During the last few weeks of topsy-turvy price movements I've been playing it safe. I like to buy carry trade pairs, but they've been heading down a lot.
Now, the big question, when will things start to turn around? A few of the pairs are getting into historically low valuations. For example, take a look at the GBPJPY pair on google finance -- click the 5yr option when it loads.
Sure, we could set new lows, perhaps for a months or years, but the odds of the UK having lower interests rates than Japan seems rather extreme. At some point, when things do finally settle down in another year or more, the GBPJPY will start to get attractive.
Other pairs, such as GBPUSD or EURUSD, which represent a bet against the US dollar make me nervous. While there is a possibility that some parts of the world, notably Australia, New Zealand and Asia, can avoid a recessionary period it's also very possible that the sinking US dollar will create a large enough trade advantage to shift the slowdown from the US to other countries as their own companies find it harder to compete internationally.
Anyway, I don't know how it will play out and from what I've learned buying a currency without having a clear notion of what you expect to happen is akin to gambling. Sure, you can be wrong when you believe something, but at least then you aren't throwing your money at the toss of the dice... and often it is possible to figure out what is going on to some degree.
So, for now, I'm keeping an eye on the JPY crosses. Perhaps the AUDJPY, EURJPY, GBPJPY and CADJPY will find themselves showing up in my account?
Aug 31, 2008
Forex can make you financially free
The Most Lucrative Part-time Job or Home Based Business Ever
The Forex market is relatively new when compared to the traditional
stock market. The Forex or Foreign Exchange Currency Market was open to the public in 1998. In a year it will be a decade old. This is one
of the major reasons most people do not know about the Forex.
The first reason why you should take a closer look at the
opportunities in the forex market is because of its liquidity
estimated at $2 trillion daily. The other reason is that it is
traded 24 hours of the day and 6 days in a week and participation is
open to all, from individuals like you and me to very large financial
institutions.
With the economic situation of our day worldwide, where there are no
more job guarantees it is not unusual to wake up one morning and find
oneself jobless. In such times, there is an increasing need for a lucrative part-time job or home based business. This is something that you can had absolute control over.
There are of course a multitude of money making opportunities out
there, but to be factual, it is very difficult to find a real
opportunity which will allow you to make a living from your home
computer. Even when you do, you would have to spend hours
doing market research and invest large sums of money to bring it to
fruition. That is if you have not gotten involved in a scam project.
Most of the opportunities on the web today, even if you make big
profits, may be held by someone else. In other words, when you
participate in those turnkey businesses, you do not have control.
In addition to all the "fire your boss today" opportunities, there is
a program on CNBC called Mad Money that seems to begetting to the
masses and unknowing students to invest in the stock market. In
reality this is a very expensive experiment especially for student
that do not have a lot of capital. Buying a Goggle stock for $400.00
a piece is very expensive given that your capital can be wiped out if
the stock goes against you by 100 points. That money could be better
invested in the Forex positions (trades).
The forex market which is also called FX is not really as difficult
as it seems. There is not that much technical vocabulary to learn,
and the risk is considerably low, if you compare it to the other
markets. If we assume that you have 40% loosing trades, you still
have 10 trades left to bring you profit.
The fact that part time job and home businesses seekers should really
consider is that you can choose when to trade, how much to trade and
where you want to trade; all you need is an Internet connection, and
you are ready to tap in the biggest market of the world with $ 2
trillion activity everyday in the same way banks and large corporation do.
Contrary to the trading of stocks, you do not have to start with a
$1000.00 capital. You can start with as little as $250.00.
When you trade a mini lot (10,000 units) of e.g. GBPUSD currency pair
your entry ticket costs $28.00. So when the pair goes your way 1
point, you are $1.00 in profit and vice versa.
You can also trade lesser trading units and you can trade for as
little as $1.00. It is therefore possible to turn a $28.00 investment
to a profit of $100.00 in 24 hours if the currency moves in your
direction 103 points. Imagine been able to do this 2 times a week. In
a good week, this pair moves an average of 400 points.
The Forex market is not a get rich quick scheme it is easy to learn
and understand. It is also easy to make money in the forex if you let
someone dedicated to your success teach you.
Mercedes made more money with FOREX trading than with car manufacturing this year. It is a good way to make $100(0) a day.
Trade without money for 3-6 months on paper, than when you learn
start trading real money. Dont be greedy. 10-20 pips a day is enough.
Start with $250 and build it up to thousands slowly. When you
become a successful trader, you can live anywhere on the planet,
and never have to be dependent on a JOB (Just Over Broke).
1.
Download Metatrader 4 from:
http://www.interbankfx.com/
WHEN YOU FOLLOW THE RULES, YOU WILL MAKE MONEY !
YOU CAN QUIT YOUR JOB NEXT YEAR ...
90 % OF NEWCOMERS FAIL BECAUSE OF GREED, SAME AS IN LAS VEGAS ...
Read and study the whole thread.
20 pips = $20 a day
20 pips = $200 a day
20 pips = $2000 a day
George Soros from Hungary come to this country and made billions on Forex. In one single day he made 1 billion ... really the sky is the limit ...
2.
Here is the thread:
http://fxovereasy.50webs.com/Home.html
Let me known your results. This is my gift for you all.
Some traders searched for years unsuccessfully for this gift.
You can learn this on your own in few days.
I am artist and a philosopher with no talent for numbers. But you
dont need any talent for this, just follow the rules.
Dalibor
http://www.myspace.com/dalibor777
++++++++++++++++++++++++++++++++++++++++++
Here is the detailed description of how to install this system
in to your Metatrader:
First down load Metatrader 4 or Strategybuilder FX MT4 (there is a downloads link at the top of the page on this forum. My understanding is that the Metatrader 4 and Strategybuilderfx 4 are the identical. Once it is downloaded then double click to open it and make sure it is operational...then close it down.
Now go to http://fxovereasy.50webs.com/Home.html click on "Indicator downloads" which will open up the list of indicators.
If you left click on the top one (SHI Channels) you will probably get text. So right click on it and you'll get a drop down window...click on "Save target as..." (I found that sometimes when I did the right click first I would not get the window that contained "Save target as" so I found that I had to left click first...then click back and then right click), now you will see a "Save as" window.
In the "Save in" window at the top you want it to read "Local Disk (C). Here is how you can get it to say that without typing it in... click on the arrow at the right side of the upper box. You will now see a drop down window...in it you will see "Local Disk (C)". Click or double click on it and it should then open up it the "Save In" box at the top. Now in the contents below you will see "Program Files". Click or double on it and "Program Files will now be in the "Save in" box (Ifound that if I clicked on the little file folder to the left of the text, it opened easier). Below you'll find "Strategybuilderfx 4 or Metrader 4". Click or double click on it and "Strategybuilderfx4 or Metatrador 4 will now be in the "Save in" box above with it's contents showing below. Find "experts" below, click or double click on it and "experts with appear in the "Save in" box above. Now you will find "indicators", on which you will click or double click and "indicators" will now appear in the "Save in" box above with nothing in the large area below.
Down at the bottom right corner click on "Save"...now you are finished downloading that indicator.
Now go back to the ForexOvereasy indicator download page and download the next indicator. You should find that when you click on "Save target as" it will take you directly to the last step, with "Indicators" already in the "Save in" box, so all you have to do is click on "Save" and its finished and you're ready to download the next indicator. Don't forget to go back to the home page and download the "New Stuff".
Now that your indicators are all downloaded, go ahead and open your "Strategybuilderfx4/ Metratrader 4.
On the left side under "Navigator" click on the + next to "Custom Indicators" which should open up and show you lots of indicators which include the ones you just downloaded. Right click on an indicator and then click on "Attach to chart". Do the same with all the indicators that you want to add...and you should be ready to go.
You can switch the chart over to candlestick by clicking on the candlestick indicator at the top just to the right of center. I suggest you do this first.
I find this tradestation a little difficult to use but that may be because I'm not used to it. It has lots of features.
If you find that you want to delete an indicator, just right click on it and click on the "Delete indicator" line. (Some of the charts may already have some indicators installed that you may not want.)
I have some charts where the candles are very close together and some that are just right...and I haven't figured out the remedy.
Here is the chat thread, but dont complicate a great system, which cant be automated:
http://www.strategybuilderfx.com/showthread.php?t=15112
On this one page you have it all. If you follow the rules, and control your greed, you will become independently wealthy with this system. You are extremely blessed to read this page, as millions of new traders gave up from a lack of a good system. Many professional trader millionaires said, that this is the best system and if you cant work with this system, FOREX is not for you!
See this chart how I made 50 pips (it could be $50 at start, $500 or $5000 every day) :
http://img389.imageshack.us/img389/4428/usdchfii1.jpg
*************************************************
I see most people trying to make a system that should generate 1000 pips or 2000 pips per month, and try to enter every possible move. But the fact is, if you want to make $18 million in 5 years, all you need is discipline and 100 pips per month. Don't believe me? Read on....
Assuming that there are 20 trading days a month, 100 pips would be an average of 5 pips per day. It doesnt matter if you do day trading or positional, if you do 1 trade or 100 trades, all you need is a system that can consistently make 100 pips for you every month.
RULES:
1) You need a system that can make 100 pips consistently every month per lot.
2) Opening balance would be $500
3) Trade is done only in mini lots
4) 0.1 lot is allowed for every $500 balance. So if you have $1000 you can trade 0.2 lots and if you have $5000 you can trade 1.0 lots and so on.
5) Emotions like greed, fear and hope have to be barred out.
6) Once you made 100 pips in a particular month, you do not have to trade till the month is over. So if you make 100 pips in 2 days, you can quit for the entire month.
RESULTS:
After 12 months you will have $3,100
After 24 months you will have $26,000
After 36 months you will have $230,100
After 48 months you will have $2,050,300
After 60 months you will have $18,278,700
Suprised ?
So maybe you'd say no system can make 100 pips consistenly per month. OK, lets say if you were right. Would you agree with me that its comparatively easier to make 10 pips per month? Even if you target 10 pips per month, you would yet end up with $1.8m in 5 years using the same methodology.
Trading is like painting a canvas, you should step back and try to look at the bigger picture than a trade or a single day alone. It is so true.
So get rid of your greed and trade with nothing but common sense. Plz see the attachment for the break up of gains per month.
http://www.traderology.com/forums/index.php?act=Attach&type=post&id=3
*********************************************************
God bless you all and I wish you a happy new lifestyle ...
The Forex market is relatively new when compared to the traditional
stock market. The Forex or Foreign Exchange Currency Market was open to the public in 1998. In a year it will be a decade old. This is one
of the major reasons most people do not know about the Forex.
The first reason why you should take a closer look at the
opportunities in the forex market is because of its liquidity
estimated at $2 trillion daily. The other reason is that it is
traded 24 hours of the day and 6 days in a week and participation is
open to all, from individuals like you and me to very large financial
institutions.
With the economic situation of our day worldwide, where there are no
more job guarantees it is not unusual to wake up one morning and find
oneself jobless. In such times, there is an increasing need for a lucrative part-time job or home based business. This is something that you can had absolute control over.
