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Thursday, December 31, 2009

Low Risk Forex Trading

Thursday, December 31, 2009
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As a trader, getting stopped out is just part of the cost of doing business. I find that this is a seldom addressed area in the arena of today's internet driven "get rich overnight trading the FOREX" group. But in fact, it should be the first thing one considers when evaluating a trading program.
I am a firm believer in the "KISS" principle. Keep it simple s*&%id.
Stop Placement 101:
You will have to use very large stops (greater risk) when trading a trend following technique. The larger the profit target, so too is the larger the stop that needs to be used. When trading a scalping technique you can use a very small stop (less risk). The smaller the profit target, the tighter the stop.
Why? Because if you are attempting to go for a larger profit target, you are going to be in a trade for a longer period of time. In order to overcome the standard pullbacks and price fluctuations that occur when one stays in a trade for an extended period of time, you need a larger stop. This style of trading is very common place in markets where the directional bias is very consistent.
One of the key characteristics of the FOREX market that is different than other markets is that the directional bias is constantly shifting. Meaning, in one 3 hour period you may be looking for a long trade and in the next 3 hour period you may be looking for a short trade on the very same currency pair. What this means to the trader who is attempting to trade a trend-following technique in the FOREX is that he will need to use very large stops, typically a minimum of 100 pips or more in most cases.
Once again, the reason for this is because of the constant shift in the directional bias. This is why many perceive the FOREX to be a "risky" market to trade.
The FOREX is a great market to trade, but it is just not a good market to trade a trend-following technique if you cannot handle the large stops and the countless hours that you are stuck in a trade waiting for the bias to shift back in your favor.
The FOREX market is the perfect market to trade on an intra-day basis. You can use a tight stop and you do not have to hold on to a trade for countless hours. A side benefit of trading these smaller intra-day moves is that it is less taxing emotionally.
One of the benefits of learning to trade a scalping methodology is you use a 10 pip stop, this includes transaction cost. That is low risk trading.
In any other business endeavor, if I asked you would you prefer to earn $500 in 30 minutes or 12-14 hours, the answer would be obvious. But for some reason traders feel that there is a benefit to holding on to a trade for extended periods of time. Trend followers risk more and work harder to earn money trading the FOREX. Scalpers can earn the same or more than trend followers with less risk and only committing a fraction of the time to trade.
Here is another way to look at it. Let's look at a currency pair that has a daily trading range of 75 pips. What is easier? Learning to consistently find 10-20 pips of profit in a consistent 75 pip range or to find the entire 75 pips? Which is less work? Once again, the answer is obvious.
Remember, one 5 lot net 10 pip trade equals $500 in profit and typically can be realized in 30 minutes or less.

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Wednesday, December 30, 2009

Looking For Investment in Forex Market? Note This Before Investment

Wednesday, December 30, 2009
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Forex market is the one of the most profitable markets in the economic world where almost traders indulge in investing some amount of money to gain profits. But you may loose money also if you do not research before investing. Study of forex market is very essential as how it works? And how value of a currency changes?
Let us brief out some of the very necessary points which the traders should consider before investing in the forex market:
Forex market is the place where major currencies are traded in pair. In first glance making profit in forex market seems very easy but this is not true in reality because the price of currencies depends upon various factors. Therefore before investing money any investor should strongly review all major factors which may cause the movement in the price of currencies.
The main factors that affect prices of currencies are studied in forex analysis methodology. These are called forex fundamentals and technical analysis method which forecast the price trends of currencies that will affect the value in future.
Forex fundamental analysis methods forecast the price of currencies in future on the basis of fundamental reasons like political and economical conditions of the country, interest rates, foreign investments, trade balance, Gross domestic products and financial policy of government etc. which directly affect the price of currency.
Forex technical analysis method forecast the price of currencies on the basis of various tools, indicators and market charts. Investors, who strongly study and analyze the factors which affect the price of currencies, have a better chance to avoid the losses and gain the maximum benefits from forex market.
If you are completely new to forex market and first time want to start investment then first of all you should open a demo account to start the fictitious forex trading for practices.
A Forex demo account service is provided free of cost by almost all online forex trading brokers. You can easily search free forex demo account service provider websites on internet. When you feel that you have got enough experience of virtual currency trading by using forex demo account, you can open a live trading account to start the actual currency trading.

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Sunday, December 27, 2009

Increase Your Forex Earnings - How Does it Work?

Sunday, December 27, 2009
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Trade and commerce have always been mechanisms using which human beings have dealt with and made profit. The Foreign exchange is not different at all. You must be familiar with the barter system that existed where people bought things by exchanging other things they had with them. A similar principle is followed here, with the exception that the trade happens using the various currencies in the world.
If you want to make some extra money and are willing to go that extra mile, this is your sphere as all you require is a calm mind and strategies. Make sure you do not go over the top and invest all that you have into this. It needs plenty of study and dedication from your side. It is wise to first understand the proceedings and learn how things happen in this realm and then start investing. This way you will accumulate skills and will be able to manage the amount in your hand very well.
For increased Forex earnings, the first thing you need to keep in mind is being thrifty. Make sure you know what you are doing. You have to remember that if you want to trade make sure you get a marginal hundred points at least to go further. This will reduce loss on your side and you will learn to go the right manner.
There is a lot of material to guide you through this process of increasing your Forex earning. It is not possible for you to sit glued to the computer trying to figure out how to trade as you will have your ordinary routine to look after. This is why you need to take help from software that is available. This way you can go about your normal routine and some time in between you can spend time on the statistics that have been collected. Based on this you can take your vital decisions.
It is alright to make mistakes. But there is no point in brooding over what has happened, instead you need to learn what went wrong and try to correct it and thereby increase your Forex earning. Wish you a happy trading ahead.

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Thursday, December 24, 2009

Few Facts About This Forex Trading Robot

Thursday, December 24, 2009
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Forex Software like FAP Turbo can help traders in earning good amount of profit. Robots like this are equally useful for a new comer and a seasoned trader. They not only assist you in calculating big amounts but also help in analysis of market data and future market drift. Following are the few things which should be considered before the purchase of this automaton.
• FAP Turbo is a robot which can work in any market condition. It has the ability to predict the market trends. This analytical ability of the software can help traders in making right moves at right time. This eventually results in earning good profits.
• The software has the demo account facility. Instead of trading with real money you can start trading with demo account and once you are satisfied with the working of the software you can invest your real money. This feature is very helpful for the new traders. And if you are not satisfied with the product or it does not suits your requirements you can get your money back with in 60 days of perchance.
• This software can trade with five currency pairs, which is very good for you as you can invest in the money of your choice.
• It's just a software, you have to adjust the settings very carefully. Wrong settings may lead to losing a trade.
• Although it can predict the future market drift but do not overestimate it. It prediction depends on the market conditions. So in case of volatile market conditions you have to supervise the software.
• Features like scalper mode are quite helpful in making small profits which pill up to be a large one at the end of the day.
These are the few things which might help you if you are planning to buy FAP Turbo as your office assistant.

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Sunday, December 20, 2009

How Much Money Can You Make?

Sunday, December 20, 2009
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Foreign exchange currency trading or forex is advertised as one of the greatest ways to earn money on the internet, but how much money can you in reality create? Of course the answer is this it depends on many factors. These include your opening investment, your training, the time which you have free and your mind-set. But one of the most crucial factors is how you control the money itself.
Most traders, when they are starting out, spend a lot of time hunting around for the perfect system. Now of course it is true that you do need a system that has the potential to make profits, but there8945180246 are still systems that some people make profits with and others do not. You will realize this if you look at online reviews. Some will say that a system is great and they are making a lot of money with it. Others are losing. Why is this? Often, it is all in the way that they manage their money.
Take for example a system that, on average, makes 30 pips profit per winning trade and 15 pips loss per losing trade, with 50% winning trades. Clearly this system will make a profit over time. However, if you have ever played roulette or tossed coins you will know that a system with an average of 50% wins will quite often have runs of 5 or more losses, or runs that go something like 8 out of 10 losses.
So even though this is a profitable system, a trader who was risking 20% of his funds on each trade, would quickly be wiped out by it. Someone risking 10% per trade would survive longer, but would probably still fall victim to a bad run in time.
Someone risking just 1% per trade, on the other hand, would probably be able to make money indefinitely with this system. Profits would be small at first, but they would grow and grow. And at 2%, a trader would probably still be safe while making twice as much money as the 1% trader.
Clearly, then, in order to maximize your profits from foreign exchange currency trading it is important to know a few basic facts about your system. This means at least backtesting it over a long period, and preferably testing in real time through a demo account too.
If you are sure that your system is profitable, you can begin to trade at low risk. However, to go as high as you safely can, you need to know what is the worst case scenario that you can expect, that is, the maximum loss that you are likely to encounter before an upturn in the worst bad run, then double it, and make sure that you will be able to cover that.
As a rule of thumb, limiting your risk to 2% of your account balance is a good strategy for most traders. This can be hard for beginners and those with low startup funds because it does mean that you will not get rich overnight. This can be disappointing but it is a fact of life. As the old saying goes, anything that looks too good to be true, probably is.
It is vital to understand that many of the cases that you see where people double their money in a month, for example, rely on using maximum leverage and maximum risk which might result in doubling your money in the first month and then losing it all in the second. This is gambling, not investing.
Foreign exchange currency trading is a process that can be used to make a lot of money, but only if you allow your funds to grow gradually, along with your experience. Understand that a 5% to 10% return on your investment per month is a great result, and you have a good chance of making money consistently with foreign exchange trading

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Thursday, December 17, 2009

Does This Software Have What it Takes to Make You a Profit?

