Forex

Who Makes Money Trading Forex

2008-02-12T18:36:00.000-08:00

Practically everybody entering trading arena has one objective to make money. While there are some people who trade for challenge or other “purist” reasons, they are decisive minority. For almost all traders, pulling money out of the markets is a primary motivation.

We have all seen TV infomercials that make it sound so easy. What you need to do is to attend some seminar, purchase a piece of software with some crossing lines or colorful arrows. Just follow these buy and sell signals and you are on your way to untold reaches. Can it really be that simple?

Reality is quite different. There are statistics claiming that 90-95% of traders lose money. How accurate this number is, may be debatable, but what is not, is the fact that more people lose money than make it.

These kind of statements often stress they apply to small speculators or beginner traders. This could be understandable. Most people get themselves into trading in a haphazard way. They don't commit enough time to education, follow questionable advice, luck discipline, are insufficiently funded. The list can go on.

Than there are professional traders. Money managers, hedge funds, bank traders, CTA's. How well do they do trading Forex? Logic would dictate this group of traders makes a lot of money. After all they employ best talent, have best market access, use sophisticated trading tools, have best trading terms, certainly are not under capitalized.

In other words, these market participants are best positioned for consistent profitability. Strangely enough, that doesn't guarantee superior results. Barclay, well known financial powerhouse, compiles Barclay's Currency Trader Index (CTI). Data for this index comprises of results from 114 managed money programs, both spot Forex and currency futures.

Since 2000 there was only one year when this index gained more than 10% till 11.08% in 2003. Index suggests that money managers as a group have been losing money for last few years. In 2005 results were 1.21%, 2006 witnessed a loss of -0.12%. Returns for 2007 to date are not much more impressive, just 0.89% gain through August.

The outlook for the rest of the year is no better. Other indexes tracking currency trading funds show similar results- marginal gains at best. These results maybe shocking to many people. If the best positioned market participants can't achieve meaningful returns, is it possible at all to extract profits from Forex trading?

What chance does a small speculator have if large players don't seem to get anywhere?

Well, smaller traders do have some advantages over large institutions. While every trader should create and stick to his trading plan, he/she is not bound by myriad of rules and limitations that institutional trader must adhere to. For one, leverage.

Money managers are not allowed to use large leverage. They may be limited to how big percentage of total funds can put in any one market. Individual trader is not. Most importantly, perhaps, money management companies can not just cash out 100% and sit on the sidelines when things don't go right. Individuals have this luxury, which, at times, maybe the smartest thing to do.

With proper market education and solid trading plan, every market participant can be successful. Outside of extremely short term scalping, where institutions have an edge in cost of trading, disciplined and patient individual can be the one who makes money. On regular basis.

Which is The Right Forex Trading System

2008-01-21T22:39:00.000-08:00

Learning Forex trading is not a simple task, but in no way it is difficult either. Forex trading is all about regulation, willpower and determination. Leveraging your strength could be extravagant by organizing the apt Forex trading strategy.

You may find hundreds and thousands of Forex trading strategies out there. Logic would tell us that there is a foreign currency strategy out there which leverages our strengths. All forex trading strategies use a variety of indicators and combinations. These indicators and studies are just calculating support and resistance and trend in the Forex trading market.

Which forex trading strategy actually works?
First, we should know who we are as forex traders. Does our character fit the pip sniper mode or does our nature draw us more towards swing forex trading. Finding your trading character would simply mean studying and practicing the different time frames and related with Forex trading strategies.

Over time you might also notice a higher level of achievement and or ease trading one style over others. You need to pay attention! The forex market is uttering you where your cleverness is more competent of extract reliable profits for the market. This is why journaling is so imperative to your every day forex trading.

Secondly, if in case you are using some body else’s forex strategy, a most of us are, organize this strategy with no change until you fully and totally recognize all aspect of the strategy through back testing and as well with some real life experience.

Don’t fall into entrap of jumping from one strategy to strategy or mixing different strategies when the one you are using does not lead to instant success. This is only a guideline for disaster.
Take the time to actually understand the forex trading strategy.

Study the components independently so a deeper understanding of the strategic mechanisms would be mastered. If you recognize the components, internalize its use, and make consistent profits into your forex trading account, then you have your own Forex trading strategy.

It does not really matter what the professionals say, your account balance is the final judge and judges for your Forex trading strategy.

6 Common Errors That Cause The Equity Wipeout

2008-01-21T22:20:00.000-08:00

You can make money using Forex charts but most traders lose and the errors they make are listed below. You can make a lot of money using forex charts but you must use them correctly, so here are the errors you must avoid.

Trading Invalid Data
You need to use data that can help you calculate the odds and that means using enough data to allow you to do this. This is common sense, yet a huge number of novice traders still try day trading it doesn’t work period.

All volatility is too random in short time frames and support and resistance levels are meaningless. You can’t get the odds in your favor and you can’t win.

Predicting Without Confirmation
Perhaps the most common mistake of all novice traders simply love predicting but this is really relying on hope or guessing and in any money making venture, if you rely on hope you will lose. For example, instead of buying a dip to support and hoping it holds, you need to see prices turn up and confirm support has held before executing your trading signal.

If you have never used momentum indicators before, then you need to learn about them and use them and two of the best are the stochastic and Relative Strength Index if you don't know them learn how to use them.

Not Buying Breakouts
Most traders are obsessed with “buying low and selling high”. If they see prices breakout above a new high, they want to wait for a pullback to get on board. Generally when prices break to the upside above strong previous resistance, they don’t pull back.

You need to learn to buy breakouts if you want to catch the best trends due to this fact, most major trends start from new market highs NOT market lows. So if you don’t buy breakouts you are missing out on the best potential trading opportunities. “Buy high sell higher” is the key so remember it.

Not Being Objective
If you are too subjective your opinions get involved and so do your emotions so try and stay objective. Avoid indicators that involve too much subjectivity, such as Elliot wave, cycles or any other indicator that is not objective.

Using Indicators Incorrectly
A good example would be the huge amount of traders who buy dips to moving averages. It’s a lagging indicator. Or buy and sell the outer Bollinger bands it’s a volatility indicator! Neither should be used to enter trades on their own. The above are common misuses and there are many more.

Using To Many Indicators and Curve Fitting
If you use too many indicators n your Forex charts to generate trading signals you will lose. In forex technical analysis simple systems work best, as there are fewer elements to break in the brutal ever changing market. Less is more when using indicators and devising your forex trading system.

A Simple Business For Huge Profits

2008-01-21T22:03:00.000-08:00

This home based business is simple to learn and can be run in around an hour a day with no overhead and best of all it grants you cash to invest, sounds to good to be true? Read on. Imagine a business where if you have $1,000 you can immediately get your hands on $100 – 200,000 to invest and leverage your business.

That’s a huge advantage if you want to build wealth and it’s available when you trade currencies. You may be saying hang on I can’t do that.

Well consider the following and you may well change your mind.
Forex trading can be learned by anyone even those traders with no financial experience. In a famous experiment legendary trader Richard Dennis taught a group of traders to trade in 14 days the result? They went on to make him $100 million. The fact is trading Forex can be learned by anyone wishing to do so.

Other advantages of this business are :

You can operate it in an hour a day or less. You have no expensive overheads or staff all you need is a computer and an internet connection. There is never a recession, as one currency rises another must fall, creating constant opportunities for profit.
You can take holidays and breaks when you want.

And the big advantage :
You can leverage any cash you put in dramatically to seek bigger gains.

How Do I get started?
You will find a lot of free information on the net, you can study the advantages and see if this business is for you. The key to this business is risk control. Leverage can of course work for or against you, so you need to study it and use it wisely.

Currencies move in trends which reflect the health of the economy they represent by locking into and running these trends you can make big profits. On the other hand you must time your entry and take losses quickly. If you can achieve the above and you have a sound simple method, you are on your way to building wealth in the world’s best home business.

The Key To This Business Is
Mindset and methods are easy to learn, but when dealing with leverage you must be disciplined and not let your emotions get involved this is the fundamental error most traders make and they lose.

The fact is most traders don’t treat it like a business and simply let their losses get out of control if you avoid this error you can win. Currency trading is fun, exciting and easy to learn and represents one of the few ways for investor’s to start with small stakes and build huge wealth quickly.

Take Charge of Your Financial Destiny
If you are fed up with affiliate deals or trying to make money from ad sense or the net consider this business it has the possibility to change your financial future forever and can be learned by anyone prepared to put in the time and effort and succeed.

Why The Most Traders Accept Big Profit

2008-01-21T22:01:00.001-08:00

This may seem an odd headline as your probably thinking all traders want big profits so will accept them this is not so. Many traders are very often right about the big trends but fail to make money from them.

Why? Let’s find out. Many traders have excellent forex methods and are right about the long term trends but cannot hold them due to the emotion of fear.

So what do they fear?
They fear of losing the profit that they have in an open position is something all novice trader struggle with. The bigger the profit gets the greater the temptation is to snatch it before it gets away.

As volatility eats into open equity, the temptation to take the profit becomes too much and the trader banks it. Missing the Huge Profits and What Might Have Been Of course the trade then goes on to pile up $20 till 30,000 or more in profits. The trader knows he should be in but did not have the mental discipline to stay in the market.

It’s easy to say holding a trend is not hard just stay disciplined but that’s only if you have never done it. Believe me its hard even for experienced traders. Money is on the line in many instances big money and emotions start to take control.

Over Coming Fear When Trend Following
Of course you need to over come these emotions and learn how to overcome the psychological trap of fear. These traders could turn mediocre or average gains into huge gains and the way to do this is to have confidence in the method you are using. Even if you are following someone else’s methodology you will only be able to hang onto a trade if you have confidence in it.

Confidence in your method is essential and you should know how and why it works and will give you the big profits.
Hold stops back at entry. If it’s a long term trend, don’t trail too quickly or closely that will see your trade get taken out by normal market volatility.
Accept the fact that open equity will draw down sometimes by several thousands of dollars per day don’t tick watch look once a day only, and hold with your stop in place.
Learn to love risk and see the short term draw down as inevitable to get your hands on the bigger pot of profits at the end of the trend.
Study the big trends historically and match yours with some to give you an idea of the target you can expect. Keep in mind if you trend follow and you catch a big trend it can last for months or years and run for a 7 dollar profit.

Confidence Discipline and the eyes on the bigger prize
You can do it it just takes a mindset that is focused on making big gains and ignoring short term volatility. It’s hard but if you can have confidence and discipline, you can hold on for bigger profits without the fear of losing.

Build For One Big Gain With 3 Steps

2008-01-07T23:25:00.000-08:00

Building your own currency trading system is far easier than most forex traders think it is and here we will look at building one in three simple steps that will give you a trading system you can make big gains with quickly.

Building your own currency trading system is essential to your success as no one else will help you get rich your on your own. All the successful traders do it on their own success comes from within not from someone else and as most of the systems sold simply don’t work.

Lets get started and build a simple robust currency trading system for big profits. The first think you need to decide when devising your forex trading strategy is to take into account your own personality. Are you a patient trader or do you like more action?

If you are a patient trader long term trend following is good if you like action then try forex swing trading (under no circumstances what so ever try day trading it doesn’t work) once you have decided you need to build your trading system.

Support Resistance and Breakouts
Most profitable currency trading systems use support and resistance and aim to sell into resistance and buy into support. You can do the above but you also need to learn to buy breakouts to new highs as it’s the most profitable form of trading.

It’s a fact that most big currency trends start From New Market HIGHS NOT market lows. If you go with these breaks you will catch some of the best high odds and profitable trades. In your currency trading system learn to do both and you will make bigger profits overall.

Use Momentum
Most currency trading systems fail because they try and predict where prices are going and if you predict your hoping and the FX markets don’t reward you for hope. For example, a forex trader will buy into support and simply hope it holds however, you need to wait for CONFIRMATION that any level of support holds before executing any trading signal, this way you are trading with price momentum and have the odds on your side.

On the other hand if you have a break of resistance make sure price momentum supports price momentum has turned down. If you are unfamiliar with price momentum you need to lean as you wont win without it (check our other articles) and read up on these great indicators :

Relative Strength Index (RSI), Stochastic, Average Directional Movement (ADX). Forex trading all about trading with the odds and if you use momentum you will achieve this and enjoy currency trading success.

Running Profits and Cutting Losses
Getting a method together is relatively simple. The hard part is money management and battling the big problem that all traders face volatility. Many currency trading systems are right about market direction but their trading signals get stopped out by volatility.

In most cases this is because traders have stops within the market noise of the trade, or trail stops too quickly. When deciding on money management for your trading system make sure that you do not try and restrict risk to much or you will create it and guarantee you get stopped out and lose.

Use these 3 guidelines when doing your money management

Risk reasonable amounts per trade up to 20 %
Do not trail stops to close you will have to give back a bit of profit
Study the volatility of the currency (learn standard deviation) and make sure that stop takes this in to account

To Simple To Make Money?
It’s a fact that simple forex trading systems work better than complicated ones as their more robust and have fewer elements to break than complicated ones Furthermore, if you build your own currency trading system you will understand it and this will lead to the confidence to apply it with discipline.

If you don’t have confidence and discipline to apply your method you have no method! The difference between winners and losers is not so much the method they use but how they cope with profits and loses.

If you take calculated risks at the right time and are aware of volatility, you can make big gains with a simple currency trading system and trading is all about making money and a system based upon the above will achieve this.

All Fact You Need To Know

2008-01-07T23:20:00.000-08:00

Before you attempt to day trade or buy a day trading system, there are 3 facts that you need to know, as they are critical for your day trading success so let’s look at them.

The Logic Of Day Trading Is Flawed
The logic of day trading is flawed and doesn’t work. Sure you see lots of people claim to make money at forex day trading but they don’t and you will never find a real time track record of gains we will come back to this point in a moment, for now lets look at why day trading cannot work.

The answer is simple :
FACT :
All short term volatility is random and prices can and do go anywhere in a day, so if this is true it’s impossible to win. Of course its common sense, there is no order to the markets in a just a few hours.

Think about it :
Millions of traders trade trillions of dollars and to say that you tell what this mass of people is going to do in a few hours is laughable. You can never win longer term day trading so let’s look at all those wonderful track records, that tell you to give up the day job and trade for a living.

Where is The Track Record?
You will see people present track records in day trading and they all have hypothetical or simulated written on them which means yep you guessed it there done in hindsight knowing the closing prices, How hard is that?

A child could do it and these track records are not worth the paper their written on. You never see a real one. The vendor knows it doesn’t work so he is not going to risk his money trading he can sell the system to you, make a guaranteed profit and you take the loss in the market. The above is what happens as these vendors trick traders with simulated track records and clever marketing copy.

Scams on the net
The Internet has bought lots of great information to forex traders but also a lot of scams and cons and the biggest con of all is anyone who tells you day trading works it doesn’t. Try and find a track record if you don't believe me and you wont find a real one if you do tell me about it, I have been searching for 20 years.

Finally
If you want to make money forex trading, you need to trade in time frames that mean you can get the odds on your side and this means trading longer term leave day trading to investors who are naive, lazy or just dreamers. If you want to win get the odds on your side and do your homework and avoid forex myths such as day trading.

Why Trying to Predict Prices is Impossible

2008-01-06T21:00:00.000-08:00

One of the biggest forex trading myths is that to win you need to predict prices in advance. In fact if you try and do this you are 100% guaranteed to lose and there is a far better way to catch profitable market moves.

Let's look at this forex trading mistake in more detail. The reason predicting forex markets doesn't work is that if you predict you are simply hoping and guessing and that is not a way to make money in any venture especially forex trading.

Scientific Theories
One of the reasons most traders think predicting is a the way to make money is that they fall for two myths :

The first is humane nature is constant and repeats therefore markets must reflect this. Human nature is constant and does repeat itself but humans are emotional and don't conform to a scientific equation.

There are numerous systems sold by the devotees of Gann, Elliot and Fibonacci that tell you that markets do move to scientific theories but if they did we would all know the price in advance and there would be no market.

If a theory is scientific by its very definition it should work all the time Period.

The second is rooted in the logic of "buy low sell high" traders for example, will watch prices dip to support and simply predict the level will hold and buy. They want to buy just above support as that's what they believe is correct. Well the answer is it's great in theory but never works in practice because you are simply hoping or guessing the levels holds and that means losses.

The correct way to trade is to trade the reality of price change and Not predict.

For example, if you see prices dip to support don't just jump in wait for confirmation that prices have turned away from support and this means using momentum indicators. Sure you miss the turn but as you can't predict that anyway it doesn't matter. If you were to get 60 - 70% of the major trends you would still make a lot of money.

So if you dot know about momentum indicators its time to learn and you should start with these :
Relative Strength Index RSI Average Directional Movement (ADX) and the stochastic there are others but these are great ones to start with. In forex trading you are dealing with odds not certainties and therefore prediction is futile and leads to losses. Acting on confirmation means you trade with the odds.

While you can confirm support and resistance with momentum the best way to catch the big profitable trends is to buy breakouts of new highs. It's a fact that most big moves start from new market highs not market lows.

Breakout trading is highly profitable as most traders refuse to buy them and wait for a pullback so they can "buy low" of course, prices don't pullback and the trader misses the move.

By not predicting and trading on the reality of a breakout when it occurs you can catch some of the biggest and most profitable moves. "Buy high sell higher" on confirmation is much more profitable than "buy low sell high" on prediction.

Profiting With Forex Managed Accounts

2008-01-06T20:43:00.001-08:00

Forex is currently one of the most liquid markets in the world, helping a lot of people to make incredible profits and offering the perfect trading experience anyone should benefit from. The introduction of forex trading on the Internet has opened new possibilities for many investors, interested in trading various currencies and certainly deriving a profit from that.

If you want to see how things go on the forex market and check out various exchange rates you go on the Internet. And what is most importantly, online you can receive important assistance from specialized companies.

They can help you learn the secrets of Forex trading, showing you what is there to know about Forex Managed Accounts. These accounts are offered so as to make your trading experience a whole lot easier and certainly much more profitable.

Forex managed accounts represent in fact live forex account which are funded by an investor and then traded by a company or a specialists in the business. As an investor, the advantage comes in the form of a beneficial rate of return, without having to worry about the trading part.

And that is actually more than great. There are many people looking to be a part of that immense trading market, probably one of the biggest ones in the world. As a consequence, Forex Managed Accounts have become even more popular in the past few years.

Given the fact that a specialist is taking care of your account, you do not have any major concerns. Your profits will certainly increase and you will certainly be satisfied with having taken that decision.

It must be understood that forex trading is not something that can be done by anyone, just like that. It requires a great of knowledge in the field, not to mention an extreme amount of patience and dedication.

Forex Managed Accounts represent probably the best choice for anyone interested in forex trading; the return rate varies depending on the account chosen, but the promised percents vary somewhere between 5% to 20%.

Those percents can give your company or firm unbelievable profits so make sure you go online and find all about forex trading. The constant rate of growth that you are provided with is an amazing advantage of forex trading, especially as you do not have to spend any time or effort whatsoever.

You let someone else manage your account for you, no matter if that requires a small percentage to be paid to the company or firm handling your account. The potential of trading currency on the forex market is beyond understanding. This is why you need to resort to the services of specialized companies and request their assistance.

With Forex Managed Accounts, you ensure your presence on the liquid market that forex is and you also ensure your steady profits. A true specialist knows how to avoid major losses and focuses on obtaining you constant profits. They don’t reach for the sky and they try to manage your forex account as professional as possible.

And if you want to know what options you have when it comes to Forex Managed Accounts, then you should be aware that they can be traded both manually and with the help of an automated trading bot. Each kind of trading offers certain advantages, advantages that are extremely well known by specialists in the field.

Still, given the fact that there are an incredible number of forex accounts out there, a lot of these professional prefer to deal with automated software. The computer software deals with a special set of rules, regarding the money trading system and also allowing for better money management.

Including a wide variety of programming languages, it can provide easier handling of forex managed accounts. If you are new at forex trading, then you certainly have the right to ask yourself what are my chances for Forex Profiting.

Well, if you let yourself in the hand of an experienced trader, then those chances are high. There is a lot of winning potential for foreign exchange trading and you too can be one of those many people engaged in such types of investment. Forex Profiting is in fact a favorable blend between circumstances, including your decision to go for Forex Managed Accounts.

That person handling all of your accounts will be able to explain to you all about Forex Profiting and the most popular strategies that investors currently implement. With that help and other resources offered, you will achieve Forex Profiting in no time.

We are confident that we can help you accomplish forex profiting and that is why we provide professional Forex Managed Accounts.

5 Characters Traits That Cause 95% Traders To Loose

2008-01-01T21:56:00.003-08:00

Forex trading is all about having the right method but also the right attitude. Here we will look at 10 character traits that the losing 95% of traders have and if you want to enjoy currency trading success you need to avoid them.

Here they are in no particular order of importance.

I am not responsible
A symbol of losers they think success will come with no effort on their behalf and blame everyone else for their failure from the tip they got from friend, newswire or broker, to the market being against them.

These people make up a surprising amount of the losing majority and they fail to see that no one can give them success but themselves. Instead of seeing this they do the following.

I Like to take expert advice
If you do be very careful as most of the people who put themselves out as experts on the net are anything but their marketing companies and have never traded in their lives. Again a vast amount of traders buy systems with unbelievable track records and then are surprised when they fail in real time (they never look at the disclaimer that says the track record is a simulation and not real).

If something looks to good to be true it probably is and this is very true in forex trading. If you follow an expert and have not done your homework on the logic they base their views on, then you are unlikely to have the confidence to follow their method with discipline when it hits a losing period. If you don't follow a method with discipline then you have no method at all.