There are of course a multitude of money making opportunities out
there, but to be factual, it is very difficult to find a real
opportunity which will allow you to make a living from your home
computer. Even when you do, you would have to spend hours
doing market research and invest large sums of money to bring it to
fruition. That is if you have not gotten involved in a scam project.
Most of the opportunities on the web today, even if you make big
profits, may be held by someone else. In other words, when you
participate in those turnkey businesses, you do not have control.
In addition to all the "fire your boss today" opportunities, there is
a program on CNBC called Mad Money that seems to begetting to the
masses and unknowing students to invest in the stock market. In
reality this is a very expensive experiment especially for student
that do not have a lot of capital. Buying a Goggle stock for $400.00
a piece is very expensive given that your capital can be wiped out if
the stock goes against you by 100 points. That money could be better
invested in the Forex positions (trades).
The forex market which is also called FX is not really as difficult
as it seems. There is not that much technical vocabulary to learn,
and the risk is considerably low, if you compare it to the other
markets. If we assume that you have 40% loosing trades, you still
have 10 trades left to bring you profit.
The fact that part time job and home businesses seekers should really
consider is that you can choose when to trade, how much to trade and
where you want to trade; all you need is an Internet connection, and
you are ready to tap in the biggest market of the world with $ 2
trillion activity everyday in the same way banks and large corporation do.
Contrary to the trading of stocks, you do not have to start with a
$1000.00 capital. You can start with as little as $250.00.
When you trade a mini lot (10,000 units) of e.g. GBPUSD currency pair
your entry ticket costs $28.00. So when the pair goes your way 1
point, you are $1.00 in profit and vice versa.
You can also trade lesser trading units and you can trade for as
little as $1.00. It is therefore possible to turn a $28.00 investment
to a profit of $100.00 in 24 hours if the currency moves in your
direction 103 points. Imagine been able to do this 2 times a week. In
a good week, this pair moves an average of 400 points.
The Forex market is not a get rich quick scheme it is easy to learn
and understand. It is also easy to make money in the forex if you let
someone dedicated to your success teach you.
Mercedes made more money with FOREX trading than with car manufacturing this year. It is a good way to make $100(0) a day.
Trade without money for 3-6 months on paper, than when you learn
start trading real money. Dont be greedy. 10-20 pips a day is enough.
Start with $250 and build it up to thousands slowly. When you
become a successful trader, you can live anywhere on the planet,
and never have to be dependent on a JOB (Just Over Broke).
1.
Download Metatrader 4 from:
http://www.interbankfx.com/
WHEN YOU FOLLOW THE RULES, YOU WILL MAKE MONEY !
YOU CAN QUIT YOUR JOB NEXT YEAR ...
90 % OF NEWCOMERS FAIL BECAUSE OF GREED, SAME AS IN LAS VEGAS ...
Read and study the whole thread.
20 pips = $20 a day
20 pips = $200 a day
20 pips = $2000 a day
George Soros from Hungary come to this country and made billions on Forex. In one single day he made 1 billion ... really the sky is the limit ...
2.
Here is the thread:
http://fxovereasy.50webs.com/Home.html
Let me known your results. This is my gift for you all.
Some traders searched for years unsuccessfully for this gift.
You can learn this on your own in few days.
I am artist and a philosopher with no talent for numbers. But you
dont need any talent for this, just follow the rules.
Dalibor
http://www.myspace.com/dalibor777
++++++++++++++++++++++++++++++++++++++++++
Here is the detailed description of how to install this system
in to your Metatrader:
First down load Metatrader 4 or Strategybuilder FX MT4 (there is a downloads link at the top of the page on this forum. My understanding is that the Metatrader 4 and Strategybuilderfx 4 are the identical. Once it is downloaded then double click to open it and make sure it is operational...then close it down.
Now go to http://fxovereasy.50webs.com/Home.html click on "Indicator downloads" which will open up the list of indicators.
If you left click on the top one (SHI Channels) you will probably get text. So right click on it and you'll get a drop down window...click on "Save target as..." (I found that sometimes when I did the right click first I would not get the window that contained "Save target as" so I found that I had to left click first...then click back and then right click), now you will see a "Save as" window.
In the "Save in" window at the top you want it to read "Local Disk (C). Here is how you can get it to say that without typing it in... click on the arrow at the right side of the upper box. You will now see a drop down window...in it you will see "Local Disk (C)". Click or double click on it and it should then open up it the "Save In" box at the top. Now in the contents below you will see "Program Files". Click or double on it and "Program Files will now be in the "Save in" box (Ifound that if I clicked on the little file folder to the left of the text, it opened easier). Below you'll find "Strategybuilderfx 4 or Metrader 4". Click or double click on it and "Strategybuilderfx4 or Metatrador 4 will now be in the "Save in" box above with it's contents showing below. Find "experts" below, click or double click on it and "experts with appear in the "Save in" box above. Now you will find "indicators", on which you will click or double click and "indicators" will now appear in the "Save in" box above with nothing in the large area below.
Down at the bottom right corner click on "Save"...now you are finished downloading that indicator.
Now go back to the ForexOvereasy indicator download page and download the next indicator. You should find that when you click on "Save target as" it will take you directly to the last step, with "Indicators" already in the "Save in" box, so all you have to do is click on "Save" and its finished and you're ready to download the next indicator. Don't forget to go back to the home page and download the "New Stuff".
Now that your indicators are all downloaded, go ahead and open your "Strategybuilderfx4/ Metratrader 4.
On the left side under "Navigator" click on the + next to "Custom Indicators" which should open up and show you lots of indicators which include the ones you just downloaded. Right click on an indicator and then click on "Attach to chart". Do the same with all the indicators that you want to add...and you should be ready to go.
You can switch the chart over to candlestick by clicking on the candlestick indicator at the top just to the right of center. I suggest you do this first.
I find this tradestation a little difficult to use but that may be because I'm not used to it. It has lots of features.
If you find that you want to delete an indicator, just right click on it and click on the "Delete indicator" line. (Some of the charts may already have some indicators installed that you may not want.)
I have some charts where the candles are very close together and some that are just right...and I haven't figured out the remedy.
Here is the chat thread, but dont complicate a great system, which cant be automated:
http://www.strategybuilderfx.com/showthread.php?t=15112
On this one page you have it all. If you follow the rules, and control your greed, you will become independently wealthy with this system. You are extremely blessed to read this page, as millions of new traders gave up from a lack of a good system. Many professional trader millionaires said, that this is the best system and if you cant work with this system, FOREX is not for you!
See this chart how I made 50 pips (it could be $50 at start, $500 or $5000 every day) :
http://img389.imageshack.us/img389/4428/usdchfii1.jpg
*************************************************
I see most people trying to make a system that should generate 1000 pips or 2000 pips per month, and try to enter every possible move. But the fact is, if you want to make $18 million in 5 years, all you need is discipline and 100 pips per month. Don't believe me? Read on....
Assuming that there are 20 trading days a month, 100 pips would be an average of 5 pips per day. It doesnt matter if you do day trading or positional, if you do 1 trade or 100 trades, all you need is a system that can consistently make 100 pips for you every month.
RULES:
1) You need a system that can make 100 pips consistently every month per lot.
2) Opening balance would be $500
3) Trade is done only in mini lots
4) 0.1 lot is allowed for every $500 balance. So if you have $1000 you can trade 0.2 lots and if you have $5000 you can trade 1.0 lots and so on.
5) Emotions like greed, fear and hope have to be barred out.
6) Once you made 100 pips in a particular month, you do not have to trade till the month is over. So if you make 100 pips in 2 days, you can quit for the entire month.
RESULTS:
After 12 months you will have $3,100
After 24 months you will have $26,000
After 36 months you will have $230,100
After 48 months you will have $2,050,300
After 60 months you will have $18,278,700
Suprised ?
So maybe you'd say no system can make 100 pips consistenly per month. OK, lets say if you were right. Would you agree with me that its comparatively easier to make 10 pips per month? Even if you target 10 pips per month, you would yet end up with $1.8m in 5 years using the same methodology.
Trading is like painting a canvas, you should step back and try to look at the bigger picture than a trade or a single day alone. It is so true.
So get rid of your greed and trade with nothing but common sense. Plz see the attachment for the break up of gains per month.
http://www.traderology.com/forums/index.php?act=Attach&type=post&id=3
*********************************************************
God bless you all and I wish you a happy new lifestyle ...
Part Time Currency Trader
The harder part is being a currency trader that doesn't lose money. You see, according to the scuttlebutt on the forums, about 90% of new traders end up losing their money to the market.
Are you thinking about trying your hand?
I'm not here to talk you out of it. I myself am a part time currency trader. By day I work at my office job and by night I fight crime with a mask and cape. Wait, no, that's not right. By night I trade online when family duties allow me to squander a chunk of time.
Trading part time has it's challenges. You will see endless market movements that you did not participate in. You will miss opportunities to open or close a position even though your ideas about what would happen next were proven right. In fact, very a large part of trading well involves being able to deal with the psychological aspects of trading, whether part time or not.
If you read other posts in my blog, such as this one on trading philosophy , you'll see that I recommend working with very small trades. If you take larger trades, relative to your available capital, you'll find the emotional stress greatly magnified. It is very difficult to make good decisions as you watch your capital evaporate before your eyes.
Nothing will drive you from the market quicker than watching your capital shrink, panicking and saving what little you can, and then watching the market reverse leaving you without a stake. Or, perhaps worse, you do get back in after seeing a healthy rise, only to watch the market reverse yet again and wreak havoc on your capital once again.
It happens. I'm sure it happens a lot.
Did I mention that I'm not trying to talk you out of becoming a currency trader? It certainly isn't impossible to trade successfully but you really have to understand that there are many different ways to be unsuccessful. One very easy way to fail is to enter the market during a period in which it is easy to understand market behavior, think that trading is quite easy, and then have the market turn upside down and brutally fleece you.
Let's see. Yes, another painful less is developing the discipline to set stops and then have them tripped trivially, while the market does in fact go in the direction that you expected. Of course, this sets you up for the opposite, hanging on to a trade endlessly expecting to go as you expected, while it sucks up more and more capital.
My advice, do become a currency trader. Take your time. Learn with a practice account. Eventually, switch to a micro or nano account and trade with very small amounts of money. Continue to play with very small capitalizations until you have blown up your account once or twice -- this happens when you get a margin call and all your funds (except active margin) are forfeited.
Take the long view. There is always going to be another opportunity. No currency pair moves only up or only down. When trading part time you must either make accurate predictions or tread softly enough that the market can't move far enough to cause a margin call.
Anyway, to get into some information you can act on, if you are totally new to the game you'll want to know the following:
* Most, if not all, companies that offer online foreign exchange trading provide free forex demo accounts. These practice accounts are the same as live accounts except of course that you don't trade real money.
* A currency trading platform is simply a fancy name for what is usually branded currency trading software. This software will let you view charts for various currency pairs, add indicators and execute trades
* Forex trading is global. You can trade starting on Monday moring in Asia until Friday night in New York. Trading is 24x7 during this period though each trading session will offer differing market volume and behavior.
