of the mistake. List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think on all possible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, if you don't follow the system, you will gradually loose confidence in it, and this at the end will put you into trades you don't really want to be, and out of trades you should be in.

Step four: Take action. Taking proper action is the last and most important step. In order to learn, you need to change your behavior. Make sure that whatever you do, you become "this-mistake-proof". By taking action we turn every single mistake into a small part of success in our trading career. Continuing with the same example, redefining the system would be the trader's final step. The trader would put a system that perfectly fits him or her, so the trader doesn't find any trouble following it in future signals.

Understanding the fact that the outcome of any trade has nothing to do with a mistake will open your mind to other possibilities, where you will be able to understand the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made.

The process of success is slow, and plenty of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person.

by Raul Lopez

Forex: No psychological limitations

2007-12-01T10:21:00.001-08:00

Back when I first started learning about investing, I decided to start from the beginning and read basic books on personal finance as well as "guides" for understanding all of the investment world in a nut shell. Most of these authors were very knowledgeable and informative, but their investment advice was far too conservative for my taste. They would literally write chapter after chapter talking about the differences between conservative investing, which according to them generally yields somewhere around 5% PA, as opposed to "risky" investing which usually meant a diversified stock/mutual fund portfolio yielding (in my mind) only slightly higher averages. What kind of returns can you expect in the stock market? Well they say the market has gone up an average of 10% a year since Adam and Eve. Popular indexes like the DOW and the now more popular S&P500 have always, like real estate, "gone up over time."

Now, these market averages are almost worshiped like golden calves. Repeatedly drilled into my brain was the concept that there were hundreds (if not thousands) of fund managers and other "professionals" out there with Harvard degrees, decades of experience, millions of dollars under management, and they were all spending 15 hours a day consuming every single bit of market information in the hopes of beating these golden calves by a few points.

What chance did I have? If Dr. Fund Guru Jr. who eats, sleeps, breathes the markets and has more credentials than I have individual hairs on my body can't consistently make 20% a year...well...forget it kid...your chances are slim to none. I guess I'll buy some shares of XYZ fund and accept the scraps off the table from the stock gurus.

NOT!

The foreign exchange market offers many benefits that the stock market does not have. Most of these have been beaten to death on various forums, blogs, articles, e-books, etc. However, it's always good to reiterate the positive (my own personal reason is last): - Forex offers unprecedented liquidity. With over two trillion dollars transacted per day on the market, it makes filling any buy/sell order virtually instant. That equates to less slippage and more profitability. "Paper trading" stocks vs actually trading stocks is very different, because orders may not be filled in a timely manner. The difference between trading a forex demo account and an actual account is virtually nill. - Forex is available 24 hours a day 5.5 days a week, as opposed to the daylight trading hours of the stock exchanges. - Forex is uncontrollable by large entities. Large net worth individuals, banks and fund managers who throw their weight around in the stock market can often have huge effects on price action. Because of the immense volume of foreign currency traded per day, the market is unmoved by "heavy hitters." Not even central banks can control the Forex market. - Forex offers up to 200:1 leverage as opposed to 2:1 stock leverage. - Forex has no restrictions for selling short, as opposed to the stock market's "uptick" rule - Forex can actually be traded INSIDE of an IRA or Roth IRA account. - Forex gains are taxed at the preferred 60/40 rate, no matter what trading style you use (intra-day, swing, position) as opposed to the tax penalties for holding stocks for short periods of time.

The list does go on, but for me the biggest advantage is a psychological one. I know it probably sounds silly, but fear and intimidation can sometimes subconsciously defeat us before we even begin. I don't like the idea of having to live up to, and in a way, compete with "professional managers" who have more knowledge of the fundamentals of the markets than I ever will. It's almost as if Forex, in some way, levels the playing field. I don't have to psychologically compete against anyone's idea of what kind of returns are "acceptable and realistic" and what kind of returns are "pure fantasy." I only have to trade until I can find an acceptable reward to risk ratio, and consistent profitability thereof. The only one I compete against is myself.

by Joshua White

Forex Market Trading And The Mind Games

2007-12-01T10:20:00.000-08:00

Mind Games defined: Mind Games are a kind of social interaction where participants try to screw with one anothers' heads. The concept is most often used colloquially to refer to deceitful, confusing or Machiavellian situations. However some mind games are described by the psychology of transactional analysis.

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who's been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind - and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn't take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others - including the mass psychology of the people that use the currency on a daily basis - but neglect to know what moves you, you're going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying 'Huh?" about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged. All right. You've heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you'll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info - if it's math, there's only one right answer, right?

The answer lies in interpretation. The numbers don't lie, but your mind does. Your hopes and fears can make you see things that just aren't there. When you invest in a currency, you're investing more than just money - you make an emotional investment. Being 'right' becomes important. Being 'wrong' doesn't just cost you money when you let yourself be ruled by your emotions - it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It's that little thing inside your head that says, "I KNOW I'm right on this, dammit!"

To most people, being right is more important than making money. Here's the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You've got to accept that picking a loser is NOT an indication of your self-worth, it's not a reflection on who you are. It's simply a loss, and the best way to deal with it is to stop losing money by moving on - and really move on. Moving on means you don't keep a running total of how many losses you've had - that's the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning. Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didn't work. But he didn't give up - because he knew that creating a source of light from electricity was possible. He believed in his overall theory - so when one design didn't work, he simply knew that he'd eliminated one possibility. Keep eliminating possibilities long enough, and you'll eventually find the possibility that works.

Winning traders see loss in the same way. They haven't failed - they've learned something new about the way that they and the market work. Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I'm wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades - but I made $250,000, making my overall profit $175,000. It's a pretty clear numbers game - but how do you keep on trading when you're losing in trade after trade? Simple - just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you've set up - but define yourself by what really matters - the overall record.

Bottom line: You can't keep emotions out of the picture, but you can learn not to let them control your decisions. Keep it all in perspective and realise that there are a lot of big boys playing this game and playing it to win...

by David Mclauchlan

Emotions And Forex Trading Don't Mix

2007-12-01T10:19:00.000-08:00

The key to making money in the currency exchange market is to avoid emotional decisions and to follow a carefully thought out strategy that takes the current market and history into account. Going with your gut is not the way to go in the Forex market. Going with your gut could cost you money. Forex trading is a highly volatile market where emotions tend to run high. Emotions can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you think you're seeing at the moment. The keys to success in Forex are system, analysis and perseverance.

Most experienced traders tell novice traders that they need to develop a system - and stick to it no matter what. Letting your emotions rule your decisions can hurt your trading in a number of ways. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system you'll maximize your profits. A system based on technical analysis of historical market trends is one of the most potent tools that you can utilize if you're just getting started in Forex trading. Many traders, with years of experience, continue to use this system to keep the profits rolling in. Many traders will tell you that when their gut instinct and their system collide, the system is almost always right.

Using a mechanical system takes the emotion out of your trading, eliminating one of the reasons people fail. Your system doesn't sway with emotions. It sticks to a tried and true course. To be effective, your system - whether you develop your own or adopt one created by someone else - should identify the entry and exit point of your trade, mitigating factors, and an exit strategy. In general terms this is as follows:

Under what conditions should I acquire a currency?

For instance, you may have a buy order for when a particular currency drops more than 5 pips because your analysis tells you that that's likely to be as low as it goes.

When should I trade one currency for another and for which one?

There are two reasons to exit - to maximize your profit, or minimize your loss. That means you have a set stop-loss order and a set take-profit order at which point you cash out your trade.

What factors will I allow to change that decision?

While the money market moves in predictable patterns, there are always individual variations of a trend within those patterns. If you've taken those variations into account, it will be far easier to decide when a factor really does make a difference, and when it's just wishful thinking. If you're not careful however this is where emotion could come into play and sour deals for you.

How will I trade out of a currency?

Your exit strategy may be as simple as a stop-loss order when my loss hits 5% or a take-profit order when I make 40% profit'.

Another key is perseverance. Analysis of trends in the market will show you that the market moves in dips and spurts within overall patterns that are predictable. No trend moves smoothly in an up or down line - there are inevitable periods of time when values suddenly spiral up or down based on some outside factor. These are the times when emotion can hurt your portfolio. When a currency that you're holding takes a sudden dip south, it's tempting to succumb to panic trading, cut your losses and run even if your system tells you to hold on. On the other hand, it's easy to catch the rising excitement as a trade starts increasing in value and scramble to buy more of the same. These are exactly the times to rely most heavily on your trading system. It will tell you exactly when to trade for maximum profit.

If you control your emotions and stick to the system you'll maximize your profits andall should be smooth sailing.

by David Mclauchlan

Forex: Why Psychiatrists Make Better Traders Than Expert Economists?

2007-12-01T10:15:00.001-08:00

It should be noted that millionaire traders, Elder, Williams and some others are in fact professional psychiatrists. And it is not accidental that not the economists are the leaders and most successful traders, but professional psychiatrists and psychotherapists. Think about it. You will become a successful trader when you understand why it happens with Forex. You will understand what your Forex mistakes are, and why you are making them. And when you correct these mistakes you will become a trader who has no psychological barriers and obstacles on his way to better earnings in the Forex market.