Thursday, December 17, 2009
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The Forex Megadroid is among the several automated systems that has gotten lots of attention lately. Everybody is curious as to what it can do and how it can help a trader earn large profits. For eight years, an algorithm, which could make the Megadroid the best Forex robot, was in the works. The plan was to design it in such a way that the robot could generate a consistent large amount of profits, without being really affected with any unexpected changes in the market conditions. The code turned out to be successful and is called the Reverse Correlated Time and Price Analysis.

The RCTPA acts like a miniature computer that stores and analyzes past and present information that it gathers from the market. It uses all these data to predict where the market will be in the next couple of hours. Because of its efficiency and accuracy, the Megadroid has maintained a winning percentage of over 95% ever since it was first launched to the public.

The Megadroid is an extremely reliable moneymaking tool because there is no need for you to watch over it while it does its job. It is fully automated so that you can just leave it alone, while you sit down, relax and go on with your usual daily routine. Although it can do almost everything by itself, it is still important that you try to exert an effort to enhance your trading skills with its help, because at the end of day, every decision will still be up to you.

Albert Perrie and John Grace are the masterminds behind this innovative and revolutionary trading robot. They have been in the Forex business for more than 40 years, and they used all 40 years worth of experience in coming up with the Megadroid.

Because of all the unique features that the Forex Megadroid possesses, there is no doubt why it has become so popular over the years. If you are thinking of using an automated software program to be by your side to help you with currency exchange, take some time to check out the Megadroid and find out if it can give you what you want.

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Tuesday, December 15, 2009

Study Forex Signals Efficiently!

Tuesday, December 15, 2009
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Nowadays almost everyone in the world is acquainted with the word "Forex". It's integral part of our life and we can see the advertisement of trading Forex almost everywhere: in metro, in the internet, on the walls and in many other places. But a person should be very careful about all that stuff. Advertisements say you, that trading is just a funny game, bringing profit. But don't believe it. It's rubbish. Forex won't just provide you profit without any effort. It's the matter of hard and efficient work, studying book, Forex signals much more.
Lots of people, eager to study, get and read the big amount of different trading tutorials and manuals, which are an essential part of Forex education. What is more, they find Forex signals on various currency pairs in the Internet.
For good start-up a person must study Forex graphics, charts, diagrams and even signals extremely carefully. You are to understand, what Forex signals stands for, what the meaning of every recommendation is, and what every graph depicts. For example, there are different kinds of diagrams displaying prices of various currency pairs, gold, oil, share indices etc. If you study that efficiently, the complete understanding of the market won't be really big problem.
It's considered, that Forex signals are very important part of trading studies, because they bring a person to practice very close A beginner will look through the signals before executing them and understand the reasons, why the provider, he got the signal from, decide to open this or that position. And by the way, it's not forbidden to speak to Forex signals providers and get to know, what they think about situation on the market. They should always be so kind to help a Forex freshman.

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Saturday, December 5, 2009

Automated Forex Software Trading - How to Become Successful

Saturday, December 5, 2009
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Forex market is open for everyone who has at least $200, computer and high speed internet connection. Everyone wants to be a part of this incredible financial world that allows people not just earn money but also to gain real financial independence. Indeed, this is a truly lucrative opportunity for you to choose. Of course, it is not that easy to make money on this volatile market and that is why a number of technological innovations were presented to make the life of a trader easier and even richer.
What Are Our Advantages?
I am talking here about automated Forex software trading that is very popular today due to its advantages. So, let's have a closer look at this software. In case you are interested in this issue then you should know the main principles that automated Forex software trading is based on.
Automated Forex software trading is used by traders because of several reasons and here are some of the most vital. To begin with it should be pointed out that some variants of automated Forex software trading that allow you to set up your 'personal advisor'. Simply speaking, you program it considering your experience, knowledge and risk factors.
So it means you give all your knowledge to this robot and therefore it cantrade for you, just like you and even better than you! You might think that it is impossible. Well, you see the great plus of this advisor is that it has no emotions. It means it will not drink coffee and smoke or bite nails -it will trade on that base you have programmed. No hesitations. That is the reason why the risk to lose is minimal.
The other advantage you should take into consideration is that with this Forex trading software you will be ableto trade 24 hours a day. This is very comfortable: you go to bed and your software works and makes money and as soon as there appears pre-programmed opportunity it proceeds transactions. There is no doubt that now you also want to buy it and in order to make the right choice follow some tips.
First of all you should look for software that is completely comfortable for you to use: simple and user-friendly. Secondly, it is recommended to choose automated Forex software trading that can be used during a certain period of time (usually from a week to 30 days) free of charge as in this way it will be easier for you to understand whether this software is suitable for you and whether it meets all your requirements.
If We Want To Become Successful We Must Avoid These Typical Mistakes
Of course, typical mistakes that people do when using automated Forex software trading also can not be omitted. First of all you need to realize that it is wrong to think that as soon as you start automated Forex software trading you will begin earn huge sums. Keep in mind that you will make money in the long run,so - be patient.
The second mistake that people usually do is that they don't want to deepen their knowledge. You should not forget that automated Forex software trading is not perfect and your knowledge is the key factor that will bring you success. So, don't be lazy and learn all the time!
Warning: Do not neglect the above! Be sure to take this advice seriously if you want to increase your Income

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Monday, November 30, 2009

Trading Price Action Using Your Intuition

Monday, November 30, 2009
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Trading Price Action  is truly a game of “gut feel”  ” trading strategy” and “price action charts”

The market is one giant poker game, and not only do you need a good
knowledge of the game itself, one must learn to read the emotion of all the
players at the poker table.

As a price action forex trader, I can only offer my personal trading insights and the things I have picked up
over the years that have helped me with trading strategies and my general approach to reading charts..

I can not give you all of the “gut feel” qualities which is a larger part of the ingredient to long term success, this market intuition and emotional element will only come with learning and trading experience. Nobody will want to tell you this though.
I am here to tell you that no matter what trading strategy you learn, it will require screen time, patience and absolute discipline to trade it successfully.

There are 2 levels to be aware of.
1. Part of trading is the strategy
2. Part of trading is the emotional element, and the ability to read the market with “good intuition and feel”.

There is no mechanical approach that I am aware of that makes money long
term, all methods I trade and that others trade that I know of, use a basic
“rule set”, and basic “trading plan condition” to then use pull the trigger on price action related setups etc.

For example, a trading plan may look like the following…

One might have 3 pre conditions,

1. The chart shows a trend within the last 10 days, price has formed a 1 2 3
reversal higher, and is trading near its recent high.
2. The market has pulled back to a support point
3. The market has now formed a “price action signal” condition to confirm a
reversal which may become the entry point.

These may be criteria in a trading plan, but how do we truly filter this,
and say ” ok I will trade this setup, but I wont trade this one, because
of…etc etc.”

As I say to all my students honestly, the greatest traders are in fact, people that can
have a trading plan conditional element, but then use what I call the “gut
feel element” and the “internal emotional filter’, or put simply, they use market experience and screen time to help make quick on the spot trigger decisions.

Thats just a qucik article on the “emotional element” in trading price aciton, and indeed all trading methods, no matter what the educators say, there is always a degree of intuition and awareness that is taking place in our trading, and its time to learn to harness it correctly.