* If you are looking for a place to open your first forex demo account I'd suggest Oanda. To ensure that you don't think I'm compensated to say that I'll ask you to search Google to find them. They are a reputable company that allows you to trade with very small amounts -- which is great for starting out.
Good luck friend, I wish you every success.
Are you thinking about trying your hand?
I'm not here to talk you out of it. I myself am a part time currency trader. By day I work at my office job and by night I fight crime with a mask and cape. Wait, no, that's not right. By night I trade online when family duties allow me to squander a chunk of time.
Trading part time has it's challenges. You will see endless market movements that you did not participate in. You will miss opportunities to open or close a position even though your ideas about what would happen next were proven right. In fact, very a large part of trading well involves being able to deal with the psychological aspects of trading, whether part time or not.
If you read other posts in my blog, such as this one on trading philosophy , you'll see that I recommend working with very small trades. If you take larger trades, relative to your available capital, you'll find the emotional stress greatly magnified. It is very difficult to make good decisions as you watch your capital evaporate before your eyes.
Nothing will drive you from the market quicker than watching your capital shrink, panicking and saving what little you can, and then watching the market reverse leaving you without a stake. Or, perhaps worse, you do get back in after seeing a healthy rise, only to watch the market reverse yet again and wreak havoc on your capital once again.
It happens. I'm sure it happens a lot.
Did I mention that I'm not trying to talk you out of becoming a currency trader? It certainly isn't impossible to trade successfully but you really have to understand that there are many different ways to be unsuccessful. One very easy way to fail is to enter the market during a period in which it is easy to understand market behavior, think that trading is quite easy, and then have the market turn upside down and brutally fleece you.
Let's see. Yes, another painful less is developing the discipline to set stops and then have them tripped trivially, while the market does in fact go in the direction that you expected. Of course, this sets you up for the opposite, hanging on to a trade endlessly expecting to go as you expected, while it sucks up more and more capital.
My advice, do become a currency trader. Take your time. Learn with a practice account. Eventually, switch to a micro or nano account and trade with very small amounts of money. Continue to play with very small capitalizations until you have blown up your account once or twice -- this happens when you get a margin call and all your funds (except active margin) are forfeited.
Take the long view. There is always going to be another opportunity. No currency pair moves only up or only down. When trading part time you must either make accurate predictions or tread softly enough that the market can't move far enough to cause a margin call.
Anyway, to get into some information you can act on, if you are totally new to the game you'll want to know the following:
* Most, if not all, companies that offer online foreign exchange trading provide free forex demo accounts. These practice accounts are the same as live accounts except of course that you don't trade real money.
* A currency trading platform is simply a fancy name for what is usually branded currency trading software. This software will let you view charts for various currency pairs, add indicators and execute trades
* Forex trading is global. You can trade starting on Monday moring in Asia until Friday night in New York. Trading is 24x7 during this period though each trading session will offer differing market volume and behavior.
* If you are looking for a place to open your first forex demo account I'd suggest Oanda. To ensure that you don't think I'm compensated to say that I'll ask you to search Google to find them. They are a reputable company that allows you to trade with very small amounts -- which is great for starting out.
Good luck friend, I wish you every success.
Lessons From A Trader''s Diary
By Boris Schlossberg, Senior Currency Strategist
Almost every successful businessman will tell you that record keeping is critical to running an efficient business. Whether designing sophisticated aeronautics or simply selling scented soap, all businesses record and analyze their transactions to refine and optimize execution. When it comes to trading FX, however, very few traders diligently record and review their trades. FX trading, with its instantly dealable rates and self-organizing accounting software, makes it easy to forsake the discipline of keeping a trading diary. Yet a diary can improve a trader''s performance far more than any piece of advanced technical analysis software or even a $2,000-per-day trading seminar. This article will outline what to record in your journal and will provide an example from the writer''s own trading diary.
Why is keeping a trading diary so valuable? First, as human beings with faulty memories, we simply forget many of the circumstances surrounding our best and worst trades and, as a result, we learn little from them if they are not recorded. Second, the gap between what we think we do and what we actually do during trading can be embarrassingly large - a problem that can easily be identified with proper note taking. Finally, the mere act of keeping a diary introduces a methodical element to trading that prevents us from trading randomly and impulsively - the culprit behind most trading disasters.
Keeping a diary need not be cumbersome or complicated. Here is a list of three key issues that should be covered in every Trade:
1. What did you trade and why?
The reason for a trade can be either fundamental or technical (preferably both), but there must be a reason. Too many retail traders put on a trade because they think that prices have either risen or fallen "enough", without any technical or fundamental justification for their opinions. Worse, many traders get into positions out of sheer boredom, forcing a trade and then spending the rest of the time trying to justify it. Even if boredom is the primary driver for the trade, having a diary will make the trader record that fact and he or she will be able to see the consequences of such behavior.
2. Where is your stop and limit and why?
It is astonishing how many traders get into a trade without any clear idea of where to take a profit or when to get out if the trade moves against them. However, by writing down specific stop and limit orders, the trader consciously plans ahead for any contingency that may occur. Even if a trader disregards the initial stop in the heat of the battle, the act of recording all of that activity will be invaluable in doing post-trade analysis and enforcing better discipline on the next trade.
3. Did the trade work out as planned?
There is often an enormous gap between how the trade setup looks on charts or through the prism of backtesting software and the emotional reality of having money at risk. Comparing the difference between the two can help traders understand their strengths and weaknesses and improve long-term performance.
Because trading is such a visual craft, attaching a chart with annotations will complete the diary process by providing a pictorial reference point for further study.
Conclusion
The act of maintaining a diary crystallized my dominant behavioral patterns, clearly showing that I am not capable of holding most of my positions long enough to achieve a 2:1 risk/reward pattern. In my case, it is even more critical to choose only the highest probability setups that have an expectancy rate of better than 60% in order for my trading to succeed.
For other (more patient) traders, the diary process may reveal that they should expand their risk parameters in order to allow for the possibility of capturing larger gains. Regardless of the conclusion, the process of diary writing reveals the true human nature of trading tose clean, crisp charts and the coldly efficient results of backtesting systems simply cannot convey. It also demonstrates why computerized systems have such a difficult time trading markets. In fact, I have witnessed the results of hundreds of systems trade in real time and not one of them was profitable in the long term. Trading requires all of our emotional and analytical capabilities in order to produce success. The act of keeping a trading diary helps us better understand the demons that drive us and, in turn, makes us better traders.
Almost every successful businessman will tell you that record keeping is critical to running an efficient business. Whether designing sophisticated aeronautics or simply selling scented soap, all businesses record and analyze their transactions to refine and optimize execution. When it comes to trading FX, however, very few traders diligently record and review their trades. FX trading, with its instantly dealable rates and self-organizing accounting software, makes it easy to forsake the discipline of keeping a trading diary. Yet a diary can improve a trader''s performance far more than any piece of advanced technical analysis software or even a $2,000-per-day trading seminar. This article will outline what to record in your journal and will provide an example from the writer''s own trading diary.
Why is keeping a trading diary so valuable? First, as human beings with faulty memories, we simply forget many of the circumstances surrounding our best and worst trades and, as a result, we learn little from them if they are not recorded. Second, the gap between what we think we do and what we actually do during trading can be embarrassingly large - a problem that can easily be identified with proper note taking. Finally, the mere act of keeping a diary introduces a methodical element to trading that prevents us from trading randomly and impulsively - the culprit behind most trading disasters.
Keeping a diary need not be cumbersome or complicated. Here is a list of three key issues that should be covered in every Trade:
1. What did you trade and why?
The reason for a trade can be either fundamental or technical (preferably both), but there must be a reason. Too many retail traders put on a trade because they think that prices have either risen or fallen "enough", without any technical or fundamental justification for their opinions. Worse, many traders get into positions out of sheer boredom, forcing a trade and then spending the rest of the time trying to justify it. Even if boredom is the primary driver for the trade, having a diary will make the trader record that fact and he or she will be able to see the consequences of such behavior.
2. Where is your stop and limit and why?
It is astonishing how many traders get into a trade without any clear idea of where to take a profit or when to get out if the trade moves against them. However, by writing down specific stop and limit orders, the trader consciously plans ahead for any contingency that may occur. Even if a trader disregards the initial stop in the heat of the battle, the act of recording all of that activity will be invaluable in doing post-trade analysis and enforcing better discipline on the next trade.
3. Did the trade work out as planned?
There is often an enormous gap between how the trade setup looks on charts or through the prism of backtesting software and the emotional reality of having money at risk. Comparing the difference between the two can help traders understand their strengths and weaknesses and improve long-term performance.
Because trading is such a visual craft, attaching a chart with annotations will complete the diary process by providing a pictorial reference point for further study.
Conclusion
The act of maintaining a diary crystallized my dominant behavioral patterns, clearly showing that I am not capable of holding most of my positions long enough to achieve a 2:1 risk/reward pattern. In my case, it is even more critical to choose only the highest probability setups that have an expectancy rate of better than 60% in order for my trading to succeed.
For other (more patient) traders, the diary process may reveal that they should expand their risk parameters in order to allow for the possibility of capturing larger gains. Regardless of the conclusion, the process of diary writing reveals the true human nature of trading tose clean, crisp charts and the coldly efficient results of backtesting systems simply cannot convey. It also demonstrates why computerized systems have such a difficult time trading markets. In fact, I have witnessed the results of hundreds of systems trade in real time and not one of them was profitable in the long term. Trading requires all of our emotional and analytical capabilities in order to produce success. The act of keeping a trading diary helps us better understand the demons that drive us and, in turn, makes us better traders.
Growing Pain in Forex Trading
To become a mature trader (not master, also not a gambler I hope) I think that people will passed the growing pain process in their trading.
First trade maybe we still in new luck comer syndrome and got excited that this is a field to grow your money. We almost relied on price movement and didn’t know about system and indicator help, we just thought about profit.
After got hit by the market price movement, then we try to understand all the background behind the price. We started to trust our own indicator, own understanding in forex system, money management, but still not in maximum achievement in profit. We even might be always remembered the first profit that we have reached before and got regret couldn’t get it anymore. This is I called growing pain process. Because in a side, we already more careful with the system and market, but still in the process to build the mentality in discipline, in managing the greed and the fear between.
I started become a serious trader still not in one year, and got realized that to reduce all the pains from forex trading starting from self management just like others job that I usually did before. So, profit is not the big issue in every business, the important thing is the continuity to earn the profit even in slow growth.
I’m sure that every friend of mine or other good traders had already got the nice system for themselves (both in technical, or money management) and realized that system is not 100% reliable. So it’s still need human control / human sense to improve the result. So maybe practice makes us better, but managing the balancing of greed and fear suppose erases our pain and keep the margin up.
What do you thought ? Any opinion or experiences that you want to share in your growing pain process ??.