So, why do the psychiatrists make better traders than economists who, as one would think, have the Forex market at their finger tips?

The economists are confused by:

- the fact that exchange rates are not always related directly to the economic circumstances in the countries. Well, do you know any economist who would be bidding for low fx rates when the economic situation is getting better and better? Or the one who admits that technical analysis of currency pairs is more important for Forex trading than the fundamental one? Any economist is confident that this can never happen because he knows all the economic dogmas. But it happens in the Forex. After all, how can a trader lose with the currencies moving up and down by the economic rules? The currency will surely react to the economic changes in the country, but who knows when and how? Here is a tip: there is the Elliott fifth way to teach a lesson to the ones who believe that fundamental knowledge is enough (before the trend turns, the currency spurts absurdly by the old trend), to confuse and draw the newbies into the game, while the experts wait for the trend to turn back.

- the lack of psychological knowledge that helps to understand the behavior of the crowd. And that is self-evident.

Are there any methods to overcome this fear?

It seems that every Forex book, every article offers efficient solutions for psychological difficulties experienced by the traders.

IN FACT NEITHER OF THESE BOOKS CONTAINS METHODS TO OVERCOME THE FEAR EXPERIENCED BY A FOREX TRADER!

But what do these books offer instead?

Almost every book of this kind consists of two unequal parts:

- the bigger part of the book narrates about traders' problem that interfere with their Forex work and make it unsuccessful (nervousness, doubts, worries, fear, sleep deprivation, etc.). As if the traders do not know their own problems.

- the considerably lesser part contains conclusions and recommendations to the traders who are to solve their problems and overcome their fears to become successful.

The conclusions are disappointing:

Many psychiatrists realize that the new field opens before their eyes - now they may treat traders whose number amounts to millions all over the world and is growing with every day. And since most traders have a dream to become as successful as George Soros and other famous traders, this new field promises to be rather lucrative.

One thing is bad though: the overwhelming majority of these new-sprung trader brain specialists do not even know what the Forex is all about.

by Alexander Brin

Protective Puts

2007-12-01T10:11:00.000-08:00

Option overlays in the forex are a great way to control risk while taking advantage of the upside in trading. Options are a broad subject so I only intend on discussing one concept in this article and then will follow up with another article on a second overlay strategy. One of our trading systems at proftingWithForex.com uses option overlays, and you can follow along month by month to see how this strategy actually performs in real time. The two concepts I will talk about are very common and can be executed easily and without constant maintenance. Those are two things I like to look for in a system so I am not the one making all the mistakes for the first time and so I can have a life along with my forex trading. I will cover protective puts in this report and covered calls next.

PROTECTIVE PUTS

A put is an option with three components. The first is a contract. When you buy a put, you are buying the right to sell someone the underlying currency at a predetermined price for a predetermined period of time. You could buy a put today to sell a lot of the GBP/USD at $2.0000 any time between now and a date you choose in the future. If the currency pair falls to 1.9900, you can still sell it for 2.0000 and realize a profit. In fact, it doesn't matter how far the currency falls. If it is still within your time window, you can sell the currency for 2.0000 at will. The set price (2.0000) that you have selected for your contract is known as the strike price. The second component is time. Options are available in monthly increments. That means you can buy one that is good until next month or 12 months from now. The choice is up to you. Finally, options cost money. The price of an option is called the premium. The premium is higher the more valuable the options is. An option with a long time frame and a great strike price is more expensive than one with a very short time frame and a more speculative strike price. I think the best way to explain this is to use an example.

Example 1:

Let's assume that on January 22, 2007, you wanted to buy one contract of the GBP/USD. Let's assume it had a price of 1.9750. You are a prudent investor, and you want some protection from risk in the market so you buy a protective put that allows you to sell this contract at 1.9750 anytime before that contract expires. In this case, the contract would have expired a month later on the third Friday of February, the 16 th . That put will cost you the equivalent of 150 pips per contract. The pair subsequently dropped to 1.9502. In that case, the put will still be worth 248 pips because you can still sell the lot for 1.9750 (1.9750 - 1.9502 = 0.0248). That is exactly equal to the amount you would have lost on the contract you were long so they wash each other out. In fact, the only thing you are out is the 150 pips you paid to purchase the contract in the first place. You didn't have to set a stop because you were totally protected. Even though the contract value dropped significantly-more than the 150 pips you had planned for-you had a hedge that protected your capital.

Example 2:

The following month's trade, February to March, would have been another loss, but the March to April trade was a winner. For the March to April trade, you could have purchased the long position in the currency pair for 1.9372. You could have covered your position with a put at 1.9350 that would have cost you 120 pips, leaving you with some exposure between 1.9350 and 1.9372. However if you add those two positions, you had a level of total risk similar to what you had during the January to February trade. During the month, your long position rose significantly to 2.0027. That means you made 655 pips. What about your put? Well, there is no way you will want to sell this position for 1.9350 so you will just let the put expire worthless. That will reduce your gains by the amount you paid for the put so your new total is a net gain of 535 pips.

This strategy can appear to be slightly complicated at first, but it is worth learning more about it as it offers significant benefits. Institutional traders use option overlays, such as protective puts, all the time. It helps control risk and reduces total volatility in a portfolio. Here are a few more of the benefits, along with two of the cons, of this strategy.

Benefit #1-No stops

You do not need to set a stop on your long currency position. How many times have you been right in your direction but got stopped out on a whipsaw in the market? I am positive that this happens to most forex traders on a regular basis. With a protective put, you are in charge and can let the exchange rate drop to zero, if that were possible, without exceeding your maximum loss. By the way, this benefit is also true during announcements. You are now in control.

Benefit #2-Unlimited upside

Unlike many hedging strategies, this technique still allows for unlimited upside. Although gains are offset by the price of the put, gains can still be significant.

Benefit #3-Lower portfolio volatility

The total portfolio has lower volatility because your downside is capped. Here is an additional example. I will assume that pricing and volatility has been reasonably constant, on average, during the last 10 years and that your strategy is to buy a long position on the GBP/USD and an at the money put with total portfolio leverage of 20:1. That would have returned 10 percent per year during that period. When you combine this advantage with some prudent analysis, it is entirely possible to see much better returns than this.

Con #1 - Cost of the put

The put will cost you 150 pips if you let it run until expiration each month-whether the market goes up or down. That price eats into your upside and creates a predetermined downside. Even if the market dropped less than 150 pips, the maximum loss will be the same.

Con #2 - Cost of trading

If you purchase a put, you will pay a commission. With commission prices falling all the time, this is usually nominal but it adds another pip worth of losses to each month's trading.

The most difficult thing for most investors to do is to protect their capital. You will hear successful individual investors often say that if you can effectively protect your capital, profits will take care of themselves. I agree with that sentiment and use protective puts to help give me an edge. At ProfitingWithForex.com we maintain a model portfolio in the trades section that uses option overlays to illustrate the concept in real time. Log in, and check it out to see what we are up to and what this looks like over time.

by Jogn Jagerson

FOREX: Exiting positions at a right time

2007-12-01T10:09:00.000-08:00

The presented article covers one of the most important (in author's opinion) aspects of trading in general and Forex trading in particular - managing of orders and positions. This includes choosing entry points, making decisions about exit points, stop-loss and take-profit of the trader. I hope this article will help new traders, who just began to work with Forex, and also to experienced traders who trade regularly and regularly make or loose their money to the market.

When I started to trade Forex and made my first big losses and profits I began to notice when very important thing about the whole trading process. While the right time to enter a position was rarely a problem for myself (nearly 80% of all my open positions had gone into the "green" profit zone), the problem was hidden in the determining the right exit point for that position. Not only was it important to cut my risk on the potential losses with stop-loss orders, but to limit my greediness and take profit when I can take it and make it as high as I can. There are many known guidelines and ways to enter a right position at a right time - like major economic news releases, global world events, technical indicators combinations, etc. But while the entering into a position is optional and trade can decide to miss as many good/bad entry point moments as they wish, this is untrue if we talk about exiting a position. Margin trading makes it impossible to wait too long with an open position. More than that, every open position in a certain way limits trader's ability to trade.

Choosing the good exit points for positions could be an easy task if only the Forex market wasn't so chaotic and volatile. In my opinion (backed by my trading experience) exit orders for every position should be toggled constantly with time and as the new market data (technical and fundamental) appear.