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Wednesday, November 25, 2009

Think of Forex Trading as a Business

Wednesday, November 25, 2009
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Many forex traders lose their shirt and this is mainly because they are not really prepared to put the time and study into their day to day trading activities.  The concept of Trading and investing in the forex market is like any other business, what you get out of it is relative to what you put into it.
In other businesses you find a market, you learn a skill or develop a product, and then develop that skill or product until it is better than other people in the same business or niche. Trading is the same - it is a business - and if you want to be one of the financially secure you will have to work at it, in the exact same manner as an astute business person. In conventional business you have to be patient, focused, disciplined, very committed, hard working, forceful, and in complete control of yourself and in control of your plans.
To be successful in your forex trading business you can’t be forceful or control the market, all you can do is identify what is happening and go with it to profit, thats not to say that you cant be confident with your trading, but you need to realise early in your career, that you are not bigger than the market, and although you run a trading business within this large market, you are never truly in control of whats happening, or what will happen in the day to day forex market movements and events.
You can never be reliant on tips or one lucky trade to secure your future, nor can you build a trading business using a mechanical autopliot kind of system. You have to continuously work at it until you have developed a trading strategy, and even when you have developed that strategy, it will require ongoing effort and monitoring.
Once you have a forex strategy that works for you don’t keep messing around with it, try to remain very consistant and subject yourself to the trading opportunites it identifies. I have read in so many articles out there on the web that you should keep searching for a different method or system to improve your trading, and I respond to that by saying, ‘ this is complete rubbish’ … rather, I strongly suggest trying to stick with what you have and see it through, you need to give things a chance to work and prove itself.
Successful forex traders know the main part of their trading business is the development of their trading skills not continually looking for the ‘Holy Grail’. When you have a set of trading rules that suit you and you are happy with what you have, you need only improve your skills to implement them, this will take much of the stress and anxiety out of trading and it will become enjoyable. That’s right, trading can become enjoyable once you have faith in your rules and your method.
When you rbegin to remain consistant and disciplined with your thinking, and of course your trading plan/rules, then you can create a dynamic forex trading business that will help secure your financial future or simply make your trading much more enjoyable and relaxing

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Sunday, November 22, 2009

How to Become Successful at Forex Trading

Sunday, November 22, 2009
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Most people’s experience in the Forex Market is relatively short and in no way profitable. They hear about the currency market and think it is an easy way to make a lot of money in a very short space of time. Now, I am not saying this can’t be done, because for some this is true, but for the majority it’s certainly not the case. Let me explain in more detail …
In the early stages of most FX trader’s career, the first trading decisions generally come from tips and recommendations from brokers, alert services, forum threads or sometimes even mutual novice trading friends. Then, at some point, traders decide to study the market and attempt to find the perfect system or method to trade with. I am sure you can relate to the following statement; for many traders, the forex market and it’s nuances truly become an obsession that takes up countless hours of searching on the internet and books, forums and DVD’s , in the hope to find the holy grail forex trading system, which they eventually find out, simply does not exist.
Traders develop or buy a system and start trading way to soon. Sometimes it is profitable, but when it has a few losing trades (which is normal), they change the system, read a new trading book, etc. or go back to looking for tips and advice, back to the forums, back to Google, searching for more information. After some time, and after more losses and frustration, most give up and stop trading altogether. Or, they go on the analysing merry-go-round, keep paper trading and never get any financial success from their trading; this is the case for 90% of newbie and intermediate traders.
A few realise that the trading method they are using is not the actually problem and the most important ingredient in their trading is actually they.
In addition, they soon realise that a sound set of trading rules is essential to trading profitably. But if the rules are not followed, they are of no value, and an average trader will have difficulty making a profit with a good trading system. Ironically, a good trader who has skill and a good mind can make a profit with even an average system. Put simply, even with a perfect system, the human mind can stop it making money!
Statistics from surveys of US traders indicate that once a trading methodology is developed by a forex trader, then 80% of the effort in trading is actually trading skills (that includes things like trading psychology and money management).
When the trading system is developed and trading skills are learned, a person starts finally trading properly. Most traders encounter a setback at some stage; either the market conditions change or they don’t follow their rules. However, if good money management is followed, this is not a serious problem. Often, even after winning for several months, after a small set back, many great traders stop trading to evaluate what has happened. This is often a mistake, and is again, the ever-present emotional element which plays in the back of our minds every day we trade. It’s a mistake to interfere with the consistent day to day trading routine, even in the face of losses, the trader has to press on and believe in what they are doing.
Here Some Common Traps Traders Fall Into:
This is where the real decision about the trader’s future is made:
1. They stop trading all together
2. They find a new system, read a new book, and do another course. This can go on forever and successful trading will never happen.
Or
3. They evaluate what really happened. Mostly it will be that market conditions had changed or they didn’t follow their rules.
Then the forex traders who go on to achieve greatness:
(a) Monitor the markets and start trading again but trade small amounts and don’t force trades, they then resume trading normally once they get back on track.
(b) Wait for market conditions that suit their trading style.
This is an important process to go through. Most traders go through this experience 2 or 3 times before they develop the skills to achieve their trading objectives.
Trading success is a result of consistency, discipline and patience and most importantly self belief… When you have a trading plan that involves clean price action strategies, and that is built on practical workable parameters and it suits your personal and financial requirements, and you stick to it, then your forex trading will become more enjoyable and more profitable.

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Tuesday, November 17, 2009

Tips For Newbies - How to start your forex trading career.

Tuesday, November 17, 2009
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Tips For Newbies - How to start your forex trading career.

Trading the forex market can be a very rich and rewarding experience for those who start from a solid foundation. For those that jump in head first with no previous training and no pre-defined plan to trade the forex market, disaster is only a trade a way. I mean that in the most literal sense because if you have no trading plan and no real idea of what being a successful forex trader entails, than you will quickly develop and reinforce all the wrong habits that eventually will destroy your trading account much faster than you think. This article is written out of personal experience and knowledge and will give you some idea of how to get started trading the forex market with the goal of consistent profits in mind.

The first and arguably most important factor in determining wither or not you are ready to trade forex is to sit down and take a look at your entire personal financial picture. If you are planning on funding your trading account with money that you might possibly need for any living expense than you are not ready to trade. You need to have disposable income that you are totally ok with losing; this is the first step in developing the proper habits of a successful forex trader. If you are trading with money that you need for bills or anything else in your life, you are doomed to fail because you will be overly emotional from the very beginning while trading, a sure fire recipe for disaster.

After determining that you do have enough disposal income to open a forex trading account you can then begin to develop a personal method or system for trading the market. I will save you months or even years of frustration, time, and money by telling you this; all you need to make your entry and exit decisions is a naked price chart. That’s right, you don’t need a bunch of fancy indicators and you certainly do not need to buy some two thousand dollar black box system. Trading is mostly psychological and most people over emphasize the technical analysis side of it. A good foundation in price action analysis is all you need as far as the technical side of trading goes. Once you know the basics of price action in the forex market you can then develop risk/reward strategies and concentrate on maintaining your self control and discipline.

I suggest you demo-trade for a month or two or three before trading your real money in the markets. Develop a good system for entries and exits so that you already know what to look for and what to do when you trade with real money. You need to know what you are going to do before you get into the trade because if you try to decide while the trade is happening you will inevitably make the wrong decision due to emotion. You need to have all scenarios planned out before they happen, so if x happens you will do y, if a happens you will do b, there should be no deciding while the trade is open.

Finally, learning from people who are already consistently successful in the forex market is probably the best route to go. The problem is that many people claim to be successful traders but few actually are for long periods of time. Forex trading is full of people trying to make a quick buck by selling some bogus trading systems that are overly complicated and simply don’t work. Simplicity is your friend when it comes to trading the forex markets. Remember that, it’s important.

So do your research before jumping in the forex market. Only trade money you can afford to lose, study price action and naked price charts and learn from a good mentor such as myself, demo-trade until you get your trading plan tweaked just right, then and only then should you think about diving in with real money.

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Thursday, November 12, 2009

The truth about Forex and Futures Trading

Thursday, November 12, 2009
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Introduction:
I’m not a self confessed market guru, nor am I an expert when it comes to written communication and education. I am however quite the expert at understanding price action and devising trading systems and methods. I am successful, not only at trading money, but at helping people improve their trading. The sole reason I succeed in the markets is because I am patient and I trade setups that repeat themselves over and over. Trading is a sport, like chess, billiards and poker, trading is a game of skill and strategy.
My analysis and approach is typically very simple. I use nothing more than daily and weekly price charts, not a bunch of fancy indicators, no fancy bells and whistles. Basic Maths and Price Charts are all one needs to make money in today’s markets.
It’s my aim to empower you with simple strategies, and hopefully make a difference to your future trading endeavors. I ask you to open your eyes and see what the market can realistically offer you. If you have $100 in a trading account, you’re not going to make it, $2000 and you have a fighting chance, $10,000, and your chances increase because you have the ability to handle inevitable losses.
I will not be filling these pages with useless trading content, and bore you to tears with basic market theory which is available for free on Google searches. I’m going to go straight into the meat, and divulge to you, not only a successful trading method, but help you understand what will help make you successful in the market.
The Realities of directional trading.
If there’s one thing I’ve learned in the last 5 years, when it comes the topic of wealth creation , weather it be trading share market, the currency market, real estate or even simple business, I find that failure in these fields is mainly due to a lack of discipline or planning. A trader can be given a method to enter traders but the question is, can they stick to the plan and manage the trade properly? Does successful trading depend on your personality or your approach? The short answer is both!
If you’re failing, you are a victim of subconscious inhibitions and mental in-capabilities, which all result in “fear” and “lack of personal discipline”. There’s a reason Ex Marines, Army and Navy personal make money trading, I know 2 ex military personnel that succeed in trading, and they both have the same personalities. They are trained in the art of war and discipline. Based on this information, a novice trader, or failing trader should then revert back to practicing a mechanical method which induces discipline and a step by step plan. Even is that method breaks even, you are starting good habits.
The reason the owner of a McDonalds Franchise makes money is purely because he follows a proven system with rules and restrictions. Successful trading and investing is no doubt similar to franchise in itself. If you use a method to trade with, and stick to it, manage your money correctly whilst maintaining constant discipline in your approach, the chances of your survival is increased 100 fold.
What you really need to know.
I want you to understand that before you trade or use this information, that any trading strategy should be just one part of your trading arsenal. My systems work for many, and can work for you, but you must be realistic. All methods lose money, as well as win money, the best approaches are often conservative and trade less often. You are not going to build Rome overnight with this method, but your most likely going to improve your results significantly over time, if not your discipline alone. As I continue to reiterate, a trading plan and disciplined approach is the true grail of trading.
I have often found that traders are obsessed with getting on “every move”, when all they really should be doing is mastering an approach to make “some of the moves”. My success can be attributed to the understanding that trading is a conservative game of patience and strategy. It’s a game no doubt, with many players, all whom are usually much smarter than the retail trader. As “small fish”, we must develop skills to jump on the back of the ‘larger fish’ (banks), and ride the tide for as long as possible. That in itself is precisely how trading works.