First trade maybe we still in new luck comer syndrome and got excited that this is a field to grow your money. We almost relied on price movement and didn’t know about system and indicator help, we just thought about profit.
After got hit by the market price movement, then we try to understand all the background behind the price. We started to trust our own indicator, own understanding in forex system, money management, but still not in maximum achievement in profit. We even might be always remembered the first profit that we have reached before and got regret couldn’t get it anymore. This is I called growing pain process. Because in a side, we already more careful with the system and market, but still in the process to build the mentality in discipline, in managing the greed and the fear between.
I started become a serious trader still not in one year, and got realized that to reduce all the pains from forex trading starting from self management just like others job that I usually did before. So, profit is not the big issue in every business, the important thing is the continuity to earn the profit even in slow growth.
I’m sure that every friend of mine or other good traders had already got the nice system for themselves (both in technical, or money management) and realized that system is not 100% reliable. So it’s still need human control / human sense to improve the result. So maybe practice makes us better, but managing the balancing of greed and fear suppose erases our pain and keep the margin up.
What do you thought ? Any opinion or experiences that you want to share in your growing pain process ??.
Aug 29, 2008
Decoupling Debunked
When the credit crisis kicked off in 2007, several analysts quietly began to circulate the theory of "decoupling," which asserted the global economy was strong enough to weather a downturn in the US economy. In other words, it was expected that the credit crisis would be contained within the US, and the rest of the world would plod along, unaffected. This notion now appears to be completely without merit, except in a few isolated cases.
Instead, economies from Europe to Asia are sinking, and sinking fast. Some economies, namely Japan and Germany, have even begun to contract! Canada and Australia may slide into recession, regardless of what happens in commodity markets. Within this context, the Dollar's 10% rally is not much of a mystery. In other words, this rally is probably more a function of economic weakness in other countries than of US economic strength. In addition, the end of de-coupling works both ways; a global economic downturn could further harm the US. A wave of negative economic data and/or the next round of debt write-downs could send the Dollar spiraling downwards. The Telegraph reports:
We are not witnessing a dollar rally so much as a collapse in European and commodity currencies. The race to the bottom has begun in earnest.
Read More: Dollar surge will not stop America feeling the effects of a global crunch
Aug 28, 2008
Bernanke: Fed to Hold Rates Steady
In his headline remarks at the annual conference for members of America's Federal Reserve Bank, Chairman Ben Bernanke reiterated his comfort with the current level of interest rates. He argued that while interest rates are certainly low by historical standards, a decline in inflation over the next few months should bridge the gap between the two. In addition, the credit crisis remains ongoing, and it is clear that Bernanke is more concerned about economic growth than inflation. Bernanke's comments are supported by the recent Dollar rally and the simultaneous easing of commodity prices. At the same time, data indicate that over the last twelve months, prices have risen at the fastest pace in nearly 17 years. If futures contracts are any indication, investors basically accept Bernanke's position, but not by much. Bloomberg News reports:
Traders added to bets that the Fed will increase borrowing costs by the end of the year, futures prices show. Odds of at least a quarter point boost in the main rate by the end of December rose to 32 percent from 18 percent yesterday.
Read More: Bernanke Says U.S. Inflation Should Slow Into 2009
Commentary: Dollar Rally- Fact or Fiction?
Over the last month, the Dollar has rallied tremendously, rising over 7% against its main adversary, the Euro. The price of gold, which serves as an inverse proxy for investor confidence in the USD, has fallen dramatically. As a result, many analysts have proclaimed that the Dollar has (permanently) bottomed out, and are busying themselves preparing projections for how high the Dollar will rise. But is the Dollar rally sustainable?
In the short-term, I would argue the answer is yes. The bubbles in the various sectors of commodity markets seem to have partially deflated, with oil and certain food staples well below the record highs they touched earlier in the year. As a result, inflation may soon begin to abate, and return to a comfortable level as early as 2009. More importantly, the US economy was among the first to be affected by the credit and real estate crises. Some analysts have argued that the worst developments have already come to pass. The crisis has since spread to the global economy, with other countries sharing in some of the burden. The result is that the US economic and monetary cycle is probably ahead of most of its peers. Accordingly, by the time the full impact of the crisis is felt by the rest of the world, the US should firmly be on the path to recovery. As other Central Banks move to ease their respective monetary policies, the Fed should be in a position to hike rates, providing further support for the Dollar.
As a result of this belief, US capital markets have received a sudden inflow of capital. This trend has been further buoyed by the notion that the US is the safest place to invest in times of crisis is gaining traction among investors. If the credit crisis continues to spread, this notion will no doubt be reinforced.
The long-term picture is of course more nuanced. The US will hardly emerge from the current crisis unscathed, and the ultimate cost of the credit crisis could exceed $1 Trillion. In addition, the US is unlikely to be shamed into changing its nasty habit of spending more than it saves. Accordingly, the twin deficits, those permanent thorns in the side of the Dollar, will probably persist. In addition, recent history suggests that investors are slow to absorb the lesson that There is No Such Thing as a Free Lunch. Despite the horrible collapse of the dot-com bubble, investors piled willy-nilly into the real estate market, with the result speaking for itself. Analysts are already speculating where the next bubble will occur; perhaps in alternative energy?
In conclusion, while the near-term prospects of the Dollar are surprisingly bright, the long-term prognosis is less so. There is no indication that the structural weaknesses in the US economy that led to the credit crisis and the multi-year decline in the USD that preceded it, will abate following its resolution. The future is inherently unpredictable, but I would expect the Dollar to continue declining once the global economy is back on track, perhaps in 2010.
The Conspiracy of Intervention
The rally in the Dollar that is currently under way. While the rally is strongly grounded in fundamentals (falling commodity prices, the spread of the credit crisis to the rest of the world), some traders are nonetheless crying foul. They claim that the European Central Bank (with or without the assistance of the US) furtively intervened in forex markets to the tune of 10 Billion Euros. Even if their claim is true, it is unlikely to have meaningfully contributed to the Dollar rally, since the amount in question is quite small. Central Bank intervention would require an expenditure of at least $100 Billion to be even partially successful. Japan, for example, has spent nearly $1 Trillion (if its foreign exchange reserves are any indication) holding down the Yen over the last decade. Besides, the Dollar rally is unsurprising, given certain recent economic developments and the benefit of hindsight. Minyanville.com reports:
Whenever global liquidity tightens relatively speaking, it is very US$ supportive. Obviously, there are always time lags between economic events until the the market perceives them. So as a result of weak demand in the US, lower imports, the demand for oil declines, and that led to a tightening of global liquidity which led to the strong dollar
Read More: Currency Intervention and Other Conspiracies
Euro Hurt by Slowing Economy, Inflation
The Euro has dropped almost 10% against the Dollar in a matter of mere weeks and everyone is wondering why. Setting aside the factors which favor the Dollar generally (irrespective of the Euro) because they were explored in previous posts, let's instead examine those factors weighing specifically in the Euro. First, the recent decline in commodity prices is causing European inflation to abate. The Euro had previously derived significant support from the ECB's hawkish stance towards fighting inflation. With lower prices, however, the need for further rate hikes may have evaporated. Second, the Euro-zone economy is looking increasingly fragile. Based on the most recent data, it actually contracted in the second quarter. Truth be told, the ECB hasn't yet turned its attention from inflation to the economy, but if both prices and economic growth continue to slow, the Central Bank may be forced to loosen its monetary policy. In fact, the perceived inevitability of this fate may already be propelling traders to dump the Euro. Money and Markets reports:
While upping his concern for the euro economy, European Central Bank President Trichet has maintained his focus on rising prices. The latest predictions...however, point towards inflation having already peaked...
Read More: Dollar's Rise Helps Level the Currency Playing Field
An End to the Oil-Dollar Spiral?
Over the last few years, the inverse relationship between the price of oil and the value of the US Dollar has been remarkable. As the Dollar has fallen to record lows, oil has risen to record highs. Now, with a massive Dollar rally underway, the price of oil has virtually collapsed. This relationship is understandable, since expensive oil contributes to the US trade deficit and crimps the economy, while the weaker Dollar, in turn, drives oil-producing countries to charge more in Dollar terms for their oil so that the price remains constant in absolute terms.
However, there are signs that this link may be coming to an end. Hedge funds, which are famous for spotting such trends and riding them to profitability, are winding down their long/short positions in currency and commodity prices because such strategies have evidently become unprofitable. Apparently, analysts and traders expect other fundamental factors to assume control over the price of oil and the Dollar. Namely, the still-unfolding credit crisis and the projected long-term supply/demand imbalance in energy markets will become more relevant. In short, don't expect a further drop in the price of oil to necessarily help the Dollar, and vice versa.
Read More: Dollar-Oil Relationship In Doubt As Market Drivers Diverge
Aug 26, 2008
LiteForex Forex Broker
LiteForex is one of the leading MetaTrader 4 Forex brokers that accept e-currencies (such as WebMoney) as the payment method. Accounts can be started with the minimum of $1, which combined with flexibility of MetaTrader platform makes LiteForex an ultimate choice for the traders that want to test their automated trading strategies on real account, but without risk of losing too much money. CFD trading is also available, so Forex traders can diversify some of their portfolio into stocks traded on NYSE.
- Start trading with $1.
- Commission free trading.
- Leverage from 1:100 to 1:200.
- Receive monthly interest on your balance.
- Competitive fixed bid/ask spreads.
- Really fast order execution.
- Account deposits via wire transfer, WebMoney, e-Bullion and Liberty Reserve.
- Many different account types available.
- 33 currency pairs, 8 currency indexes, 32 CFDs and 2 metals to trade.
- One of the best trading platforms - MetaTrader 4.
- Reliable dedicated trading servers.
- 24 hours a day, 5 days a week trading support.
- Partnership opportunities for serious clients.
It is easy to start trading with LiteForex - all you have to do is just register at their website, download their MetaTrader 4 client software, deposit money via one of the available methods (takes no more than an hour) and start trading!
Forex Books for Beginners
Here you will find the Forex e-books that provide the basic information on Forex trading. You can learn basic concepts of the Forex market, the technical and fundamental analysis. While all these e-books are recommended for every new Forex trader, they won't be very useful to the very experienced traders.
Almost all Forex e-books are in .pdf format. You'll need Adobe Acrobat Reader to open these e-books. Some of the e-books (those that are in parts) are zipped.
If you are the copyright owner of any of these e-books and don't want me to share them, please, contact me and I will gladly remove them.
Candlesticks For Support And Resistance — The basics of trading with candlesticks charts by John H. Forman.
Online Trading Courses — Course #1 lesson #1 by Jake Bernstein.
Commodity Futures Trading for Beginners — by Bruce Babcock.
Hidden Divergence — by Barbara Star, Ph.D.
Peaks and Troughs — by Martin J. Pring.
Reverse Divergences And Momentum — by Martin J. Pring.
Strategy:10 — Low-risk, high-return forex trading by W. R. Booker & Co.
The NYSE Tick Index And Candlesticks — by Tim Ord.
Trend Determination — A quick, accurate and effective methodology by John Hayden.