Let's say, you took a short position on EUR/USD at 1.2563, at the time you are taking this position the support/resistance level is 1.2500/1.2620. You set your stop-loss order to 1.2625 and your take-profit order to 1.2505. So now, this position can be considered as an intraday or 2-3 days term position. This means that you must close it before it's "term" is over, or it will become a very unpredictable position (because market will differ greatly from what it was at the time you have entered this position). After the position is taken and initial exit orders are set, you need to follow the market events and technical indicators to adjust your exit orders. The most important rule is to tighten the loss/profit limit as time goes by. Usually if I take a middle term position (2-4 days) I try to lower the stop and target order by 10-25 pips every day. I also monitor global events, trying to lower my stop-losses when very important news can hurt my position. If the profit is already quite high, I try to move my stop-loss the entry point, making a sure-win position. The main idea here is to find an equilibrium point between greed and caution. But as your position gets older the profit should be more limited and losses cut. Also, trader should always remember that if the market began to act unexpectedly, they need to be even more cautious with exit order, even if the position is still showing profits.

Every trader has their own trading strategy and habits. I hope this article will make its readers think about such an important aspect of trading as the exit orders and this will only improve their trading results.

by Andrey Moraru

The Costs Of Trading

2007-12-01T10:05:00.000-08:00

You may have relatives or friends who trade the markets. They could be trading shares, futures, options or forex. You may have heard of their exciting trading stories and perhaps this aroused your curiosity and you wondered whether you should trade too. One of the first questions you ask before you trade would be: what are the costs of trading.

The costs of trading depend on several factors, including the instrument and market you are trading. Most of the costs you pay are to your brokerage firm. They need to make a living in exchange for the services they provide.

Generally, you would expect to incur the following costs:

Commissions

Slippage

Spread

Platform Fees

Expenses

Commissions

These costs are charged by brokers. The commission you pay is usually calculated as a percentage of the size of your trade. For example, if you are buying or selling $10,000 worth of shares, your broker may charge you 1% of that. They may also charge in tiers: for example, if you are buying or selling shares with a total market value of less than $10,000 then your broker may charge you $30. If it is under $20,000, they may charge you $50. Therefore, if you bought $5,000 worth of shares, you would still pay $30 commission. And if you bought $12,000 worth of shares you would still pay $50 commission.

Slippage

The price of a commodity is always moving as long as the market is open. Therefore, if the price of a share is quoted at $10 now, it does not mean that when you decide to buy, you will buy those shares at $10 each. When you put in your order and it gets filled, the market price may have already changed. If your order to buy the shares was filled at a price of $10.25, and you bought 100 shares, then your total slippage cost is: $25 (that is 100 shares * $0.25). If you had the same slippage when you sell, then the entire slippage costs for you getting in and out of the market would be $50 (that is $25 * 2 trades).

Spread

The spread is the difference between the bid to buy and offer to sell for the commodity. If the most eager buyer is willing to buy US Dollars for 0.7500 Australian Dollars each, but the most eager seller is only willing to sell them for 0.7510 Australian Dollars each, then there is a spread of 10 pips. These 10 pips are referred to as the spread. If you bought 100,000 USDs, the spread would cost you 100 Australian Dollars. (Pips are discussed further in the book: The Part-Time Currency Trader .)

Platform Fees

Some brokers charge you monthly for using their trading platforms.

Expenses

These costs include those associated to your trading education like buying books, trading software, data subscription and so forth.

Some people may 'brush' these costs aside as negligible costs of having fun, much like the coins they put in poker machines. However, if you want to look at trading as a business, you have to minimize them and make sure you are getting the most for every dollar you spend to ensure your long-term survival.

by Marquez Comelab

FOREX - Dealing With Your Losses

2007-12-01T10:01:00.000-08:00

One of the most important rules of Forex trading is to keep your losses as small as you possibly can. With small Forex trading losses, you can stick it out longer than those times when the market moves against you, and be well positioned for when the trend turns around. The one proven method to keeping your losses small is to set your maximum loss before you even open a Forex trading position.

The maximum loss is the greatest amount of capital that you are comfortable losing on any one trade. With your maximum loss set as a small percentage of your Forex trading effort, a string of losses won't stop you from trading for any particular amount of time. Unlike the 95% of Forex traders out there who lose money because they haven't begun to use wise money management rules to their Forex trading system, you will be ok with this money management rule.

To use as an example, If I had a Forex trading float of $1000, and I began trading with $100 a trade, it would be reasonable for me to experience three losses in a row. This would reduce my Forex trading capital to $400. It would then be decided that they're going to bet $200 on the next trade because they think they have a higher chance of winning after having lost three times already.

If that trader did bet $100 dollars on the next trade because they thought they were going to win, their capital could be reduced to $250 dollars. The chances of making money now are practically nil because I would need to make 150% on the next trade just to break even. If the maximum loss had been determined, and stuck to, they would not be in this position.

In this case, the reason for failure was because the trader risked too much money, and didn't apply good money management to the play. Remember, the goal here is to keep our losses as small as possible while also making sure that we open a large enough position to capitalize on profits and minimize losses. With your money management rules in place, in your Forex trading system, you will always be able to do this.

by Don Spanish

Money Management Tips For Trading On The Forex

2007-12-01T10:00:00.000-08:00

What is Money Management: describes strategies or methods a player uses to avoid losing their bankroll.

Money management in the foreign exchange currency market requires educating yourself in a variety of financial areas. First, a definition of the foreign exchange currency or forex market is called for. The forex market is simply the exchange of the currency of one country for the currency of another. The relative values of various currencies in the world change on a regular basis. Factors such as the stability of the economy of a country, the gross national product, the gross domestic product, inflation, interest rates, and such obvious factors as domestic security and foreign relations come into play. For instance, if a country has an unstable government, is expecting a military takeover, or is about to become involved in a war, then the country's currency may go down in relative value compared to the currency of other countries.

The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.

There are five major forex exchange markets in the world, New York, London, Frankfurt, Paris, Tokyo and Zurich. Forex trading occurs around the clock in various markets, Asian, European, and American. With different time zones, when Asian trading stops, European trading opens, and conversely when European trading stops, American trading opens, and when American trading stops, then it is time for Asian trading to begin again.

Most of the trading in the world occurs in the forex markets; smaller markets for trade in individual countries. Simply put forex trading is the simultaneous buying of one currency and selling of another. Over $1.4 trillion dollars, US of forex trading occurs daily and sometimes fortunes are made or lost in this market. The billionaire George Soros has made most of his money in forex trading. Successfully managing your money in forex trading requires an understanding of the bid/ask spread.

Simply put the bid ask spread is the difference between the price at which something is offered for sale and the price that it is actually purchased for. For instance, if the ask price is 100 dollars, and the bid is 102 dollars then the difference is two dollars, the spread. Many forex traders trade on margin. Trading on margin is buying and selling assets that are worth more than the money in your account. Since currency exchange rates on any given day are usually less than two percent, forex trading is done with a small margin. To use an example, with a one percent margin a trader can trade up to $250,000 even if he only has $5,000 in his account. This means the trade has leverage of 50 to one. This amount of leverage allows a trader to make good profits very quickly. Of course, with the chance of high profits also comes high risk.

Like many other speculative investments, a key part of money management for the forex trader is only using money that can be put at risk. It is wise to set aside a portion of your net worth and make that the only money you use in forex trading. While the chances of good profits are there, if you should have a problem and get wiped out, you'll only have a limited amount of money placed at risk. Also remember that the market is n constant motion. There are always trading opportunities. If a currency is becoming stronger or weaker in relation to other currencies there is always a chance for profit. For instance, if you believe that the Euro is gong to become weak compared to the US dollar then selling Euros is a good bet. If you believe that the dollar is going to become weaker than the yen, or the pound sterling, then selling dollars is wise. Staying current on the news and current events in the countries whose currency you hold is a smart move. Many people reach points where they can predict currency changes based on political or economic news in a given country. Remember though that forex trading is speculation, so be careful when managing your funds and only invest what you can afford to risk.

Please always make sure you check with the pros when dealing in this market unless you are doing this as a hobby and don't have a lot at stake in it. There are a lot of big boys playing here and they won't lose much sleep if you and thousands others lose their shirts...

by David Mclauchlan

The Sneaky Way To Managing Losses In Your Forex Trading

2007-12-01T09:58:00.000-08:00

One of the cardinal rules of Forex trading is to keep your losses small. With small Forex trading losses, you can outlast those times the market moves against you, and be well positioned for when the trend turns around. The proven method to keeping your losses small is to set your maximum loss before you even open a Forex trading position. The maximum loss is the greatest amount of capital that you are comfortable losing on any one trade. With your maximum loss set as a small percentage of your Forex trading float, a string of losses won`t stop you from trading. Unlike the 95% of Forex traders out there who lose money because they haven`t applied good money management rules to their Forex trading system, you will be far down the road to success with this money management rule.

What happens if you don`t set a maximum loss? Let`s look at an example. If I had a Forex trading float of $1000, and I began trading with $100 a trade, it would be reasonable to experience three losses in a row. This would reduce my Forex trading capital to $700. What do you think those 95% of traders say at this time? They would reason, "Well, I`ve already had three losses in a row. So I`m really due for a win now."

They would decide they`re going to bet $300 on the next trade because they think they have a higher chance of winning.

If that trader did bet $300 dollars on the next trade because they thought they were going to win, their capital could be reduced to $400 dollars. Their chances of making money now are very slim. They would need to make 150% on their next trade just to break even. If they had set their maximum loss, and stuck to that decision, they would not be in this position.