I don't like being wrong
Well in forex trading your going to be wrong a lot of the time, as only you can be wrong and the market price is always right no matter what you or I think. Most traders hate taking a loss and looking stupid but the markets do that to everyone and even the best traders lose at times.

If you try and argue with the price and justify your position, you will run up losses and lose and your emotions will take over.

I deserve to win I am smart
I have met some very clever people in forex trading and the majority of them lose if you think that being smart helps you then it won't. In forex trading you get paid for being right with your trading signal that's it and it's a fact that the best forex trading systems are simple.

They work far better than complicated ones as they have fewer elements to break. Clever people tend to over elaborate their trading and think the more they put in the more they get out but this does not apply in forex trading. If you want to make money keep it simple and remember forex trading is probably 20% method and 80% mindset.

I am not a patient person
If you are an anxious or nervous person then you are unlikely to win at forex trading. You need patience to wait for the right opportunities and you need patience to hold positions through short term volatility to bigger profits. If you are an anxious trader you will probably let your emotions get the better of you trade too much, engage in revenge trading etc and lose.

There of course other losing traits but the above are very common ones and hold anyone of them and you will lose. Forex trading is not hard to learn anyone can do it but most fail because they don't realize that correct mindset is the key to success.

To be successful at forex trading you need to rely on yourself, have a deep understanding of why your method works, so you can have the confidence to apply it with discipline. If you understand the above you can avoid these common losing traits and get a mindset for forex trading success.

First Rule You Need To Know Before You're Start

2008-01-01T20:44:00.001-08:00

So, now you are a forex currency trader. But how can you avoid the risk of losing money if you are a newbie? I think many newbie traders would like to have an experienced successful adviser, who could help both newbie or experienced trader, someone who could teach them how to trade without losing money.

Before you start or continue trading, you need to know the main rule of successful forex traders you should use your own forex trading system. You can ask : why is this system so important? It is very simple.

If you don't have your own successful trading system you may lose your money after only 1 or 2 weeks. It's very difficult to be a successful trader without using a tried and tested system. For many people trading is a gamble.

They try to start trading as soon as possible and make money too quickly. This usually leads to losing on the first trade. Many successful traders have their own strategies that have proven their effectiveness.

But the problem is it can take many years before you you'll find this strategy, and also it will take some time to test how well it works. Yes this is true some traders develop their strategies over 2 or more years.

Here's a simple test for you, check your trading results for the last 3 Months. Do you have your own rules? Do you make profits consistently? Is your capital growing every week or month? If all answers are "yes", you have already your own forex trading strategy. But if any questions were answered "no". Stop your trading immediately! You're losing your funds and you need to make some changes.

The easy way to change your losses to profits. Get an already working trading strategy from traders who are already making money. These successful traders have incorporated their trading strategies into a piece of forex trading software that helps traders make their decisions immediately. You need to be using software that gives you exact buy or sell signals.

This forex trading software will alert you about the best opportunities at the right moment. Because the program calculates many forex indicators and follows all trading rules automatically. So there isn't the "human error" factor.

Ask yourself do you say sometimes "It was a bad day today". I'll tell you why this is bad day for you. Because you think this is a bad day and you made mistakes in your trading and lost money today. This software doesn't know about "bad" days. It just follows the trading rules without emotion to make profits for you.

Every successfully trader uses a few strategies to increase their profits, and minimize losses. The simpler a strategy is, the better it is. I started to use an already proven and working forex trading system after an experienced professional trader gave this advice to me.

And this helped me a lot. I think for many new traders or people who have some problems with it right now "I mean losses" this will be a good opportunity to turn your losses into profits.

Scientific Theories and Predicting Forex Prices

2007-12-27T22:54:00.000-08:00

Many forex traders think that prices move to a scientific theory and that they have to predict to win at forex trading but this is one of the biggest trading myths and will ensure you lose. Read on and find out why and learn a better way to guarantee currency trading success.

The myth that forex prices move to a scientific theory has been spread by vendors who sell predictive trading systems that they say will make a trader rich and they appeal to greedy or naive traders.

Of course they don't work why?
If prices could be predicted with scientific accuracy we would all know the price in advance and there would be no market. Markets move because they are uncertain. Of course if somebody really had found a scientific theory, they would be to busy making money to sell it to you. Predicting forex prices is simply another word for hoping or guessing and if you base your forex trading strategy on that you don't have one.

Famous Scientific Theories that Don't Work
There are lots of scientific theories and many are based around the Fibonacci number sequence (which was actually devised to solve a problem to do with the copulation of rabbits in the 12th century) this is not to insult Fibonacci who was a brilliant thinker but even he would be surprised at how his theory has been hijacked by the far out investment community.

Also in the hall of fame is Elliot and his Wave Theory (lets ignore the fact he died a pauper) and look at his trading system.

There is nothing scientific about the theory.
It's all subjective! If a theory is scientific it should be by definition objective. Finally we have Gann and natural law well if he knew how the markets moved why did he lose all his money and have to sell courses to make a living? None of the theories are scientific. They appeal to the lazy, naive and the far out crowd, who love them.

The problem is they don't know the scientific theory of market movement and no one does - because there isn't one. Let's get in the real word and focus on making money with a forex trading system based upon sensible logic

The Good News
The good news is that human nature is constant and you can spot repetitive price patterns that can be traded for profit. You won't win every trade but if you trade the right set ups and execute your trading signal at the right time, you can win longer term. Forex trading is simply a game of odds but that doesn't mean you can't win - you can and the rewards can be huge.

Trade The Reality and The Odds
The best way to trade forex markets is to use forex charts and look and act upon the reality of price change. A trader who uses technical analysis doesn't care how or why the markets move, he is just wants to make profits when they do.

If you are looking for a level to hold or break wait for confirmation that it has first and go with the trend. Don't anticipate wait until you see the reality and then execute your trading signal.

So if you want to learn forex trading the right way and get good forex education, understand that trading is a game of odds not certainties but if you learn to trade them you can make a lot of money.

Scientific Theories and Predicting Forex Prices

2007-12-27T20:24:00.000-08:00

Many forex traders think that prices move to a scientific theory and that they have to predict to win at forex trading but this is one of the biggest trading myths and will ensure you lose. Read on and find out why and learn a better way to guarantee currency trading success.

The myth that forex prices move to a scientific theory has been spread by vendors who sell predictive trading systems that they say will make a trader rich and they appeal to greedy or naive traders.

Of course they don't work why?
If prices could be predicted with scientific accuracy we would all know the price in advance and there would be no market. Markets move because they are uncertain. Of course if somebody really had found a scientific theory, they would be to busy making money to sell it to you. Predicting forex prices is simply another word for hoping or guessing and if you base your forex trading strategy on that you don't have one.

Famous Scientific Theories that Don't Work
There are lots of scientific theories and many are based around the Fibonacci number sequence (which was actually devised to solve a problem to do with the copulation of rabbits in the 12th century) this is not to insult Fibonacci who was a brilliant thinker but even he would be surprised at how his theory has been hijacked by the far out investment community. Also in the hall of fame is Elliot and his Wave Theory (lets ignore the fact he died a pauper) and look at his trading system.

There is nothing scientific about the theory.
It's all subjective! If a theory is scientific it should be by definition objective. Finally we have Gann and natural law well if he knew how the markets moved why did he lose all his money and have to sell courses to make a living? None of the theories are scientific. They appeal to the lazy, naive and the far out crowd, who love them.

The problem is they don't know the scientific theory of market movement and no one does because there isn't one. Let's get in the real word and focus on making money with a forex trading system based upon sensible logic

The Good News
The good news is that human nature is constant and you can spot repetitive price patterns that can be traded for profit. You won't win every trade but if you trade the right set ups and execute your trading signal at the right time, you can win longer term. Forex trading is simply a game of odds but that doesn't mean you can't win you can and the rewards can be huge.

Trade The Reality and The Odds
The best way to trade forex markets is to use forex charts and look and act upon the reality of price change. A trader who uses technical analysis doesn't care how or why the markets move, he is just wants to make profits when they do.

If you are looking for a level to hold or break wait for confirmation that it has first and go with the trend. Don't anticipate wait until you see the reality and then execute your trading signal.

So if you want to learn forex trading the right way and get good forex education, understand that trading is a game of odds not certainties but if you learn to trade them you can make a lot of money.

Forex Quote

2007-12-27T20:18:00.000-08:00

All about a Forex Quote. The word FOREX is derived from the words "Foreign Exchange. Unlike other financial market in the world, Forex is open 24 hours every day where there is always a major financial center open where banks, dealers, hedge funds, corporations, individual investors and speculators are trading currencies.

The cumulative buy and sell of a currency causes the value of your Forex investment to move either up or down. There are numerous factors that cause the fluctuation of exchange rate. A country's political, social and fundamental economic environment and their central banks fiscal policy, interest rate adjustment are some of the common factors.

To have a better understanding how the currency exchange rate can affect the value of your Forex investment, this article will concentrate on the topic of Forex Quote.

Currencies are traded in pairs and each currency has its own symbol. For the Euro dollar it is EUR, Japanese Yen it is JPY, for the Pounds Sterling it is GBP, and for the Swiss Franc it is CHF. Hence, EUR or USD would be Euro-Dollar pair. GBP or USD would be pounds Sterling-Dollar pair and USD or CHF would be Dollar-Swiss Franc pair and so on and so forth.

You will always see the USD quoted first with few exceptions such as Pounds Sterling, Euro Dollar, Australia Dollar (AUD) and New Zealand Dollar (NZD. The first currency quoted is called the base currency. This is not surprising as the U.S. dollar is regarded as the central currency of the Forex market and is involved in nearly 90% of all Forex transactions.

So how are these currency pairs quoted on the Forex market? You will see two numbers on all Forex quotes. The first number is called the bid and the second is known as the offer (or the ASK) price. Take for instance EUR or USD, you will see 1.4625 or 1.4630.

The first quote of 1.4625 is the bid price, the price where traders are prepared to buy Euro against the USD Dollar. The second number 1.4630 is the offer or ask price and it is the price traders are prepared to sell the Euro against the US Dollar.

You will notice that there is a difference between the bid and the offer price. This difference is known as the spread. Based on the previous EUR or USD quote, you know that 1 Euro is equal 1.4625 US dollar.

The way profit is measured of a currency is by "pips" or point. PIP is the acronym for price interest point. If the EUR or USD moves from 1.4625 to 1.4655 that is 50 pips. A pip or 0.001 is the last decimal place of a currency quotation with the exception of the Japanese Yen and Yen cross rates. A price movement for the USD or JPY from 111.10 to 111.60 will be 50 pips.

The objective and goal for all Forex Traders are to profit from foreign currency movements. The rewards of trading Forex are immense and the amount of money you can earn can be life changing and ultimately leads you to achieve financial freedom.

This requires continuous and adequate understanding and training in Forex education. This education may include understanding technical analysis, chart pattern and formation, trade management such as stop loss and profit target and money management. And if you invest and get the right Forex Trading knowledge, you can enjoy long term currency trading success.

Achieving The Mindset of Forex Traders

2007-12-27T20:14:00.000-08:00

Forex trading is easy to learn yet 95% of traders lose money. The reason for this is that forex trading is more about mindset than method. It's the mindset of the millionaire traders that sets them apart from the losing majority. In this article we will look at how to get the right mindset for currency trading success.

The minority of traders that make really big gains all make their money with different methods but they all have a certain trait that set them apart.

Let's take a look at them.
Success comes from Within
If you think you can follow someone else and be successful your wrong success comes from within and to be successful you need to accept responsibility for your destiny. You need to have a desire to succeed and a willingness to work smart to get the knowledge you need.

Now you need to understand this key equation :

Understanding = Confidence = Discipline

Most traders don't understand that if you try and follow the herd, the news, a guru or mentor you will never have the inner belief in the trades. If you understand what you are doing, you will have confidence and confidence is required to apply your system with discipline through losing periods.

Keep in mind this simple equation.

Simple Forex Trading Method + Applied with discipline = Forex success

If you don't have the confidence to apply your method with discipline, you have no system at all. There are no secrets to forex trading that many people would have you believe all the knowledge you need is available for you to learn but you need to learn the RIGHT knowledge and then apply it with confidence and discipline.

Most forex traders then that discipline is easy to acquire but it's not as you are confronted with total responsibility for your actions. You have to confront an all powerful being (the market) and only you can be wrong and it's all always right.

You have to have the ability to create your own rules and have the discipline to apply them. In 1983 legendary Richard Dennis taught a group of people who had never traded before a system in just 14 days and sent them off to trade.

The result?
They made over $100 million dollars in four years. These traders were all taught the same system but some scored far bigger gains than others and this is purely mindset as they had all been taught the same method.

You can learn forex trading and you can adopt the mindset of the millionaire traders but you need to do your homework, gain the right knowledge, to instill confidence and discipline will follow. The big difference between the losing majority and the elite traders is a difference of mindset.

Learn Forex Trading, This Equation Make You Rich

2007-12-27T20:10:00.000-08:00

If you want to learn forex trading, then you need to understand the equation enclosed (most traders don't) if you do and can see its significance, then you can enjoy long term currency trading success so here it is :

Fundamentals + Investor Perception = Price

Now that simple! But consider its significance and understand that most traders don't, because they base their forex trading strategies on the following forex myths :

Following the breaking news stories is a great way to make money
Day trading limits risk and can be rewarding. Forex prices can be predicted.
Markets move to a scientific theory.

Believe any of the above and you will lose and lose quickly. Let's take a look at the equation in more detail. We all know the supply and demand situation affects the price but it's not the fundamentals that are important it is the way humans perceive them.

We all have the same facts to look at but we all decide what they mean in our own way, with the emotions of greed and fear controlling the bulk of traders. Try and trade news stories and you are simply seeing a story nothing more and if traders got rich trading the news there would be a lot more traders who make money.

Day trading works of course it doesn't the time span is to short how can you possibly predict what millions of traders will do in a few hours? You can't.

Forex prices cant be predicted either, as that's just another word for hoping or guessing and you wont make any money doing that and this is linked to the fact there is no scientific theory of market movement. If there were, we would all know the price in advance and there would be no market.

What you really need to understand regarding the above equation is : Forex trading is chaotic but you can win if you trade the odds.

It's a fact that traders throughout history push prices too far this is trader psychology at work. Short term price spikes never last for long and their easy to see on a forex chart and their trade able for profit for savvy traders who can spot them.

Certain chart patterns reflect human psychology, if you can learn to spot them and trade them you can trade the odds and win. You simply react to the reality of price change and go with the trends no hoping or guessing just trading the reality of price.

If you use charts you can you see the fundamentals as well as the trader psychology. All a forex chartist does is assume that all fundamentals are immediately reflected in price action and in today's world of instant communications that's truer than ever before but forex charts give you something more.

You get to see how the participants perceive the fundamentals and its humans that determine the price. If you have read this article and understood it you will see the common myths that most traders fall for and lose and a better way to win.

Think about the above equation and what we have said here and you will have a valuable piece of forex education which can set you on the road to learning forex trading the right way and help you enjoy long term currency trading success.

Forex Trading Tip, Could Get Rich From Forex Trading

2007-12-18T04:43:00.000-08:00

Forex trading can be learned by anyone and that's a fact yet despite this 95% of traders lose all their money. So what is the trading tip that separates winners from losers let's find out.

First let's start with a rather inspiring story..

In 1983 legendary trader Richard Dennis decided to prove that anyone could learn to trade and that trading was a learned skill. He took a group of traders from all walks of life, of varying educational levels, of all ages and both sexes and in 14 days he taught them to trade he then gave them trading accounts. The result they went on to make over $100 million dollars and proved him right.

While Dennis taught them how to trade a method which was simple so simple anyone could learn it he taught them something more :
He made sure that they understood exactly how the method worked so they could have confidence in it and the discipline to follow it through losing periods to achieve success.

The fact is it is not the method that is the critical element in trading success its holding your discipline when you are confronted with an all powerful force the markets. Forex markets move where they want to, are always right and it is only the trader who can be wrong.

This causes most traders huge problems and the main ones are as follows :

We all like to be right and the forex markets will make a mug of even the best traders at times.
Man is a pack animal and likes the reassurance of his peers and we have done this since stone age times and grouping together in most areas of life and sharing knowledge and skills has seen mankind advance do it in the markets and you will lose with the majority.
We are used to order and rules that we follow and that's what makes society work but in the markets you have to make your own rules and just as importantly, take responsibility for your actions again most traders find this hard.

While Dennis taught them a method he taught them to understand themselves, have confidence and discipline and this really is the key to currency trading success.

If you can't follow your currency trading system you have no system at all period. To get the mindset to win keep in mind the following as there as an important part of your forex education as learning a trading system.

Accept responsibility for your actions and understand success is firmly on your shoulders.
Understand whatever method you use (even if you buy it from someone else) so you have confidence.
Cheerfully take losses as a consequence of making long term profits.
Do not take advice from others or believe the news you will be sucked into the pack.

It looks easy to learn forex trading and it is but that doesn't mean you are going to win as we have said it's a purely learned skill but you need something extra to enjoy success and that comes from inner understanding which leads to confidence and discipline.

You may not become as rich as the traders Dennis taught but if you understand that forex trading is not easy (and you wouldn't expect it to be with the rewards on offer) you can use this forex trading tip to build a forex trading strategy for long term success.

All you need to do is work smart and absorb the trading tip and use it.

A Method Make Money Fast

2007-12-18T04:20:00.000-08:00

Want to make money fast but don't have much initial capital? Well here is a method you can use in fact anyone can and it is a proven way to make money fast. Let's take a look at it. Here are some simple steps to making money fast and the method can be learned by anyone.

Leverage
Money makes money we all know that but unless you win the lottery are rich already or maybe marry into wealth, you don't have this advantage so you need to leverage your money. Leverage is simply trading more money than you have. For example, if a broker lets you leverage 200 : 1 and you have $500 then you can trade $100,000.

One of the best ways to get leverage is to open a forex trading account. Hang on you may say, I can't trade currencies it's to hard.

In 1983 legendary trader Richard Dennis taught a group of people of all ages, both sexes and varying educational levels to trade in just 14 days. The result? They went on to make $100 million dollars for Dennis and become some of the most famous traders of all time.

Forex trading is all about having the right knowledge but Dennis taught them something more he taught them how to apply it with discipline. With leverage this is essential you must cut losses quickly, when trading with leverage as your losses and profits are magnified. If you do this, you can leverage and hold your winning trades and make money fast over time.

So how do you get started?
The best way to trade forex markets is to use charts and simply follow market trends. You can learn all the basics on the net. It's also a good idea to go to your local Amazon bookstore and pick up some classics from the real pros that have "walked the walk" for under $100 you can pick up a great selection.

Is Currency trading really that easy?
The answer is yes and no. Learning currency trading is easy and anyone can learn to trade but most traders don't win.

Why is this?
They simply can't trade their method with discipline and if of course you have n discipline, you have no method in the first place. Trading success is as much to do with getting the right mindset as having the right method.

If however you have the desire to succeed and a willingness to learn, currency trading can offer you a life changing income. The question is do you like a challenge and do you really want to make money fast? If so welcome to the world of global currency trading.

How To Generate Your Own Signals

2007-12-18T04:08:00.000-08:00

Trading in forex? Learn how to generate your own signals.

Forex is a large global market where currencies are bought and sold. This billion of dollars industry is however scary to a lot of individuals because

they have no knowledge of forex
those that have the knowledge suffer from the fluctuating forex signals not to worry, whether you are a novice or professional in forex marketing this model is for you, even if you know nothing about forex, this manual will see you through.
you do not require previous trading experience
would be able to create forex signals yourself
low risk and high returns up to thousands per day This model has received 5 star certification award for the work from home solution.

Don’t waste your money paying to companies for forex trading signals when you can actually generate one yourself Why should you pay for signals that won’t bring profit? This model called forex killer will see you through making boat loads of money through forex marketing.

The features of this model include :

it is used by professional and beginners alike with no experience whatsoever
you can start with as little as $500 on a real forex account
it works with all trading platforms
it works in any country and with any broker
it can be tested without having to risk any trading capital
Can be used anywhere, anytime.
Free updates for life this model assures you of large smiles to the bank.

12 Interesting Forex Trading Facts

2007-12-17T03:01:00.000-08:00

Forex is an abbreviated name for foreign exchange. The forex market is an around the clock cash market where the currencies of nations are bought and sold, typically via brokers. For many years, the Forex market was dominated by large institutions such as banks and brokerage firms.

However, the Forex market has experienced a major change over the past several years, as a growing number of private investors and traders just like you have started to actively trade. The purpose of this article is to reveal 12 interesting facts about the forex trading market.

What is a Forex trading system? The trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A system is a disciplined method for organizing dynamic, ever changing market phenomena.