The Original Turtle Trading Rules — by OrignalTurtles.org.
Introduction to Forex — by 1st Forex Trading Academy. This trading course intends to provide to all of the students analytical tools on the trading system and methodologies. In this respect, the purpose of the course is to provide an overview of the many strategies that are being used in Forex market and to discuss the steps and tools that are needed in order to use these strategies successfully.
The Six Forces of Forex — by Scott Owens. A small e-book covering the basic and the main problems of Forex trading.
Study Book for Successful Foreign Exchange Dealing — by Royal Forex.
FOREX 101
For those unfamiliar with the term, FOREX (FOReign EXchange market), refers to an international exchange market where currencies are bought and sold. The Foreign Exchange Market that we see today began in the 1970's, when free exchange rates and floating currencies were introduced. In such an environment only participants in the market determine the price of one currency against another, based upon supply and demand for that currency.
FOREX is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day. With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.
Another somewhat unique characteristic of the FOREX money market is the variance of its participants. Investors find a number of reasons for entering the market, some as longer term hedge investors, while others utilize massive credit lines to seek large short term gains. Interestingly, unlike blue-chip stocks, which are usually most attractive only to the long term investor, the combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors with a broad range of strategies.
How FOREX Works
Transactions in foreign currencies are not centralized on an exchange, unlike say the NYSE, and thus take place all over the world via telecommunications. Trade is open 24 hours a day from Sunday afternoon until Friday afternoon (00:00 GMT on Monday to 10:00 pm GMT on Friday). In almost every time zone around the world, there are dealers who will quote all major currencies. After deciding what currency the investor would like to purchase, he or she does so via one of these dealers (some of which can be found online). It is quite common practice for investors to speculate on currency prices by getting a credit line (which are available to those with capital as small as $500), and vastly increase their potential gains and losses. This is called marginal trading.
Marginal Trading
Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.
EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)
When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.
Investment Strategies: Technical Analysis and Fundamental Analysis
The two fundamental strategies in investing in FOREX are Technical Analysis or Fundamental Analysis. Most small and medium sized investors in financial markets use Technical Analysis. This technique stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price. Essentially then, what this type of investor does is base his/her investments upon three fundamental suppositions. These are: that the movement of the market considers all factors, that the movement of prices is purposeful and directly tied to these events, and that history repeats itself. Someone utilizing technical analysis looks at the highest and lowest prices of a currency, the prices of opening and closing, and the volume of transactions. This investor does not try to outsmart the market, or even predict major long term trends, but simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.
A Fundamental Analysis is one which analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. By the numbers, a country's economy depends on a number of quantifiable measurements such as its Central Bank's interest rate, the national unemployment level, tax policy and the rate of inflation. An investor can also anticipate that less quantifiable occurrences, such as political unrest or transition will also have an effect on the market. Before basing all predictions on the factors alone, however, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants. For just as in any stock market, the value of a currency is also based in large part on perceptions of and anticipations about that currency, not solely on its reality.
Make Money with Currency Trading on FOREX
FOREX investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in FOREX short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.
and also this is my 101 post of FOREX 101
Start at the top and work your way down.
This is my 100 th post in this blog.And i am looking forward many to come.....
Back to the point..
One of the important points we teach in the FXCM Power Courses is to trade in the direction of the trend on the daily chart. We recommend only trading the strongest trends as that is where you are likely to find the best trading opportunities. After having identified a strong trend on the daily chart, we then recommend moving down to an hourly or 4-hour chart to find your entry and exit, but only in the direction of the daily trend. Too often though, new traders lose their way and start with the short-term charts to find a trade and then move up to the daily chart to justify their choice. But this approach is not as effective as starting with the daily charts to find the strongest trends. These new traders want action and seem to be able to squeeze a trade out of the market even if there are few solid opportunities. This of course lowers the win percentage and profitability of your approach. We must start with the daily chart first and stick with the most obvious trends. Then if you move down to the intraday charts of those strongest trending markets and no trades are setting up, you must exercise discipline and patience to stay out of the market and not force a trade. Being okay with staying out of the market is key to long-term success. The idea is to trade the strongest setups instead of always being in a trade. So make sure your goals are prioritized to increase your chance of success and only trade when you have the best chance of winning.
Back to the point..
One of the important points we teach in the FXCM Power Courses is to trade in the direction of the trend on the daily chart. We recommend only trading the strongest trends as that is where you are likely to find the best trading opportunities. After having identified a strong trend on the daily chart, we then recommend moving down to an hourly or 4-hour chart to find your entry and exit, but only in the direction of the daily trend. Too often though, new traders lose their way and start with the short-term charts to find a trade and then move up to the daily chart to justify their choice. But this approach is not as effective as starting with the daily charts to find the strongest trends. These new traders want action and seem to be able to squeeze a trade out of the market even if there are few solid opportunities. This of course lowers the win percentage and profitability of your approach. We must start with the daily chart first and stick with the most obvious trends. Then if you move down to the intraday charts of those strongest trending markets and no trades are setting up, you must exercise discipline and patience to stay out of the market and not force a trade. Being okay with staying out of the market is key to long-term success. The idea is to trade the strongest setups instead of always being in a trade. So make sure your goals are prioritized to increase your chance of success and only trade when you have the best chance of winning.
Aug 25, 2008
Fear And The Profitable Forex Trader
In order to start Forex trading the new trader doesn't need a fortune or good Wall Street contacts that will let him become part of the chosen ones. The only thing the new forex trader needs is some starting capital (as low as $100, but an amount around $5000 would be more recommendable) and the free forex trading platform that will be provided by the Forex broker.
But one thing is to start Forex trading and other very different is becoming a profitable Forex trader. In order to become a profitable trader the new trader will immediately discover the imperative need of having an accurate knowledge of the markets and a good understanding of the forex technical indicators. Concepts as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.
This basic knowledge is indeed essential but once in front of the trading station, with real money on the line and with an open trade subject to the currency markets oscillations; things will start to get tricky even if the basic technical concepts of forex trading have been understood by the beginning and sometimes also by the experienced trader.
Knowledge will start to fade in front of one of the most basic instincts we humans beings have. Fear will ask for an entrance to the traders mind and if let in by the inexperienced trader, it will turn the making of critical decisions difficult and many bad trading moves may follow.
It is very natural to be afraid and let fear invade us if we are not really sure of what we are doing or we can not afford to lose even a cent in a bad trade; or seen in a different approach, the trader is so anxious and perfectionist that he won't let him lose anything and will take it very seriously if he loses a trade.
Fear is one of the worst enemies of the Forex trader. In order to become a profitable trader it is essential that the person involved in trading understands that he must leave fear aside and stick to the trading plan he has constructed and arranged before, always understanding that losing trades happen to everyone and they are always part of a profitable trading career. A forex trader must learn how to profitable use his stops without heavily compromising the capital in his trading account, i.e., he must play safe but realizing that a calculated risk must be undertaken in order to maximize profits.
In short, fear is a natural emotion we all humans have given the right environment is present; therefore it is the trader's obligation not to arrange a "fear environment" around him and be psychologically prepared for the ups and downs of the trade. No one is prefect and that's an even deeper truth in forex trading.
About the author:
Adrian Pablo is a Forex freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of trading , visit:
=> http://www.1-forex.com
Forex Trading: Mistakes in a Trading Environment
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 Forex 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.
1. 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.
1. 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.
1. 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
1. 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.
1. 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.
STRAIGHT FOREX © 2005, 2006, 2007
Newbie Mistakes Can be Expensive In Forex Trading
Learning anything new can lead to mistakes, but making mistakes can be the natural part of the learning process. When learning to trade or invest in the Forex, mistakes can lead to lose of profits and can become expensive. A good investor will understand the market they are using for trading. Whether you are new or experienced, you can still make mistakes. There are common errors that many traders and investors make when trading on the Forex. With a little research, you can learn how to avoid common Forex trader mistakes and how to learn to move on.
Using too much margin when trading or investing on the Forex can lead to costly mistakes. Margin is the use of borrowed money to purchase securities. While it is true that using margins can help you make more money, it can also make your losses bigger. When new investors look at margins as “free” money, they have the potential to lose much more money in the Forex. Margin is not free money and using is too much can end up making more debt than profits. You would not buy stocks using a credit card, so you would not use margins to trade currency. When investors use margins when trading on the Forex, it requires the investor to have to watch their investments much more closely than when margins are not used. Margins should never be used if the investor does not have the experience or time to closely monitor their trades.
Another common, but costly mistake is when investors buy and trade on unfounded tips. This is one of the most common mistakes, even with more experienced traders. It is easy to be tempted to buy or trade currency or even stocks when you overhear someone talking about the next big “thing”. Sometimes this can be helpful, but more often than not, it will only lead to losses, not profits. Do not fall victim of investing and trading based on tips you hear or read about on television or on the Internet. If you hear about a trade that interests you, then best tip is to do some research and talk to your broker before trading or investing. You can also benefit from getting a second opinion about a Forex tip before buying, selling or trading any form of currency.
Not understanding how the foreign exchange market works is yet another costly mistake that new traders and investors make. Understanding the terminology and terms used in the Forex is very important to new traders. There are tutorials and free demos widely available on the Internet that allows traders and investors to learn how to use the Forex to their advantage. In addition, it is wise to choose an experienced broker that can help you trade and invest in the Forex. These brokers should know everything about the Forex and can help traders and investor make wise choices. Find a broker that is tied with a good financial institution and that has experience in the Forex.
Also, another common mistake is when traders and investors buy or sell when the rate on currency is cheap. Sometimes this is a good move, but just because the rate is low, does not mean that it will profit the investor. Instead of choosing a currency to buy or trade, it is best to look at all of the factors that affect the exchange rate and look at the trends and history. Avoid buying or selling any currency just because the rate is low. Most of the time, there is a distinct reason why these rates are low. Research the trends of the currency and find out, which ones are the best profit makers when trading on the foreign exchange market.
Last of all, another common mistake that costs money for both new and experienced traders is that they underestimate their trading abilities. Some investors feel that they do not understand the Forex well enough to trade to their fullest ability. Anyone with willingness to learn the Forex can profit with some education and research. It can take some time to learn the aspects of the foreign exchange market, but even new investors can learn how to trade with success.
All this to say that you must do your homework. Do not go into all this thinking that it will be easy. There are a lot of big boys playing this game and most of them will not lose any sleep if you lose your shirt at all this. Like any investment, do not mortgage your first born in order to get started.
Using too much margin when trading or investing on the Forex can lead to costly mistakes. Margin is the use of borrowed money to purchase securities. While it is true that using margins can help you make more money, it can also make your losses bigger. When new investors look at margins as “free” money, they have the potential to lose much more money in the Forex. Margin is not free money and using is too much can end up making more debt than profits. You would not buy stocks using a credit card, so you would not use margins to trade currency. When investors use margins when trading on the Forex, it requires the investor to have to watch their investments much more closely than when margins are not used. Margins should never be used if the investor does not have the experience or time to closely monitor their trades.