Here`s a perfect illustration why most people lose money in the Forex trading market. Let`s start out with another $1,000 float, and begin our Forex trading with $250. After only three losses in a row, we`ve lost $750, and our capital has been reduced to $250. Effectively, we must make 300% return on the next trade and that will allow us to break even.

In both of these cases, the reason for failure was because the trader risked too much, and didn`t apply good money management. Remember, the goal here is to keep our losses as small as possible while also making sure that we open a large enough position to capitalize on profits. With your money management rules in place, in your Forex trading system, you will always be able to do this.

by David Jenyns

Forex Information: How To Draw DeMark Trendlines

2007-12-01T09:31:00.000-08:00

When searching for Forex information on the internet you are likely to find articles relating to trendlines and trendline analysis.

Tom DeMark is a specialist in the field of technical market analysis and his best-selling book "The New Science of Technical Analysis" released in 1994 spells out some innovative techniques when it comes to the use of trendlines.

Much Forex information on the internet is of a general nature, and many articles are written about Forex by individuals who are not traders themselves. Tom DeMark on the other hand has had a long career with institutions trading stocks, futures, currencies and options.

His guidelines on the use of trendlines are very specific and they can be helpful to the newer trader who is searching for reliable Forex information on how to use standard indicators.

Here is a brief step-by-step description of how to draw DeMark trendlines:

Note: The term swing high and swing low (also called cycle high and cycle low) refers to the following:

In An Uptrend: A swing high is the wick of a candle that is higher than the wick of the candle to the left and right.

In A Downtrend: A swing low is the wick of a candle that is lower than the wick of the candle to the left and right.

Obviously the more candles to the left and right that are higher in a swing low or lower in a swing high makes the swing or cycle more significant.

An uptrend is where price is making higher highs and higher lows. A downtrend is where price is making lower highs and lower lows.

Drawing DeMark Trendlines

Drawing Trendlines In An Uptrend

Examine the bottoms of the candles on your chart and identify the most recent candle wick that is lower than the candle wicks to the immediate right and left of it.
Look left on the chart, and identify the previous low candle that has candle wicks higher to the immediate right and left of it which is lower than the current low candle.
Now draw a line from the current lowest candle to the previous lowest candle (drawing from right to left).
Now take the end of the newly drawn line which stops at the current low candle and extend it forward some distance (drawing from the present position to the right).
Drawing Trendlines In A Downtrend

Examine the tops of the candles on your chart and identify the most recent candle wick that is higher than the candle wicks to the immediate right and left of it.
Look left on the chart, and identify the previous high candle that has candle wicks lower to the immediate right and left of it which is higher than the current high candle.
Now draw a line from the current highest candle to the previous highest candle (drawing from right to left).
Now take the end of the newly drawn line which stops at the current high candle and extend it forward some distance (drawing from the present position to the right).
You have now drawn a Tom DeMark trendline.

This can now be a reference point for future price action. It will often be observed that price will come and check this level. If it breaks through, it can mean a change in direction, the significance of which will depend on the time frame being used.

Trendlines drawn on 5 minute or 15 minute charts have much lesser significance than trendlines drawn on higher time frames such as the 1 hour, 4 hour, or daily.

Caution Required

Much Forex information extols the virtues of trendlines as an indicator of possible future price action.

Mr. DeMark certainly has made this a science and his detailed approach to drawing trendlines is certainly more accurate than just drawing general trendlines along the bottoms and tops of trends according to the way the eye sees.

However, trendlines in themselves do not indicate where high probability trades can be taken.

It is important to use a variety of indicators before pulling the trigger. Examining previous levels of support and resistance is probably far more significant in determining where price is likely to hesitate that watching trendlines.

However, they can be useful. If you find a key support or resistance level also coincides with a Fibonacci retracement or extension level which is also at an intersection with a trendline, then you have built a reasonably solid case for a trade.

Use this Forex information on DeMark trendlines wisely, with caution, and it can be another useful addition to the Forex day trader's toolkit!

by Michael A. Jones

Discover Some Magic to Beat The Forex: The Elliott Wave Theory for Forex Markets

2007-12-01T09:29:00.000-08:00

One of the best known and least understood theories of technical analysis in forex trading is the Elliot Wave Theory. Developed in the 1920s by Ralph Nelson Elliot as a method of predicting trends in the stock market, the Elliot Wave theory applies fractal mathematics to movements in the market to make predictions based on crowd behavior. In its essence, the Elliot Wave theory states that the market - in this case, the forex market - moves in a series of 5 swings upward and 3 swings back down, repeated perpetually. But if it were that simple, everyone would be making a killing by catching the wave and riding it until just before it crashes on the shore. Obviously, there's a lot more to it.

One of the things that makes riding the Elliot Wave so tricky is timing - of all the major wave theories, it's the only one that doesn't put a time limit on the reactions and rebounds of the market. A single In fact, the theories of fractal mathematics makes it clear that there are multiple waves within waves within waves. Interpreting the data and finding the right curves and crests is a tricky process, which gives rise to the contention that you can put 20 experts on the Elliot Wave theory in one room and they will never reach an agreement on which way a stock - or in this case, a currency - is headed.

Elliot Wave Basics

* Every action is followed by a reaction. It's a standard rule of physics that applies to the crowd behavior on which the Elliot Wave theory is based. If prices drop, people will buy. When people buy, the demand increases and supply decreases driving prices back up. Nearly every system that uses trend analysis to predict the movements of the currency market is based on determining when those actions will cause reactions that make a trade profitable.

* There are five waves in the direction of the main trend followed by three corrective waves (a "5-3" move). The Elliot Wave theory is that market activity can be predicted as a series of five waves that move in one direction (the trend) followed by three 'corrective' waves that move the market back toward its starting point.

* A 5-3 move completes a cycle. And here's where the theory begins to get truly complex. Like the mirror reflecting a mirror that reflects a mirror that reflects a mirror, the each 5-3 wave is not only complete in itself, it is a superset of a smaller series of waves, and a subset of a larger set of 5-3 waves - the next principle.

* This 5-3 move then becomes two subdivisions of the next higher 5-3 wave. In Elliot Wave notation, the 5 waves that fit the trend are labeled 1, 2, 3, 4 and 5 (impulses). The three correcting waves are called a, b and c (corrections). Each of these waves is made up of a 5-3 series of waves, and each of those is made up of a 5-3 series of waves. The 5-3 cycle that you're studying is an impulse and correction in the next ascending 5-3 series.

* The underlying 5-3 pattern remains constant, though the time span of each may vary. A 5-3 wave may take decades to complete - or it may be over in minutes. Traders who are successful in using the Elliot Wavy theory to trade in the currency market say that the trick is timing trades to coincide with the beginning and end of impulse 3 to minimize your risk and maximize your profit.

Because the timing of each sequence of waves varies so much, using the Elliot Wave theory is very much a matter of interpretation. Identifying the best time to enter and leave a trade is dependent on being able to see and follow the pattern of larger and smaller waves, and to know when to trade and when to get out based on the patterns you identify.

The key is in interpreting the pattern correctly - in finding the right starting point. Once you learn to see the wave patterns and identify them correctly, say those who are experts, you'll see how they apply in every facet of forex trading, and will be able to use those patterns to trigger your decisions whether you're day trading or in it for the long haul.

by Joseph Plazo

Gann Angles - A Unique Powerful Tool For Trading Profits

2007-12-01T09:21:00.000-08:00

W D Gann developed technical trading systems that made him a fortune of in excess of 50 million dollars.

Gann was a trading legend and his stature is reflected in the life size portrait people see when they enter the New York Stock Exchange.

Gann Angles were one of his most effective tools so let's look at them. What do they do?

Gann angles allow you to pinpoint your entry and exit levels for bigger profit potential. Let's look at why Gann angles work.

Gann based his investment strategy on the fact that by studying the Past we can see patterns that will be reflected in the future which is true of any technical systems, but his view was unique on how these patterns occurred

Gann based his methods on the following:

1. Price, time, and range are the only three factors relevant to market movement.

2. Markets are cyclical in nature.

3. Financial price movements are geometric in design and function.

Gann believed that market movements were a reflection of human nature which is constant over time and by studying the past we can predict the future.

Gann's use of angles

Gann's used three patterns to predict market behavior in the future

1. Price study- This uses support and resistance lines, pivot points and angles.

2. Time study - This looks at historically reoccurring dates derived from natural order that Gann believed governed market movement.

3. Pattern study - This studies trends using trend lines and reversal patterns.

Using Gann angles requires practice and experience and below we have outlined tha basics that anyone using Gann angles should keep in mind.

Firstly, determine time units.

The way to determine a time unit is to study charts and look at the distances in which significant price movements occur.

Put the angles to the test and see how they perform.

The intermediate time period ( 1 - 3 months) tends to produce the highest number of accurate patterns and is the time frame to trade.