Forex is the most liquid market in the world, thus making it easy to trade most currencies.
Unlike equities or futures trading, you pay no commissions on the Forex deals that you make.
According to the Wall Street Journal Europe, the most commonly traded currencies on the Forex market are the U.S. Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the British Pound (GPB), the Canadian Dollar (CAD), the Australian Dollar (AUD), and the Swiss Franc (CHF).
The most commonly traded currency pairs are the U.S. Dollar and the Japanese Yen, the U.S. Dollar and the Euro, and the U.S. Dollar and the Swiss Franc.
The U.S. Dollar is involved in nearly 90% of all Forex transactions.
Ten financial institutions account for nearly 73% of the total Forex trading market volume. The Top 10 most active traders are Deutsche Bank (17.0%), UBS (12.5%), Citigroup (7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J. P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%), and Morgan Stanley (3.9%).
The five major Forex trading centers are London, New York, Tokyo, Sydney, and Frankfurt.
The three major Forex trading countries are the United Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).
Currency market players typically use Forex analysis as a means of predicting currency price movements. Forex analysis is divided into two types: fundamental and technical.
Margin is referred to as the collateral needed to facilitate the Forex deal. Usually, this is a very small portion of the entire deal, say 1% or 1:100. Please note that margin is a double edged sword. Without the proper use of risk management tools (for example, the stop loss option), you can experience substantial losses as well as gains.
A stop loss order is a market order to close a Forex position if or when losses reach a pre-set threshold.
A fundamental analysis uses economic and political factors, such as unemployment rates, interest rates, or inflation, as a means of predicting currency movements. Fundamental analysis is concerned with the reasons or causes for currency movements.

Technical analysis uses reliable historical data as a means of forecasting these movements. The technical analyst believes that history repeats itself over and over again.

Technical analysis is not concerned with the reasons for currency movements (for example, interest rates or inflation). Instead, it believes that historical currency movements are a clear indication of future ones.

Trading Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.

Some Important Tips About Forex Trading

2007-12-17T02:59:00.000-08:00

Forex stand for Foreign Exchange Market (FX) which is always marked for its geographical dispersion. Currencies from all over the world are bought and sold for profit in the forex market. Investors are the real players in forex trading.

Forex market welcomes the investors of all income size and any background. If you are thinking to make profit in the forex market you should have a sound knowledge of the currency market.

To start your global Forex trading you need to open a forex account first. Just fill in the application form and sign the margin agreement which let’s the broker intervene at any time. Here are some tips one must know before dealing with the forex trading or forex exchange.

Know your forex trading market
Know about the currencies that you want to trade with. Try to get the details about the country whose currency you’re trading in the forex market. The more you know about the country more profit you can make, currency you are trading with.

With the knowledge of the country you can better understands the strategies of the market and will be able to predict the movement of the money.

Pick a forex trading system and stick with it
The better strategy to win the forex trading game is picking a forex trading system and sticking to it. Being a forex trader one should analyze the market and certain calculated risks associated with the market.

Market analysis is based on technical analysis which is the interpretation of facts and data based on the data generated by the market. Fundamental analysis seeks to trace out the factors and conditions which influence the market economy and play a pivotal role in altering opinions.

Several economic, political, social events affect the forex and its workings. A perfect trader in forex is one who can understand these factors and feel the pulse of the market before striking gold.

Practice makes one perfect
Practice makes one perfect whether it is forex trading or some other field. Take some time to be a smart player of the currency trading game. If you are not making profit initially, never make a rush.

Keep your eye on the margin
If you are not properly aware of the margin trading try to keep away. It is often said to be a great way to lose a lot of money quickly. Stay away from forex margin trading until you are not properly aware of it. In forex trading, the bottom line is how much money you made at the end of the day.

One should try to start with Micro Forex
Micro forex is a boon for the beginners in the forex trading. With the help of micro forex trading, a novice with limited knowledge can make profit in the forex trading market.

Try to Keep the Trading System Simple and look for Long Term Trends
Your trading must be as simple as possible. Try to follow the guide lines and look for long term trends in the currency market. Analyze the market efficiently and then invest.

Forex is the largest market place of currency trading. While currency trading in forex market or dwelling over currency market, one should mull over the present scenario and future prospects of the country, currency of which he is trading.

Closing Your Forex Broker

2007-12-17T02:31:00.000-08:00

Usually people dealing with the forex trading deal with the help of a forex broker. A forex broker is a forex trade provider that you sign up with, in order to trade the currency market. It’s good to rely on a broker but choosing a right forex broker is also an important decision.

Half of your trading strategy depends upon the selection of a correct forex broker to deal with your forex trade. You can find Forex brokers in every part of the world just as you will find currencies traded in almost every corner of the globe but beware of the scammers and frauds.

However smart you’re in the forex trading you should consider a few points when you go out to opt for a broker to deal with your currency trades. Here are some important points about the forex broker :

The most important thing about the forex broker is to ensure whether he is qualified or not. Go for a broker registered with the Commodity Futures Trading Commission CFTC) as a Futures Commission Merchant (FCM). This will provide you a legal security against the scams.
Make sure to keep your funds separate from the broker’s operating fund. When you sign up to use brokers services you will have protection and insurance against any internal fraud.
Know about the business model used by the broker you are working with.
The spread is the difference between the bids and ask prices of the currencies you trade. Usually brokers offer fixed or variable spreads, and they can be different for large accounts and mini accounts.
Ask for the details of what slippage the broker would expect to occur during normal and fast moving markets.
Ensure about their margin requirements. Make sure about percentage of the investment in your trades do they expect you to pay to open a trade. Do they have any minimum margin requirements which they use to earn interest on any overnight positions?

Once you perform your complete research and have selected one or more Forex brokers, then it is time to set up your trading account. There are a myriad of institutions facilitating currency trading for the individual investor but choosing the right one can make a difference between your profit and loss. Gather all available information before taking the first step and hiring a broker.

Forex is the largest market place of currency trading. While currency trading in forex market or dwelling over currency market, one should mull over the present scenario and future prospects of the country, currency of which he is trading.

5 Tips on Learning Forex Trading To Win

2007-12-10T22:40:00.000-08:00

It's a fact 95% of traders learn forex trading the wrong way and lose but learn these tips and you will have a head start on the road to currency trading success.

Forex Trading is not Easy
You wouldn't expect it to be either with the rewards on offer which can be life changing. On the other hand it's not hard either, you simply have to learn the right knowledge and get a forex trading strategy to win.

Today, traders try and take the easy route in all aspects of life and they think they can buy success. All for $100 they can get a trading system which will make them $10,000 a month. The advice to these people is get in the real world.

The good news is :
If you accept that forex trading is not easy but can be hugely rewarding for the effort you put in then you will make the required effort to succeed.

Don't Work Hard Work Smart
Many people think the more knowledge they acquire the better when learning currency exchange but the fact is :

You don't get paid for effort; you get paid for being right with your market timing and trading signal and that it. It doesn't matter if you spend 20 minutes on it or 20 hours, it's the outcome of the execution of your trade that determines how much money you make.

You need to work smart and learn the right knowledge and this should only take you a few weeks or less (see our other articles for full breakdown) you're then ready to trade forex and win. After your initial forex training it should take you 20 minutes or less per day to trade and that's it.

Keep It Simple
Many people that not only is it good to put in a lot of effort, it's a great idea to be clever and build complicated forex trading systems, as they are likely to have more chance of success. Just like in the application of time to currency trading, you need to learn not to over complicate it keep it simple. It's a fact that simple trading systems work best, as they are more robust in the brutal world of real trading and have fewer elements to break, than complicated ones.

Find Your Own Road
No one else is going to make you rich its all on your shoulders, your alone and that's the best place to be, remember the 95% of losing traders cant accept responsibility for their actions trust a mentor, guru or broker and lose so being away from the losing herd and trade in isolation.

You will even if you take advice know exactly how your forex trading strategy is going to work. The above is essential because from understanding comes from confidence and from this combination comes discipline. Discipline is vital to your forex trading success because if you can't apply a forex trading method with discipline you don't have one.

Your Trading Edge
This is what will separate you from the losing majority of forex traders and allow you to enter the elite 5% of winners that make the big profits. The edge can be anything you like but it must give the confidence to beat the majority and win.

If you don't know what it is then continue your forex education until you do. Learning currency exchange is easy but learning the discipline to apply your method is hard and will only come from understanding exactly what you are doing and trading on your own.

If you understand all the above about getting the right forex education then congratulations you have taken your first step on the road to currency trading success

Learning the Forex Trading Basic for Better Understanding

2007-12-10T22:35:00.000-08:00

The forex market, also known as the foreign currency exchange market, has been around for quite some time. The reason it has become only recently popular is because once upon a time only the financial elite had enough assets and access to the foreign currency exchange market.

Only major corporations, banks and opulent individuals who possessed great wealth were allowed entrance into these chambers of currency commerce. Alas, the world has evolved and a new entity has come into existence and altered the human way of life. Technology.

The greatest invention being the Internet. Now time and space have practically lapsed and we have the ability to contact anyone, anywhere, at anytime. This makes the world quite different from what it used to be.

Today any individual can open up an online forex account and begin trading. He needs no qualifications, no justifications, just a suffice bank account. One can open up an online forex trading account for as little as $5000. That's incredible.

Whereas the New York stock exchange is centered in New York and has specific trading hours, the forex market is global and not tied down to a specific location. An investor may conduct trades from wherever he is on earth, no matter what the local time is. The forex trading day actually commences in Sydney, Australia.

From there it progresses gradually east, sweeping through financial centers like a ghost of finest velvet. Barely tangible yet so lucrative. The average daily turnover in the forex trading market is $2 trillion US dollars. To be part of something that is so fantastic must be great, no?

Surely you have already begun to fantasize about the luscious millions you will earn overnight. Thought this is technically possible and there have been quite a few accounts of individuals who have earned great sums in the span of just twenty four hours, one still needs to take the proper precautions when investing money in such a volatile market. As high as the profit is, so is the risk. That's why it's not enough just to know about stocks, bonds and trading strategies. You need an in depth education.

First of all, you need to know basics. Forex trading is an automated system and so you must realize that most of the things you'll have to learn will be part of a much greater system of signals and signs.

The most basic and primary thing you should be aware of is that you buy and sell currencies, at the same time. Meaning, as you buy one currency, you are selling another. Furthermore, you attempt to purchase a currency when it's value is low and sell a currency when it's value is high. So far, so good.

Next you need to learn the terminology and currency pairs. You will find them listed in a different chapter on this website and they are explained in layman's terms so that anybody can understand them.

There are so many websites and online tutorials that teach about forex trading. There are also tons of college or university classes that really teach everything you need to know. If you are serious about becoming a forex trader and understanding the automated forex system, you will have to study hard and open your mind to learning.

After abstract theories and learning the nooks, you will be advised to practice forex trading on a 'dummy' account. Trying to become a forex trader without this practice would be like trying to become a lifeguard without ever learning how to swim. It would never work.

The reason there are so many options for 'dummy' forex accounts is simple. It's because any experienced forex trader or broker know that entering the forex trading system, especially the automated forex trading system, is not an easy task if you've never actually done a trade.

You would not want to open up a real trading account and spend real money without having any clue how to do so. That's why there are so many options for these 'fake' accounts and you should put them to good use.

After you feel you've experienced enough fake trading and demos, you need to decide what sort of automated system you would like to use for your trading purposes. The reason you need a system is because you need constant updates about currency values and alerts for trades you would like to conduct.

Automated systems allow you to conduct several transactions at one time through creating different trading platforms. The system you choose will present you with the required charts that express the market trends that have happened within a certain time frame. That's why you need to know not only how to read charts and understand how to manipulate them, but also which type of automated system will serve your trading needs best.

A Simple Plan for Big Profits

2007-12-10T22:27:00.000-08:00

If you want to make money fast you can and you don't need much to start with but you do need a plan and a proven method and this is what this article is all about. It's about becoming a forex trader from home. Before you say it couldn't do that or it's to expensive, check out the following facts below.

Forex Trading is a learned skill and anyone has the potential to get the right knowledge to succeed in just a couple of weeks. Its not to expensive either, you can open an account online with $500.00 or less and while you wont make big gains quickly on a small amount like the above you can Leverage this cash and that's why the opportunity is so lucrative

Leverage the key to big profits
If you put down $500.00 with a broker, they will let you trade 100 times this amount $50,000.

That makes things a little more interesting.
Of course leverage is a double edged sword, it can work for or against you to make it work for you, risk control is essential. The best way to trade forex is with forex charts and follow trends, (if you can read a graph and recognize patterns you can trade successfully).

It's a proven fact that currencies trend for long periods up or down as they reflect the economic health of the country. You aim is to lock into these profits and follow them and simply liquidate your losers quickly. Let me now give you a story that will inspire you.

Fact Anyone Has the Potential Here's Why?
In 1983 legendary trade Richard Dennis, set out to prove that anyone could learn to trade. He gathered a group of people of all ages, both sexes and of varying educational skills, he then taught them a simple trading method in just 14 days.

The result?
He set them up with trading accounts and they went on to make him $100 million dollars and become some of the most famous traders of all time. In fact many still trade today. Now you may not get as rich as the above group of traders but it shows you that anyone can make money with a plan.

Is it that easy? The answer is yes and no.
Forex trading is easy to learn but you must adopt the right mindset and that means the discipline to cut losses and run profits if you can do this, then you are on your way to currency trading success.

You can educate yourself on the basics of using forex charts quite easily it is then a question of having the discipline to apply your method. Do not be fooled into thinking discipline is easy it's hard to follow a plan when money is on the line but again it's a skill anyone can learn.

If you want to win at forex trading all you need is a desire to succeed, a willingness to learn and the discipline to follow your plan if you do this forex markets offer you an opportunity to build wealth and change your life.

The Real Question is:
Do you have the desire and are you up for the challenge?

Learn 7 Characteristics A Good Forex Trading System

2007-12-09T23:28:00.000-08:00

Nowadays Forex trading has become one of the favorite activities for many men and women around the world. This people is looking for a way of earning some extra money in their free time but many have realized that they have just found a profitable business that lets them earn a full time income helping them keep their lifestyles, even working from home and in a significant number of cases even letting them improve their past lifestyles when they held full time jobs.

But Forex trading is not an easy task; it is simple to enter a trade and let it run, but making yourself a profitable trader takes more than just willingness; it takes knowledge and a good forex trading system.

There are many companies and individuals out there offering you trading systems that promise to be the real thing and that will teach you how to earn tons of money. But you must be aware that not all of them are sincere and you should be ready to look for some specific characteristics good forex trading systems must have.

They must be willing to let you know part or the basics of their system for free. It is a good sign if they have a free course or seminar describing their methodology so you can decide if it's for you before you give them any money. They must have a no questions asked guarantee of your money back; if at the end they fail to deliver on their promises.

They should offer some forms of continuing support and education after you make your purchase. It is a very good sign if they provide an on-line or email forum so that their clients can interact with one another and the developer of the trading system. Another good sign would be if they have a support phone number where you can reach them at during regular business hours.

You should be able to make an appointment to talk on the phone with the developer of the system if you wish. If you're paying good money for the system then you should have the right to speak to the developer. If not, go somewhere else for your trading system needs.

The trading system they offer you should be recession proof and go beyond the traditional linear models that are based mostly on past results. Ideally, the forex trading system you get should allow you to go with the market direction, wherever it's going, instead of hoping and believing it will go one way or another, and then find out it was all wrong.

The system should be given to you with software that performs the complex math behind it making it simple for you to use at any time and without strange formulas. They must enthusiastically listen to your concerns about trading, what you wish to accomplish and answer your questions to your satisfaction.

If you suddenly feel they are in the business only for your money, then you better move on. You want to make sure that the people selling you a Forex trading system is actually interested in a mutually beneficial, long term relationship with their clients.

Why Most Traders Use the Wrong Way and Lose

2007-12-09T23:20:00.000-08:00

It's a fact that today is forex news sources are better than ever and its delivered quicker yet the ratio of losers to winners in forex trading remains the same as it did 50 years ago 95% lose and only 5% lose. The news can be useful but you need to know how to use it.

First let's look at a simple equation :

Forex Fundamentals (supply and demand news) + Investor Psychology = Price

The facts are there for all of us to see but assessing the impact of the news is hard because humans (millions of them) all motivated differently see the facts but they all draw their own personal conclusions from them and that's the price.

If it were easy to trade by following the news then there would be a lot more winners than there actually are. Of course he was making a joke but it is amazed by how many traders think that because a story appears on Reuters or another newswire, they can trade it you can't.

The fact is that humans always push prices top far up or down, as their emotions come into play and most major tops are formed when the news is most bullish and vice versa in a bear market. It's a fact that prices generally move in line with the long term fundamentals but prices spike to far from fair value up or down along the way and history shows us these spikes don't last. You can spot them easily on a forex chart and trade them for profit.

There is a well know saying :
"If you can hold onto your head when everyone around you is losing theirs, you probably haven't heard the news" In forex trading this means you sit back in a detached fashion and look at your forex charts and when you see a price spike you start to question the news. For example the euro spiked to 1.50 recently and everyone said that the dollar was finished yet its rallied and will probably rally further.

Why?
Because all the news stories have been discounted: Interest rate cuts, the sub prime mortgage crisis, the US will slip into recession etc and things can only get better and people also didn't pay attention to GDP which is robust. The dollar was simply oversold and rallied, when the news was at its most bearish. This doesn't just happen in forex, it happens in any market.

Reading a great story about oil going to $160.00 dollars a barrel and that $100.00 a barrel was sustainable. Well there is no shortage of oil. Global demand is actually falling and the true value of oil is in the $70 - 80 region.

When people said $100 a barrel was a forgone conclusion it was time to sell. The fact is we are not creatures of logic, we are creatures of emotion. Humans are also pack animals, we like to be with the crowd and the news reflects this. The facts are the crowd never wins.

If you look at a forex chart and you see a piece of bullish news that fails to rally a market or a bearish piece of news that doesn't cause a market to fall that is telling you to look at your charts and look for a contrary trade. Forex news can be useful but not in the way that many traders think.

Learn Forex Trading, Why it is Impossible to Predict Price

2007-12-09T22:52:00.000-08:00

One of the most important points in your forex education should be that if you try and predict forex prices you are 100% guaranteed to lose. The reason is obvious yet more novice traders make this mistake than any other yet you don't have to predict to win let me explain why?

Predicting is simply another word for hoping or guessing and that will not make you money in any venture in life and certainly not currency trading. Let's first dispel the myth of prediction and then explain what you really have to do to win.

Why Predicting Forex is as Accurate as Your Horoscope
There is a huge industry in guru's who tell you they can predict market tops and bottoms and that markets move to a scientific repetitive pattern and pedal ridiculous theories based upon Gann, Elliot wave or Fibonacci numbers. They all lose and its again common sense why markets don't move to a scientific law.

Why Dont they?
Because if they did, we would all know the price in advance and there would be no market a market by its very nature moves on uncertainty. Also if their was a scientific theory that applied to forex trading whoever had it, would not need to sell it to you, as they would be making to much money.

How to Win
The way to enjoy currency trading success is not to attempt to predict but to act on the reality of the price change. Let me give you an example that will make this clearer. Let's say you see a currency coming into test major support and you think it's going to hold. You do not simply execute a trading signal into the level of support you wait. You wait for support to hold and prices to turn away from the level supported by price momentum.

Using Momentum
If you don't know anything about momentum indicators, then make them an essential part of your forex education. These momentum oscillators will help you confirm changes in price momentum and allow you to see visually when price is strengthening away from support. You may say I will miss the turn and sure you will - but you don't know its going to turn in advance.

There is an old saying :
"A bottom picker becomes a cotton picker"
And its right, try and predict market lows or highs and you will end up losing your trading account equity.

Great momentum indicators to use are :
They are excellent indicators and will get the odds in your favor. This is what forex trading is a game of odds not certainties. Don't let that worry you though if you can trade the odds you can make a lot of money.

If you want to win trading is not about trying to be clever and catching the exact turn, know one can do that so don't try. Trading has one aim making money and don't worry if you could catch just 60% of all the major trends you would be very rich.

If you learn forex trading the right way and get the right forex education you will now know you need to to act on the reality of price change, use momentum indicators to get the odds in your favor and if you do, your currency trading profits will soar.

Forex Broker, Can you Trade Successfully?

2007-12-06T23:29:00.000-08:00

If you have been getting your forex education and you're ready to trade, you need to find out one key point can you handle the emotional side of trading? A Demo account won't help you this new service offered by some forex brokers will.

So you want to become a currency trading and you need to now feel the emotion and there is a new account called a protected account which acts like a bridge between a demo account and fully funded trading account. It's a fact that 95% of traders lose as they cannot handle the emotional side of trading.

As a novice trader you want to feel it but not risk much and have plenty of trades, get the experience on a small deposit and that's exactly what a protected account does.

The concept is simple :

There is a set period of normally two weeks
You have set risk
You have set leverage
You can make as many trades as you wish in this period even if you are in debit

At the end of the period :

The broker takes any losses
You take any profits that you make

A Real Trading Experience
The great thing about these accounts is you have limited risk can trade as much as you wish and you have a target it's a hands on experience with real money on the line.

The fact is most traders make money in demo accounts no pressure is not the real world of currency trading and these accounts allow you to feel the trading experience.

So it's a demo account simply to learn the mechanics of trading a protected account to feel the experience and then on to a full trading account with your forex broker and hopefully long term currency trading success.

How to Choose the Forex Trading System

2007-12-06T23:21:00.000-08:00

Here are some tips to help you choose the best Forex trading system.

In order to pick the right trading system, you will need to establish some basic criteria that you can use to evaluate any possible candidates. Here are some suggestions to help you make your choice.

One of the first things you need to check into is what type of commitment you have to make in order to use the system. Will you need to commit a minimum amount of resources to the system in order to be able to participate?

If so, what is that minimum amount? Set aside any trading system, which insists that you have to set aside an amount of funds, that you are not comfortable with or are unable to reasonably commit and still maintain your current standard of living. Next, look into support resources that are available to you as a user of the system.

You may also want to look for a comprehensive tutorial that helps you understand the way the system works at each juncture. Another aspect in regard to resources has to do with the ability to communicate with another human being. Can this be accomplished with emails, direct chats or even by placing a toll free phone call?