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Sunday, November 8, 2009

Major Economic Events in Forex Trading

Sunday, November 8, 2009
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Major Economic Events in Forex Trading

Major Economic Events in Forex:
Economic indicators are closely watched in the investment world, their release can have an immediate and volatile effect on the forex market. There are three main types of indicators; leading, coincident, and lagging. Leading indicators are believed to change in advance of changes in the economy, which can give you some idea of what might happen before it actually occurs. Coincident indicators reflect changes in the economy at about the same time they actually occur. Lagging indicators change after the overall economy changes and are of little use for prediction. Interest rates are a major driver of forex markets and each economic indicator is watched closely by the Fed as they decide on their monetary policy. For this reason many of these indicators can have substantial effects on the forex market.
Gross Domestic Product (GDP)
The GDP report is the most important of all economic indicators. It is the biggest measure of the overall state of the economy. The GDP number is released at 8:30 am EST on the last day of each quarter and it reflects the previous quarter’s activity. The GDP is the aggregate (total) monetary value of all the goods and services produced by the entire economy during the quarter being measured; this does not include international activity however. The growth rate of GDP is the important number to look for.
Consumer Price Index (CPI)
The CPI report is the most widely used measure of inflation. This report is released at 8:30 am EST around the 15th of each month and it reflects the previous month’s data. CPI measures the change in the cost of a bundle of consumer goods and services from month to month.
The Producer Price Index (PPI)
Along with the CPI, the PPI is one of the two most important measures of inflation. This report is released at 8:30 am EST during the second full week of each month and it reflects the previous month’s data. The producer price index measures the price of goods at the wholesale level. So to contrast with CPI, the PPI measures how much producers are receiving for the goods while CPI measures the cost paid by consumers for goods.

Retail Sales Index

The Retail Sales Index measures goods sold within the retail industry, from large chains to smaller local stores, it takes a sampling of a set of retail stores across the country. The Retail Sales Index is released at 8:30 am EST around the 12th of the month; it reflects data from the previous month. This report is often revised fairly significantly after the final numbers come out.

Employment Indicators

The most important employment announcement occurs on the first Friday of every month at 8:30 am EST. This announcement includes the unemployment rate; which is the percentage of the work force that is unemployed, the number of new jobs created, the average hours worked per week, and average hourly earnings. This report often results in significant market movement.
NAPM
This report is called the National Association of Purchasing Management index and it measures conditions in the manufacturing sector. The NAPM index is released on the first business day of the month at 10 am EST and it reflects the previous month’s data.
Consumer Confidence Index
The consumer confidence index is released on the last Tuesday of the month at 10 am EST, the report measures how confident consumers feel about the state of the economy as well as their spending power. Consumer confidence is considered a crucial part of the economic picture, the more confident people feel about the stability of their income the more likely they are to make purchases.
Durable Goods Orders
The durable goods orders report gives a measurement of how much people are spending on longer-term purchases, these are defined as products that are expected to last more than there years. The report is released at 8:30 am EST around the 26th of each month and is believed to provide some insight into the future of the manufacturing industry.
Beige Book
The Beige Book report is part of the FOMC’s preparations for its meetings and is published 8 times per year. The report is released two Wednesdays before each Federal Open Market Committee meeting at 2:15 pm EST. The Beige Book report summarizes economic conditions in each of the Fed’s regions. This report is seen as an indicator of how the Fed might act at its upcoming meeting.
Interest Rates
Interest rates are the main driver in forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy. The Fed can use the tools at its disposable to lower, raise, or leave interest rates unchanged, depending on the evidence it has gathered on the health of the economy. So while interest rates are the main driver of forex price action, all of the above economic indicators are also very important.

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Thursday, November 5, 2009

How to become a full time forex trader

Thursday, November 5, 2009
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Becoming A full Time Trader -Developing Forex Systems - Nial Fuller
You only need to master one trading setup to be a consistently profitable trader.
Screen time will allow you to master one setup.
After you have mastered one setup “own it” you can add another setup. This can be an ongoing process developing your own style.
The best setup to begin with is the one that you see and understand easiest. If you are forcing yourself to learn a setup because you believe another person is successful using it you may be taking the longer route to profitability. We are all different . Our brains and personalities will gravitate to different setups. This is also true of exit techniques. Most traders I hear from lengthen their road to profitability by trying to apply too many concepts before owning the first one. They have studied a myriad of techniques but have yet to master any. This allows them to talk about trading but unable to consistently trade profitably.
The first decision to make is; do you desire to be a counter trend trader? or a with the trend trader? Eventually, you can be both. At the beginning, or a new beginning perhaps, you will do best choosing to master a setup and follow the trend. If you have been at this game for awhile and are not yet consistently profitable you know what I am saying is correct.
This site contains trading techniques and setups with the intent that it will aid you in creating “your” trading style. My personal trading style is a combination of various styles and setups.
I trust this website will be an exercise in my personal understanding of my own style allowing all to benefit.
PICK ONE, MASTER IT, BE CONSISTENTLY PROFITABLE

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Tuesday, November 3, 2009

Forex Fundamental Analysis Article

Tuesday, November 3, 2009
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Basics of  Forex fundamentals

That forex analysis is a basic part of any trading method is accepted and understood by everyone. The usefulness of technical analysis for the determination of entry and exit points is also recognized by most traders. It is a pity that the other branch of forex analysis, the fundamental study of currency markets, is neglected by a significant number of beginners, and even by some experienced traders. This is an unfortunate situation. Since the invention of coinage by the Kingdom of Lydia in Anatolia, speculation has been a part of economic activity. And since those earliest days of trading, a vast number of successful traders have based their decisions on fundamental analysis, which is a fact recorded by documents thousands of years old, such as the Chinese Shi Ji.

Forex fundamental analysis is based on the notion that although market events are random in the short term, in the long-term the value of a currency pair will converge toward the theoretical value determined by economic fundamentals. In the short-term, markets move in an apparently random fashion. But examination of long-term forex trends shows the relationship between fundamentals and the markets clearly. It is, for instance, basic knowledge that interest rate differentials influence market action in an easily perceptible way. Unlike technical studies, fundamental analysis also helps us to establish the causes of market events. While technical analysis shows the how, where, and when of the markets, fundamental studies provide us the crucial “why” component necessary for linking those “where, when, how” aspects of the price action.

Fundamental analysis is certainly not news trading, nor is it a way of timing the markets. While it sometimes happens, it is rare that the dictates of forex fundamental analysis will be reflected in the market action immediately. But the later that the markets realign themselves with fundamentals, the severer the correction will be. The longer the irrationalities last, the stronger their elimination in the markets, and the greater the profits of the fundamental trader.

From the earliest days of the invention of currencies, fundamental analysis has brought countless riches to its followers. The speculators of antiquity, army contractors of the Roman era, Chinese merchants of the Warring States period, the Rotschild family in the 19th century, and the better known examples of our time like George Soros or W. Buffet have all utilized the powers of fundamental analysis to acquire wealth well beyond the imagination of those whose practice is limited to technical studies. Whether you wish to join them is up to you. But the tools of forex analysis are available to all who desire to use them, and you have only yourself to blame if you miss your opportunity.

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Monday, November 2, 2009

Why Use Forex Price Action Analysis ?

Monday, November 2, 2009
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Why Trade Forex with Price Action?

The forex market is a highly liquid and sometimes fast moving market that lends itself wonderfully to the trading method of price action analysis. Price action analysis is the identification and implementation of specific price action signals or setups in the market you are trading. Forex is a great market to use price action analysis on because it is open 24 hours a day 6 days a week and this means there are more price action signals for you to take advantage of. All you need to know is what to look for and you can best learn this from a professional price action trader.

I have tried about every way to trade the market you can imagine and after all the frustration, time, and money wasted I ended up realizing that the best way to trade any market is just by analyzing a naked price chart. My unique way of trading using price action setups is a result of many hours of screen time spent analyzing price movement and price action patterns.  Trading is a process of trying different methods and tweaking them and eventually ending up with your own unique trading method.