Secondly, a trader needs to determine the high or low from which to draw the Gann lines

Here you can use Fibonacci levels or pivot points to help you get an accurate picture . Gann then looked for "vibrations" or "price swings."

Finally, you need to know which pattern to use:

The most common patterns are the 1x1, the 1x2, and the 2x and are purely differences in the slope of the line.

The 1x2 is half the slope of the 1x1.

The numbers simply indicate the number of units and the slope of the line.

Traders need to look for patterns to trade.

The direction of the slope will be either down and to the right from a high point or up and to the right, if it's a low point.

Always look for repeat patterns on the charts.

Gann' theories are based upon the cyclical in nature of market movement, so the easier the patterns are to spot the more likely they will be tradable for profit.

Using Gann Angles for Trading Profits

Gann angles are a fantastic tool for predicting support and resistance levels.

Of course, many other trading methods use support and resistance lines however Gann angles add a new dimension, simply because they are diagonal.

The best Gann Formation

Will indicate a balance between time and price.

This will occur when prices move in synch with time.

This is present when the Gann angle being studied is at exactly 45 degrees.

In total there are nine different Gann angles that can be applied.

When one line is broken, the following angle will then give the next area of support or resistance.

Gann angles are just one of the tools He used to amass a fortune trading other include, the Golden ratio, Fibonacci numbers - when combined you have a powerful proven trading method.

As markets are cyclical and human nature never changes Gann's methods still apply today and are used by many savvy traders.

Gann made millions from Gann angles and the tools above study his methods further and see what they can do for your trading and you may be glad you did.

by Sacha Tarkovsky

Better Understand Technical Analysis and Some Indicators

2007-12-01T09:18:00.000-08:00

We're focusing on technical analysis in this article with a description of some of the important indicators.

We could say, all wealthy traders use technical analysis but not all technical analysis traders are wealthy although T.A. is the most precise way of trading the Forex market. It's also useful note that fundamentals play their part in indicating whether a price will move up or down. It gives you the edge over other traders.

Technical Analysis is so powerful because of a few reasons

1) it represents numbers. All information and its impact on the market and traders is represented in a currency's price. 2) It helps to predict trends and the foreign exchange market is very 'trendy'. 3) Certain chart patterns are consistent, reliable and repeat themselves. T.A. helps us to see them.

Here's one way of putting technical analsysis into perspective (wish I had a dollar each time I said 'technical analysis'). We all know that prices move in trends. Research has shown that those that trade 'with the trend' greatly improve their chances of making a profitable trade.

Trends help you become aware of the overall market direction and often rescue us from less then profitable entry points. I attended a 2 day course costing me over $2500 AUD and the biggest thing I learned from it was the need for discipline and emotional control. The content was so basic that within the next 3 or 4 articles, I would have covered all of it. So learning the 'tools of the trade' the technical indicators and their applications will help you to diagnose what the market is doing but even then you need to expect ups and down and trade with emotional control.

Stay with the trend, follow the price.

Find the price of the currency pair. If EUR/USD is 1.4224 and moves to 1.4180 then 1.4090 then the market is in a down trend. Concern yourself only with what the market IS doing not what it might do. Listen to the markets and the indicators will backup what they are telling you.

Moving Averages. Tell you the price at a given point of time over a defined period of intervals. They are called moving because they give you the latest price while calculating the average based on the selected time measure.

They lag the market so to give you an indication of a change in trend, use a shorter average such as a 5 or 10 day moving average. By combining a shorter term and longer term M.A. you can detect a buy signal when the shorter term crosses the longer term moving average in the upward direction. Or a sell signal if it crosses in a downward direction. For example, you could use a 5 day versus a 20 day moving average or a 40 day versus a 200 day moving average. There are simple moving averages, linearly weighted which gives more importance to the recent prices or exponentially weighted. The latter is a favourite because it considers all prices in a time period but emphasizes the importance of the most recent price changes.

MACD Based on moving averages, a MACD plots the difference between a 26 exponential moving average and a 12 day exponential moving average, with a 9 day used as a trigger line. If a MACD turns positive when the market is still plummeting it could be a strong buy signal. The converse also works.

Bollinger Bands (sounds like an elastic band) Prices tend to stay between the upper and lower bands. They widen and become more narrow depending on the volatility of the market at the time. A sell signal would be when the moving average is above the Bollinger bands and vice versa for a buy signal. Some traders use it in conjunction with RSI, MACD, CCI and Rate of Change.

Fibonacci Retracement Describe cycles found throughout nature and when applied to technical analysis can find shifts in the market trends. After a climb prices often retrace a large portion sometimes all of the original move. Support and resitance levels often occur near the Fibonacci retracement levels.

RSI Relative Strength Index measures the market activity to see whether it's overbought or oversold. This is a leading indicator so helps to indicate what the market is going to do (awesome!). Ahigher RSI number indicates overbought (so expect a bearish shift) and a lower number indicates oversold.

Successful traders will generally use 3 or 4 signals to provide a more conculsive signal before entering a trade.

Always remember, "If in doubt, stay out!" . Technical analysis doesn't factor in political news, a country's economic profile or fundamental supply and demand.

Technical Analysis helps us figure out how much money to risk on a trade. How and when to enter the market and how to exit the trade for profit or to minimize loss.

I sincerely hope you find this article useful.

by Sorna Devadas

Trading Trend And Ranges In Today's Forex

2007-12-01T09:15:00.000-08:00

When you choose to start trading in the Forex market, which is often called the foreign exchange market, you will need to know a little trading vocabulary. Learning specific terms and what they mean are essential before you even think about using real money to trade. You would never get into a pilot's seat and try to fly a plane without ever having taken flying lessons. The same goes for foreign exchange market trading. You need to be fully aware of what you are doing. This is a market that is not quickly learned, so you should never assume that once you jump into it, you will learn as you go. While some people opt to do that, they typically end up losing an adequate sum of money because they were not as prepared as they should have been. Knowing the importance of trading trends and ranges in Forex trading is very important. If you are thinking of trading in the Forex market, be sure you know what these terms mean and their implications.

Trading Trend

When price moves consistently in one direction in the Forex, a trend occurs. When the direction is higher, the trend is often called bullish. When the direction of the price is moving lower, the trend is often called bearish. These terms are relative of course. When you define a trend, you should always remember that price peaks and troughs are in the same direction. When you are dealing with a bearish trend, remember that price highs and lows are moving lower. Likewise when you are dealing with a bullish trend, they are moving higher.

Often when trends occur, it is possible to draw support lines under one that is moving higher (an uptrend). You can also often draw resistant lines above one that is moving lower (a downtrend). Once you see these lines break, it can be assumed that the trend is complete. At this point there is a possibility that the trend will begin to reverse. When it does reverse, you will need to know the pattern of what that entails.

Trend Reversal

When you hear of a trend reversal, it simply means that the direction of market prices is changing. Often you will see trend reversals following a four step pattern. Usually, this includes the market making a new high, the trend line being broken, the market making an intermediate low, and a new rally that does not match the first high. Many times you will see prices break the previous low however. You may come across terms such as Double, Triple Tops, and Bottoms, which are all trend reversal patterns. Head and shoulders patterns are also popular reversal patterns.

Trading Range

The trading range is actually a sideways chart pattern. It is often used to represent a resting period before the original trend is resumed. You may see these when you are charting trends and should know what they imply.

Often trends are very important to investors. Those who engage in trend-following are people who look at major trends and make decisions in the direction of the trend. This can be a good strategy, but you must know a great deal about trends and the market in general in order to use this technique successfully. Beginners are not usually very good at tracking trends and using trend-following techniques. One thing that you should also note is that some price movements are trendless. This means that they have no clear direction, which makes trend-following nearly impossible.

Remember, that in order to fully understand trends, you must be educated in the ways of the market and foreign exchange in general. Beginners should not rely heavily on foreign exchange market trend tracking. Once you get more experience you can begin looking into tracking more and more. However, be aware that different things affect and influence the Forex. These influences can change what people expect trends to be. Therefore, you should be a seasoned trader in order to rely on the trends and ranges alone. Educate yourself on these terms and learn to recognize them in the actual market. After all, learning the terms is one thing and being able to see them in reality is different.

by David Mclauchlan

Relative Strength Analysis In Forex Trading

2007-12-01T09:14:00.000-08:00

Analysis means: Research used to assist in predicting the direction of the markets based on technical data relating to price movements of the market, or on fundamental data such as corporate earnings.

The relative strength analysis is a technical report that allows investors and brokers to make informed decisions about trading on the Forex. The Forex, also known as the FX or foreign exchange market is the most liquid of all markets in the world. Over two trillion dollars changes hands everyday through the foreign exchange market. There are many factors that affect both the stock market and the foreign exchange market.

When investors and brokers look at the relative strength analysis, they are getting a picture of how the trends in the Forex should go. This analysis allows brokers to see current trends in the foreign exchange market and allows them to know if they are interested in buying or selling currency at any given time. This can help an investor or financial institution make educated decisions on which markets are gaining and which ones are losing.