Pass on any system that seems to leave you hanging out there on your own, even if you consider yourself too savvy to ask for help. The fact is that you will need assistance at some point and it would be nice to know it is there when that day comes.

You may also want to look closely at what type of claims for success are made for the system in question. While you do want to get involved with a system that has a proven track record, there is no need to waste your time with any trading system that promises overnight wealth. While people can and do make impressive livings involved in currency trading, the fact is that they tend to make them over time, not overnight.

Avoid any system that makes what seem to be grandiose claims for success. Focus your attention more on trading systems that will be able to support you for the long term, as you incrementally grow your revenue stream. Finding a Forex trading system that is reputable, reliable, and will provide you with the support you need can be done.

If you take a little time to evaluate each possibility and make sure the trading system provides everything you need to grow your own success. It can be helpful to find out what others think of a system before you purchase one.

If you search for Forex forums in search engines, then join a few of these forums, you will soon get an idea of Forex trading systems that have a good reputation, this will help give you confidence before you purchase one.

It should be noted Forex trading involves substantial risk of loss and is not suitable for all investors.

Currency Trading System, Tips on Getting One for Profit

2007-12-06T23:06:00.000-08:00

There are numerous currency trading system for sale on-line but 95% of them are junk. There are some good ones out there and they can make you great profits, so follow the tips below and find the best currency systems.

Real Track Records
The first point to make is that you should if possible get a system that has a real track record that means real dollars, real trading and audited. This may not ensure future profitability but shows the logic is probably soundly based and that the vendor has had the confidence to trade it.
Simulated Hypothetical Track Records
Most currency trading systems don't come with a real track record but with a simulated or hypothetical one and you need to take these for what they are : Designed in hindsight knowing the closing prices there is nothing wrong with back testing but you must ensure the testing was done correctly.

This is the subject of the next point :
Beware OF Curve Fitting
Of course it's easy to make profits if you know the forex price data already and many vendors simply make track records up and bend the system to fit the data.

When you see a track record with huge gains and low draw down the likelihood is the vendor has bent the system rules It is therefore a good idea to see the system rules do not try and trade any system you do not know the logic of. A good currency trading will have simple rules and simple logic. If they do and the test is realistic then they can work in real time if their curve fitted they won't work.

Clues to curve fitted systems are: Lots of rules, unique rules for various trading conditions and different rules, for different currencies. Curve fitting is the major reason most forex trading systems lose.

Many trader bend the system to fit the data without realizing but many vendors do it on purpose. This is done to show track records which are simply too good to be true to appeal to the greed of buyers these people are not traders their normally marketing organizations. Keep in mind if you see a track record which looks to good to be true it probably is.

The Key to Forex Success
They key to making money with a trading system is to follow it with discipline. This means you MUST understand the logic it is based on to have confidence to trade it through inevitable losing periods, so you need to understand and agree with the logic.

If you don't have the discipline to follow your currency trading system, you don't have a system. You will never follow a mechanical trading system unless you have confidence so make learning it part of your forex education.

If you follow the above tips and have realistic expectations from your currency trading system, you check the logic and you're happy with the performance and draw down then you can trade it for real and enjoy currency trading success for very little effort.

Forex Brokers, A Guides to Getting Started

2007-12-05T21:36:00.000-08:00

If you want to trade forex you need a forex broker and there are plenty around, here we will give some tips on picking the best for forex brokers and how to maximize your potential with them. Many traders see brokers as the enemy who lose them money but the fact is there neither your friend nor your enemy their simply there to transact your orders in an efficient, cost effective and timely manner and that's it.

The most important points to consider when dealing with a broker are the following :

Competitive Spreads
Pay no more than 5 pips on the majors and if you shop around you can get 2 - 3. This is your cost of doing business and needs to be kept low.

A Reliable Trading Platform
If you are trading online this is imperative and most trading platforms today are excellent - but make sure you test drive it, for usability via a demo account to prove it to yourself.

Leverage
Any broker today will give you more leverage than you will ever need. 100:1 is fine but many brokers will go up to 400 : 1.

Security Of Funds
Look for well established brokers who use segregated accounts have been in business for years rather than months. The longer they have been in business and and the bigger they are the better.

What You do NOT Want From a Broker
A lot of brokers sell higher fees based upon the service they give you in terms of trading recommendations etc. Keep this point in mind if brokers were good at trading they wouldn't be brokers, ignore them and execute your own trading signals.

Useful EXTRA Services
Some brokers give extra services away that are useful such as discounts on trading tools, books and newsletters which a lot of traders like but there is one service we saw recently which is excellent for novice traders and it's called :

A PROTECTED ACCOUNT
If you are new to forex trading, then you will probably try a demo account to get the feel of trading but useful as they are for learning the mechanics, they don't replicate the feeling of dealing with real money. Many brokers to help get novices feet wet with limited risk offer Protected Accounts, to act as a bridge between a demo account and a full trading account.

They allow traders to trade with small amounts of money and do as many trades as they like in a set period (normally a couple of weeks) and the trader can still trade even if he is debit. At the end of the period the broker covers the losses if any and the trader takes the profits.

This means a trade as much as he wants even when he is debit on a set leverage and has a set risk in advance. These accounts give the feel of forex trading but have set risk and will show a forex trader his potential, before moving to a full trading account.

Finally
Getting the right forex broker is easy and you only have to keep a few points in mind and then you're all set, to enter the exciting and lucrative world of currency trading.

A Substantial Benefits of Automated Forex Day Trading

2007-12-05T21:33:00.000-08:00

More and more people are being drawn to foreign currency trading rather than to the various other types of investment available today and it is not hard to see why this is the case.

The Forex market is the biggest trading market in the world and demonstrates a steadily growing trading volume which has risen from in the region of $500 billion dollars to $2 trillion in the last twenty years.

It is also an incredibly liquid market which is not bound to any specific location and operates 24 hours a day around the globe making it in effect a continuously open market. As one market closes another is opening for trading and you can follow the markets across the globe as you trade and even more or less eliminate the fact that your own home market is closed at the weekend.

It is no wonder therefore that foreign currency trading attracts a wide variety of big and small traders who enjoy a very wide choice of trading strategies resulting from the many different factors which affect foreign exchange rates.

In fact for many traders coming into the market it is the many different factors which affect currency rates which they find most attractive as it permits them to use a large range of different tools when working in this extraordinarily exciting market.

Possibly the biggest influence today however on the growth of the market and on its popularity is to be seen in automation which has never been easier to accomplish and which brings with it many more advantages than disadvantages.

Automatic foreign currency trading permits trades to be effected in real time anywhere in the world and more or less eliminates the losses so often experienced with manual systems which are trying to operate in such a fast moving and volatile environment. Anybody who has traded with manual systems will know very well the frustration arising out of a row of trading losses produced by nothing more than a simple time delay in buying or selling.

Automated Forex trading also lets you operate in a wide range of different currency markets simultaneously without any regard for the time zones of the markets concerned. If you are in the US at 4 o'clock in the morning then automated trading allows you to work with traders on the other side of the globe in numerous different countries all at the same time without any problem.

For many traders one difficulty is the management of risk and this risk too is reduced as we move into automated trading. Manual trading systems often make traders anxious about whether payment will be forthcoming following the completion of a trade but because payments will now be synchronized in real time this is much less likely.

Indeed, as the automated trading system continues to improve settlement systems will also be updated and such risks will probably be virtually eliminated before too much longer.

Computer technology has advanced by leaps and bounds in recent years and is going to continue to advance for many years to come. Most importantly, access to computer technology easily and inexpensively from the comfort of our own homes, or today even when we are mobile, means that we are now all able to handle our investments easily.

For people operating in the currency trading world automated foreign currency trading will certainly come as a very welcome addition to an already magnificent investment vehicle.

Currency Exchange Interest Rates and Market Inefficiency

2007-12-05T21:27:00.000-08:00

Forex traders have multiple it could almost be said infinite strategies to trade the forex market and to take advantage of market, The “carry trade” is a forex strategy that plays on the fact that different nations, being able to attract a higher flux of capital, and having different level of economical and industrial development, offer different interest rates, some higher than others.

As we saw in Currency Trading and The Forex Capital Markets, this fact, representing market inefficiency, is in turn a trading advantage that can be exploited by forex traders. The carry trade involve buying a currency of a country that has a high interest rate and selling a currency of another Country that, on the other hand, has a lower interest rate.

Forex traders are thus able to profit in two ways.
Earn the difference in the spread (the difference between the two interest rates) of the two currencies, and Earn form capital appreciation.

Usually the spread in interest rates is not very large and can be expected to be in the order of 3% to 4%, however, it should be regarded from the broader perspective of the leverage offered by forex and by the lower risk that, at least compared to other forex trading strategies, this system entails. In fact, when factoring in 20 : 1 or even higher leverage ratios (some forex traders can trade these currency exchange rate inefficiencies with up to 200:1 leverage).

As we noted below, the carry trade can profit from two sources however, capital appreciation can work against the forex trader in fact, if capital depreciate, the forex trader will be losing money on this part of the trade, and at the end of the day it is the sum of the two streams (difference in interest rate spread and capital appreciation or depreciation) that will give the verdict as to whether the overall forex trade was successful or not.

Forex traders performing this type of strategy are obviously looking to earn both yield from the interest rates spread and the appreciation of the currency pairs it is thus crucial to determine in which countries (that is, which markets) carry trades will produce the higher returns with a level of risk in line with the returns expected by the currency trader.

This is indeed very difficult to answer certainly, the forex market is driven by fundamental for a large extent, but it is the psychology of people and their swings in mood that most drives the forex markets.

Investing in a Country that pays high interest rates is riskier that investing in a country that pays lower interest rates because a developing country, thirsty for capitals and money will want to attract the resources it needs by encouraging investors and forex traders with higher returns for their money.

However, such a country has intrinsically a higher risk profile and ultimately it is the forex trader that must be willing to take its chances after carefully evaluating the multiple factors coming into the picture.

Simple Profitable Stochastic Trading System For The Forex Market

2007-12-05T20:18:00.000-08:00

The stochastic indicator shows over bought/over sold status in the market, I have found this indicator give a good edge on the market if used at the correct time. On the stochastic indicator you should see two horizontal lines, one at 20 and one at 80. These two lines are our trigger lines, we will be using them for entries into the trade.

As you may have herd many times before if you want a low risk trade you must trade with the trend and that is exactly what we are going to do.

Plot the following weighted moving averages on your chart. 5,10,20,30,40,50,60,70,80,90,100,110,120,130,140,150 this will create a pretty looking wave of moving averages. Set them to whatever colour you like just make sure you can see the price action through them ok.

Use the moving averages to give you a clear view of what the trend is dong the 150 being the long term trend and the 5 the shortest tern. You will notice that the 5 wma will retrace back towards the larger wma's very ofter in a trending market.

What we are looking for is this to happen while the stochastic indicator is oversold for a up trend and overbought for a downtrend. The entry for the trade is when the stochastic crosses back over ether of the horizontal lines.

For example: all moving averages are clearly in a downtrend, price makes a retrace back into the moving averages and the stochastic indicator moves into the overbought area crossing the 20 horizontal line. Once the stochastic indicator curls over and crosses the 20 line again heading for the other side, you wait for the close of the current candle and enter your trade.

Use small stops and let profits run with a trailing stop.

How to Pick the Right Forex Trading Broker

2007-12-05T20:07:00.000-08:00

Picking the right forex trading broker can be a tedious exercise for most traders. There are more than a hundred online brokers today and more are coming on board. Since the foreign exchange market is worth trillions of dollars, it offers lucrative opportunities for brokers to set up their firm online. The challenge is with too many choices, it is hard to decide which is best for you. This piece of information would provide you with the necessary tips to pick an ideal forex trading broker.

Since the foreign exchange market is decentralized, it can be hard to identify fraudulent practices by unscrupulous brokers. When finding a broker, do make sure to follow the following pointers and your chances of finding an honest and reliable forex trading broker are dramatically increased!

1. Always request for references that you can speak with.

2. Do a check with the local regulatory agencies and make sure that the forex trading broker is registered. For US-based brokers, see if they are registered as Futures Commission Merchants (FCM) with the Commodity Futures Trading Commission (CFTC) and registered with National Futures Association (NFA).

3. Compare the account details such as the minimum deposit required, leverage, spreads and so on. Ask them specifically are there any commissions chargeable, lot fees, etc. This is to ensure you do not incur hidden costs. Some sneaky traders deliberately give you an impression that they are the cheapest to use but in actual fact load you on hidden charges.

4. The trading platform needs to be user-friendly. Many traders especially first-timers find it challenging to navigate around the site just to make sense of the charts and currency prices. If there are demo accounts, try them.

5. REQUOTING. This is a big pitfall that many traders fell into before realizing. Low spreads and commissions do not mean much if the forex trading broker decides to "trick" you with requoting. Basically, what it means is that when you transact with a buy/sell call for a currency pair at a certain price, the broker requotes and charge you on the requoted price rather than what you see.

The difference in transacted prices can be as much as 9 pips and beyond. Be wary of those dealers that keep requoting when you are making huge gains! It is common to have occasional ones but when it happens way too often, you should smell a rat. Always choose one that have a "no requoting" policy.

Few Want To Risk, All Want To Win

2007-12-05T19:46:00.000-08:00

This applies to any type of business under the sun, especially to property and currency. Staying on the side of value, which is what bookmakers do, ensures that in the long run you are a winner.

There are several tips how to stay on the side of value:

1.Doubling your stakes is madness. Remember if you flip a coin a thousand times and it comes up tails, the odds are still even money that it will come up tails the next time you flip it!

Conclusion: Investing lots of good money just to get back what you are losing plus a little profit, is making the risk is too high and the return too low. You are not on the side of value. Keep away from deals like that, but if involved, cut your losses and stop as soon as you can. It is far better to wait for value when trying to recoup.

To keep on buying falling foreign currency in the belief that it is bound to go up any minute, is a similar kind of example. More chance to recoup will come, when the sentiment is showing signs to support the currency you bought. Value will be knocking on the door.

When it comes to housing, value comes into play again, whether if you are selling or buying. If selling, value is found in investing a little to make the house look that much better. Whatever amount you invest to make the house nicer, it will return back twice as much, and surely help to sell the property quicker.

Many sellers think that it is silly to make improvements to a house they no longer want. Yes, but they have to sell it first. If you are buying, the value is better when the prices are down rather than up. Not many lose in the long run on houses bought at sensible prices.

2.When the risk is big and the gain is big, there is no point in getting involved.

3.When the risk is small and the gain is big, in the long run you profit.

4. When there is no risk and the gain is big, beware, unless you are a burglar.

You would think that all you have to do is to follow rule 3 to succeed. Maybe so, but it requires one more thing which is, to have the rare ability to convince yourself to wait for value. Very few people have that, hence they lose money.

If you cannot find value by yourself go to experts who can.

I used to know a fellow, who thought himself a dab hand at being able to always foretell foreign currency exchange trends, but otherwise, he was quite normal. Last time I heard, he married a rich old widow just in time to avoid financial problems. I hope he got value.

How to Profit From Forex Mini Trading

2007-12-05T19:19:00.000-08:00

Given that the main way of making money in the stock market is when the market is going up, it is amazing to note that we can make money when the forex market is either going up or down. Most people think that forex trading requires a lot of cash. It is true if you are not aware of what is known as forex mini trading. This little instrument will make the difference.

The great thing about this is that one can earn a lot of profit as well as set time for pleasure when participating in it. This uses a different leverage calculation than regular forex trading, though both are more or less the same in features.

The difference is that it uses a smaller size of currency lots, only 10,000 currency units, compared to the 100,000 currency units utilized in regular forex trading. This means one can have a lesser risk in forex mini trading.

These are some of the other main features of forex mini trading:

1. First, one only needs a small startup capital of $300 to open a forex mini account. Compared to regular forex trading or other business endeavors out there, this is very affordable.

2. You can get a high leverage of up to 200:1 in a forex mini account. A small margin deposit requirement of $50 per lot traded is given. A high leverage is a great way to achieve a huge profit in a short time, and this is evident in this type of trading.

3. In forex trading, one pip is equal to one dollar. There is only a small amount of risk when one trades in pips. For example, if one has a 30-pip floating loss, this amounts to only $30 in losses, which is smaller than a $300 loss in a 100K account. This makes the trader more disciplined in his dealings.

4. You can start with smaller trade sizes. The contract size in forex mini trading is 10,000 units, which is only a tenth of the standard account. This allows less risk in trading. One can increase trading as he or she gains valuable experience. This would mean more profits in the future since one has acquired discipline in trading from the very beginning.

You can enjoy the same features as well as the same benefits and regular forex trading. They have the same modern software, charts, resources and other sources needed to help them make decisions. This is perfect for people who are quite new to forex trading and those who want to join, but have limited capital.

The great thing about this is that one develops a lot of discipline and decision-making ability since one is trading in lesser amounts. This means a whole lot since the risks and dangers in regular forex trading is lessened.

How Do You Make Money In Currency Trading?

2007-12-05T19:11:00.000-08:00

This question is being asked by investors and potential investors worldwide as they witness the multi-year downturn trend of the US dollar and upswings in other currencies such as the Euro or Canadian Dollar. Only since 1999 have US citizens been allowed to trade foreign currencies at a individual level while investors in other nations have done this for years.

Trading currencies takes place in the foreign exchange (forex) market and is the largest financial market in the world with a $3.2 trillion US dollar a day average turnover according to the Bank of International Settlement in April 2007.

With the market open 24 hours a day 6 days a week, it offers more liquidity than the U.S. stock market or treasuries. And thanks to technology and the Internet, individual investors can take advantage of opportunities to earn profits at home, on the road or where ever they may be.

Currencies are traded in pairs such as the Japanese Yen/U.S. Dollar or Canadian Dollar/U.S. Dollar. Those that trade against the U.S. Dollar are most popular, with the U.S. dollar being represented in over 86% of forex trades.

Among the top currencies that do so are the Australian Dollar (AUD), Japanese Yen (JPY), British Pound (GBP), Euro (EUR), Canadian Dollar (CAD) and the Swiss Franc (CHF). These particular currencies float freely in value and do fluctuate up and down. Many forces affect their value, such as the economic health of the nation(s) behind a money, interest rates, inflation, news in global stock markets, actions of central banks and so on.

For example, in 2007 major forces weighing on the U.S. dollar are the housing market slowdown and foreclosures, bad debt such as subprime mortgage defaults causing billions of dollars of losses to U.S. businesses, overall bad economic health in America, energy price increases in oil and interest rate cuts by the Federal Reserve.

In another example, forces that are pushing the Australian dollar up are climbing commodity prices, a very strong economy, a low unemployment rate and high interest rates with more potential rate increases by the Reserve Bank of Australia in 2008. Fundamental reasons such as these or technical analysis using charts are what motivate investors to get in and out of the forex market, with the goal of making a profit.

Trading in currencies is tracked in movements called "pips". A pip is the smallest unit of price for all currencies. For example in a EUR/USD (Euro/U.S. Dollar) pair, a purchase price quote of the Euro being 1.4821 to the US dollar, has the smallest unit of price four places to the right of the decimal point. Any change in the price from that position would be the reference point of profit or loss in a transaction.

The USD portion of the pair is also known as the quote, which would make each pip movement worth 1/10000 of a US dollar. (There are 10,000 pips in one US dollar making a single pip worth $0.0001.) The EUR portion of the pair is known as the base. If you made a buy of 10,000 Euro base units at 1.4821 and sold at 1.4846, your transaction would have a movement of 25 pips, and your profit would be $25.00 US (10,000 units x .0025 pip movement = $25.00).

When orders are placed through a broker/dealer, they go to an interlinked connection of extremely large commercial banks that buy and sell foreign currencies. There is no centralized exchange or physical location for the foreign exchange market.

The forex market, which used to be the domain of banks, now includes multinational corporations, global money managers, dealers, international brokers, futures and options traders and individual investors. Even the governments of nations get involved should intervention be required on their part to provide stabilization of currencies.

Part of becoming profitable in foreign exchange means taking time to do things to insure personal success. Positive steps include making the effort to learn about the forex market before trading, testing trading strategies with a demo account, not being highly leveraged and managing portfolio risk.

Investors have made large sums of money in forex, but remember that money can be lost in foreign exchange and one should consider the amount of risk and potential loss involved before starting, and that such trading is not suitable for every person.

What Are The Order Types Used by Forex Trader?

2007-12-04T19:36:00.000-08:00

During the last decade, forex trading has become one of the most attractive business opportunities to ever hit people's interest around the world. Every day people from many walks in life is actively considering entering the profitable world of the currency markets due to its accessibility and trading characteristics.

One of the first things you will do once you decide you want to enter and learn about the forex markets will be to choose your forex broker and then download the free trading platform software from your broker website.

When you first open your trading station software, you will find that there are a number of ways to enter the market or, said in another way, there are a number of ways to place an initial order to buy or sell any currency pair.

One of these types of orders is what is called a "Market order"; this is an order to buy or sell a currency pair at the market price considering the instant that the order is received and processed (which is usually within seconds of hitting the "OK" button on your trading platform).

When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."

There is a different way to enter the market that is called an "Entry order"; this is an order to buy or sell a currency pair when it reaches a certain price target which you should determine by using your knowledge of technical and fundamental indicators. In theory this can be any price. You could set an entry order for the low price of a time period, or the high price of the same time period' it all depends on your intentions, to sell or to buy.