Price action analysis works very well in the forex market because it is such a dynamic and active market. The beauty about price action analysis is that it is an inherently flexible approach to trading that gives you a perspective on the market that allows you to make sense out of what is happening at any given time. I have been profitable by concentrating on just 2-3 good price action setups that have proved profitable again and again for me. If you learn how to read what the chart is telling you and focus on 1 to 3 setups that you like, eventually you will make money. Where people go wrong is using indicators and other overly complicated methods and then constantly jumping from one technique to the next. You have to find a truly consistent edge in the market and then just concentrate on that until you get it down, then you can maybe add more tools to your arsenal.

Trading is difficult enough without having an overly complicated method that tells you to look at multiple lagging indicators when you could just be looking at a simple price chart. Probably the best reason to trade forex using price action is that any indicator you use on your chart to analyze market movement is derived from price and is just showing you in a less vivid format the same thing price is showing you. Some people like indicators because they give you buy and sell signals when lines cross or whatever. The thing is, if you know what price action signals to look for you can get the same entry signals but at a much better price which gives you a better chance at profiting.

Just because your charts come with a hundred different indicators doesn’t mean its going to help your trading or make you money in the markets. We are trading financial markets here, so the core of what we are doing is trying to profit off of price movements. Why people would not naturally make their trading decisions off of pure price movement is beyond me. I promise you that if you simplify your trading method and concentrate on using price action you will wonder how you ever traded any other way.

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Friday, October 30, 2009

Successful Forex Rading System

Friday, October 30, 2009
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Forex Trading System
2.1. What is a Forex Trading System?

Forex trading system is the subsystem of the forex trading plan which governs when and at which price you open and close your trades. A trading system works on the signals given by technical analysis and/or fundamental analysis. The signals are taken to see if the trader should buy or sell a specific currency pair or must close the open position(s). Any currency trading system prevents information overload by filtering out the universe of technical and/or fundamental signals in such a way that only the most reliable (successful in the past) signals or signal combinations are acted upon.

There are two kinds of trading systems - the discretionary and the mechanical. Discretionary trading systems expect the trader to use his or her own judgement to ascertain the importance of each of the technical or fundamental signals (whose number is potentially infinite) that he or she gets. Mechanical trading systems operate on a fixed number of technical or fundamental signals without the participation of the trader. Discretionary trading systems require the perpetual application of creativity (flexibility of approach) from the trader in the understanding of the changing market conditions. Mechanical trading systems require the creativity from the trader only in the forex system development phase.

Discretionary forex trading systems are best employed by professional forex traders with a lot of experience (internalized practical market knowledge) against which they can determine the validity of any signal that they receive. These traders usually remember a large number of various signal patterns from the past (just like the master chessmen) that they can compare to the current market conditions, to make their analysis more objective. In essence, they use themselves (i.e. their brain) as their trading system - often very successfully - because human mind has the best pattern recognition power on the planet.

Starting currency traders are advised to begin by following professionally created mechanical forex trading systems. Most of these systems are sold-out in the form of the forex signals that are usually developed by experienced traders who have found a way to systemize their knowledge of the markets into a working strategy. At the same time, the beginning traders can work on building their own knowledge base of the forex market through the quality forex books, educational courses, bank reports and newswires on this subject -so that they can too, with time, create mechanical trading systems from their own insights and intuitions (using the forex charting packages which allow to do this).

Beginning without a proven mechanical forex trading system (that has positive mathematical expectation) drastically dilutes the chances of maintaining the capital. This is because any intuition or a hunch that the traders experience as a result of some newly gained knowledge of the forex market is likely to be overridden by one of the two emotional derivatives of their life-long programming towards the money - the greed and the fear. In other words, without exact adherence to an existing mechanical trading system the beginning trader will eventually succumb to his or her emotions. As a matter of fact, the only way the traders can acquire discipline in the early phases of their trading careers is by tight following the signals generated by a proven mechanical forex trading system.

Note: Neural Network Packages (e.g. NeuroShell) emulate the process of human learning and can be used to accumualte the knowledge of the past technical and/or fundamental signal patterns (just like the mind of professional forex traders does) for the purpose of the future currency price forecasting.

Quote: "A mechanical approach to the markets can be successful and this is backed up by the fact that approximately 80% of the $30 billion in the managed futures industry is traded by exact systematic methods", from the "The Ultimate Trading Guide" by John R. Hill, George Pruitt, and Lundy Hill.
2.2. Components of a Forex Trading System.

A regular forex trading system consists of two subsystems - the entry system and the exit system. These systems can operate on a different or the same set of inputs. The inputs can be technical or fundamental signals.A system consists of a number of rules which interpret the signals that it receives. The entry system evaluates the signals to determine if and at which level the positions should be opened. The exit system evaluates the signals to determine if and at which level the open positions should be closed.

The propose of an entry system is to find market points which allow to open positions with high potential reward and low potential risk (high reward-to-risk ratio). The risk is defined as the pip distance from the entry price to the next support or resistance level lying opposite to the entry direction (above entry for sell and below entry for buy). The reward is defined as the pip distance from the entry price to the next support or resistance level lying in the direction of the entry (above entry for buy and below entry for sell). It is generally advised that the traders accept only the trades with the reward-to-risk ratio of over 2 (e.g. risk=60 pips, reward=130 pips). All the same, depending on the accuracy of a trading system (i.e. the percentage of the winning trades of all the past trades) this requirement might be shifted to a lower or a higher value without sacrificing the profitability of the system. This is because the true measure of the long term profitability of a forex trading system is neither the average per-trade reward-to-risk ratio nor the accuracy of the system but the combination of these two measures which is calculated as the mathematical expectation of a trading system. In the absence of the accuracy measure of a trading system (as is the case with some discretionary trading systems) - the trader ought strive to find entries with the greatest possible reward-to-risk ratio.

Note: Elliott wave analysis allows to find entries with extremely high reward-to-risk ratios (e.g. just check some of reports on MTPredictor's site). It is worth noting that MTPredictor automatically calculates the reward-to-risk ratios and helps to find optimum entry points based on these ratios. Some Elliot wave software developers (e.g. Advanced Get) also supply their subscribers with detailed Elliott wave trading plans.

The aim of an exit system is to protect the capital base and the unrealized profits. The capital base is shielded by ensuring that the trades are exited with a fixed loss when the reasons for holding them are no longer valid. This is done by triggering a stop-loss order on your forex brokerage account when the price crosses the level which defined your risk at the entry. If you are a discretionary trader, forcing yourself to place the slop-loss on each trade and to stick to it no matter what will make you very selective about your entries - which ought increase your profitability. The unrealized profits are protected either by a take-profit order which is triggered on your brokerage account when the price reaches the level which defined your profit at the entry or with the help of the trailing stop-loss which gradually locks in more profits as the price moves in your favour. In fact, the trailing stop-loss exit can be more suitable than the fixed take-profit exit if you wish to profit from the extending "character" of some impulse waves. In such a event the trailing stop-loss can be placed just a few pips opposite to the trendline which defines impulse wave. There is one more type of exit which can be used to protect the trader from missing trading opportunities - the time exit. A time exit is triggered if a trade hasn't reached either its stop-loss or take-profit level in the specified period of time. Exiting such trades reduces the chances that the capital will be tied up when better opportunities appear on the other currency pairs.

Note: Most forex newswires (e.g. Marketnews) are a great source of real-time information on the location of the major support and resistance levels and clusters of large orders that are watched by professional forex traders and which can be used to manually update the position of your trailing stop-loss.
2.3. Development of a Currency Trading System.

Making a mechanical forex trading system involves a number of steps: 1) Selecting the inputs for the trading system - technical analysis or fundamental analysis tools which will generate the signals for the system; 2) Developing the rule-set which will operate on these signals; 3) Optimizing the parameters of the analysis tools used to produce the signals; 4) Backtesting and forwardtesting the system over historical price data. Each of these steps is covered in more detail below:
2.3.1. Selecting the Inputs for the Trading System

It is important to base your selection of inputs to the system on a sensible premise about the way the currency markets operate. As an example, you can use 200-day moving average to determine if the market is in a long-term up or down trend because a large proportion of professional forex traders use this technical tool to measure market trendiness. It is also better to combine technical analysis tools of different type and scale because this increases the chances of finding high-probability entry points (those that are likely to be followed by sharp currency price moves in your favour), which should, in turn, contribute to the overall system accuracy.

If you use technical tools only on the higher time-frame charts like the daily or the weekly charts this will increase the duration of the trades and the time periods out of the market - because the signals will take longer to form. Either of these outcomes can have detrimental impact on the trader and investor morale during the inevitable losing streaks as is shown by our forex trading simulator (Please note: The size of this page is 0,6 Mbs and it requires that you have Flash installed and Javascript enabled in your browser). which can last longer than they are naturally prepared to wait. This makes it important to focus on lower time-frame charts (e.g. hourly charts) for signal generation which will lead to shorter trade durations and, consequently, to quicker recoveries from the drawdowns. Shorter trade durations can also help to the trader to defeat the temptation to overtrade because he or she can expect to see the next entry signal in the next couple of days - not in the next couple of weeks.