There are many factors that affect the exchange rate in the Forex. These factors can include political events, governmental policies, inflation, and current trends in the importing and exporting business, consumer opinions and even natural disasters all over the world. The relative strength analysis looks at all of these factors. The past trends in the Forex are also taken into consideration, but are not the only thing that is looked at when forecasting this type of market.

The relative strength analysis compares all foreign currency and the exchange rates every day. The report will then be sorted by their strength rating and ranked according the previous week's rating. This report relies on at least 45 weeks of data so that sustained growth can be seen with ease. Using this analysis promises to be one of the most valuable tools of forecast the trends in the Forex. In addition, it can show the rating of stocks and rate them into which ones are the strongest. The stock market has a direct relation to the foreign exchange market because it reflects current trends in buying and selling, which will increase or decrease the value of currency.

The current trend in predicting the trends in the Forex is to use not only the relative strength analysis, but to also look at other factors such as the stock market barometers and economic factors. When investors and brokers look into all of these factors when forecasting the Forex, it makes for a highly reliable means of predicting trends. This can be the vital difference between making money and losing money on the foreign exchange market.

When using the relative strength analysis in relation to the foreign currency exchange, it is possible to tell which markets are performing well and which ones are not. The key is finding the markets and currency that are moving up on the ranking scale. It is important to remember that like stocks, the Forex is affected by a variety of factors. The relative strength analysis can help investors find which ones are good investments. This report is based mostly on a stock's closing price and the relative strength analysis is based on gains and losses. The report can calculate the markets report for any period in time.There are several benefits to using the relative strength analysis when attempting to forecast the Forex. When an investor looks at the relative strength of a certain stock, it affects the foreign exchange rate. One with a strong relative strength is ideal, but the value on these will not be low. Investors can look at a stock that is increasing in values and used the relative strength to measure whether or not this particular stock is moving up because it has a history of increasing or if it has a sustained high value. Stocks with a good relative strength over a constant, steady time period are good performers in the Forex market.

by David Mclauchlan

Forex Trading Indicators and the Ever Changing Market Conditions

2007-12-01T09:09:00.004-08:00

Once you enter the Forex trading world you will immediately notice the need of using technical analysis in order to find trends when looking at the forex charts and also the importance of being aware of when they first develop so you can ride the trend until it ends. The foreign exchange market is a very strong trending market, lots of ups and downs in short periods of time, and it's, therefore, a place where technical analysis can be very effective.

But you should always remember that the indicators are only giving you a high probability behavior the markets may show when you are trading, but will never tell you the behavior of the currency prices with total certainty.

If you want to become a profitable forex trader you will need to use as many technical indicators as you can, or create a personalized trading strategy based on a combination of these indicators, to recognize with the best accuracy possible the trend. In other words, a professional forex trader will try to identify the major trend, the intermediate trend, and the short-term trend and then construct his trades in that direction based on how long their rules allow him to hold a position.

The forex markets are always changing, that's why you should always have an open criterion when using your technical indicators. Markets will be changing and different combinations of indicators may be required with time in order to have the most accurate, highest probability, prediction of future currency price behaviors.

If the action of the market shows your judgment to be correct, then you must consider staying with the market' and look for the maximum profit on each trade, according to your risk-to-reward/equity management rules. If you happen to be in a bad day and the market goes against you, the smart trader will take profits and get out of that trade. In a narrow market, when prices are not going anywhere, but move within a narrow range, there is no sense in trying to anticipate when the next big movement is going to be.

So, you must always be alert and open to use as many and as different indicators in order to stay tuned with the market and become a profitable trader at the end of the day.

by Martin Redhead

Forex Traders Need To Know About Crossing Currency

2007-12-01T09:09:00.003-08:00

Why did the currency cross the road? No this has nothing to do with the term crossing currency

Crossing currency on the Forex is one of the most profitable ways to earn money for many investors. The Forex is unlike any other type of market in the world. The foreign exchange market is extremely liquid and involves over two trillion dollars everyday. The top three currencies that are most traded on the Forex are the US dollar, the Japanese yen and the Euro. All of these currencies are traded the most out of all other forms of currency.

With the foreign exchange currency being so large, it is very liquid. Crossing currency using the Forex allows a large amount of flexibility for the trader and investor. The Forex gives the trade the ability to buy and sell currency quickly so that they are never stuck in any investment. When investors use online trading as their form of crossing currency, the trading platform can be pre-set to the preferences of the trader. If the trade is not going as expected, the platform can be set to stop the trade, allowing the trader to lose less money while using the Forex.

Learning to trade on the foreign exchange, also called the Forex, market can be both exciting and profitable. In order to trade successfully on the Forex it is essential to understand the way the market works, the terminology and the trends. Brokers and financial institutions are often the best way for traders to learn how to use the Forex for profit.

When an investor or individual wants to trade one type of currency for another, it is called exchanging currency, or crossing currency. Currency crossing is the main goal of trading on the Forex. For example, if a business or investor has US dollars and needs to trade those into Japanese yens, a broker would do this on the Forex. Many investors trade currency to make a profit. When a certain type of currency is bought at a low exchange rate, the currency can be sold once the rate increases to turn a profit.

Learning to cross currency in the Forex can be complicated. The biggest factor in trading on the Forex is having knowledge about the Forex and how it works. In addition, there are many benefits of using the Forex for trading. Crossing currency gives traders the leverage to make large profits while keeping the risk of losing capital to a minimum. In ideal conditions, an investor that puts in $500 could potentially make over $100,000.

Crossing currency also allows traders and investors to profit in rising and falling markets. This is another difference between the stock market and the foreign exchange market. With the stock market, an investor can only make money when the shares are on the rise. When there is a falling "bear" market or the stocks decline, investors cannot make money on the stock market. When crossing currency in the Forex, this is not true. This is one appealing factor of trading on the Forex. Investors can make large amounts of profits when a currency pair is either up or down. Crossing currency in the right direction can always make profits.

Another benefit of using the Forex for currency crossing, or trading is that the Forex is always open. When investing the in the stock market, the trading is limited to when the market is open. It has a definite closing time during the business week. This is not true of the foreign exchange currency. The Forex is open all the time and does not close. Traders benefit from the ability to trade twenty-four hours a day using the Internet.

Learning to trade on the Forex can be easy when new investors go through an experienced broker or financial institution. Also, there are many ways to learn how to trade on the Forex using free demo accounts available on the Internet. These websites offer valuable resources and free ways for the new investor to practice using the Forex. This is very important for those who want to learn the ins and outs of crossing currency before opening an actual account. Mini Forex accounts are also a good way for the new investor to trade currency without having the risk of a regular account. A mini account allows traders to use a smaller amount of money as their initial investment.

by David Mclauchlan

How To Read Forex Charts: 5 Things You Must Know

2007-12-01T09:07:00.000-08:00

Learning the basic skills in forex, such as how to read forex charts, is really important.

This is because once you have this vital skill under your belt, it will be a lot easier and quicker when the time comes for you to learn and practice an actual forex trading system.

By the time you finish this article, you'll learn how to read forex charts, as well as know the pitfalls that can occur when reading them, especially if you haven't traded forex before.

Firstly, let's revise the basics of a forex trading as this relates directly to how to reade forex charts.

Each currency pair is always quoted in the same way. For example, the EURUSD currency pair is always as EURUSD, with the EUR being the base currency, and the USD being the terms currency, not the other way round with the USD first. Therefore if the chart of the EURUSD shows that the current price is fluctuating around 1.2155, this means that 1 EURO will buy around 1.2155 US dollars.

And your trade size (face value) is the amount of base currency that you're trading. In this example, if you want to buy 100 000 EURUSD, you're buying 100 000 EUROs.

Now let's have a look at the 5 important steps on how to read a forex chart:

1. If you buy the currency pair, that is, you're long the position, realise that you're looking for the chart of that currency pair to go up, to make a profit on the trade. That is, you want the base currency to strengthen against the terms currency.

On the other hand if you sell the currency pair to short the position, then you're looking for the chart of that currency pair to go down, to make a profit. That is, you want the base currency to weaken against the terms currency.

Pretty simple so far.

2. Always check the time frame displayed. Many trading systems will use multiple time frames to determine the entry of a trade. For example, a system may use a 4 hour and a 30 minute chart to determine the overall trend of the currency pair by using indicators such as MACD, momentum, or support and resistance lines, and then a 5 minute chart to look for a rise from a temporary dip to determine the actual entry.

So ensure that the chart you're looking at has the correct time frame for your analysis. The best way to do this is to set up your charts with the correct time frames and indicators on them for the system you're trading, and to save and reuse this layout.

3. On most forex charts, it is the BID price rather than the ask price that's displayed on the chart. Remember that a price is always quoted with a bid and an ask (or offer). For example, the current price of EURUSD may be 1.2055 bid and 1.2058 ask (or offer). When you buy, you buy at the ask, which is the higher of the 2 prices in the spread, and when you sell, you sell at the bid, which is the lower of the two prices.