As an example, one usual recommendation is that you should always set an entry order to be the same price as the 'open price" of the time period. When you place an "entry order" to buy, for example, you are simply saying "I want to buy this currency pair at a given future price and if it never reaches that price, I won't purchase the pair."

Stop and Limit orders are two different ways to exit a trade, automatically (without closing out your position via the click of your mouse or manually), after the trade is entered. And they are widely used as safety locks so you won't end losing everything in a bad trade. In short, you must always use stops and limits when trading the forex markets.

A "stop order" is used to stop losses. A "limit order" (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order, this is; if you buy or sell.

Remember a "stop order" is always placed below the current market value of that currency pair when you are in a long (buy) trade. And a "limit order" is always placed above the current market value of that currency pair when you are in.

The Rubber Band In Forex Trading System

2007-12-04T19:25:00.000-08:00

Of the many trading methods available out there there is one that has been recently realized and that is amazingly simple and uses the forex trading platform of your choice. This trading method will show you how to build your own indicator suite based on the author's recommendation, but this method is not only colored screen shots, it will allow you to make a profit very often, in fact more often than you think.

It is important to mention that the author doesn't recommend The Rubber Band Method in a fast 5, 10, or 15 min time frame, he says 30 min to 4 hours is the optimum time frame for his forex trading system.

However, some traders who like fast trading can do it in a 10 min chart, and even in the 15 min chart. It is beyond question that in a chart faster than 10 min, you will be trading "market noise", and your pips will be limited.

His stop loss or limit ratio for money management is really good. By using RBM formula for setting stops and limit orders for profit targets, you can even lose 1/2 of your trades and still come out way ahead in profit.

You will learn a lot from this simple method. It only uses his RBM custom indicator and one other technical indicator making your chart really simple and uncluttered. Additionally the system is so simple that it practically screams at you indicating when to take the trade and when you should take your profit.

"Buying" and "Selling" In Forex Trading

2007-12-04T19:20:00.000-08:00

These days everyone is talking about a new profitable activity called Forex trading and the great opportunity this activity represents for people willing to brake free from the corporate world and start working from home or any where else without losing their current lifestyle and even improving it.

Most experienced traders consider that the best and most profitable of the capital markets is the Forex market. For many years Forex trading was the sole domain of major banks, large financial institutions and countries central banks for example the U.S. Federal Reserve Bank.

But these days, thanks to the Internet the market has been opened to everyone willing to learn the best techniques in forex trading and with the intention of making substantial profits as the institutions mentioned above that annually and consistently make pretty high profits from trading in the Foreign Exchange market.

You have many advantages when trading the forex markets, for example you don't have to worry about fees you may have to pay to your broker; there are also none of the usual fees to which futures and equity traders are accustomed to pay always no exchange or clearing fees, no NFA or SEC fees.

The forex market has five major currencies: US Dollar, Japanese Yen, British Pound, Euro and the Swiss Franc. It is due to their great popularity in world's commerce transactions and its high activity that these five currencies account for over 70% of North American trading.

Of course there are other trend able currencies they include the Canadian, Australian and New Zealand Dollars. These minor currencies account for 4% - 7% of the total market volume. Together, all this five majors and minors currencies constitute the backbone of the Forex market.

The concept of "Buying" in Forex refers to the acquisition of a particular currency pair to open a trade and "Selling short" refers to the selling of a particular currency to open a trade, i.e, just the opposite. When you Buy, you are expecting the price of the currency pair to increase with time, you buy cheap to sell high; which is easy to understand.

In the case of Selling short, it looks a bit more complicated. Here the way to make money is to initially sell a currency pair that you think will lose value in a given period of time and then, once it happened, you will buy it back at the new price but now you can sell it at the previous greater price the currency had when you opened the trade, so you earn the difference in prices. It may seem kind of tricky when you are starting, but once you are in front of your trading station it will look much simpler.

Factors Involved In Becoming A Successful Forex Trader

2007-12-03T21:57:00.001-08:00

These days everyone is talking about Forex trading and the great opportunity this activity represents for people willing to brake free from the corporate world and start working from home or any where else without losing their current lifestyle and even improving it.

Forex trading has changed dramatically in the last 10 years thanks to the technological advancements of the Internet era. With real time streaming technology and faster and more efficient computer systems, almost anything, from roses to FX trading, is available at the click of a button.

Some of the great reasons why Forex trading is a great way of entering the capital markets is that your trades are all commission free and it has a low transaction cost. All the best forex brokers have these characteristics and even Mini FX traders (i.e., traders starting with accounts having a capital as low as $250), who are just starting in this field, can buy and sell currencies on-line always commission free.

But one thing is to start Forex trading and other very different is becoming a profitable Forex trader. In order to become a profitable trader the new trader will immediately discover the imperative need of having an accurate knowledge of the markets and a good understanding of the forex technical indicators.

Concepts as Moving Averages, Fibonacci levels, Bollinger Bands, etc are the basic knowledge every trader must have.

But having a good knowledge of these concepts is not everything you need. Fear is one of the worst enemies of the Forex trader. In order to become a profitable trader it is essential that the person involved in trading understands that he must leave fear aside and stick to the trading plan he has constructed and arranged before, always understanding that losing trades happen to everyone and they are always part of a profitable trading career.

A forex trader must learn how to profitable use his stops without heavily compromising the capital in his trading account, i.e., he must play safe but realizing that a calculated risk must be undertaken in order to maximize profits.

In short knowledge is the key to a successful trading career but it also must go along the proper psychological preparation of the trader in order to be able to tame the markets and become a profitable trader.

A Short Introduction to Fibonacci Forex Trading

2007-12-03T21:14:00.000-08:00

Fibonacci forex trading is the basis of many successful forex trading systems that are used by a great number of professional forex traders around the world. Trading systems based on this "numbers sequence" are so successful that billions of dollars are earned every year by traders following its rules.

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

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

Additionally, one important thing to remember is that Fibonacci analysis is a leading indicator. What this means is that by learning the correct Fibonacci trading tactics and techniques you will know how to determine the most probable turning points in the market before the price gets there. Yes, you can know what the forex market will do in advance.

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

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

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

Many people tries to make this analysis overly complicated scaring away many new forex traders that are just beginning to understand how the forex market works and how to make a profit in it. But this is not how it has to be.

It can't say it's a simple concept but it is quite understandable for any trader once he or she has grasped the basics and has had some practice trading using Fibonacci levels along with other secondary indicators that will help you to improve the accuracy of the entry and exit point for every particular trade.

Can The Online Forex Trading Satisfy Your Needs?

2007-12-03T20:45:00.000-08:00

People that are very keen on knowing how Forex trading is done should consult broker reviews here they will find all their answers. Most online Forex trading reviews can answer their questions regarding things such as softwares used, guides or courses. An increasing number of people is very interested in entering Foreign exchange trading, believing there is big time money in that.

There is so much out there to learn about the Forex in order to trade traditionally. Before they were introduced to the Forex most people barely even knew what it was all about. Being introduced to revolutionary systems has changed their lives consulting online Forex trading reviews, trying free demos, managing their accounts all these have turned them into successful brokers.

Different people think different systems are the best when it comes to trading on the Forex. However, besides reading the online Forex trading reviews you should take advantage of the 15 days free trial so you can experience for yourself how it works this is one of the smartest ways beginners can trade in the market.

Broker reviews advise people to turn to systems that can ease their work. For instance, a very good system would be one where :

The automated system does the trading for you,
There are no charts, no graphs and no guesswork,
You spend up to 20 minutes per week managing your account,
You can structure your trading to buy low sell high,
You can collect daily interest on leveraged money,
You have full, 100% control over your money.

Such systems do most of the work for you, so that you can spend a minimum amount of time managing your account. Although you are managing your account hands on, you will not learn about the market easily. The online Forex trading reviews may advertise such systems, but you should know they will not be much help if you want to learn by doing everything yourself. If you are such a person you should look for more detailed Forex guides.

You should keep in mind there is one problem when it comes to choosing a system, virtually every platform has someone warning you it is a scam. Broker reviews can guide you to safe systems, they usually rate them having in mind the ease of use regarding limits, stops, fast trade execution etc. But please remember that different people may want different things from a certain system, so the best thing to do is try it, as we have previously mentioned it.

There are people who think you do not need software, but you need to spend a little of your precious time doing your own research on different sites, learning about the Forex market and how it works. These are the same people that say that most of those software presentations are scams because they use indicators that you can easily get from any basic trade station.

What they don’t say is something all broker reviews say: that such software is meant to be used by beginners and by people who do not have the time or the patience to fully understand the market.

The Deal With Forex Brokers

2007-12-02T21:06:00.000-08:00

Forex brokers are the best thing out there right now. And whether you are looking to hire one or you are looking for some forex courses for yourself, you are making a good choice. Although it is said that brokers only buy and sell, thus having a boring job, the satisfaction can be quite big.

Truth be told, Forex is a great market and there are millions to be made. In order to fully understand this world, one must take some Forex courses, or have Forex brokers work for them. For instance, one of the forex broker leaders is located in Switzerland and is regulated by the Swiss Federal Department of Finance; audited by KPMG.

They have very tight spreads, with a total of 25 currency pairs Gold and Silver. Here are the spreads :

pips for EURUSD, USDJPY, AUDUSD, EURGBP, EURCHF,
pips for GBPUSD, USDCHF, USDCAD, EURJPY,
pips for CADJPY, CHFJPY,
pips for NZDUSD, AUDJPY,
pips for EURAUD, GBPCHF, NZDJPY,
pips for EURCAD, GBPJPY,
pips for GBPCAD, GBPAUD, AUDCHF, CADCHF, NZDCHF,
pips for AUDCAD, AUDNZD.

The default leverage is 1 : 200 but the client could choose the leverage from 1:1 to 1:200 at the account opening procedure. Depending on the client’s account equity they can have different margins. Different equity levels have different margins. For instance different Forex courses show these margin requirements :

Less than 25,000 - 0.5%
25,000 to 1,000,000 - 1%
1,000,000 to 5,000,000 – 2%
5,000,000 to 10,000,000 - 3%
above 10,000,000 - 5%

Please have in mind that on weekends and holidays margin requirements remains the same.

Forex brokers count SWAPS both as negative and as positive. Swap free accounts are also available. As well as that, Forex brokers can place Stop and Limit orders as close as 5 pips from market price. as a client, you can choose to have your account denominated in either USD, EUR, GBP, JPY, CHF, AUD or CAD.

If you want to do it yourself, you could get some Forex courses that show you everything you need to know. You can become very successful using proprietary software from different companies. These are network marketing companies and usually their only products are such soft wares for which they charge about $100 per month. Some people are more interested in the sensational results of the Forex trading than in the network marketing business.

Their system is "set it and forget it", this is why one checks their account twice per day and do not have to watch a computer screen constantly. They have set up great deals with 4 large Forex brokers for anyone these are the kind of deals that normally only large institutional investors get.

How to Deal With Currency Trading Volatility

2007-12-02T20:41:00.000-08:00

You’ll read a lot about the advantages of trading currencies yet most traders tend to turn advantages into disadvantages due to a lack of understanding. That’s why 95% of currency traders lose money and there’s one thing in particular that wipes out more trader equity than anything else volatility. Most forex traders simply can’t deal with volatility.

Volatility, Deal with it or lose Money

Currencies are volatile, and in theory you can trade for thousands in profits every day, but the reality is :

Most traders make fundamental errors when trying to deal with volatility and they’re wiped out. The main error they make is with stop placement. These traders are so keen to avoid risk, that they actually create it. They do this by placing their stops incorrectly thus giving themselves no chance of winning.

Volatility is also more of a problem to deal with when you use leverage. Many forex brokers will grant up to 400:1 leverage and if you can’t deal with volatility, then leverage simply compounds the problem. Many forex traders are great at picking market direction, but these traders are continually stopped out by volatility. They’re frustrated when they get stopped out and then see the trade go onto make $10,000 to $30,000 and they’re not in.

Today, in our world of instant communications, currencies are more volatile than ever before. While you can see the big, long term trends on any forex chart, the volatility within these trends is huge. This volatility will soon take your equity if you don’t have a forex trading strategy to combat it and lead you to currency trading success.

If you want to succeed in forex trading, then you need to deal with volatility, so here are some tips to help you :

Do you know what standard deviation is?
If you don’t, then look it up on the net right now or read our previous articles. If you want to deal with volatility, then an understanding of standard deviation is a necessity.

You Need To Take Calculated Risks
Most traders have their stops too close, and although they appear to have a lower risk, the fact is that the odds are heavily in favor of their stop being hit. It may look a low risk on paper but it’s almost a guaranteed loss in practice making it high risk.

A perfect example is the forex day trader who thinks they can place stops using daily support and resistance and keep risk low. However, all volatility is random in short time periods so they say goodbye to their equity.

If you want to win at trading, then you need to be like a successful gambler bet big when the odds are in your favor and don’t bet, when they’re not. Only place stops behind valid resistance and support and be very selective with your trading signals.

Accept Drawdown in Open Equity
When trailing a stop, be patient you need to keep it back far enough, not to be taken out by market noise. This is hard when you see thousands in equity wiped out in a day. However, keep your currency trading system firmly focused on the bigger prize and accept that you’ll have to take losses in the short term to make longer term meaningful gains.

Volatility in forex trading is a huge advantage but you must learn to deal with it correctly, in order to achieve currency trading success. If you can’t deal with volatility and risk, then you’ll lose money it’s that simple.

Fundamental Analysis For Forex Traders Guide

2007-12-02T20:29:00.000-08:00

If you are new to forex trading you have access to a lot of fundamental analysis as the click of a mouse from banks brokers and news wires you can look at and trade upon it let’s look at forex fundamental analysis and how to use it.

A forex trader, who makes trades based upon fundamental analysis, will look at the supply and demand situation in relation to the currency studied, and try and predict the impact of the various factors on its movement and they include :

Economic growth and economic policy
Interest rate outlook
Balance of payments
Employment
Trade deficit
Political Factors

To name but a few but there is a problem when trying to use fundamental analysis :
The facts are there for all to see but price is ultimately decided by millions of different opinions such as you and me and we all draw our own conclusions from the facts and numbers. Furthermore all the news is available in seconds anywhere and this means it is discounted.

With human nature involved and the fact that fundamental analysis is quickly discounted it is almost impossible for the novice trader to execute trading signals on. If you want a graphic example of how forex fundamental analysis won’t help you make money consider this fact :

The ratio of winners to losers is the same today as it was 50 years ago and this is despite better news more of it and faster communications. So if you are thinking of trading it think again. A far easier way is to study charts and use technical analysis. A technical approach takes into account both the supply and demand situation, as well as investor psychology. We can see the impact of both at once and reflected in the price.

Many traders don’t believe that technical analysis works, as it can’t take into account the fundamentals but this is not correct :

Technical analysis assumes that all known fundamentals are going to show up instantly in price action. Technical analysis therefore is simply a short cut way of taking into account the fundamentals and more importantly takes into account human psychology.

The equation for market movement is :

Supply and demand factors + Human perception (investor psychology) = Price action

So if you are thinking of trading using forex fundamental analysis, you can save yourself a lot of time and increase your chances of success, by taking a technical approach that reflects all the factors that influence price and increase your odds of success.

The 3 Keys to a Winning Trader's Mindset

2007-12-02T19:51:00.000-08:00

Forex trading is simple to learn, and anyone can acquire the skills, so, why is it that 95% of traders lose money? Many traders lose money because they have poor methods, though some have sound methods but still lose because they lack the right mindset to succeed. Here we’ll look at the three keys for getting the mindset of the millionaire traders.

Desire and Passion
If you want success in anything including forex trading, then you must desire success. If you have the desire, then you’ll do what’s required to succeed. If you look at any of the legendary traders, they all had desire and they loved what they did with a passion.

You must also have desire and passion for what you do. However, that’s not enough you must also avoid worrying about risk and setbacks. Currency trading success doesn’t come easily, so, if you can’t build up the strong desire and passion required for successful trading, then you should find something else to do as you’ll lose your money trading in the currency markets.

If however, you accept that it’s not any easy road and you’re prepared to put in the effort, then forex trading can earn you an income that most people can only dream of.

Confidence
You hear traders talk a lot about discipline when forex trading but you don’t hear them talk much about confidence. However, confidence is a vital component of your forex trading strategy confidence in yourself not in some mentor, or guru you’re following.

If you want to succeed in currency trading, then you have to have rock solid confidence that your currency trading system this will lead you to currency trading success. You must retain your confidence, even when you’re losing money - and there’ll be periods when you lose money, for weeks, or months on end.

If you don’t have un-shakeable confidence that you’ll ultimately succeed, then currency trading will break you and you’ll throw in the towel before you become a winner. To have confidence, you need to understand exactly how, and why your forex trading strategy works.

This will give you a trading edge and ultimately, success. If you don’t know what your trading edge is, then you’ll be joining the majority of traders the ones who lose money.

Discipline
You’ve probably heard that discipline is vital to trading success and if you think that following a system with discipline is easy then, think again.

Lets look at an example of just how hard currency trading with discipline really is: In the eighties, legendary trader Richard Dennis taught a group of traders with no previous experience, how to trade and he gave them a method they could all use. In 14 days, these traders were given trading accounts and collectively, they quickly made over $100 million.

They were all successful traders - yet there was a huge variation between the results of the individual traders. In Curtis M. Faith’s great book “The Way of the Turtle”, he discusses this in depth and the lesson is learning a successful trading system is not enough. You need the correct mindset to execute the system correctly and nothing can prepare you for this.

You simply have to experience it yourself and it’s tough trying to stick with a currency trading system, when the pressure is on and you’re losing money. Money is on the line and emotions are involved.

Many forex traders try to prepare for trading, with demo accounts and making big percentage wins. However, there’s no pressure it’s practice, and it’s easy try doing it for real, with real money that’s when if becomes difficult.

Now you have them the three keys to adopting the right mindset, in order to achieve currency trading success. It’s not easy to achieve the winning traders mindset but when the rewards are as great as they are in FX trading, you wouldn’t expect them to be.

Forex Scalping Systems, Getting One for Big Consistent Profits

2007-12-02T19:31:00.000-08:00

There are a lot of day trading and forex scalping systems on the Internet but how do you choose one that's right for you to help you enjoy currency trading success? Let's take a look at forex scalping.

When I look at these trading systems, it always amazes me that with millions of traders trading trillions of dollars daily, these systems can predict what this huge mass of people will do and predict what will happen in hourly, 30 minute bars or less.

You obviously can't but traders still believe they can do it but if you think about it it's absolutely a ridiculous way to trade and means you are 100% guaranteed to lose.

Don't believe me?
Then try and find a forex trading system that tries scalping that has a real track record to back up the ridiculous claims they make. You won't get a real one, you will get a simulated one done in hindsight KNOWING the closing prices well that's hard.

Let's see if I knew tomorrows price today, how much money would I make? Alas, it's not as easy as that as we don't have the luxury of knowing the forex prices in advance. Of course day traders tell you that you can predict moves within short time frames.

However to anyone who sits down and looks at the facts, it's pretty obvious that support and resistance levels are useless in daily time frames as all volatility is random and prices can and do, go anywhere.

You can't get the odds in your favor and you will lose over time. You could flip a coin and get the same success rate. So why are these systems so popular?

Quite simply these currency trading systems appeal to one emotion greed.
Traders actually think that with no effort and spending a hundred dollars or so they can make $10,000 a month, scalp 50 pips each day and end up disappointed as the market gives them their reality check. Day trading is a great story and so are Harry Potter books but it don't actually believe in wizards.

Today anyone can write an e-book put some clever copy on it and try and sell it on the net and people do. How many of these vendors have actually traded? Very few, their sold by marketing organizations, that are simply selling a story. They make money selling the course or system and the trader gets wiped. The vendor has a guaranteed profit and the trader a guaranteed loss.

Day trading should be left to the dreamers and greedy traders looking for the fast buck with no effort (which if you find a way of doing this please tell me) and concentrate on perfecting a sensible forex trading strategy one that trades longer term and get the odds in your favor.

If you want to make money and learn forex trading for profit the correct way forget forex scalping and day trading and get the right forex education to win.

Forex Trading Systems

2007-11-30T00:15:00.000-08:00

Forex trading systems are popular just switch them on and turn your computer into a regular money making machine. That's the theory, the reality is 95% or more lose due to curve fitting and if you don't know what it is then you should.

Curve fitting is when a forex trading system is bent (curve fitted) to price data to make a profit. A trader I once knew likened this to shooting at a barn door with a gun and then afterwards going and drawing a circle around each shot, to make it look like a bulls eye.

Vendors when testing their forex trading systems on past data, find that it doesn't work or doesn't work well enough, so they bend or curve fit the system, until it does. A curve fitted trading system will never work in real time trading.

Why?
Because the data sequence will never re produce exactly again. Clues to curve fitted systems are:

Lots of rules and parameters.
Different rules for different currencies or trading conditions.
Extraordinary profit and low or little draw down.

Generally, a good trading system should consist of a few rules and parameters and work the same in all market conditions and in all currencies.

While many traders make genuine attempts and curve fit by accident, most don't they simply make up the track records and curve fit to make a track record look good. How many systems do you see sold for a few hundred bucks that promise you 1,000% per annum $10,000 bucks a month etc. The answer is loads.

These vendors are NOT traders, their marketing companies and they know they can put out any track record they like so long as the disclaimer has the words "done in hindsight" "simulated" Of course we can all make a profit going backwards but the problem is we have to trade not knowing the future and that's a little more difficult.