Quote: "Your freedom to choose your time-frame is too valuable to lose. Investors and margined speculators, on the other hand, can choose their own time-frames. This is one of their positional advantages, to use a favourite notion of Larry Hite* , one of the founders of Mint Investment Corp* - one of the largest of the futures fund operators. Investors and speculators can choose. Obviously it makes sense to choose time frames which match any natural rhythms that can be discerned in the currency markets." John Percival in his book "The Way of the Dollar".

Note: If you are using the Elliott Wave analysis your average holding period will depend on the degree of the impulse or corrective waves that you are trading.

Choosing which fundamental factors are best for your forex trading system (e.g. as inputs to your neural network) can be very hard because the effect of various economic indicators on the currency prices changes with time. In other words, the strength of correlation between the price of a currency pair and the fundamental factors relevant to it is not fixed (even with interest rate differentials). In contrast, the relationship between the price patterns (especially the classical price patterns) and trader psychology (the driving force behind most important price moves) remains fairly stable over the years. This is the reason why the forex traders are encouraged to dedicate most of their efforts to building trading systems around the technical analysis.

Another all-important question is the time horizon of the prediction that the trader is trying to make with his system. Better not to try to forecast currency prices too far into the future. This is because the number and the complexity of interaction of various technical and fundamental factors rises geometrically with each trading day. It is, therefore, best to "leave" this task to high-end investment banks and houses which alone have the capacity to perform the necessary calculations inherent in longer-term currency course forecasting. It is more practical for the typical currency trader to concentrate on capturing the so-called "knee-jerk" market reactions driven by crowd emotionalism through the analysis of the current technical or fundamental conditions.

Quote: "Rule 5: Be prepared for anything don't try to predict what will happen or when. Investing is a skill, not a science. The Zen swordsman dicsniplines body and mind to counter any blow spontaneously; he does not anticipate the moves of an opponent, for that impedes his ability to react. Likewise, professional investors know they cannot control the real estate or stock market, let alone the global economy. Instead, they train themselves to be financially intelligent, to think confidently and creatively when opportunities or problems arise." one of the The Seven Rules of Investing given in Robert Kiyosaki's book "You Can Choose to Be Rich".

You should also try not to include too many indicators (over 12) in your forex trading system. This is because probability that the system will perform like it did in the past diminishes as you add more indicators to your system. As a rule, the larger the number of indicators in your system the longer the period of historical currency price data you need to backtest the system on.

Note: There is no necessity to learn all the available indicators and technical analysis methods before you can start creating your own robust trading systems. It is usually enough to master just a few "basic" technical indicators and formations to start combining them to identify high probability entry and exit points. The fundamental and technical reports issues by the investment banks are one of the best sources of information on which technical and/or fundamental signals are watched by the professional trading community that you can include in your forex trading system. In the long run it is best to stick to a sound forex trading strategy, that has high probability of being profitable in the long-run, than to dissipate your capital among a variety of "promising" methods.
2.3.2. Developing the Rule-Set which will Operate on the Signals

You can create these rules based on your observation of how the prices move in relation to various technical and fundamental indicators. For example, you might notice that currency prices tend to resume trending behaviour after they correct toward and touch 200-day moving average. You can use this observance to formulate a rule which will enter the markets when the prices bounce off from the 200-day moving average. You could also notice that the prices tend to stop trending when they touch the outer daily Bollinger bands. You can use this information to create a rule which will exit the trades once the prices penetrate the outer daily Bollinger Band. Because making rule-sets for mechanical trading systems forces you to quantify your insights about the market this practice aids to clarify them.

The rule-set of a forex trading system is in essence the clarified version of the weighing algorithms that you naturally create in your mind as you learn the technical and fundamental analysis and observe the price action. I say "weighing" because most of the technical rules are transcribed in your mind as fuzzy patterns (e.g. "The longer the shadows of a doji the more likely the reversal" or "The steeper the trendline - the more bullish or bearish the market sentiment."). When you make the trading system, you transfer your knowledge to the computer in the form that can be understood by it. Admittedly, the quality of the computerized model very often will fall short of the actual mental model that you keep in your head. Nevertheless, the real advantage of the "mechanicizing" your market knowledge is the power to objectively determine the validity of your trading ideas by the process of the backtesting. It should be noted that the closest the computers approach to simulating the complexity of human comprehension of the market patterns is in the neural network packages.

Neural network packages can be especially effective if you wish to model your way of weighing the strength of support or resistance levels. For example, if you believe that fibonacci retracements are more reliable entry points if they are confirmed by reversal candlestick patterns and/or RSI divergence you can "ask" a neural network to search for past occurrences of this pattern combination and determine the actual numeric weight that should be placed on each of these technical signals for the entry or exit to occur. This process is very advantageous because it allows the computer to extend your natural pattern recognition ability by perfecting (or objectifying) the weights associated with each technical input/signal. This way you can objectively measure the strength or the beauty of the technical setups that you encounter in your trading (e.g. the resultant model might require the position to be opened if the total sum of signal weighs is bigger than 0,5 where a reversal candlestick signal is "worth" 0,15, fibonacci retracement is "worth" 0,3 and the RSI divergence is "worth" 0,45). In essence, your forex trading system is the description of how beautiful your trading setups should be, where "beauty" is defined as the convergence of confirming signals from different type and/or scale technical analysis tools. Advanced users of the neural networks can go even further by tying the position size (within the maximum percentage value set by their money management system) to the strength or the beauty of the technical setup. If done decently this practice will allow them to make the most of the best trading opportunities while simultaneously reducing the exposure on the less promising setups.

Meta4: An fascinating parallel to weighing the signals in order to determine if the position should be taken or not is the way people fall in love. Each individual carries a certain number of unconscious or semi-conscious qualifiers that "describe" in more or less fuzzy terms the appearance, the character, the temperament of their likely mate. When you meet the person who posses enough of these traits (i.e. above some "threshold" or unconscious minimum) the cascade of the confirming signals sets your mind off into the love state. A similar process occurs in the mind of discretionary trader when the market action through all of its technical and/or fundamental signals (i.e. "when all the pieces fit") activates the hunch or intuition response from him or her. If you compare the brain of a discretionary trader to a neural network the hunch finds its direct expression in the output neuron. The similarity between the process of falling in love and experiencing a hunch is probably behind such market advices as "do not marry your trades" or "do not fall in love with your trades". To stretch the similarity further we can compare a stop-loss order to the practice employed by some of the married couples called the "boundary". The boundary is the some form of behaviour unacceptable to the other spouse which if violated will lead to the end of relationship. Yet another analogue is between adding to a losing position and trying to win a favour of an unloving partner - the more you invest the harder it is to let go and the more likely you are to end up destroyed financially (emotionally in the relationships). As a final comparison the neural networks allow to model the connections among the ideas in the human mind in a similar way that a website through all its external and internal links permits to express the specific mental idea-network of its creator.

Quote: "I use all forms of technical analysis, but interpret them through gut feel. I do not believe in mathematical systems that always approach markets in the same way. Using myself as the "system," I constantly change the input to achieve the same output—profit!", Mark Weinstein in Jack D. Schwager's book "Market Wizards".

Note: It should be marked that the effectiveness of your model will always be only as good as the inputs that you give or "feed" to it (as someone said - "Garbage in, garbage out"). This is because computers merely extend your pattern recognition ability and cannot be relied upon to think up a winning system on their own - if this was false, the markets would have been cornered long ago by the guy with the most powerful computer.
2.3.3. Optimizing the Parameters of the Analysis Tools used to Produce the Signals

Some forex charting packages (e.g. TradeStation) permit to optimize the parameters of the technical indicators that you use in your forex trading system. Optimization allows to find parameter values of your indicators that result in the biggest profit (most frequently used measure of system performance in optimization) from the trading system over the past data. An good example of the optimization is looking for the best time-period parameters for a two-moving-averages crossover system. Commonly the periods of two moving averages are stepped from 1 to 50 in steps of 1 and the trading results for each of around 250 moving average combinations are recorded and then sorted to find the most profitable combination. Such process of going though all possible parameter combinations is called brute force optimization. As the number of indicators used in your system increases arithmetically the number of potential parameter combinations increases geometrically. The total number of parameter combinations is, therefore, said to be subject to combinatorial explosion. For example, to optimize a system with 5 indicators each of which has 50 different parameter values you would have to cycle through 312 500 000 (50^5) possible parameter combinations. The only way you can expect to quickly solve such huge optimization problems in your lifetime is through the use of generic optimizers (e.g. OptEvolve for the TradeStation or NeuroShell Trader Professional).

Optimization of the time-period parameter of the cycle-based indicators like Stochastics permits to automatically adapt them to the cycles present in the market instead of using the default time-period values - which is the method originally used by the developer of Stochastics.

As a final note, try not to over optimize your indicators because majority of the professional forex traders use default indicator settings. You are looking for trading setups where the smart money will be acting (as opposed to the general investor public) so it doesn't make much practical sense to use indicator settings that hardly any professional forex trader is aware of.