Another common, but costly mistake is when investors buy and trade on unfounded tips. This is one of the most common mistakes, even with more experienced traders. It is easy to be tempted to buy or trade currency or even stocks when you overhear someone talking about the next big “thing”. Sometimes this can be helpful, but more often than not, it will only lead to losses, not profits. Do not fall victim of investing and trading based on tips you hear or read about on television or on the Internet. If you hear about a trade that interests you, then best tip is to do some research and talk to your broker before trading or investing. You can also benefit from getting a second opinion about a Forex tip before buying, selling or trading any form of currency.
Not understanding how the foreign exchange market works is yet another costly mistake that new traders and investors make. Understanding the terminology and terms used in the Forex is very important to new traders. There are tutorials and free demos widely available on the Internet that allows traders and investors to learn how to use the Forex to their advantage. In addition, it is wise to choose an experienced broker that can help you trade and invest in the Forex. These brokers should know everything about the Forex and can help traders and investor make wise choices. Find a broker that is tied with a good financial institution and that has experience in the Forex.
Also, another common mistake is when traders and investors buy or sell when the rate on currency is cheap. Sometimes this is a good move, but just because the rate is low, does not mean that it will profit the investor. Instead of choosing a currency to buy or trade, it is best to look at all of the factors that affect the exchange rate and look at the trends and history. Avoid buying or selling any currency just because the rate is low. Most of the time, there is a distinct reason why these rates are low. Research the trends of the currency and find out, which ones are the best profit makers when trading on the foreign exchange market.
Last of all, another common mistake that costs money for both new and experienced traders is that they underestimate their trading abilities. Some investors feel that they do not understand the Forex well enough to trade to their fullest ability. Anyone with willingness to learn the Forex can profit with some education and research. It can take some time to learn the aspects of the foreign exchange market, but even new investors can learn how to trade with success.
All this to say that you must do your homework. Do not go into all this thinking that it will be easy. There are a lot of big boys playing this game and most of them will not lose any sleep if you lose your shirt at all this. Like any investment, do not mortgage your first born in order to get started.
Applying Poker Strategies to Trading The Markets
In poker, a player can choose the stake he is willing to play. In the futures markets the stakes are chosen by the size of the trade. However, one of the biggest differences found is as follows:
1. In poker, you are automatically offered the option to play a hand that you are dealt. For example, in no-limit holdem this can be a Q10, KK, 10J, 2-7, etc....
Each starting hand begins with a probability. For example, pocket 9's has a 52.4% favorite against an AK suited. The odds of getting dealt a pocket pair are 5.88%.
2. In trading, you are not automatically dealt starting hands. Starting hands in poker equals setups in trading. In order to hold a pocket pair, you must find a trading setup.
Each setup has its own set of probabilities. A setup that offers a 80% winning probability should be ranked higher than a setup that offers a 50% winning probability. The more setups a trader has the more ammunition or hands he has to play with. If a trader only trades moving average crosses, this is like playing only a KQ in poker. In poker, waiting for pocket AA's will slowly drain your capital with blinds and is definitely not the way to get rich. However, a poker player who is flexible to play a variety of hands with a variety of styles is the better player.
A trader needs to have different entry/exit and risk parameters for each setup. If one of your setups involves moving average crosses, make sure you apply different entry/exit and risk parameters from a scalping setup.
I like to consider my trading freestyle. I am very flexible with the different setups I have. Trading requires creativity. Novice traders apply too much science into trading and not enough art.
Trading should be compared to a game of limit holdem. No trade is worth all your chips so do not hold a no-limit mentality. When in doubt, stay flat. As long as you play the right hands and control your losses, a trader should come out ahead.
Good luck and best of trading.
1. In poker, you are automatically offered the option to play a hand that you are dealt. For example, in no-limit holdem this can be a Q10, KK, 10J, 2-7, etc....
Each starting hand begins with a probability. For example, pocket 9's has a 52.4% favorite against an AK suited. The odds of getting dealt a pocket pair are 5.88%.
2. In trading, you are not automatically dealt starting hands. Starting hands in poker equals setups in trading. In order to hold a pocket pair, you must find a trading setup.
Each setup has its own set of probabilities. A setup that offers a 80% winning probability should be ranked higher than a setup that offers a 50% winning probability. The more setups a trader has the more ammunition or hands he has to play with. If a trader only trades moving average crosses, this is like playing only a KQ in poker. In poker, waiting for pocket AA's will slowly drain your capital with blinds and is definitely not the way to get rich. However, a poker player who is flexible to play a variety of hands with a variety of styles is the better player.
A trader needs to have different entry/exit and risk parameters for each setup. If one of your setups involves moving average crosses, make sure you apply different entry/exit and risk parameters from a scalping setup.
I like to consider my trading freestyle. I am very flexible with the different setups I have. Trading requires creativity. Novice traders apply too much science into trading and not enough art.
Trading should be compared to a game of limit holdem. No trade is worth all your chips so do not hold a no-limit mentality. When in doubt, stay flat. As long as you play the right hands and control your losses, a trader should come out ahead.
Good luck and best of trading.
Forex Trading : How to be a Profitable Forex Trading Trader
" Forex Trading is so hard. I seldom have a winning trade!" " Forex Trading is so easy. I just have another winning streak for the entire week!"
Two Groups of Forex Traders - The Losers And The Winners
Read the two statements above again. These are two of the main statements I often hear from friends who are trading forex. Diametrically opposite, these two statements contrast greatly between themselves- one group of traders finding forex trading so very difficult for themselves, hardly able to get a winning trade. Traders from this group are fumbling at the ropes, trying to become profitable traders and to be able to bring home the roost. Traders of another group are the happier ones. They are consistently profitable in their trades. They are the winners in the forex market.
You look around - and you see others are doing so well in forex trading, and amassingpersonal wealth, even trading for a living- some of them making thousands of dollars each time they trade- and you think you should be one of them.
Why 90% Of Forex Traders Are Losers
So why is it that 90% of the traders in forex not making consistent money? What is it that the other 10% of the traders have that make them the superb winners?
Currency trading was until recently the domain of the super rich and of the big time institutions. Unless you are well oiled, and have deep pockets or a huge sum of money as a capital support, it is not likely for you to even access currency trading.
However, this changed with time, especially when forex mini accounts were created, leading to a surge in people wanting to trade in forex.
This led to a problem...and the problem began to become bigger and bigger and exists till this day.
Forex trading is just simply exploding, with over $2 trillion dollars worth of currencies transacted every single day, with this accelerated growth bringing along problems.
Many people are getting into forex trading without the proper training and proper education as traders. The easy accessibility of the internet made it worst. Many beginners merely scour the internet based websites, picking up morsels of trading knowledge on forex here and there and started to trade. Not that self education is not enough, but the nature of forex trading is such that those who are successful traders are simply not telling how they trade. Most successful traders are traders, their time being occupied by their trading and research into trading setups and have no time to promote their trading signals on the internet. To them, they are first and foremost traders and not educators, and there is simply no reason to post their skills or give away their secrets of successful trading for free on the internet.
The easy access of the internet has led to a proliferation of websites featuring some common trading systems purportedly useful for forex trading. The popularity of forex trading has led to a viral duplication of these websites with almost similar content, until a big majority of forex traders who gleaned their "education" and training from the internet to concentrate on such systems, without knowing exactly when they are suitable for use and when they should not be used at all.
Among other factors, this is one of the main factors why a big majority of the self-taught forex traders are not making any money, or at best are inconsistent in their trading. Most of them are just using the wrong tools or the wrong trading systems and have not gotten to master their trades or themselves.
Sun Tzu"s Art of War Provides The Solution To Your Trading Blues
Sun Tzu's Art of War provides a key solution to successful battle, which can be extrapolated to forex trading.
Sun Tzu's Art of War called it: "Know Your Enemy"
And your enemy in forex trading is merely the forex market itself and you- the person itself.
To win in the forex market, you must know the forex market itself - in other words, you must get to understand the currency-pairs that you are trading on. Spend time to study their price movements. Know what trading patterns and setups occur time and again in those currency-pairs. Be familiar with the risk-reward ratios of each specific trade pattern for those currency-pairs you are trading. Define and apply a specific trading strategy for those currency-pairs you trade. Know when to enter and exit the market and when to stay away. The best way to ensure you are doing it correctly is to get another experienced and successful trader to mentor or to show you the ropes. Budget to learn before you trade.
As to the other part of the battle, you need to see the part of you, yourself who is the enemy. Forex trading involves decision making where your risk tolerance is put to the test, where emotions of greed and fear will play a daily tug of war within your heart. The solution to win this emotional battle is to trade with discipline. Adopting a winning strategy, a winning plan complete with risk management and ensuring you do not deviate from that plan is a necessity for you to win. Again, have your mentor to show you and to fine tune that trading plan.
You can join the 10% of forex traders who are consistent winners, and start to create a consistent income trading from home, away from the rat race if you are prepared to learn.
source: http://forex-trading.cashflowpc.biz
Two Groups of Forex Traders - The Losers And The Winners
Read the two statements above again. These are two of the main statements I often hear from friends who are trading forex. Diametrically opposite, these two statements contrast greatly between themselves- one group of traders finding forex trading so very difficult for themselves, hardly able to get a winning trade. Traders from this group are fumbling at the ropes, trying to become profitable traders and to be able to bring home the roost. Traders of another group are the happier ones. They are consistently profitable in their trades. They are the winners in the forex market.
You look around - and you see others are doing so well in forex trading, and amassingpersonal wealth, even trading for a living- some of them making thousands of dollars each time they trade- and you think you should be one of them.
Why 90% Of Forex Traders Are Losers
So why is it that 90% of the traders in forex not making consistent money? What is it that the other 10% of the traders have that make them the superb winners?
Currency trading was until recently the domain of the super rich and of the big time institutions. Unless you are well oiled, and have deep pockets or a huge sum of money as a capital support, it is not likely for you to even access currency trading.
However, this changed with time, especially when forex mini accounts were created, leading to a surge in people wanting to trade in forex.
This led to a problem...and the problem began to become bigger and bigger and exists till this day.
Forex trading is just simply exploding, with over $2 trillion dollars worth of currencies transacted every single day, with this accelerated growth bringing along problems.
Many people are getting into forex trading without the proper training and proper education as traders. The easy accessibility of the internet made it worst. Many beginners merely scour the internet based websites, picking up morsels of trading knowledge on forex here and there and started to trade. Not that self education is not enough, but the nature of forex trading is such that those who are successful traders are simply not telling how they trade. Most successful traders are traders, their time being occupied by their trading and research into trading setups and have no time to promote their trading signals on the internet. To them, they are first and foremost traders and not educators, and there is simply no reason to post their skills or give away their secrets of successful trading for free on the internet.
The easy access of the internet has led to a proliferation of websites featuring some common trading systems purportedly useful for forex trading. The popularity of forex trading has led to a viral duplication of these websites with almost similar content, until a big majority of forex traders who gleaned their "education" and training from the internet to concentrate on such systems, without knowing exactly when they are suitable for use and when they should not be used at all.