The Internet means you see them all the time and while most traders pass them by on the basis that, "if it looks to good to be true it probably is", many others let greed, naivety or both get the better of them and buy them.

If you want to buy a forex trading system, your best option is to get one that's got a real time track record, to show it's based on sound logic. After all, if the vendor does not have the confidence to trade it why should you?

If you buy a simulated one, then it should be one with very few rules which work on all currencies, in all markets and you should understand how and why it will works. So when you see that track record promising you untold riches - think curve fitting and think losses rather than profits.

Shop Around For The Good Ones
You can make money with a forex trading system but you need to be careful in your selection. If you are then your time will have been well spent and you could enjoy long term currency trading success with it.

Forex Trading Success, Catching Big High Reward Low Risk Turning Points

2007-11-30T00:09:00.001-08:00

For the savvy forex trader the best opportunities are at big market turning points. Although the majority never spot them they offer the highest reward and the lowest risk and if you can spot them you can enjoy forex trading success. A market (any financial market not just currency trading) moves to this equation :

Market Fundamentals + Human Perception = Price

It's a fact that humans are not creatures of logic but of greed and fear and they always push prices to far up or down away from the fundamentals and then prices return to more realistic values.

All short term, accelerated price spikes in forex trading are short lived and prices tend to turn when the fundamentals are most bullish or bearish and that has been true since the start of trading. The majority of losing forex traders get caught at these turning points (95%) and the savvy pros make a killing so how do you spot these changes and enjoy currency trading success?

They can be seen on any forex chart and if you have the right technical tools you can act on them and get your market timing right and execute a great contrary trade.

Here are some clues on how to spot these turning points. Watch for a forex trend that is moving quickly and accelerating upwards, moving based upon bullish or bearish news that says there is no end in sight.

Bollinger Bands
Next watch for high volatility and a great way to spot this is a price at the outer Bollinger Bands or beyond it. Now you can be alert for a trend change. You don't predict you wait for confirmation and check 3 other indicators (all the indicators here are discussed in our other articles so look them up). Look for the ADX Line to be above 40 combined with RSI in overbought territory.

Now Confirm Your Trading Signal
To trigger the move, watch for a stochastic reading to cross down with bearish divergence (in a bull market) or up with bullish divergence (in a bear market), to trigger a sell from overbought or oversold levels. This set up is even better if it has been preceded by an ADX signal turning down from above 40.

Trading Price Momentum Divergence
The above tools if used in the above way, in a forex trading system, on strong bull or bear markets, will help you catch a counter trend as the bullish or bearish news peaks and momentum diverges with price. With a little practice you will never miss a big turning point again also, the more volatile and exaggerated the move the better 100% + Profits.

These are what I call the 10:1 trades and they will normally see the amount of potential reward to be 10 times the risk. Most traders can't do the above. They get influenced by the herd and the news but if you stay detached watch your charts and execute your forex trading system with discipline, you can pile up huge profits.

Emotional Price Spikes Will Always Occur
Human nature is constant and humans always push prices to far up or down so this method will always work. Savvy forex traders and make sure their smiling and making big profits while the losing majority get hammered. If you want to enjoy forex trading success, practice the above and you will soon be piling up some big FX profits.

A Simple Tips For Bigger Profits

2007-11-29T22:00:00.000-08:00

If you want to enjoy currency trading success then this simple tip will help you. Most currency traders simply do one thing they shouldn't and that's why they lose so here is the tip. When trading in currencies always keep this point firmly in mind :

The amount you trade has no bearing on how much money you are going to make so cut your trading and focus on high odds trades and focus on high odds trades. Most currency traders when they start want to trade and be in on the action but this means they lose, as the high odds trades don't come around very often. Know traders who trade 6 till 10 times a year and make over 100% and others who trade all the time and make nothing. Consider the vast number of traders who day trade and lose.

Why do they lose?
Because all short term moves are random. Sure they have clever systems and work hard but their not trading the odds and a long term trader will win hands down against them in terms of profit. There is the view that the more effort you put in the more you get out and that's true in many areas of life but not the forex markets. In forex markets you get paid for being right and that's it.

If you want to win, you have to trade the high odds trades so what is a high odds trade?
The best way to look for a high odds trade is to look for areas of support and resistance the market considers valid this means they have been tested several times and these tests have taken place in several different time frames normally weeks or months apart. When you look at these levels you are looking to go with breaks of support and resistance and go with the break.

It's a fact that most of the big currency trends start from new market highs or lows and if you don't go with these breaks you will miss some of the best trends. Most traders can't do this. Their obsessed with getting in at a lower or better price and wait for the pullback. It doesn't come and they sit their waiting and wonder what might have been.

The above may sound a simple way to make money and it is but most traders refuse to do it trade too often on trades with bad odds and lose. Trading is an odds game and if you want to win you need to trade when the odds are in your favor it's as simple as that.

It would say that you will get a trade like this in forex markets no more than once a month and you get about 10 - 12 really good breakouts a year. Learn to focus on these and you will be trading with the odds in your favor and load up the trade in terms of how much you risk.

Forex trading involves taking calculated risks at the right time and if you trade breakouts that are considered valid you are doing just that. So if you want to enjoy currency trading success with your trading system trade the high odds breakouts.

Profiting From Panic Selling

2007-11-28T20:39:00.001-08:00

Panic selling occurs when a stock price rapidly declines on high volume. This often happens when some event forces investors to re-evaluate the stock's intrinsic value, or when short-term traders are able to force the stock price down far enough to trigger long-term stop-losses. The entire process creates a tremendous opportunity for bottom-fishers to initiate long positions, especially if the event behind the panic selling was non-material or speculative in nature (such as an SEC investigation or an analyst opinion). Here we shed light on the panic selling process and introduce a model that can help you predict the right time to take a long position after panic selling occurs.

The Process
Panic selling happens in several phases. Figure 1 illustrates a typical panic selling scenario that occurred as a result of an SEC investigation. The company in this example is Doral Financial (DRL), a corporation whose primary business is mortgage banking, but this chart can be read as a general illustration of what happens in panic selling situations.

Let's break down what happens at each numbered step in the chart:

Step 1 - Something occurs that causes the stock price to rapidly decline on high volume.

Step 2 - Eventually, a high volume day occurs when buyers and sellers fight for control of the trend. The winner then takes the trend on low follow-up volume.

Step 3 - If no significant trend change occurs at point 2 (i.e. a continuation), then there is typically another point of high volume in which a substantial reversal (long or short term) may occur.

Step 4 - This process continues until a long-term trend is established and confirmed with technical or fundamental factors.

Now we'll look at how we can predict when a trend change is going to occur.

The Exhausted Selling Model (ESM)
The Exhausted Selling Model (ESM) was developed to determine when a price floor has been reached. This is done by using a combination of the following trend, volume and turnaround indicators:

* Trendlines
* Volume
* Moving Averages
* Chart Patterns

Notice that a variety of indicators are used to confirm that the trend has changed. As a trader, you may choose how many confirmation indicators you wish to use. The fewer confirmation indicators used, the higher the risk and the higher the reward (in the sense that, the longer you wait for confirmation, the less potential gain there will be for you to capture), and vice versa.

The rules to using the ESM are as follows:

1. The stock price must first rapidly decline on high volume.
2. A volume spike will occur, creating a new low, and appear to reverse the trend. Look for candlestick patterns showing a struggle between buyers and sellers here (i.e. cross patterns or engulfings).
3. A higher low wave must occur.
4. A break of the predominant downward trendline must occur.
5. The 40 and/or 50-day moving averages must be broken.
6. The 40 and/or 50-day moving average must then be retested and hold.

Note that you may use other moving averages - ideally, ones that connects highs or lows. Typically, a break of a larger moving average is more indicative of a trend break than smaller moving averages.

As you can see, the ESM combines several techniques to ensure that the trend has changed for the long term.

Panic selling naturally creates great buying opportunities for well-informed traders and investors. Those who know when the selling is over can benefit from the retracements/turnaround that often occur afterwards. The Exhausted Selling Model explained here provides a safe and effective method to determine where the best entry point is, and the ESM's use of multiple indicators can help you avoid costly mistakes.

Anticipation Vs. Prediction

2007-11-28T20:34:00.000-08:00

Technical analysis is a useful tool that allows a trader to anticipate certain market activity before it occurs. These anticipations are drawn from previous chart patterns, probabilities of certain trade setups and a trader's previous experience. Over time, anticipation can eliminate the need for over-analyzing market direction as well as identifying clear, objective areas of significance. It isn't as hard as it sounds. Read on to find out how to anticipate the direction of a trend and follow it through to a profit.

Anticipation Vs. Prediction
Oftentimes, technical analysis is referred to as some sort of black magic used to time the market. However, what many outside of the financial world don't realize is that traders don't try to predict the future. Instead, they create strategies that have a high probability of succeeding - situations where a trend or market movement can be anticipated.

Let's face it - if traders could pick tops and bottoms on a consistent basis, they would be spending more time out in a Ferrari F430 convertible enjoying a nice stretch of highway. Many of you have probably tried picking tops and bottoms in the past and are through with the game. Perhaps you've already following in the footsteps of many professional traders, who attempt to find situations where they can anticipate a move and then take a portion of that move when the setups occur.

The Power of Anticipation
When deciding on whether or not to make a trade, you likely have your own method of entering and exiting the market - you should decide on these before clicking the buy/sell button. Technical traders use certain tools such as the moving average convergence divergence (MACD), the relative strength index (RSI), stochastics or the commodity channel index (CCI) along with recognizable chart patterns that have occurred in the past with a certain measured result.

Experienced traders will probably have a good idea of what the outcome of a trade will be as it plays out. If the trade is going against them as soon as they enter and it doesn't turn around within the next few bars, odds are that they weren't correct on their analysis.

However, if the trade does go in their favor within the next few bars, then they can begin to look at moving the stops up to lock in gains as the position plays out. ('Bars' are used as a generic term here, as some of you may use candlesticks or line charts for trading.)

Figure 1 is an example of a trade taken on the British pound/U.S. dollar (GBP/USD) currency pair. It uses an exponential moving average crossover to determine when to be long and when to be short. The blue line is a 10-period EMA, and the red is a 20-period EMA.

When the blue line is over the red, you are long and vice versa for shorts. In a trending market, this is a powerful setup to take because it allows you to participate in the large move that often follows this signal. The first arrow shows a false signal while the second shows a very profitable signal.

Fundamental Analysis For Traders

2007-11-28T20:28:00.000-08:00

The use of the fundamental approach in trading has long been an object of argument between its followers and those who mercilessly deride the method's usefulness. We will not take sides in this eternal argument, but we will try to find out how the average trader can benefit from fundamental analysis. Read on to discover the strengths and weaknesses of fundamental analysis as a traders' tool. (For more insight, see What Can Traders Learn From Investors.)

The Mechanics
The fundamental approach is based on an in-depth and all-around study of the underlying forces of the economy, conducted to provide data that can be used to forecast future prices and market developments. Fundamental analysis can be composed of many different aspects: the analysis of the economy as the whole, the analysis of an industry or that of an individual company.

A combination of the data is used to establish the true current value of stocks, to determine whether they are over- or under-valued and to predict the future value of the stocks based on this information. (To learn more, see Introduction To Fundamental Analysis.)

Methodology-wise, different approaches can be taken. For example, industry groups can be compared with other industry groups, while specific companies within those groups are compared against each other.

Role in Trading
The expediency of applying fundamental analysis to trading depends on several criteria. The first factor that should be taken into consideration is the potential profit sources you are targeting. A stock exchange is no factory and it does not produce any kind of material value. If you are really after a profit you need to know whose loss can be turned into your profit. Moreover, to trade profitably, you need to know the reasons for which somebody else's money can become yours.

There are three profit sources:

1. Your fellow traders, specifically those who are less knowledgeable, less experienced or simply too slow on the draw, can be a source of profit for you.Of course, the traders are out to make money, but many them will also lose money. Here you can profit by applying better trading skills and better quality trading systems.

2. Initial public offerings and companies issuing additional stock can provide you with an opportunity to cash in on the discrepancy between the IPO price of the stocks and the prices at which they will eventually settle. As a trader, your earnings will be well-deserved compensation for the risk you take on, but this level of risk can be reduced by using technical analysis. (To learn more, see the IPO Basics tutorial and The Murky Waters Of The IPO Market.)

3. Established companies, mutual funds and other large financial organizations make big moves in the financial markets, and can act as portfolio builders for investors and traders. In this case, a trader's profit will act as compensation for the risks taken. In fact, the trader insures major investors against fluctuations in the cost of the stocks by buying the related risks and trying to use them.

Therefore, technical analysis can be considered a means of profiting from less experienced traders, whereas one of the ways fundamental analysis can be used is as a tool for making money on a major market player (a major corporation or government).

As far as short-term trading is concerned, fundamental analysis cannot be used as a "tactical", short-term decision-making method. Technical analysis enables traders to gain a vision of the market and make the right move at the right time, while fundamental analysis should be applied strategically, over longer periods of time.

It helps an investor obtain information about the overall state of the market, attractiveness and state of a specific security as compared to other securities, However, when and how to react to the information, derived through fundamental analysis, is determined using technical analysis. (For more insight, see The Basics Of Technical Analysis.)

Regardless of your trading role and attitude to fundamental analysis (and the amount of trust you put in it), you have to be knowledgeable about a number of things to use this approach. The underlying principles of fundamental analysis are based on a number of factors that affect the economy.

Year in year out, these factors are becoming increasingly volatile and harder to predict. For a person who isn't educated in the required related fields, trying to find the key morsel of fundamental information in that motley hodge-podge of economic, political and other data and correctly interpreting it can become a wild goose chase.

Would You Profit As A Day Trader?

2007-11-28T20:00:00.000-08:00

Market timing attempts to predict the direction of future market movements in order to buy low and sell high. It is a strategy that most professional investors rely on and most other investors hope to replicate. Interestingly, it's also a strategy that has negative connotations for many investors. Have you ever wondered whether you could make money as a day trader? Read on as we cover the controversy behind this strategy.

The Controversy
At the academic level, the very concept of market timing is called into question by those who believe in the efficient market theory. This theory is based on the premise that, at any given time, prices fully reflect all available information on a particular stock and/or market. Thus, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else.

Outside of academia, the controversy surrounding market timing is primarily focused on day trading conducted by individual investors and the mutual fund trading scandals perpetrated by institutional investors in 2003. Media coverage of these issues has been so prevalent that many investors now dismiss market timing as a credible investment strategy. Because the popular media has a significantly greater audience among investors than most academics do, the image the popular media has created for market timing provides a good spot to begin an exploration of the topic.

Day trading sits at the extreme end of the investing spectrum from conventional buy and hold wisdom. It is the ultimate market-timing strategy. While all the attention that day trading attracts seems to suggest that the theory is sound, critics argue that, if that were so, at least one famous money manager would have mastered the system and claimed the title of "the Warren Buffet of day trading".

The long list of successful investors that have become legends in their own time does not include a single individual that built his or her reputation by day trading. Even Michael Steindhartd, who made his fortune trading in time horizons ranging from 30 minutes to 30 days, claimed to take a long-term perspective on his investment decisions. From an economic perspective, many professional financial advisors shy away from day trading, arguing that the reward simply does not justify the risk.

Legality, Ethics and Mutual Fund Scandals
Despite the controversy, market timing is neither illegal nor unethical. Attempting to make a profit is the reason investors invest, and timing your purchases and sales so that you buy low and sell high is the general goal of most investors (although short selling and arbitrage take a different approach, the success or failure of these strategies still depends on timing).

The problems with mutual fund trading that cast market timing in a negative light occurred because the prospectuses written by the mutual fund companies strictly forbid short-term trading. Despite this prohibition, special clients were allowed to do it anyway. So, the problem was not with the trading strategy but rather with the unethical and unfair implementation of that strategy, which permitted some investors to engage in it while excluding others.

The Professional Approach
All of the world's greatest investors rely, to some extent, on market timing for their success. Whether they base their buy/sell decisions on fundamental analysis of the markets, technical analysis of individual companies, personal intuition, or all of the above, the ultimate reason for their success involves making the right trades at the right time. In most cases, those decisions involve extended periods of time and are based on buy-and-hold investment strategies.

Value investing is a clear example, as the strategy is based on buying stocks that trade for less than their intrinsic values and selling them when their value is recognized in the marketplace. Most value investors are known for their patience, as undervalued stocks often remain undervalued for significant periods of time.

To Time or Not to Time?
If your goal is to buy low and sell high, you are market timing. As noted above, it is very difficult to be successful at short-term market timing over an extended period of time. The average investor doesn't have the time (or desire) to watch the market on a daily basis and will be far better served by a focus on long-term investing instead of trying to guess the direction of the market on a daily basis.

When the costs and risks are factored into the equation, even most professional investors prefer to stretch their investment horizons over a longer time frame. It is far easier to be successful if you purchase an investment and hold it until the price rises, regardless of how long it takes, than to purchase an investment at 9am and hope to make a profit just a few hours later.

How Safe Are The Forex?

2007-11-27T21:34:00.000-08:00

As an investment category, yes. All sorts of prudent and conservative institutions colleges, pension funds, foundations, trust departments invest in stocks.

There is, technically, greater risk in common stocks than in the Forex. But as any experienced investor can tell you, there are many not unusual situations in which a common stock can be viewed as a better safer investment than the issues ahead of it.

Or, take the common stocks of corporations like General Electric and Union Carbide. These, as it happens, are the only issues on the companies' books. Who would argue that the bonds of even a first-class railroad, for example, were necessarily safer?

Safety also depends, to an extent, on the price at which the stock was bought. A company may be solid as a rock, but eager investors may have bid its stock to an unrealistically high level in terms of the per share earnings likely to be attained. If a quarterly or year end earnings statement does not bear out the optimism of the eager buyers, they may begin to unload.

The man who has bought near the top and wants to hang on may see a dismaying depreciation in his holdings, even though, by all investment standards, he does own a good, safe stock.

The point is, some stocks are safer than others, and the value of all stocks may shift and vary and thereby alter temporarily their safety-the possibility of cashing them at the price paid for the investor.

It is not hard to find a safe stock, if by that you mean one representing a lively, alert, efficient company that is unlikely to collapse and fail. While not every stock listed on the New York Stock Exchange is a daisy, the mere fact that it has met the requirements for listing says much in its favor.

For one thing, to obtain listing a company must agree to report its financial condition regularly. This alone makes it possible to evaluate the company's performance and prospects, and thus estimate whether its stock is a good buy.

This in not to say that unlisted stocks or stocks carried on other exchanges are chancy. As you can quickly discover, some rather fine companies are not on the so called Big Board the New York Stock Exchange. The Great Atlantic and Pacific Tea Company, Humble Oil, and Creole Petroleum are listed on the American Stock Exchange.

Such representative companies as Anheuser Busch, Eli Lilly, and Time, Inc. are unlisted, and traded only in the over the counter market. Few insurance companies and no banks both quite stable stock categories are listed on the New York Stock Exchange.

Still and all, the new investor will be wise to confine his dealings to stocks that are relatively well known and have a ready market. For out of the estimated 5,000 public, stock-issuing corporations in the United States there are, inescapably, some dogs. They do not have to be thieving and corrupt. Poor management, wobbly financing, and an inability to keep pace with the times in production and distribution are reason enough for the investor to avoid them.

Here, too, may be mentioned the "penny stocks," which have enjoyed an unfortunate vogue in recent years. These glitter like a prize in a shooting gallery, but they promise something for nothing, and this is no premise for a smart investor to accept. Many are out and out swindles.

Others are legitimate enough, but rank as the wildest sort of speculation double-0 on the roulette wheel, or a mare in the Kentucky Derby will come home a winner more frequently than these babies.

For the man who can only be called the ignorant investor, they have a certain attraction. The small investment- or bet-of $100 may purchase 500 or 1,000 shares which make a man feel big, whereas the same amount buys only a fraction more than one share of American Tel and Tel, which is discouraging and makes a man feel small.

Furthermore, a penny stock only has to rise a penny to double in value AT&T has to go to around 160; and with the cunning of the ignorant, even penny stock investors seem to know that the rate of movement-up or down-is swifter among low priced stocks than high. And finally and this is the most insidious argument of all-the penny-stock buyer persuades himself that the amount of money he puts up isn't too important after all, he's riding a long shot.

What is wrong with all of this is that at no point does value enter into the calculation. Anyone who does not consider the worth of what he is buying is a gambler, not an investor. The sorry result is that a few bad gambles can sour an otherwise sane person on the true value of investment.

Beyond this, safety is largely a matter of sanity. There are many ways of examining a stock and of judging the time to buy it or sell it. All of them are available to the average investor. Learn them and use them. You will never get stuck with a poor stock masquerading as a safe one.

Hedging Against Inflation, one of the big arguments in favor of stocks bears on another aspect of safety. This is the fact that stocks may frequently act as a hedge against inflation.

Inflation, according to the classic definition, is the economic condition resulting in a rise in prices and a drop in the purchasing power of the dollar. In effect, goods are scarcer than money. Thus, through the operation of the forces of supply and demand, goods become more expensive. Dollars, relatively more plentiful, become cheaper-more of them are needed to buy this item or that.

In the United States, inflation has been at work for some time. It is not runaway inflation. Our productivity (goods) is managing to stay fairly well abreast of our prosperity (money). Still and all, since 1939 the Consumer's Price Index means of measuring the fluctuation in the prevailing prices of certain basic household commodities has jumped from 99.4 to 195.7, almost a 100 per cent rise. In the same period, the dollar's value has dwindled from 100 cents to 47.3 cents-value, of course, representing what the dollar will buy.