2.3.4. Backtesting and Forwardtesting the System over Historical Price Data.

Backtesting allows to see how your system would have performed if it was run during some period in the past. You optimize indicator parameters using the price data in the backtesting period. It is crucial that the time period that you backtest your system on is representative of the currency pair that you wish to trade - it should include all types of market conditions (trending, rangebound) and it should be as recent as possible. Once you are comfortable with the performance of your system you forward test it - you run it on the out-of-sample price data (the price data that would be immediate future to the backtesting period). This way you can see if the system is able to perform likewise to the way it did during the backtesting. The closer the system's performance during the forward testing is to its performance during the backtesting the more robust the system and the more assured you can be that it will continue to trade in a similar manner during the real-time trading. You could also wish to trade your system on a forex demo account for some time before beginning to trade it with the real money.

Backtesting aids the trader or investor to determine if they are prepared psychologically for the live trading of a forex trading system. By examiningthe past performance of a system they can decide if the size of the drawdown, the number of the consecutive losses and the average duration of the trades are acceptable for them. For the complete list of the performance measures that you could wish to review before starting to trade with professionally-created mechanical trading systems please visit the forex signals page. In contrast to the mechanical trading systems the discretionary trading systems cannot be backtested because the discretionary traders cannot guarantee that they will react to a similar set of signals in the future in the same manner that they did in the past.
2.4. Implementation of a Forex Trading System.

There are two ways you can implement a forex trading system - either manually or automatically. Discretionary trading systems can only be followed by the manual placing of the trades. Mechanical trading systems are better followed though the use of automation.

If you are following a discretionary trading system you will be generally screening the currency markets for the signals that you have outlined in your checklist. The checklist is the description of the technical or fundamental trading signals that your trading system's rule-set operates on. The checklist could also contain the guidelines on how often you should check your forex charts/forex newswires for the signals (using the economic news calendar provided by the forex newswires as your fundamental signal timing tool); in contrast, the mechanical forex trading systems will be going through their own checklists with every second, 24 hours a day - which no human being can possibly do. Having a elaborate checklist will help you to be more disciplined in the application of your system. It is better to write your checklist in the form of the questionnaire. You can automate your search for some technical signals with the help of those forex charting packages which allow you to set up the sound or email/SMS alerts to notify you whenever the technical signal of your interest is generated (e.g. in Intellicharts). The forex bank reports and the forex newswires frequently issue mini reports of technical conditions on the market which most often are merely the "filled-in" versions of the same checklist.

Manual implementation of the mechanical signals is NOT recommended. Since the signals are generated by the computer you will always feel compelled to double-check them against you own experience - since no computer can model your thinking with 100% accuracy. This can lead to the delays and/or missing of some of the signals which can potentially undermine the system profitability, that rests on the principle of taking each signal exactly at the time it is generated. A lot is being said about the widespread lack of the discipline in taking the signals of the mechanical forex trading systems. This trouble can be easily overcome though the use of a reliable signal automation service. You solve all emotional troubles associated with the manual trading of the signals by simply automating this process. Elimination of the emotions from the trading through the use of the automated mechanical forex trading systems should explain their popularity amidst the multi-billion dollar hedge fund industry.

An crucial aspect of mechanical system trading is the monitoring of its real-time performance. The concealed market dynamics (a particular way of reacting to technical or fundamental signals that an important grouping of forex market participants shares - or, systematic mass investor impulsiveness) that your system has captured during the back-testing may be switching or might already have changed at the time you start to trade your system with the real money. The single way you can say that the market dynamics that you are focusing on have changed or not is to compare the real-time and the past system perofrmance. If the system continues to perform like it did on the backtesting then you can conclude that the market dynamics it targets have not yet changed. If you notice important deviations in such system performance measures like the maximum peak-to-valley drawdown, the average duration of trades, the average value of the profits/losses, the maximum number of consecutive winners/losses, it can signal that an important shift in market dynamics is taking place (e.g. a group of investment banks have modified their trading models). The fastest way to update your system to the changes in market dynamics is available for the neural network packages - which allow to retrain your model over the most recent price history. Retraining a neural network involves readjusting its matrix of weighs which allows it to stay attuned to the current market conditions. If mechanical trading systems suffer form the paradigm shifts on the market - the same can be said of the human mind (discretionary trading systmes) which tends to be very inflexible once a partciluar way of doing things (i.e. trading style) is ingrained in it.
2.5. Mastering System Trading.

To master system trading you ought have the patience to wait calmly for the entry or the exit signal from your own forex trading system and act only on them - irregardless of the technical or fundamental conditions that you see in-between these signals. It is no wonder why the best traders prefer to compare themselves to skilful predators when they describe their trading style:

Quote: "Top traders love the hunting metaphor to describe what they do. One of them, for example, claims he is like a cheetah. The cheetah can outrun any animal, but it still stalks its prey. It won't attack until it is right on top of its prey. In addition, the cheetah usually waits for a weak or lame animal to get close. Another top trader told me that he trades like a lion. He watches the herd for weeks until something other than his presence causes the herd to panic. When the herd panics, he then chases a weak or lame animal that appears most confused. The difference between an average hunter and a really skilled animal like the swift cheetah or the cunning lion is that the skilled hunter waits until the odds are overwhelmingly in his favor", from "The Ten Tasks of Top Trading" by Van K. Tharp.

Quote: "Much of the time, even professionals don't have a clear picture of what is going on, but they have learned to have the patience to wait for select, specific setups. You must learn to trade on only the most recognizable and reliable patterns." from the "Street Smarts: High Probability Short-Term Trading Strategies".

The most important rule of systematic trading is to take each and every trading signal that your system generates. Only by taking all the signals at the time they are generated can you count on replicating the past performance of your system. If you have the slightest suspicion that you will not be able to take all the signals - either due to the timing of the signals or your busy schedule - you should arrange for the signals to be automatically traded.

At the end of the day, a forex trading system just like the money management system serves to protect yourself from your own destructive tendencies which very often mask themselves as the "well-meaning" hunches and gut responses. This doesn't mean that you shouldn't trust your instincts - only that you should base your trades on them only if you can eliminate emotions from your decisions. This is because a trading system is a method to profit from other traders' emotional instability, therefore, if you do not control your own emotions you will not be able to profit from any system. Removing the emotions from your manual trading can take years (!!!)- so it can be more practical and profitable to simply autotrade your system.

Even if you start your currency trading career by following a professionally created forex trading system you will receive full satisfaction from the trading - in terms of profit and self-actualization - only if you make and trade a successful system of your own. One of the best books which can help you to start this fascinating journey is "Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis" by Richard L. Weissman.

Quote: " In the meantime, it cannot be emphasized enough that, at the very least, genuine success in trading markets involves the adoption of a trading system. Without the discipline of such a system, the very best efforts are likely to be doomed to failure." Tony Plummer in his book "Forecasting Financial Markets: The Psychology of Successful Investing".

There are no certainties in the forex trading, since the future will never be exactly the same as the past. There are only probabilities, which you can systematically put in your favour with the help of a established forex trading system.

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Tuesday, October 13, 2009

Finding the Right Forex Trading Software

Tuesday, October 13, 2009
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Forex Trading is quickly becoming the hottest niche in the trading world. The regular market has become so tumultuous that the best traders in the industry are walking around scratching their head on a regular basis. If you were ever going to get involved in forex trading, now is the time. However, you are going to have to find the right forex trading software to be successful.

If you have familiar with the regular market, you are quite aware of how quickly the market changes. This is even more so true in forex trading, but the patterns of the changes tend to be much more recognizable as you are dealing in currency.

Now while currency has a reputation of being extremely volatile, it also follows patterns over times that you can spot. The challenge is in being able to spot the trend in time to be able to take advantage of it. While there are still a few horses around that have the gift, few people can pick up trends like software can.

Unless you are able to stand at the computer 24 hours a day, it is unlikely that you are going to be able to be successful trading currency unless you have software that can do your tracking for you. While you are sleeping, the software is busy crunching numbers and evaluating trends for you. When a good trend shows up, you can have the program send you an alert that will allow you to verify the trend and take advantage of the trade.

Of course, even the best program is going to put up a dud every now and again. Sometimes there are false trends that even the computer will misread. The goal of course is to find the right software that will allow you to win on more trades than you lose. If you can do this, the odds are in your favor to make a nice profit over the long run.

Something else to keep in mind as you follow this market is to make sure that you wait for the trend to be verified before you jump on it. You do this so you don't get caught up in one of those false trends. By taking that little extra time, you are protecting yourself and your investment.

The big knock on doing this is that you are not going to be able to take advantage of the lowest support level if you are going long or the best resistance price if you are going short. In the end, you have to look at if the risk is worth the reward. By trading in this manner, you may not make the maximum profit on the deal, but you are much more assured of actually making a profit every time you do a deal.

Forex trading is a great way to lock up that future and to make a living in the current economy. If anyone tells you that it is going to be an overnight get rich quick deal, run away. What you need is a good, reliable program that spots good deals that you can make money from time and again.