Among other factors, this is one of the main factors why a big majority of the self-taught forex traders are not making any money, or at best are inconsistent in their trading. Most of them are just using the wrong tools or the wrong trading systems and have not gotten to master their trades or themselves.
Sun Tzu"s Art of War Provides The Solution To Your Trading Blues
Sun Tzu's Art of War provides a key solution to successful battle, which can be extrapolated to forex trading.
Sun Tzu's Art of War called it: "Know Your Enemy"
And your enemy in forex trading is merely the forex market itself and you- the person itself.
To win in the forex market, you must know the forex market itself - in other words, you must get to understand the currency-pairs that you are trading on. Spend time to study their price movements. Know what trading patterns and setups occur time and again in those currency-pairs. Be familiar with the risk-reward ratios of each specific trade pattern for those currency-pairs you are trading. Define and apply a specific trading strategy for those currency-pairs you trade. Know when to enter and exit the market and when to stay away. The best way to ensure you are doing it correctly is to get another experienced and successful trader to mentor or to show you the ropes. Budget to learn before you trade.
As to the other part of the battle, you need to see the part of you, yourself who is the enemy. Forex trading involves decision making where your risk tolerance is put to the test, where emotions of greed and fear will play a daily tug of war within your heart. The solution to win this emotional battle is to trade with discipline. Adopting a winning strategy, a winning plan complete with risk management and ensuring you do not deviate from that plan is a necessity for you to win. Again, have your mentor to show you and to fine tune that trading plan.
You can join the 10% of forex traders who are consistent winners, and start to create a consistent income trading from home, away from the rat race if you are prepared to learn.
source: http://forex-trading.cashflowpc.biz
Forex Trading: Let your winners run
This saying is bartered about like some kind of wise words from above - cut your losses and let you winners run.
I think that most of us in the 1KT know about cutting losses - that's the easy bit, hell if we dont then we go broke right? Or do we?
BUT 'let your profits run' is harped on by almost every guru and book writer on the planet - unfortunately they never answer the inevitable question that follows "how far?"
How far is letting a profit run? if you allow a 1 pip trade to go to 2 pips you've let it run. if you let a 10 pip trade go to 500 you've let it run - when exactly is enough?
To give some background to differing opinions before the floodgates of posts follow, please allow me to present some popular opinions and their reasoning behind them.
1. trade it till it's dead - in this scenario you take a trend trade and then stay in the trade until the trend shows it has broken - ie the sequence of higher lows has been broken in an uptrend or the lower highs are broken in a downtrend.
I myself carried an experiment out in 2005 regarding this issue. what i did was produce a spreadsheet with every trade i took in it. for each trade there was what the actual trade made if left till the trend broke and what the result would have been had you taken 10, 20, 30 etc pips on each trade - this went all the way up to 200 pips (i was trading 5 and 15 min charts at the time)
the object of the sheet was to calculate my ideal take profit - so for example if at 70 pips take profit it made more money than at 80 then 70 would be best.
After 150 trades it was time to assess the results and they really suprised me.
what i thought would happen was that as most of my trades did not go father than 50 pips that the ideal take profit would be somewhere between 30 and 50 pips - that taking say 50 would pay for the big runners that i would miss because id get 50 instead of say 20 when the trend had broken.
even though the vast majority of my trades went a maximum of 50 pips ish and they probarbly closed at +20 or less as predicted there were a few trades that went much more even to almost 200 - they were not regular but they had to be factored in.
after 150 trades the results were in - the best take profit, from an account gain perspective was .... no take profit!, just close at the trend end!
This really kind of blew my mind - even though on the majority of my trades i was giving back sometimes 50% or more of the move it still made more money than taking a set value. - the runners paid for the lost retraces and then some. - the differences weren't small either they were large.
The problem with leaving the trades on the table are obvious - psychologically most of the time you feel like you are giving pips back.
2. Take Profits regularly and let the losers run.
This is a dirk de toit kind of standpoint from bird watching in lion country - although letting the losers run forever is not the idea as I will explain.
Basically in this strategy you decide on the underlying trend using fundamentals OR longer term charts (after all they tell you where the trend is not where the fundies say it should be)
you then identify a place on the longer term charts where you will class the trend as broken and that's where all your stops will be - you are going to trade in one direction only.
so you decide the trend is long so you are only going to trade long and your chosen method is to buy dips.
each time you take a trade you look for profits that you are comfortable with, say 40 pips in the case of Mr du-toit. if the dip was not really a dip you leave the trade in because chances are price will come back anyway with the prevailing trend. you buy the next dip again and just leave trade 1 there - trade 2 you again take your 40 pips etc. all with low leverage of course.
you carry on buying these dips and treating each trade as an individual trade taking profit everytime. The losing trades are only closed when the underlying trend is changed by either fundamental means or whatever method you have chosen.
The plus side of this method is that because you are always with the underlying trend you get a lot of winners - even if sometimes you have to wait for them - Dirk claims around 85% and others back up this figure so i have no reason to doubt them.
the downside is that when you do have to close losers because the trend changes they are larger than the winners, often several hundred pips and that is when the drawdowns happen.
the theory is that you have lots of wins and the wins make more than the large losers.
3. Reduction take profits.
The third one to cover is where you close say half the position at specified levels and let the rest run.
Van tharp in his books says this is folly and you would always make more money by leaving the whole position in - and i'm sure that this is true but i can't comment on it as ive never done it.
Discussion:
Although we look at the market scientifically there is also the psychological aspects of trading. Im sure than those who follow Dirk's method of 85% winners feel much better MOST OF THE TIME that do those who trade looking for the big one who only win say 35% of the time.
There are many ways of looking at this and i'm sure all have some relevance, however more than anything, as an active trader and money manager I have to not only rely on cold maths and physics, but also on my emotinal well being.
which is harder - having a w/l of say 35% which produces drawdowns regularly or having an 85% w/l which produces drawdowns much less regularly but when they do they are large and take longer to get out of?
i can tell you that the 35% method produces drawdowns in about2-3 weeks and then they come out of those drawdowns spectacularly fast, like in 2 days or so to new highs.
im guessing that the other method produces them the other way around - a hard drawdown in a day or so that then takes 2-3 weeks to pull out of.
The way I have traditionally traded has been the 35% W/L way and I can now suffer some very hard drawdowns without it bothering me too much as I know how they turn around.
To be good at this I had to mentally condition myself that if i took money off the table before a trade was over that i did a bad thing - even if it made money. I made it hurt when i took 50 pips and the trend went to 200.
what i would really like to know is that those who take money at set pip levels, say 30 pips or whatever, how do you mentally train yourself NOT to kick your ass really hard when those trades go on another few hundred pips or so without you on board?
also interested in other views on taking profits or cutting losers etc but please try and keep the topic fresh and not just saying 'this is what i do' - tell us why and how you control the mental downside to your strategy (every way has a downside)
Source : http://www.forexfactory.com/showthread.php?t=54070
I think that most of us in the 1KT know about cutting losses - that's the easy bit, hell if we dont then we go broke right? Or do we?
BUT 'let your profits run' is harped on by almost every guru and book writer on the planet - unfortunately they never answer the inevitable question that follows "how far?"
How far is letting a profit run? if you allow a 1 pip trade to go to 2 pips you've let it run. if you let a 10 pip trade go to 500 you've let it run - when exactly is enough?
To give some background to differing opinions before the floodgates of posts follow, please allow me to present some popular opinions and their reasoning behind them.
1. trade it till it's dead - in this scenario you take a trend trade and then stay in the trade until the trend shows it has broken - ie the sequence of higher lows has been broken in an uptrend or the lower highs are broken in a downtrend.
I myself carried an experiment out in 2005 regarding this issue. what i did was produce a spreadsheet with every trade i took in it. for each trade there was what the actual trade made if left till the trend broke and what the result would have been had you taken 10, 20, 30 etc pips on each trade - this went all the way up to 200 pips (i was trading 5 and 15 min charts at the time)
the object of the sheet was to calculate my ideal take profit - so for example if at 70 pips take profit it made more money than at 80 then 70 would be best.
After 150 trades it was time to assess the results and they really suprised me.
what i thought would happen was that as most of my trades did not go father than 50 pips that the ideal take profit would be somewhere between 30 and 50 pips - that taking say 50 would pay for the big runners that i would miss because id get 50 instead of say 20 when the trend had broken.
even though the vast majority of my trades went a maximum of 50 pips ish and they probarbly closed at +20 or less as predicted there were a few trades that went much more even to almost 200 - they were not regular but they had to be factored in.
after 150 trades the results were in - the best take profit, from an account gain perspective was .... no take profit!, just close at the trend end!
This really kind of blew my mind - even though on the majority of my trades i was giving back sometimes 50% or more of the move it still made more money than taking a set value. - the runners paid for the lost retraces and then some. - the differences weren't small either they were large.
The problem with leaving the trades on the table are obvious - psychologically most of the time you feel like you are giving pips back.
2. Take Profits regularly and let the losers run.
This is a dirk de toit kind of standpoint from bird watching in lion country - although letting the losers run forever is not the idea as I will explain.
Basically in this strategy you decide on the underlying trend using fundamentals OR longer term charts (after all they tell you where the trend is not where the fundies say it should be)
you then identify a place on the longer term charts where you will class the trend as broken and that's where all your stops will be - you are going to trade in one direction only.
so you decide the trend is long so you are only going to trade long and your chosen method is to buy dips.
each time you take a trade you look for profits that you are comfortable with, say 40 pips in the case of Mr du-toit. if the dip was not really a dip you leave the trade in because chances are price will come back anyway with the prevailing trend. you buy the next dip again and just leave trade 1 there - trade 2 you again take your 40 pips etc. all with low leverage of course.
you carry on buying these dips and treating each trade as an individual trade taking profit everytime. The losing trades are only closed when the underlying trend is changed by either fundamental means or whatever method you have chosen.
The plus side of this method is that because you are always with the underlying trend you get a lot of winners - even if sometimes you have to wait for them - Dirk claims around 85% and others back up this figure so i have no reason to doubt them.
the downside is that when you do have to close losers because the trend changes they are larger than the winners, often several hundred pips and that is when the drawdowns happen.
the theory is that you have lots of wins and the wins make more than the large losers.
3. Reduction take profits.
The third one to cover is where you close say half the position at specified levels and let the rest run.
Van tharp in his books says this is folly and you would always make more money by leaving the whole position in - and i'm sure that this is true but i can't comment on it as ive never done it.
Discussion:
Although we look at the market scientifically there is also the psychological aspects of trading. Im sure than those who follow Dirk's method of 85% winners feel much better MOST OF THE TIME that do those who trade looking for the big one who only win say 35% of the time.
There are many ways of looking at this and i'm sure all have some relevance, however more than anything, as an active trader and money manager I have to not only rely on cold maths and physics, but also on my emotinal well being.
which is harder - having a w/l of say 35% which produces drawdowns regularly or having an 85% w/l which produces drawdowns much less regularly but when they do they are large and take longer to get out of?
i can tell you that the 35% method produces drawdowns in about2-3 weeks and then they come out of those drawdowns spectacularly fast, like in 2 days or so to new highs.
im guessing that the other method produces them the other way around - a hard drawdown in a day or so that then takes 2-3 weeks to pull out of.