In a fluid situation like this, safety of investment takes on a new dimension. Many conventional ways to save through a savings account, an annuity, a Government bond held to maturity can practically guarantee safety of principal. You will always get out the same number of dollars you put in. But there is no assurance as to how much those dollars will buy.

Stocks cannot guarantee that the amount you have invested will be returned to you, safe and sound. But when dollars are plentiful and goods bring a fat price, it is possible that a company in whose earnings you have a share will be distributing dividend dollars more liberally.

So shares and the Forex have risks but if you are aware of them you can make sure you limit them.

If you invest in Forex or shares "paper trade" first and only use real money once you feel comfortable. With the Forex you can use good Forex software that is available to limit your losses. A good rule is worth mentioning: Never risk more than you can afford to lose.

Learn Forex Trading On-line

2007-11-27T21:29:00.000-08:00

It has been usually seen that the name of on-line share markets evokes interest in those who are unaware of the market policies but want to dabble in share market just in order to gain windfall gains.

This is not a healthy sign for the ignorant as trading in forex investments and reaping benefits thereof is a difficulty job that includes high level of stake. Thus, it is very important to learn forex currency trading online as ignorance can be a dangerous affair.

Forex trading is speculative in nature therefore it should be kept in mind on the part of the investor that he or she is prepared for the unforeseen circumstances. In order to facilitate the on-line brokerage, there are many on-line sites that help in providing the methods to learn forex currency trading on-line that can help in increasing the overall knowledge of the investor.

They help in providing brokerage tips to the budding investors so that they are able to understand the intricacies of the market and predict the nature of the stocks so that they can improve the profit making capacity on their part.

In order to learn forex currency trading on-line, there are many websites that provide on-line forex trading courses that can be handy in understanding the basic principles of market trade. It instructs about all the basic terms and technical languages used in the forex trade.

Once the user is well versed in the basics of on-line forex trading, he or she can approach the broker who will help him in opening the account and dabbling in shares and forex deals. This includes 24 hours open market which is facilitated by the Internet.

In this market, the trader can bet on the forex reserves and attain benefit form the share market. Thus, it is very important to learn forex currency trading on-line. Without its knowledge, one is at the constant risk of losing his hard earned income.

Finding The Best Time To Trade

2007-11-27T21:26:00.000-08:00

Trading in the worlds largest and the most liquid financial market is one of the best ways to earn money. Here, if you know how, when, and what to trade, you can be sure that you can earn huge amounts of profit. It is a fact that a lot of people who traded in this financial market became successful and became very rich almost overnight.

As a trader, you would want to grab the opportunity to earn lots of money and of course, start a trading career in Forex. The Forex market, as mentioned before, is the largest and the most liquid financial market in the world.

Unlike the stock market and other financial market, Forex has no centralized location as it operates 24 hours a day at different locations around the world. Trades in this financial market are done through an electronic network.

In the past, because of the high financial requirements, Forex was only limited to large multinational corporations and financial institutions, such as banks. However, because of the advancement of the communications technology and also the existence of high speed Internet, Forex in the late 90s is now available for everyone who is interested in trading in the Forex market.

Forex trading, for a beginner trader, is simply the buying and selling of different currencies of the world. This may seem simple enough for everyone, but you should also consider that a lot of inexperienced traders and some experienced traders have suffered huge financial losses in Forex.

You should always keep in mind that aside from the fact that Forex can give you a great money making potential, Forex also has equal risks. Therefore, before you enter this market and trade, you should first consider a few things in order for you be successful in this money making venture.

First of all, you have to know how to trade currencies. In Forex trading, all you need is a personal computer with an active Internet connection, a funded Forex account and a Forex trading system. There are numerous websites that offer Forex trading. In order to start trading, you have to open and fund an account first with your chosen website. After that, you can now start trading in the most liquid market in the world.

You need to have a fast Internet connection in order to keep up with the updates and price movements and prevent slippages from happening. Another thing you have to consider is that as much as possible, you should register in a Forex website that offer dummy accounts so that you can practice your skills and strategies in Forex trading.

Now that you know how to trade in the Forex market, the next thing you need to know is what to trade. The Forex market involved different currencies from all over the world. It is also traded in forms of currency pairs. Here are the different currency pairs that you should consider trading in the Forex market:

EUR/USD
USD/JPY
GBP/USD
USD/CHF
AUD/USD
USD/CAD
NZD/USD
EUR/GBP
EUR/JPY
GBP/JPY
CHF/JPY
GBP/CHF
EUR/AUD

These are the most commonly traded currency pairs in the Forex market. It is up to you to determine which currency pair you want to trade depending on market conditions. If you do it right, you can be sure that you can earn a substantial amount of income.

The next and last thing you should consider is when you have to trade in the Forex market. Since the Forex market is open 24 hours a day, you can trade whenever you like. And, since it is the most liquid, you can get out whenever you like. It is just a matter of knowing if the market condition is profitable or if it is falling.

Forex traders are mostly speculators who try to predict which currency is going to increase in value and which currency will decrease in value. Speculators use Forex charts to spot a trend and determine when a particular currency will increase or decrease in value.

Now that you know how to trade in the Forex market, you can now open a funded account and start trading currencies.

Always remember that in all trades done in the financial market, you should also expect to suffer from losses. You should be prepared to deal with it and accept it. This is why you need a substantial amount of money to trade in Forex.

Four Types of Stops

2007-11-27T21:07:00.000-08:00

Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.

1. Equity Stop

This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%.

One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.

2. Chart Stop

Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.

3. Volatility Stop

A more sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed.

One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.

4. Margin Stop

This is perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions.

This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires).

So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.

Money Management Styles

2007-11-27T21:00:00.000-08:00

Generally speaking, there are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses.

The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)

To a large extent, the method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.

For example, in EUR/USD, most traders would encounter a 3 pip spread equal to the cost of 3/100th of 1% of the underlying position. This cost will be uniform, in percentage terms, whether the trader wants to deal in 100-unit lots or one million-unit lots of the currency.

For example, if the trader wanted to use 10,000-unit lots, the spread would amount to $3, but for the same trade using only 100-unit lots, the spread would be a mere $0.03. Contrast that with the stock market where, for example, a commission on 100 shares or 1,000 shares of a $20 stock may be fixed at $40, making the effective cost of transaction 2% in the case of 100 shares, but only 0.2% in the case of 1,000 shares.

This type of variability makes it very hard for smaller traders in the equity market to scale into positions, as commissions heavily skew costs against them. However, FX traders have the benefit of uniform pricing and can practice any style of money management they choose without concern about variable transaction costs.

Forex Money Management

2007-11-27T20:14:00.000-08:00

Put two rookie traders in front of the screen, provide them with your best high-probability set-up, and for good measure, have each one take the opposite side of the trade. More than likely, both will wind up losing money. However, if you take two pros and have them trade in the opposite direction of each other, quite frequently both traders will wind up making money - despite the seeming contradiction of the premise. What's the difference? What is the most important factor separating the seasoned traders from the amateurs? The answer is money management.

Like dieting and working out, money management is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success.

The Big One

Although most traders are familiar with the figures above, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.

Most traders begin their trading career, whether consciously or subconsciously, visualizing "The Big One" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets.

Who can forget the time that George Soros "broke the Bank of England" by shorting the pound and walked away with a cool $1-billion profit in a single day? But the cold hard truth for most retail traders is that, instead of experiencing the "Big Win", most traders fall victim to just one "Big Loss" that can knock them out of the game forever.

Learning Tough Lessons

Traders can avoid this fate by controlling their risks through stop losses. In Jack Schwager's famous book "Market Wizards" (1989), day trader and trend follower Larry Hite offers this practical advice: "Never risk more than 1% of total equity on any trade. By only risking 1%, I am indifferent to any individual trade." This is a very good approach. A trader can be wrong 20 times in a row and still have 80% of his or her equity left.

The reality is that very few traders have the discipline to practice this method consistently. Not unlike a child who learns not to touch a hot stove only after being burned once or twice, most traders can only absorb the lessons of risk discipline through the harsh experience of monetary loss. This is the most important reason why traders should use only their speculative capital when first entering the forex market.

When novices ask how much money they should begin trading with, one seasoned trader says: "Choose a number that will not materially impact your life if you were to lose it completely. Now subdivide that number by five because your first few attempts at trading will most likely end up in blow out." This too is very sage advice, and it is well worth following for anyone considering trading FX.

Know Automated Forex Systems And Improve Your Bottom Line

2007-11-25T23:41:00.000-08:00

Forex trading (the buying and selling of one currency against another to capitalize on fluctuating currency values) never sleeps. With only very minor exceptions on the weekend, Forex trading is ongoing in some time zone, in some country of the world. There is no opening or closing bell on the Forex market.

Inherently, the Forex market is structured in a way that invites investing missteps and missed opportunities. Because markets are opening and closing continuously, changes to the market are occurring continuously, and unless you are a person that never, ever sleeps or eats, the potential for you to miss out (or worse, lose out) is ever present.

The only way to even the playing field in your favor is to use an automated Forex trading system to do your work for you. In fact, these systems are the very tools the pros use so that they never miss a currency trading beat.

Forex Automated Trading Systems Explained
Automated Forex trading systems are used to buy and sell on the Forex markets any time of the day; that means that you can still enjoy optimal Forex trading and get on with the rest of your life.

Automated Forex systems work according to your trading instructions. On your own, or with the help of a trading mentor, you set the parameters of your Forex trading program and instruct the system to move accordingly. The rules that you use to program your system, your trading instructions are signals to exact points of entry and exit into markets.

A number of parameters can be set within your automated Forex trading system. You can define price patterns, market trends (such as fading or counter trends, following trends, or breakout trends), price points, averages, technical indicators, price level proximity and such as your rules for trading.

The system will then use the parameters to create an algorithm that will work automatically on your behalf any time of the day or night, any day of the year in any market the world over.
Improve Forex Trading With Automated Forex Trading Systems

By now, no doubt you've noticed a theme; automated Forex Trading Systems manage your currency trading portfolio all the time. They trade exactly as you would if you were able to do nothing else but sit by your computer and manage trades all day and night long, all week and year long.

With a good automated Forex system, there is no worry that you will miss an important investment opportunity or bail out point overnight or while at work and there are no hounding phone calls at inopportune times from your broker who requires immediate instruction. This is the most crucial advantage of Forex trading with automated Forex trading systems, and the best reason to use one.

But the advantages of automated Forex trading systems are not limited to their "always on" capabilities. Automated Forex systems also take a lot of the human element-that element that is so oft responsible for lapses in heat of the moment judgments, out of the trading equation.

Automated Forex systems allow you to carefully examine your own trading style ahead of time and design the system that works the best for you. You can tailor your trading to your own risk tolerance levels, which are inputted into your system. In so doing, the responsibility for making pressured decisions on the spot in an ever changing market is removed.

Automated Forex systems take the stress and emotion out of currency trading decisions. Guesswork and room for interpretation are eliminated; fear and greed are eliminated; reliable, predictable progress is what remains; in the end, all you see is the results.

To sum it up, automated Forex trading systems take the least advantageous elements of the human side of trading out of the process, and replaces it with reliable, precise currency trading instruction. In a currency market that is always evolving, the only way to maximize results is to let this modern technology work for you.

Forex Trading Strategy, A 3 Step Method for Success

2007-11-25T23:35:00.000-08:00

Here we will outline a simple way to make money with a forex strategy anyone can learn and apply in a few days and it works. Let's look at this forex trading strategy in more detail.

First things first
The key to currency trading success is a simple robust method combined with discipline. If you don't understand how and why your method works you will NOT be able to apply it that's why you have to learn it yourself. Currency trading success comes from within.

Now how do you trade?

Methodology
The first point is you need a simple robust method simple systems work far better than complicated ones as there are fewer elements to break. The best system to use is a breakout system, based upon support and resistance and confirmed by momentum.

How should your system work ?

A Forex Trading System
Firstly, forget all about the idea of buying low or selling high it doesn't work in the real world of forex trading the best way to trade is to buy breakouts to new highs or lows. Most big trends start from these breakouts and the odds are in your favor. Trade breaks of valid resistance (the more test the better) and if possible in two different time frames spaced by weeks or months and the more periods the better.

When a break occurs you want to go with it. How do you decide?

You look at forex price momentum.
If you don't know about momentum indicators are, now is the time to start.
Get one or two you like we favor the RSI and stochastic and you can look them up in our other articles. If price momentum supports the move you are not guessing or hoping the move will continue you are trading the confirmation.

Stop is then below the breakout point.
That's nice and simple then and it is but breakout logic is timeless most traders want to wait for pullback but on the big moves they don't come and their left missing the move don't make the same mistake. If momentum supports the break execute your trading signal on your forex chart and go with it.

Money Management & Discipline
You are only trading valid breaks of support or resistance and these normally lead to big trends so you keep your stop back. Do not trail too soon. When you do, make sure you keep your stop outside of normal daily volatility.

This system is based upon breakout methodology which works and is easy to understand. You can also see why the bulk of traders don't do it.
You have to buy highs or sell a low which requires discipline but if you want to make money and you have confidence in your forex trading system, then you will do it. The fact is if you want to succeed remember this equation :

Robust simple system + Applied with discipline = forex success

You need both to come together in your forex trading strategy, to enjoy currency trading success. It may be simple but that doesn't mean it doesn't work it does. Furthermore, it should only take 30 minutes a day or less to apply and execute.

Forex traders constantly want to predict (this means hoping or guessing ) and lose, they also want to buy low or sell high but this is not possible and also if you do it, your not trading high odds trades. A simple breakout system, you understand and can apply with discipline works best.

Parallel and Inverse Analysis

2007-11-21T22:45:00.000-08:00

Very few spot forex traders conduct any form of parallel and inverse analysis of the major pairs and exotics to determine the best way to trade the forex on a day to day basis. Even though it would be nearly impossible to trade the forex successfully not knowing where the overall strength and weakness was in the spot forex across multiple pairs.

Lets look at some examples. Many people like to trade the GBP or USD they spend countless hours losing sleep waiting to trade this pair even when no trend or parallel inverse confirmation is available. Losses occur.

They could increase their odds dramatically by setting up some entry rules and examples like the ones shown below. Only buy the GBP or USD if the GBP or CHF and GBP or JPY are strengthening as well. This would be parallel confirmation on the GBP strengthening across the board.

Only buy the GBP or USD if the EUR or USD is strengthening and the USD or CHF is weakening. This would be confirming the entry with two other pairs and across the board weakness in the USD. In either situation you have confirmed the entry with at least two other pairs. Both of these entry rules would include a stop order, and you can enhance the rules further by examining the EUR or GBP for weakness. This is inverse confirmation.

But this is not what traders do. They want to trade the GBP or USD so badly that they ?manufacture? a trade, or the they want to use ? indicators?, or trade the news. This is a mistake and is equivalent to betting or gambling. There is no logic to support the entry, the forex works in a logical way. Lets look at some other examples. Lets say you prefer to hold carry trades and prefer to trade the GBP or JPY, you could set up rules for entry as follows:

Only buy the GBP or JPY if the GBP is strong across the board based on parallel and inverse pairs, or only enter the GBP and JPY if the GBP and USD and USD and JPY are both strengthening somewhat or a lot. In the second scenario the GBP or JPY will slingshot upward at a very fast pace.

Or another scenario is to only buy the GBP and JPY if the EUR and JPY, CHF and JPY and AUD and JPY are all strengthening as well, in this case the USD is not in the picture because of across the board weakness in the JPY. Either way you have confirmed the entry with other pairs.

Another example would be to buy the USD or CAD only if the EUR or CAD and AUD or CAD are also strengthening. Similar rules can be applied to any major or exotic pair and easily monitored upon entry. In the case of the three CAD pairs, if you also do a careful analysis of support and resistance, you can trade the pair with the most potential rather than just trading the USD or CAD.

But this is not what traders do, they get stuck trading the same pair and wind up justifying a trade when a trade is not there. These trade entries are not based on logic they are based on emotional needs. This leads to losses. The forex works in a very logical process and you must let the logic work for you. Stop looking at indicators and start looking at other pairs to support your entries, these are the best indicators available.

Across the board strength and weakness in groups of pairs occurs weekly in the forex. But if you search the Internet far and wide you will see that it is rarely and in fact never discussed by traders, analysts, and trade planning services charging hefty monthly fees. People are too busy looking at? indicators? and absolutely no discussion of the market forces governing the spot forex ever occurs.

It is very rare if nearly none existent for one forex pair to move strong without other pairs to confirm the move. This is true for any major or exotic pair. If you are? stuck? trading the same pairs while other pairs and exotics are making strong moves its time to look at all of the pairs every night then pick the best opportunities based on parallel and inverse analysis.

In order to trade the spot forex daily and weekly, you must analyze 15-20 pairs every day to determine the current market forces, this will lead to less entries, more logical entries, and better confirmation of entries when the movement starts. Parallel and inverse analysis is the logic behind the spot forex.

Forex Education

2007-11-21T22:33:00.000-08:00

Your forex education must help you answer the question below correctly. If you can't answer the question below then don't trade forex as you will lose.

What is your trading edge ( defined)?
A trading edge to clarify is something that will help you win, when 95% of traders lose and enable you to join the 5% of winners. Below we have listed some common beliefs which many forex traders hold that are NOT a trading edge and simply see traders lose.

I Follow an expert as he knows best. I have bought a trading system from a vendor with a simulated track record. Day trading is a great way to make money. I use a predictive scientific theory as markets are scientific. I Like to predict the big moves in advance. Buy low sell high is a great way to make money.
I don't have money management rules I just place a stop.
I have a lot of knowledge and learn more all the time to win.

If you hold any of the above beliefs you will lose.

So what should your trading edge consist of?
It doesn't really matter so long as you know what it is, you have confidence that it can make you money and is based on sound logic. It's personal to you but must be in line with the following equation.

Logical Forex Method + Understanding Logic = Confidence = Discipline to apply it = forex success.

Lets start with it must be logical and all the beliefs we listed above are myths and not logical. You must of course understand how your method works, not just follow a mentor or guru because if you don't understand your method, you won't have the confidence to follow it, with discipline, and if you cant followit with discipline you no method.

In the method itself, there must be an edge and it can be anything you like but you must understand how and why it goes you one. For example, my edge is hitting contrary trades at turning points. with four indicators combined I have confidence will work. Yours could be anything but so long as you know what it is then that all that matters.

Your edge is personal to you.
When acquiring your forex education, understand that method is only part of the equation for success. The really successful traders know that success is as much based upon understanding, confidence and discipline, as it is on the method used its an overall understanding your after.

Today, too many traders will not get the right forex education and take short cuts. They believe they can buy success from a guru or vendor for a few hundred dollars and of course lose.

Success comes from within.
If you learn forex trading the right way and focus on getting the right forex education, you can get an edge and you can win. The fact is everything about successful forex trading can be specifically learned, by those willing to put in the time and effort.

If you put in the time and effort, your forex education will be richly rewarded as you will be able to enjoy currency trading success and pile up huge long term profits.

The Perfect timing to sell your stocks

2007-11-21T22:07:00.000-08:00

While quite a bit of time and research goes into selecting stocks, it is often hard to know when to pull out – especially for first time investors. The good news is that if you have chosen your stocks carefully, you won’t need to pull out for a very long time, such as when you are ready to retire. But there are specific instances when you will need to sell your stocks before you have reached your financial goals.

You may think that the time to sell is when the stock value is about to drop – and you may even be advised by your broker to do this. But this isn’t necessarily the right course of action.

Stocks go up and down all the time, depending on the economy…and of course the economy depends on the stock market as well. This is why it is so hard to determine whether you should sell your stock or not. Stocks go down, but they also tend to go back up.

You have to do more research, and you have to keep up with the stability of the companies that you invest in. Changes in corporations have a profound impact on the value of the stock. For instance, a new CEO can affect the value of stock. A plummet in the industry can affect a stock. Many things – all combined – affect the value of stock. But there are really only three good reasons to sell a stock.

The first reason is having reached your financial goals. Once you’ve reached retirement, you may wish to sell your stocks and put your money in safer financial vehicles, such as a savings account.

This is a common practice for those who have invested for the purpose of financing their retirement. The second reason to sell a stock is if there are major changes in the business you are investing in that cause, or will cause, the value of the stock to drop, with little or no possibility of the value rising again. Ideally, you would sell your stock in this situation before the value starts to drop.

If the value of the stock spikes, this is the third reason you may want to sell. If your stock is valued at $100 per share today, but drastically rises to $200 per share next week, it is a great time to sell – especially if the outlook is that the value will drop back down to $100 per share soon. You would sell when the stock was worth $200 per share.

As a beginner, you definitely want to consult with a broker or a financial advisor before buying or selling stocks. They will work with you to help you make the right decisions to reach your financial goals.

Forex Trading Software, Which One To Choose?

2007-11-20T20:53:00.000-08:00

Forex Trading Software and Forex Trading Systems are programs designed by currency trading experts, which interpret data from the marketplace and favor low risk options which will have a greater chance in resulting in profit.

There has been some bad press, specifically on forex trading software, and there are certainly some scams to be aware of out there. This article will describe some quality forex trading products, which will more than likely see you achieve success in your currency trading sooner.

Forex Killer
This product is in my mind the leader of all forex trading software options. Forex Killer was created by Andreas Kirchberger, a veteran currency trader who used to work for Deutsche Bank. This product really performs, and has had quite a lot of promotion even on CNN. The software itself is extremely user friendly, with minimal options which is ideal for those lacking in currency trading experience.