If you use the chart price to determine an entry or exit, realise that when you place an order to sell when the chart price is say 1.330, then this is the price that you'll sell at assuming no slippage.

If on the other hand, you place an order to buy when the chart price is the same price, then you'll actually buy at 1.3333. A forex system will often determine whether your orders will be placed simply according to the chart price or whether you need to add a buffer when buying or selling.

Also note that on many platforms, when you're placing stop orders (to buy if the price rises above a certain price, or sell when the price falls below a certain price) you can select either "stop if bid" or "stop if offered".

4. Realise that the times shown on the bottom of forex charts are set to the particular time zone that the forex provider's charts are set to, be it GMT, New York time, or other time zones.

It's handy to have a world clock available on your computer desktop in order to convert the different time zones. This is important when you're trading major economic announcements.

You'll need to convert the time of an announcement to your local time, and the chart time, so you'll know when the announcement is going to happen, and therefore when you need to trade.

5. Finally, check whether the times on your forex charts corresponds to when the candle opens or when the candle closes. Your charting software may be different to someone else's in this way.

The reason I mention this, is that if you need to trade major economic announcements, either by entering a trade based on the movements that happen after the announcement, or to exit a trade before the announcement in avoid getting stopped out during it, then you need to be precise (to the minute!) as these trades are performed according to what happens at the 1 minute immediately after the announcement, not the candle afterwards!

So there you have it.

You now have the 5 essential keys to how to properly read forex charts, which will help you to avoid the common mistakes which many forex beginners make when looking at charts, and which will speed up your progress when you're looking at forex charting packages, and forex trading systems that you want to trade!

Now that you know this, practice looking at forex charts with each of these 5 points in mind.

So get to it!

by Mark Hamburg

What's the .382 Fibonacci Ratio in Forex Trading?

2007-12-01T09:06:00.001-08:00

It was mentioned in a past article that Fibonacci forex trading is the basis of many forex trading systems used around the world by profitable forex traders. These systems are all based on the famous Fibonacci ratios (.236, .50, .382, .618, etc.) and each of them can specialize in a particular ratio along with other minor indicators in order to make the pinpointing of the entry and exit levels as accurate and profitable as possible.

One of the widely used Fibonacci ratios is the 0.382 ratio. As it can be easily seen on any forex chart, currency prices are continually changing and they follow an oscillatory pattern with peaks and valleys. The limit of the peak is usually called a resistance level while the valley is usually called a support.

In order to find the 0.382 ratio level what you do is, first; measure the size of the drop or rise over your time of interest. Once you have that value you multiply this by 0.382. Now depending on what you are looking at, a rise or a drop on the price of the particular "currency pair" you are trading, you will add the last value you calculated to the total drop or subtract the value from the total rise.

These operations will give you the 0.382 Fibonacci ratio level, either for a rise or a drop on the chart you are analyzing. Once you have the value you can then start planning the strategy you will follow in order to make a high probability profit from this valuable information. For the 0.382 ratio level calculated for a recent rise in the "currency pair" exchange price, your calculated level will be a highly probable support and for the case of a level calculated for a recent drop of the prices your level will be a highly probable resistance.

Knowing this ahead of the market and having the proper secondary indicators, will give you a huge advantage over most forex traders, and that's something any trader would like they could count on. That's why Fibonacci trading is so widely accepted over the world, and of course, why it's so profitable and successful.

by Adrian Pablo

What's Fibonacci Forex Trading?

2007-12-01T09:04:00.001-08:00

Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques.

Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence, the definition of this sequence is that it's formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ...But in the case of currency trading what is more important for the forex trader is the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc.

These ratios are mathematical proportions prevalent in many places and structures in nature, as well as in many man made creations.

Forex trading can greatly benefit form this mathematical proportions due to the fact that the oscillations observed in forex charts, where prices are visibly changing in an oscillatory pattern, follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent, but so close as to be really amazing.

Fibonacci price points, or levels, for any forex currency pair can be calculated in advance so that the trader will know when to enter or exit the market if the prediction given by the Fibonacci forex day trading system he uses fulfills its predictions.

Many people tries to make this analysis overly complicated scaring away many new forex traders that are just beginning to understand how the forex market works and how to make a profit in it. But this is not how it has to be. I can't say it's a simple concept but it is quite understandable for any trader once he or she has grasped the basics and has had some practice trading using Fibonacci levels along with other secondary indicators that will help to improve the accuracy of the entry and exit point for every particular trade.

by Adrian Pablo

Pivot Points in Forex: Mapping your Time Frame

2007-12-01T08:57:00.000-08:00

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.

Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.

As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from "bull" to "bear" or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.

Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work?

They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating pivot points

There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).

Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open: 1.2386
High: 1.2474
Low: 1.2376
Close: 1.2458

The PP would be,
PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us?

It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.

Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT.

Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.

Support 1 (S1) = (PP * 2) - H
Resistance 1 (R1) = (PP * 2) - L
Support 2 (S2) = PP - (R1 - S1)
Resistance 2 (R2) = PP + (R1 - S1)

Where, H is the High of the previous period and L is the low of the previous period

Continuing with the example above, PP = 1.2439

S1 = (1.2439 * 2) - 1.2474 = 1.2404
R1 = (1.2439 * 2) - 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 - 1.2537) = 1.2537
S2 = 1.2439 - (1.2636 - 1.2537) = 1.2537

These levels are supposed to mark support and resistance levels for the current session.

On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.

S1, S2, R1 AND R2...? An Objective Alternative

As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.

We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.

Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method?

We at StraightForex (www.straightforex.com) use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio (RR) of any given trade based on where the is the market relative to the previous session.

by Raul Lopez

How to earn in Forex

2007-12-01T08:31:00.000-08:00

Forex, where the commodity to be traded is currency, and not stocks and shares, is a trading market which gives its investors, returns in the form of the relative value of one currency exchanged against another. Forex trading is therefore, always dealt in currency pairs with the major currency pairs being Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY), to name a few.

And it is with concurrent buying and selling of currencies that the trader hopes to make a profit on favorable exchange rate fluctuations. Exchange rates are always fluctuating, going down as well as up, within seconds and the whole art of trading lies in perfectly foreseeing the trend of the variation between two currencies.

But, how do you make money in such a competitive and incessant Trade market?

Well, here is an example to illustrate how…
Supposing the current bid/ask price for EUR/USD is going by the rate of 1.5027/30, giving you the option to buy 1 euro with 1.5030 US dollars or sell 1 euro for 1.5027 US dollars. Now, if you feel that the Euro is underrated against the US dollar, you would opt on buying Euros, selling your dollars at the same time. So you buy 100,000 euros by paying 150,300 dollars. You can then start analyzing the market, waiting for the exchange rates to rise. One can also opt in for Spot Forex Trading due to its benefits

As predicted, the rates begin to rise and then you decide a favorable rate at which you plan to sell your Euros to get a hefty profit. Supposing the Euro rises to 1.5090/93. Now, to realize your profits, you sell 100,000 euros at the current rate of 1.5090, and receive $150,900. You bought 100k Euros at 1.5030, paying $150,300. You sold 100k Euros at 1.5090, receiving $150900. That's a difference of $600 or in other words, you successfully earned a profit of $600.

Change and fluctuation, in any trading market is quiet frequent and rapid, especially in the Forex market, where these recurrent changes are also influenced by various other world events and factors like oil prices, interest rates and economic conditions. But with all these rapid fluctuations going on, the main aim of any Forex investor still remains on making profit. Every trader is predicting and waiting for the value of the currencies to change in his favor. You can also learn more about the Positions in forex

Forex Glossary

2007-12-01T08:22:00.000-08:00

Ask Price/ Offer Price
The ask and offer price is the price at which the market is ready to trade a specific currency. This is the price where, an investor can purchase the base currency. When seeing a quote, it is located on the right side.
For example, in the quote EUR/USD 1.4547/52, the ask price is 1.4552.

Base currency
The currency listed first in a Currency Pair is known as the Base currency.

Bids
A Bid is the price at which the investor is willing to purchase a currency.

Bid/Ask Spread
Simply stating, Bid/Ask spread is the variation between the bid and offer price. It can also be defined as the degree of difference in pips, amid the buying price and the selling price of a currency pair.

Broker
A person or an organization acting as an agent, putting together buyers and sellers for a commission or fee, can be defined as a Broker. They are the ones who work on behalf of their investors.

Counter Currency
The currency listed second in a Currency Pair is known as the Counter currency.

Currency symbols
EUR - Euro
AUD - Australian Dollar
CAD - Canadian Dollar
CHF - Swiss Franc
JPY - Japanese Yen
GBP - British Pound

Day Trading
Day trading refers to the buying and selling of positions within a single day’s trade.

Foreign Exchange
Also known as Forex or FX, it is the process of buying of one currency in exchange of other currency in an over-the-counter market.

Leverage
Leverage is the ratio of the deposited amount to the amount that can be traded. Find out Importance of Forex Leverage

Limit order
Limit orders let the Forex investors stop further trading and leave the market at preset profit objectives. It is an order which restricts the greatest price to be paid or the lowest price to be received.