The way I have traditionally traded has been the 35% W/L way and I can now suffer some very hard drawdowns without it bothering me too much as I know how they turn around.
To be good at this I had to mentally condition myself that if i took money off the table before a trade was over that i did a bad thing - even if it made money. I made it hurt when i took 50 pips and the trend went to 200.
what i would really like to know is that those who take money at set pip levels, say 30 pips or whatever, how do you mentally train yourself NOT to kick your ass really hard when those trades go on another few hundred pips or so without you on board?
also interested in other views on taking profits or cutting losers etc but please try and keep the topic fresh and not just saying 'this is what i do' - tell us why and how you control the mental downside to your strategy (every way has a downside)
Source : http://www.forexfactory.com/showthread.php?t=54070
Forex Trading As An Online Money Making Business
For many Forex Trading beginners, after many days and nights of learning and digesting Forex courses, purchasing of various Forex Trading Software and System, you still find yourself with a huge hole in your initial capital.
As times go by, slowly, your dreams of financial freedom and success begin to fade. You will begin to ask yourself, are you a failure? Are you not intelligent enough to become a profitable trader? After all, there are many successful trading experts out there who are living their Online Money Making dreams....
So the money making online million dollar question - Are you cut out to be a profitable Forex Currency Trading trader? Yes, you can become a profitable Forex trader! You just need to treat your online Forex Trading like running a successful online money making Business.
Forex Trading Style
Similar to Stock Trading or any form Investment Trading. You must ask yourself - what is your trading style - news trading, swing trading, momentum trading, pattern trading and intraday or longer term trading? It is alright to have a "library" of trading style or setups, but what most profitable trader does is to concentrate on a niche or particular trading style. Learn to do one thing consistently well instead of trying to master too many trading methodologies. You have to pick a style that suits you.
Online Forex Trading Plan
What is your foreign currency trading plan? Before any trade entry, you have to ask yourself is this the right set up entry for your trading style? Where is your exact trade entry point? What are your Stop Loss target? What is your profit target?
Anyone involves in Foreign Currency Trading and not having a well defined stop loss is going to have their entire online trading account wipe out before they even realized it. I knew someone did just that recently. A US$10,000 account was wiped out within a week without Stop Loss trading a few currency pairs. You also need to know what is your profit target point is. What is the point of having an winning trade but your trading account does not make money. For one simple reason, you didn't take the winning money from your trade and market reversal against you.
Forex Trading Profit & Loss Plan
Lots of beginners don't realized the important of reward to risk factor in Forex Trading. You will never make money online if you risk $500 but make $100.
Follow your Well-Defined Forex Trading Plan
Once you have written down a well-defined trading plan, you must have the discipline to stick to it. All beginners must remember that Discipline and Money Management are the two most import aspects of trading. Even the greatest Forex Trading System or methodologies will fail if you can't stick to it.
JoonTrader is the owner of www.forexdiscover.com. For further recommended resources on how to make money in Forex Trading. Click here to grab the secret to consistent pips.
Article Source: http://EzineArticles.com/?expert=Joon_Trade
As times go by, slowly, your dreams of financial freedom and success begin to fade. You will begin to ask yourself, are you a failure? Are you not intelligent enough to become a profitable trader? After all, there are many successful trading experts out there who are living their Online Money Making dreams....
So the money making online million dollar question - Are you cut out to be a profitable Forex Currency Trading trader? Yes, you can become a profitable Forex trader! You just need to treat your online Forex Trading like running a successful online money making Business.
Forex Trading Style
Similar to Stock Trading or any form Investment Trading. You must ask yourself - what is your trading style - news trading, swing trading, momentum trading, pattern trading and intraday or longer term trading? It is alright to have a "library" of trading style or setups, but what most profitable trader does is to concentrate on a niche or particular trading style. Learn to do one thing consistently well instead of trying to master too many trading methodologies. You have to pick a style that suits you.
Online Forex Trading Plan
What is your foreign currency trading plan? Before any trade entry, you have to ask yourself is this the right set up entry for your trading style? Where is your exact trade entry point? What are your Stop Loss target? What is your profit target?
Anyone involves in Foreign Currency Trading and not having a well defined stop loss is going to have their entire online trading account wipe out before they even realized it. I knew someone did just that recently. A US$10,000 account was wiped out within a week without Stop Loss trading a few currency pairs. You also need to know what is your profit target point is. What is the point of having an winning trade but your trading account does not make money. For one simple reason, you didn't take the winning money from your trade and market reversal against you.
Forex Trading Profit & Loss Plan
Lots of beginners don't realized the important of reward to risk factor in Forex Trading. You will never make money online if you risk $500 but make $100.
Follow your Well-Defined Forex Trading Plan
Once you have written down a well-defined trading plan, you must have the discipline to stick to it. All beginners must remember that Discipline and Money Management are the two most import aspects of trading. Even the greatest Forex Trading System or methodologies will fail if you can't stick to it.
JoonTrader is the owner of www.forexdiscover.com. For further recommended resources on how to make money in Forex Trading. Click here to grab the secret to consistent pips.
Article Source: http://EzineArticles.com/?expert=Joon_Trade
Five Basic Human Weaknesses In FX Commodity Trading
Five basic human weaknesses in Forex Commodity trading: Greed, fear, impatience, pride and lack of knowledge. How do these emotions can cause so many Forex traders to lose money? Let’s examine this five.
1. Greed
Greed can cause poor forex Commodity traders increasing the size of their trading positions the moment they’re still in a winning position trade. This often results in these forex commodity traders having the largest position size trade just before the market turns in the opposite direction. As a result, this causes them to suffer large losses.
2. Fear
Fear makes people avoid entering into good trades because they don’t know what they’re doing. Heard of the phrase “buy low, sell high”? Unfortunately, many traders think that this is true. The profitable traders however, know that a more accurate phrase would be: “buy high, sell higher” or in other words Trends is your friend, forex trader who know how to trade the trends will make profits.
Fear is often the result of not knowing what one is doing. If you have a proper, reliable forex trading system, fear shouldn’t be in your forex trading vocabulary.
3. Impatience
The opposite of fear, impatience can lead people to enter into trades when there are no clear forex trading signals. Needless to say, most of these impatient trades usually turn out to be unprofitable.
4. Pride
This is very possibly the worst forex commodity trading weakness of all! Pride makes a forex trader hold on to losing positions with the false hope that the position will turn around in his favour. Winning forex traders are humble, and aren’t afraid to admit that they’ve made a mistake when they lose money. After all, no one can be right all the time!
Unfortunately, many losing forex commodity traders refuse to admit that they’re wrong, and often lose money to pay for their pride.
5. Lack of Knowledge
The most important thing in Forex Commodity trading is you must have proper knowledge
before you jump into forex trading. Lack of knowledge can cause many forex trader loosing their money.
Understanding the effects of this five basic human weaknesses is crucial before a trader can be a consistently profitable trader. Overcome this weakness and train yourself with proper forex knowledge and diciplines, and don’t fall into this traps yourself!
1. Greed
Greed can cause poor forex Commodity traders increasing the size of their trading positions the moment they’re still in a winning position trade. This often results in these forex commodity traders having the largest position size trade just before the market turns in the opposite direction. As a result, this causes them to suffer large losses.
2. Fear
Fear makes people avoid entering into good trades because they don’t know what they’re doing. Heard of the phrase “buy low, sell high”? Unfortunately, many traders think that this is true. The profitable traders however, know that a more accurate phrase would be: “buy high, sell higher” or in other words Trends is your friend, forex trader who know how to trade the trends will make profits.
Fear is often the result of not knowing what one is doing. If you have a proper, reliable forex trading system, fear shouldn’t be in your forex trading vocabulary.
3. Impatience
The opposite of fear, impatience can lead people to enter into trades when there are no clear forex trading signals. Needless to say, most of these impatient trades usually turn out to be unprofitable.
4. Pride
This is very possibly the worst forex commodity trading weakness of all! Pride makes a forex trader hold on to losing positions with the false hope that the position will turn around in his favour. Winning forex traders are humble, and aren’t afraid to admit that they’ve made a mistake when they lose money. After all, no one can be right all the time!
Unfortunately, many losing forex commodity traders refuse to admit that they’re wrong, and often lose money to pay for their pride.
5. Lack of Knowledge
The most important thing in Forex Commodity trading is you must have proper knowledge
before you jump into forex trading. Lack of knowledge can cause many forex trader loosing their money.
Understanding the effects of this five basic human weaknesses is crucial before a trader can be a consistently profitable trader. Overcome this weakness and train yourself with proper forex knowledge and diciplines, and don’t fall into this traps yourself!
Best Times To Place Your Commodity Trading Signals
If you want to make money forex commodity trading you don't need to constantly watch prices - this is a total myth. You really only need to look twice maybe three times a day at most and that's it. So what are the best times to trade?
The first point I want to make is you will hear a lot of rubbish written about the best times to trade.
Today there is a huge market in telling people they have to be in touch with price quotes all the time to make money - Nonsense!
This is normally put about by day traders (who all lose anyway as all short term movements are random) who think that it helps them. They also put about another myth - stop loss hunting by brokers! Forex brokers don't need to do this, because day traders have their stops within random volatility and will get stopped out anyway.
Forex Trading Money Management Principles
Trade With Sufficient Capital
One of the worst blunders that forex traders can make is attempting to trade without sufficient capital.
The trader with limited capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading the method(s) or patterns.
Exercise Discipline
Discipline is probably one of the most overused words in forex trading education. However, despite the clich¨¦, discipline continues to be the most important behaviour one can master to become a profitable trader. Discipline is the ability to plan your work and work your plan.
Forex News Trading Tip: How To Trade The FOMC
The Federal Open Market Committee (FOMC) decision on interest rates is one of the most powerful market movers in the forex market and when the markets move traders trading the news have the opportunity to make money.
The FOMC sets the discount rate or federal funds rate and because interest rates are set higher to induce foreign investment and therefore fight inflation during times of prosperity and lower to increase spending during recessions they are one of the main factors influencing the strength of the dollar.
Economic indicators play a huge role in the forex trading especially for traders who approach the market through fundamental analysis and trade the news. The Federal Open Market Committee (FOMC) interest rate decision is one of the most influential indicators for the US dollar and you can be sure after the news is released there is going to be volatility in the markets and volatility is what traders thrive on.
Forex Trading - Anyone Can Learn the Skills to Win, But 95 % of Traders Lose, Why?
It's a fact anyone can learn the skills needed to win at forex or other commodity trading - but they don't and the reason why is, they neglect the major factor they need to learn to achieve forex commodity success. Understand this factor and how important it is and you can win.
This is a simple equation for forex commodity market success:
Correct Knowledge = Understanding = Confidence = Discipline = Forex Success
What's obvious about the above?
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