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Thursday, October 8, 2009

How to develop a profitable forex trading stratey

Thursday, October 8, 2009
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Before you plunge into one of the most liquid, unpredictable and profitable markets in the world, there are some things that you should know about before putting your money in the hands of a forex broker. When money is involved, there are a lot of things you should consider, and these are the key to developing the best Forex strategy, for you to start making a profit. For instance, there is a great deal of money management that must be put in place before you run off with a lot of hope in your pocket. Hope is not going to pay the bills. Your money is and you need to know when and how much of your money you are going to use.

Always set yourself some realistic targets and limits to ensure that you do not spend too much money. Also, do not fall prey to the gambling endemic that is afflicting many Forex traders - this means they simply cannot stop trading no matter how much they loose and they often make irrational decisions in order to 'win' back the money that they have lost. Set yourself some parameters and stick to them, you will regret the fact that you account has run dry and you start to owe the brokerage a sum of money. Also, always have some risk capital on hand so that when things do go wrong, you will be able to bail yourself out. The total sum of your investment and risk capital should be an amount that you are able to afford.

Nobody should go into trading with their life savings in tow. The capital you put into the commodities market should be capital you can spend and if you do lose, will not have an adverse affect on your life style. That said, Forex trading is all about watching market patterns and market psychology. Unlike normal and traditional commodities trading, many people would say that the Forex market falls into a pattern when it comes to either a crisis or an upheaval within currencies. Issues like inflation, political violence and economic decisions can adversely affect the performance of the currency pair you have chosen. But there is always a pattern and this pattern is the structure of many trading strategies of experienced investors. For example, you must learn that there are many 'safe' currencies in the market that investors flock to when there is wind of a calamity in global economies. This is just one aspect.

Market psychology is ruled by major decisions my collective moves in the market. Because of the fact that huge multicontinental banks are the biggest driving forces within the FX market, they have pre planned moves when situations come up. Your job as an investor is to read the signs and react accordingly. The good thing about Forex is that is a very liquid market, so you can pull out any time you want - or on the flip side can invest in a click of a mouse. With these in mind when investing, you will have the key to developing the best Forex trading strategy.

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Thursday, October 1, 2009

Choosing the Best Professional Forex Brokers

Thursday, October 1, 2009
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If you are thinking of getting in touch with USA forex brokers, there are some important factors you need to consider. It's actually not that tough to find one considering there are lots of these professionals out in the market today. The real challenge however is finding someone who can really bring you results and assure that you are going to get quality services out of your investment. Bear in mind that forex brokers' rates vary accordingly and they may turn out to be a bit pricey.


The reason why it is important to hire a forex broker that specifically trades in the US dollar currency is that it gives you exposure to experiential and technical aspects. The US currency is one of the most widely used trading money in the market today. It's like the base where other currencies peg their rates at so when the US dollar fluctuates, it tends to change the course of the trading market as well. Liquidity is something that you must expect when it comes to the trading game.


Here are some important points you might need to consider when it comes to choosing among USA forex brokers.


1. Is the forex broker duly regulated? - The US bank and its related financial agencies have a say on the players in the forex market. Therefore it is important that you get in touch with these types of people. The great thing about using forex brokers who are regulated is that they are quite meticulous with their process. They need to do this because aside from liaising with you and their business spread partners, they also need to submit their financial standing and reports to regulating authorities. This way, you are assured that you are getting in touch with reliable people with a solid reputation.


2. Be the one to specify your trading platform - Although forex brokers are known to employ their own trading platforms, it would still be best if you are the one who will be giving directions for this system. Your trading platform should depend on the amount of time you can devote on the project and your work system. There are many different kinds of trading systems which you can use. You can either choose to have your trading run on autopilot, you may want to purchase a licensed trading software, or simply log online to an open source trading network. If you are not yet familiar with these things then you can also ask the expertise of forex brokers to help you choose the platform that would suit you best.


3. Trading methods used - Aside from the trading platform being used, you should also delve deeper into the specifics of the trading methods being used by your preferred forex broker. Here is where things such as spread, funds safety, and fractional trading would come into picture. All of these key ingredients to facilitate your forex business.


Do not let yourself be overwhelmed with having plenty of choices for USA forex brokers. Make sure you trim them down to qualified individuals whom you feel comfortable to work with.

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Sunday, September 13, 2009

AUTO FOREX TRADING SYSTEM

Sunday, September 13, 2009
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If you wish to make most of the forex trading opportunities, then auto forex system trading is something which could really assist you in this concern. Just select the best trading system and earn lots of money.

When it comes to earn lots of money with forex trading in an easiest manner, it is highly recommended to go for auto forex system trading. Now, you must be wondering why it is so. Well, before taking into the account of these systems, it is essential for you to consider their worth first. Basically, forex trade market works for twenty four hours a day. It means that opportunities of earning money can come at anytime. But, is it possible for you to monitor all these trade activities for the whole day? Well, the answer will definitely be no! Now, here comes the requirement of these auto forex system trading.

Such systems can assist you as a professional broker and that too without charging any monthly wages. Now, let us consider the functioning of these trading systems. Basically, these systems work upon the specific software which acts according to the growth or fall of the currency. It means that the decisions taken by auto trading system are the assurance of earning a lot of money.

In addition, these systems do not require you to sit in front of them to monitor their activities. They work for you throughout the whole day and as soon as any earning opportunity arrives, you are sure to grab that instantly. Although these systems are quite trendiest these days, but it doesn't mean that you should trust them blindly. As forex trading is a risky game and even a single mistake of yours could put you into halt. That's why it would be a prudent decision to go for a demo session of these systems.

In addition, make sure the system that you are going to deal with is tested under the practical conditions of forex market. You can also search over the Internet to find out the most appropriate auto forex system trading software for you. It doesn't matter which software you are using in the forex trading, the only thing which matters is your strategy to make the most out of it. Therefore, select the software that works according to your strategies

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Thursday, August 13, 2009

Painless Business Opportunity that can be happening in few Hours

Thursday, August 13, 2009
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Did you ever consider making money in Forex trading as a home based business? I did and I was let down embarking, however, after doing some home effort, I was absolutely certain with this brainstorm. I consider my initial losses in Fx trading nothing but a startup expense that's linked with any venture you can think of. Not here forever all my sorrows.

One affair that I like about the Fx trading business is that you can rehearsal at no cost for as long as you desire, and one more feature is that you can pull together as much information about as you can perhaps cope with before you leap into this venture. Understanding, practice and some slight startup funds is all you need. If you do not cover the last, or the necessary capital to set up an account then all you have to do is study to be gainful in demo account and convert a wealthy comrade of yours to go in mutual undertaking with you, many are doing this. You supervise the account for your rich associate who's wealth is gathering nothing but dust someplace even in the bank account your friend's savings would barely make him 4% a year. if you develop into a profitable Currency trading trader you can make your friend this type of yield every solo business day instead of an entire year after you capture yours. A Currency trading account administrator is at liberty to have more than 30 % of all returns on original invested capital. You can gain knowledge of Forex trading by visiting unbiased websites that endow with loads of information regarding Currency trading all for free, you can get the ready established approach or wait until you develop yours.

One such set trading methods that you can go ahead and take hold of it to diminish the time required to turn out to be a thriving currency trader is the Forexbody procedure. This approach is so unfussy that anyone without even the slightest clue about Forex can be taught, first by browsing the valuable neutral information and watching the free Metatrader screen recordings on the forexbody website. Particular lexis about the Forexbody metatrader screen recordings, these measures are not for babypips guys and girls, these videos demonstrate remarkably very hard-hitting forex trading that can only be done by those who have become very good at the game well. Picture an account made twice larger in 30 minutes, yes screen recordings on Forexbody site illustrate just precisely this breed of exertion, but on the other hand, as tyro you get careful guidance on the site and recommendations on trading the easy mode to achievement.

The website has Currency trading signal by sms that you can evaluate for free. the signal has a victory rate of over 93% and if you are to be fulfilled with just the eminent 10 pip yield limit per deal the success rate would exceed 98 %. Even trades that turn out to be losers revolve to winners when given enough time. There a abundance of information on how to be thriving using Forexbody two times a day signal and there are 10 rules you have to abide by and according to Forexbody source, you can twofold your account every 45 days with low risk trading habits. all you need is self discipline and a robust will to tug the trigger immediately upon getting trading signal.

To be able to meet with ceaseless earnings you need to instigate the low risk approach, with this strategy a small account can be on track and full-grown over the period of 4 to 6 months to a decent amount where it can engender as much as $3000 in unbroken take-home pay, another time without taking piercing risks, while parting room for further expansion for further and unlimited upsurge in income.

The Wrapping up, If you ever thought about having your own business and working from the soothe of your own residence, you got to give this a test, It will not cost you any money to test the whole lot on virtual accounts that you can get free from plenty of Fx trading brokers worldwide, but you have possibility to be your own boss in a short time and the attempt on achieving the American ambition, stop commuting and fling that dress rules away.

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