Liquidity
Liquidity can be defined as the capacity of a market to allow fat transaction with negligible impact on the price stability.

Margin
Margin is the minimum amount required to be deposited before an investor starts trading. This can also be known as the initial amount with which the Forex trading account can be opened.

Pip / Point
When dealing in terms of quotes, prices are expressed in terms of Pips. Pips can be defined as “percentage in points” and are mostly the fourth decimal point i.e. 1/100th of 1%. A pip can also be defined as the smallest value at which an exchange of currency can take place.

Stop Loss Order
Stop/loss commands allow the investors to set an exit point for a loss. By limiting your losses to a pre set position, Stop/loss orders help investors control their risk conditions. 'Stop-loss' can lower an investor's exposure to risk by a large proportion.

Support
Price level for which intensive buying can lead to the price decreasing (down-trend).

Technical Analysis
The analysis based only on the technical market data (quotes) with the help of various technical indicators.

Trend
Direction of market which has been established with influence of different factors.

Unrealized (Floating) Profit/Loss
A profit/loss for your non-closed positions.

Useable Margin
Amount of money in the account that can be used for trading.

Used Margin
Amount of money in the account already used to hold open positions open.

Volatility
A statistical measure of the number of price changes for a given currency pair in a given period of time.

How To Trade Forex

2007-12-01T04:18:00.000-08:00

The foreign exchange market (Forex) offers many advantages to investors. But you need to know where to begin.

This short guide will give you the Forex basics, so you can quickly start participating in this fast growing market.

In the past, foreign exchange trading was limited to large players such as national banks and multi-national corporations. In the 1980's the rules were changed to allow smaller investors to participate using margin accounts. Margin accounts are the reason why Forex trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.

A Learning Curve

Forex is not simple, though, so you'll need some knowledge to make wise investment decisions. Although it is relatively easy to start trading on the Forex, there are risks involved.

Your first move as a beginner should be to find out as much as possible about the market before risking a dime.

Find A Broker

Forex traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Open an Account

Opening a Forex account is as simple as filling out a form and providing the necessary identification. The form includes a margin agreement which states that the broker may interfere with any trade deemed to be too risky. This is to protect the interests of the broker, since most trades are done using the broker's money.

Once your account has been established, you can fund it and begin trading.

Many brokers offer a variety of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in Forex trading for as little as $250. Standard accounts may have a minimum deposit of $1000 to $2500, depending on the broker. The amount of leverage (how much borrowed money you can use) varies with account type. High leverage accounts give you more money to trade for a given investment.

Trades are commission-free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread': the difference between bid and ask prices.

Paper Trading

Beginning traders are strongly advised get accustomed to Forex by doing "paper trades" for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools provided by most Forex brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new Forex investor should use these demo accounts at least until they are consistently showing profits.

Forex Software

Each broker has its own set of software tools for making transactions, but there are a few tools that are common to all Forex brokers. Real-time quotes, news feeds, technical analyses and charts, and profit-and-loss analyses are some of the features you can expect to see on most online brokers' web sites.

Almost every broker operates on the Internet. To access a broker's online services you'll need a reasonably modern computer, a fast Internet connection, and an up-to-date operating system. Once your account is set up, you can access it from any computer just by entering your account name and password. If for some reason you are unable get to a computer, most brokers will allow you to make trades over the phone.

There are lots of ways to make money. Forex trading is just one more potential stream of income -- if you are prepared to learn and practice.

Why Forex

2007-12-01T04:13:00.000-08:00

With more than $1.5 trillion USD being traded daily, the foreign exchange market has managed to become the world's largest financial market, over the last three decades. With the large minimum deal sizes and rigid financial requirements, the Forex market, till recently, was not explored by the common trader or individual investor. But now the average investors can also engage in Forex trading. Some of the advantages of Forex trading are as follows:

Liquidity. Forex is by far the most liquid financial market in the world with nearly 2 trillion dollars traded everyday. This ensures price stability, and you will always be able to open and close transactions. Also it is hard to manipulate the market in a extended manner.

24hr Market. The market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes on Friday at 5:00 pm EST when San Francisco terminates operations. There are transactions in practically every time zone, allowing active traders to choose at what time to trade.

Leverage trading. Trading the Forex Market offers a greater buying power than many other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have only 0.25% in margin of the total investment. For instance, a trader using 100:1 means that to have a US$100,000 position, only US$1,000 are needed on margin to be able to open that position.

Low Transaction costs. Almost all brokers offer commission free trading. The only cost traders incur in any transaction is the spread (difference between the buy and sell price of each currency pair). This spread could be as low as 1 pip (the minimum increment in any currency pair) in some pairs.

Low minimum investment. The Forex market requires less capital to start trading than any other markets. The initial investment could go as low as $300 USD, depending on leverage offered by the broker.

Specialized trading. The liquidity of the market allows us to focus on just a few instruments (or currency pairs) as our main investments (85% of all trading transactions are made on the seven major currencies). Allowing us to get to know better each instrument.

Trading from anywhere. If you do a lot of traveling, you can trade from anywhere in the world just having an internet connection.

What is Forex?

2007-12-01T04:10:00.000-08:00

Forex (Foreign Exchange, Forex currency exchange) simply means the buying of one currency and selling another at the same time. In other words, the currency of one country is exchanged for those of another. The currencies of the world are on a floating exchange rate, and are always traded in pairs Euro/Dollar, Dollar/Yen, etc. In excess of 85 percent of all daily transactions involve trading of the major currencies.

Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. The following notation is used for these currency pairs: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. You may consider them as "blue chips" of the FOREX market. No dividends are paid on currencies. The investment profits come from well known "buy low - sell high".

If you think one currency will appreciate against another, you may exchange that second currency for the first one and stay in it. In case everything goes as planned, some time later you may make the opposite deal - exchange this first currency back for that other - and collect profits.

Transactions on the FOREX market are fulfilled by dealers at major banks or FOREX brokerage companies. FOREX is the world wide market, so when you are sleeping in the North America some dealers in Europe are trading currencies with their Japanese counterparties. Therefore the FOREX market is active 24 hours a day and dealers at major institutions are working in three shifts. Clients may place take-profit and stop-loss orders with brokers for overnight execution.

Price movements on the FOREX market are very smooth and without gaps that you face almost every morning on the stock market. The daily turnover on the FOREX market is about $1.2 trillion, so investor can enter and exit position without problems. The fact is that the FOREX market never stops, even on the day of September-11, 2001 you could obtain two-side quotes on currencies.

The currency foreign exchange market is the largest and oldest financial market in the world. It is also called the foreign exchange market, or "FOREX" or "FX" market for short. It is the biggest and most liquid market in the world, and it is traded mainly through the 24 hour-a-day inter-bank currency market - the primary market for currencies. The forex market is a cash (or "spot") inter-bank market. By comparison, the currency futures market is only one per cent as big.

Unlike the futures and stock markets, trading of currencies is not centralized on an exchange. Forex literally follows the sun around the world. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S.

In the past, the forex inter-bank market was not available to small speculators due to the large minimum transaction sizes and often-stringent financial requirements. Banks, major currency dealers and the occasional huge speculator used to be the principal dealers. Only they were able to take advantage of the currency market's fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.

Today, foreign exchange market maker brokers such as FX Solutions are able to break down the larger sized inter-bank units, and offer small traders the opportunity to buy or sell any number of these smaller units (lots).

These brokers give virtually any size trader, including individual speculators or smaller companies, the option to trade the same rates and price movements as the large players who once dominated the market. Market makers quote buying and selling rates for currencies, and they profit on the difference between their buying and selling rates.

Forex is the acronym for Foreign Exchange Market. This is the biggest and most liquid market of the entire world today. One to three trillion dollars exchange hands at Forex every day. That’s a huge amount of money. No stock market exchange of any country come close to this.

This market is huge. It is a sea of money full of sharks and dangerous waters, but it is also the only market where you at least hypothetically can make $1,000,000 in two weeks starting with only $1,000.

I say hypothetically because what happens often is that people blindly gamble their money at Forex without knowing anything about it and they lose their shirt. That’s why I say to you: be careful! This market is profitable, but you need to learn the basics well, do your homework and demo trade a lot.

Just remember that 95% of traders lose money, 5% make it and less than 1% become rich at Forex. The nice thing about this market is that you can make money without creating any product or service, selling anything, nor advertising. You just trade some cash and get paid depending on your knowledge and expertise.

This is the market where banks, transactional corporations and individual traders exchange one currency for another. I am talking about the spot Forex market. You can trade at huge leverage as much as 400 to 1, meaning that for every dollar that you have for trading you can trade 400. For example if you have $1,000 on your account you can trade as much as $400,000.

This is dangerous. Most experienced traders won’t use such a high leverage. In the other hand, high leverage can be good if you learn how to use it in your favor. Anyway, that’s enough for the basics. If you want to learn more about how this market emerged, its history and so, then read my other articles.