It is highly compatible works with all trading platforms in all countries. You can set up a demo account, and experiment with the software without having to risk any of your own capital. At the core of the software are extremely accurate algorithms which predict market activity with great results.

Profitable Trend Forex System
Profitable trend forex system is the product of veteran trader John Chen. John has developed and utilised this system before releasing it to the public. Some users have been able to consistently generate 83-114-157 pips a week.

The key principles of John’s currency trading system is identifying the trend in the marketplace, and joining this trend with precise timing. This product would be better suited to people with some trading experience.

Forex Trading Machine
This product is the creation of Avi Frister, a veteran forex trader of over 11 years experience. The system is based on Price Driven Forex Trading (PDFT) which is a specific style of trading. At the core of the system is understanding key trends and when to exploit them for profit. Avi is extremely upfront in explaining his methods on his website.

5EMas Forex System
This forex trading system is the creation of Adam Burgoyne. The system is completely unique, and claims to never have been used by anyone else in currency trading. The key principles of the system are identifying a significant trend while it is beginning, and utilising low risk exit strategies to increase the likelihood of profit.

It is well worth doing the research if you are seeking the best forex trading software and forex trading systems. Make sure the product you are considering is reputable preferably some form of award, and a none conditional money back guarantee.

There are quite a few scams out there to be aware of, so be careful. Utilising quality forex trading software and systems will more than likely see you succeed faster in your currency trading ventures.

How to Read a Chart & Act Effectively

2007-11-20T20:23:00.000-08:00

Introduction

This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. Probably most of you have taken a course or studied the use of charts in the past. This should add to that knowledge.

Recommendation

There are several good charting packages available free. Netdania is what I use.

Using charts effectively

The default number of periods on these charts is 300. This is a good starting point;

Hourly chart that’s about 12 days of data.
15 minute chart its 3 days of data.
5-minute chart it’s slightly more than 24 hours of data.

You can create multiple "tabs" or "layouts" so that it’s easy to quickly switch between charts or sets of charts.

What to look at first

1. Glance at hourly chart to see the big picture. Note significant support and resistance levels within 2% of today’s opening rate.

2. Study the 15 minute chart in great detail noting the following:

Prevailing trend
Current price in relation to the 60 period simple moving average.
High and low since GMT 00:00
Tops and bottoms during full 3 day time period.

How to use the information gathered so far

1. Determine the big picture (for intraday trading).

Glancing at the hourly chart will give you the big picture – up or down. If it’s not clear immediately then you’re in a trading range. Lets assume the trend is down.

2. Determine if the 15 minute chart confirms the downtrend indicated by big picture:

Current price on 15-minute chart should be below 60 period moving average and the moving average line should be sloping down. If this is so then you have established the direction of the prevailing trend to be down.

There are always two trends – a prevailing (major) trend and a minor trend. The minor trend is a reversal of the main trend, which lasts for a short period of time. Minor trends are clearly spotted on 5-minute charts.

3. Determine the current trend (major or minor) from the 5 minute chart:

Current price on 5-minute chart is below 60 period moving average and the moving average line is sloping downward – major trend.

Current price on 5-minute chart is above 60 period moving average and the moving average line is sloping upward – minor trend.

How to trade the information gathered so far

At this point you know the following:

Direction of the prevailing trend.
Whether we are currently trading in the direction of the prevailing (major) trend or experiencing a minor trend (reaction to major trend).

Possible trade scenarios:

1) Lets assume prevailing (major) trend is down and we are in a minor up-trend. Strategy would be to sell when the current price on 5-minute chart falls below the 60 period moving average and the 60 period moving average line is sloping downward. Why? Because the prevailing trend is reasserting itself and the next move is likely to be down. Is there more we can do? Yes. Look for further confirmation. For example, if the minor trend had stalled for a while and the lows of the past half hour or hour are very close to the 5 minute moving average then selling just below the lows of the past half hour is a better place to enter the market then just below the moving average line.

2) Lets assume prevailing (major) trend is down and 5-minute chart confirms downtrend. Strategy would be to wait for a minor (up trend) trend to appear and reverse before entering the market. The reason for this is that the move is too “mature” at this point and a correction is likely. Since you trade with tight stops you will be stopped out on a reaction. Exception: If market trades through today’s low and/ or low of past three days (these levels will be apparent on the 15 minute chart) further quick downward price action is likely and a short position would be correct.

3) A better strategy assuming prevailing trend down, 5-minute chart down, and just above days lows is to BUY with a tight stop below the day’s low. Your risk is limited and defined and the technical condition (overdone?) is in your favor. Confirmation would be if today’s low was a bit higher than yesterday’s low and the price action indicated a very short-term trading range (1 minute chart) just above today’s low. The thinking here is that buyers are not waiting for a break of today’s or yesterday’s low to buy cheaper; they are concerned they may not see the level.

4) Generally speaking, the safest place to buy is after a sustained significant decline when the bottoms are getting higher. Preferably these bottoms will be hours apart. By the third or forth higher bottom it is clear a bottom is in place and an up-move is coming. As in the example above your risk is limited and defined – a low lower than the last low.

5) The reverse is true in major up-trends.

Other chart ideas

There are always two trends to consider – a major trend and a minor trend. The minor trend is a reversal of the major trend, which generally lasts for a short period of time.
Buying above old tops and selling below old bottoms can be excellent entry levels; assuming the move is not overly mature and a nearby reaction unlikely.
When a strong up move is occurring the market should make both higher tops and higher bottoms. The reverse is true for down moves- lower bottoms and lower tops.
Reactions (minor reversals) are smaller when a strong move is occurring. As the reactions begin to increase that is a clear warning signal that the move is losing momentum. When the last reaction exceeds the prior reaction you can assume the trend has changed, at least temporarily.
Higher bottoms always indicate strength, and an up move usually starts from the third or fourth higher bottom. Reverse this rule in a rising market; lower tops…
You will always make the most money by following the major trend although to say you will never trade against the trend means that you will miss a lot of opportunities to make big profits. The rule is: When you are trading against the trend wait until you have a definite indication of a selling or buying point near the top or bottom, where you can place a close stop loss order (risk small amount of capital). The profit target can be a short-term gain to nearby resistance or more.
Consider the normal or average daily range, average price change from open to high and average price change from open to low, in determining your intra-day price targets.
Do not overlook the fact that it requires time for a market to get ready at the bottom before it advances and for selling pressure to work it’s way through at top before a decline. Smaller loses and sideways trading are a sign the trend may be waning in a downtrend. Smaller gains and sideways trading in an up trend.
Fourth time at bottom or top is crucial; next phase of move will soon become clear… be ready.
Oftentimes, when an important support or resistance level is broken a quick move occurs followed by a reaction back to or slightly above support or below resistance. This is a great opportunity to play the break on the “rebound”. Your stop can be super tight. For example, EURUSD important resistance 1.0840 is broken and a quick move to 1.0860, followed by a decline to 1.0835. Buy with a 1.0820 stop. The move back down is natural and takes nothing away from the importance of the breakout. However, EURUSD should not decline significantly below the breakout (breakout 1.0840; EURUSD should not go below 1.0825.
After a prolonged up move when a top has been made there is usually a trading range, followed by a sharp decline. After that, a secondary reaction back near the old highs often occurs. This is because the market gets ahead of itself and a short squeeze occurs. Selling near the old top with a stop above the old top is the safest place to sell.
The third lower top is also a great place to sell.
The same is true in reverse for down moves.
Be careful not to buy near top or sell near bottom within trading ranges. Wait for breakaway (huge profit potential) or play the range.
Whether the market is very active or in a trading range, all indications are more accurate and trustworthier when the market is actively trading.

Limitations of charts

Scheduled economic announcements that are complete surprises render nearby short-term support and resistance levels meaningless because the basis (all available information) has changed significantly, requiring a price adjustment to reflect the new information. Other support and resistance levels within the normal daily trading range remain valid.

For example, on Friday the unemployment number missed the mark by roughly 120,000 jobs. That’s a huge disparity and rendered all nearby resistance levels in the EURUSD meaningless. However, resistance level 200 points or more from the day’s opening were still meaningful because they represented resistance to a big up move on a given day.

Understanding Spreads

2007-11-20T20:18:00.000-08:00

These days just about every forex broker claims to have the tightest spreads in the industry. But marketing-speak can be deceiving.

The topic of spreads in the forex spot market is surprisingly complex and often not well understood. Yet nothing affects your trading profitability more. In these pages, we bring some light to the topic after covering the basics.

What Is A Spread?

FIRST, spread is the difference between the ask price (the price you buy at) and the bid price (the price you sell at) quoted in pips. If the quote between EUR/USD at a given moment is 1.2222/4, then the spread is 2 pips. If the quote is 1.22225/40, then the spread is 1.5 pips.

SECOND, it is how brokers make money. Wider spreads result in a higher ask price and a lower bid price. As a consequence, you pay more when you buy and get less when you sell, making it more difficult to realize a profit

Brokers don't typically earn the full spread, especially when they hedge client positions. The spread compensates the market maker for taking on risk from the time it executes a client trade to when the broker's net exposure is hedged (possibly at a different price).

7 Favorite Tips for trading

2007-11-20T17:39:00.000-08:00

Currency trading training is not over when a trader finally sees the equity increasing in their account.

The Forex market is a very demanding environment and for a trader to maintain a success level, constant currency trading training is necessary.

The following 7 favorite tips can be used as timely reminders and need to be read and absorbed on a regular basis:

#1 - Take Responsibility

"The buck stops here." Don't blame the markets, or a host of other factors for a losing trade. You entered it for whatever reasons you had at the time. Take responsibility for it.

#2 - Use Each Losing Trade As A Stepping Stone

You lost a trade? Good. It will help you focus on a potential problem in your trading method. If after careful analysis you are satisfied you worked according to your plan, fine. Move on.

#3 - Never Become Impatient With The Market

New traders in the early stages of their currency trading training can be eaten alive by the market. During periods of consolidation with little liquidity the anxious impatient trader will force trading opportunities where there none.

Learn to accept the fact that around 70% of the time price will be in a consolidation channel.

#4 - Focus Daily On Improving Your Trading Skills

Currency trading training is an ongoing process. Day by day, step by step the trader improves. So rather than be preoccupied with profits and losses, concentrate on developing the skills. Your account will start to reflect your focus in time.

#5 - Be Pleased With Well Executed Trades Whatever The Outcome

Is this possible? Yes. You can feel well pleased even with a losing trade if you stuck to your methodology and executed the trade well. It is dangerous to feel good about a winning trade when you went against your trading method to achieve it. Your elation is likely to be short lived. Learn to execute the plan!

#6 - If In Doubt Stay Out

The feeling of regret can drain a person mentally and emotionally from entering a poorly considered trade. Once the trigger has been pulled and the trade starts going wrong, the agony of watching it inch towards your stop should renew in the trader the determination to stay out when in doubt!

#7 - Always Have A Good Reason

Currency trading training involves careful analysis of reasons for entering a trade. Just because price is high is not a reason to go short or long if price is low. Price will do what price wants to do so rather than trading from gut reaction, e.g. "Price can't go any higher (or lower)" learn to detach emotions and use pure technical analysis to establish a number of reasons why you should take a trade.

As currency trading training is a long term commitment, skills and disciplines learned can sometimes be forgotten as bad habits creep in.

It is necessary to constantly renew the thinking processes by repeating over and over the habits of successful traders.

Currency Trading Tips for Beginners

2007-11-19T18:18:00.000-08:00

Here we are going to give some currency tips for beginners who want to get involved in the exciting and potentially lucrative world of currency trading. Could you be successful at currency trading?

Firs things first.

You will see a lot of people telling you currency trading is easy don't believe them - its not and you wouldn't expect it to be with the rewards on offer.

The good news is - anyone can learn to trade currencies and have the potential for big gains just follow these tips.

Get Educated For FREE

The net has a wealth off forex education that's free and can give you all the basics you need to get started. You simply need to hunt around to get it but what should you be looking for?

The Best Way to Trade

Is using forex technical analysis and forex charts so learn about why it works and the various chart formations that repeat which you can trade for profit.

If you trade using forex charts, you will simply be following trends and trying to spot and lock into them for profit. They come around all the time and by following charts your not bothered about why they emerge you just want to lock into them when they do.

Forget News Sources

The news will simply make you lose, as your emotions will get involved.

Why?

Because news is simply stories or opinions and reflects the majority of currency traders, who end up losing remember - 95% lose!

So avoid the news and simply follow the reality of price on forex charts.

Forex Systems

There are plenty of forex e-books and systems on the net making outrageous claims using hypothetical track records and most are junk - avoid them.

There are some good ones and these generally focus on the reality of trading i.e. its not easy and their easy to find.

If you want to buy one go ahead - but make sure you get guarantee and you don't see claims that look to good to be true being made by the vendor - as they old saying goes, if they look to good to be true, they probably are.

Don't day trade

The biggest myth of currency trading is that day trading makes money - it doesn't and you will never find a day trading system with a long term track record of profits.

Either swing trade looking for moves of a few days to a week or so - or follow long term trends of weeks or months.

For novice traders swing trading is easier it requires less patience and trades come around more often.

Learn currency trading yourself and don't follow anyone else - this is really the key to currency trading success. The reason for this is simply - if you don't understand what you are doing, you wont have confidence to follow your system with discipline. when it hits a losing period ( and trust me they all do) you need to have discipline to follow your method or you have no method in the first place.

Trading looks easy but most traders fail as we said earlier the figure is 95%.

The reason most traders lose is they buy systems that are simply marketed on simulated track records that look to good to be true - they are and traders who follow them soon throw in the towel, when they hit a few losses - the bulk of them are in day trading, a graveyard for novice traders.

The best way to win is to do it yourself.

There is loads of free information to help you as we have said.

If you learn a simple system, based on technical analysis and can apply it with discipline, you are ahead of most novice traders!

Our currency tips for beginners above, will point you in the right direction to get started and in part 2 of this series, we will show you how to build a simple forex trading system for profit.

Forex - What is it?

2007-11-18T23:36:00.000-08:00

The international currency market Forex is a special kind of the world financial market. Trader’s purpose on the Forex to get profit as the result of foreign currencies purchase and sale. The exchange rates of all currencies being in the market turnover are permanently changing under the action of the demand and supply alteration.

The latter is a strong subject to the influence of any important for the human society event in the sphere of economy, politics and nature. Consequently current prices of foreign currencies evaluated for instance in the US dollars fluctuate towards its higher and lower meanings. Using these fluctuations in accordance with a known principle “buy cheaper – sell higher” traders obtain gains.

Forex is different in compare to all other sectors of the world financial system thanks to his heightened sensibility to a large and continuously changing number of factors, accessibility to all individual and corporative traders, exclusively high trade turnover which creates an ensured liquidity of traded currencies and the round - the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding markets abroad open.

Just as on any other market the trading on Forex, along with an exclusively high potential profitability, is essentially risk - bearing one. It is possible to gain a success on it only after a certain training including a familiarization with the structure and kinds of Forex, the principles of currencies price formation, the factors affecting prices alterations and trading risks levels, sources of the information necessary to account all those factors, techniques of the analysis and prediction of the market movements as well as with the trading tools and rules.

An important role in the process of the preparation for the trading on Forex belongs to the demotrading (that is to trade using a demo-account with some virtual money), which allows to testify all the theoretical knowledge and to obtain a required minimum of the trade experience not being subjected to a material damage.

A new perspective on the global FXmarket

2007-11-18T23:28:00.000-08:00

Global financial managers are taking a fresh look at the oldest and largest market in the world – foreign exchange – and discovering new ways to generate alpha, or expanded returns from their currency exposure. Increasingly, investment managers are paying closer attention to the risk in their portfolios, in particular the risk of currency fluctuations associated with their international investments.

A growing number of managers are viewing FX as a distinct asset class and realising that managing their currency exposure can improve their return on investment. Another trend is the use of FX derivative products as an alternative to the over-the-counter (OTC) market, especially by technologically savvy fund managers.

Electronic trading has changed the landscape of the global FX marketplace by bringing enhanced transparency, easily accessible liquidity and reduced transaction costs to the portfolio manager. Hedge funds, CTAs and currency overlay managers are discovering the value of transacting their FX business electronically, and it has forever changed the way buy side customers execute their daily currency trading.

To hedge or not to hedge?

The amount of capital invested with global money managers has exploded in recent years, with over $1,000bn under management, and with it has emerged the question of what to do about currency risk. While global portfolio managers can either choose to manage their currency exposure internally or outsource the management, they must decide whether to hedge currency risk entirely, partially, or not at all.

If you are a US fund manager with a portfolio that includes Japanese equities, for example, you have risk – in this case, yen risk. Money managers have begun to realise that they cannot ignore the currency exposure in their portfolio, and that decisions must be made in order to achieve the best possible return. The first step is acknowledging that you have currency risk that may affect your fund’s performance; the second is deciding what, if anything, you want to do about it.

The problem with doing nothing is that currency valuations clearly have an impact on returns. If an overlay manager has a longer term investment horizon, but happens to enter the market during a period of high volatility, their returns could either be greatly improved or adversely affected within specific time frames, even though at the end of the horizon the net return could be zero.

It may be that currency exposures do balance out over time, but that can be a difficult point to make to investors, especially if they’re unhappy about taking a hit on returns because the euro fell by 10 percent despite expectations that it would strengthen. Currency management can help preclude a mismatch of investment horizon versus the movement or fluctuation in the currency. Studies have demonstrated that actively managing currency risk can generate more consistent and less volatile returns and positively impact a portfolio. If managers don’t do it, they potentially have a problem.

Hedging strategies

Once the decision to actively manage currency risk is made, overlay managers must then decide what strategy is best for their portfolios. Most managers choose from one of three strategies: passive, active or dynamic management strategies.

Passive approach:
This approach utilises a fixed hedge ratio against a benchmark, either unhedged, fully hedged or partially hedged. For example, a manager may track performance by correlating CME S&P 500 futures, FTSE, and Nikkei 225 values against CME sterling and Japanese yen futures and track returns by monitoring the movement of the indices versus the return on the currency exposure. If the Nikkei increases 2 per cent and the yen falls 2 per cent, a manager who has fully hedged by selling CME Japanese yen futures has also successfully managed his yen overlay exposure. If he/she were not hedged or partially hedged, his returns would have been negatively impacted. A passive overlay approach is easy to implement, simple to monitor (CME FX futures are publicly listed), low in cost and does not necessarily require an overlay specialist.

Active approach:
An active currency overlay management approach can exploit short-term opportunities that a passive approach would miss. For example, overlay managers using an active approach could be more than 100 per cent hedged in a particular currency if they believe strongly that that currency will move sharply in a certain direction. In addition, overlay managers can use an active approach along with a passive approach, and can outsource some of the risk to additional managers, while maintaining a passive approach in-house.

Dynamic approach:
This approach utilises options pricing theory as an insurance policy to manage currency exposure. Among the benefits of this approach are the mitigation of cash flow problems, the lack of need to pay large upfront premiums and it reduces worry about adverse currency movement, since the option will only be exercised if it is in the money.

All three of the above strategies can be easily managed by using CME FX futures or options on futures products. In addition, overlay managers can execute their transactions anonymously 23 hours per day on the CME Globex electronic trading platform, monitor their positions in real time and reduce transaction costs dramatically compared to the OTC market.

Transparency, speed and liquidity

Transparency:
In contrast to the call around tradition of the OTC market, the electronic markets at CME are completely transparent. CME offers direct electronic access to all market participants on CME Globex for all products. While the bid/offer in the cash FX market is usually only accessible to large traders via prime brokerage platforms or other single platforms, CME traders can view hundreds of bids and offers and participate directly in establishing the going price of any trade in a central marketplace. Prices are not skewed to favour a dealer’s position as they may be in the OTC market, which factors unknown spread costs into the deals.

What you see is what you get. There are no hidden costs and the spreads are the same for all customers. Whether you are a fund manager, individual investor, or professional trader, CME offers equal access and the same liquidity for all traders. In addition, there are competitive fee structures in place at the CME to suit all customer segments.

Speed:
Quick execution has not been a focus of currency overlay managers, who typically trade long-term positions. But that point of view is changing. Overlay managers are increasingly adding high velocity strategies to their trading style to increase alpha, another reason for currency overlay managers to trade CME FX.

The speed of electronic execution at CME can help reduce slippage, lower costs and thereby improve returns, whether the goal is active currency management for return or passive management for hedging risks.

Liquidity is always a key issue for currency overlay managers, who may need, for example, to execute a trade for €100m at any time.

CME has the liquidity to handle €100m trades (800 contracts) easily, and it’s available for all to see on our web site – at www.cme.com/equivalents. E-quivalents is a free application that displays CME FX volume and prices in spot equivalent terms. There is nothing else out there quite like it.

CME E-quivalents enables viewers to see the top five bids and offers in real-time, basically around the clock, in spot market convention, which makes it easy to compare FX cash and futures prices.

The site also displays options quotes on European style euro and yen options, as well as forward rate quotes in six major currencies from ICAP, the world’s largest interdealer broker. Banks act as market-makers to provide liquidity around the clock for CME FX products.

CME’s euro futures prices regularly show a one-point bid/ask spread, and the average size of each bid and offer rivals the cash market in liquidity (see the screenshot above).

Alternative asset class

In addition to trading FX for currency overlay, financial managers are increasingly looking to FX as an alternative asset class and finding that it can add value to a diversified portfolio.

While the returns in currencies may not be as consistent as they can be in equities or in fixed income, profit opportunities are always available because of the continual fluctuations in currency rates. And, unlike equities, there are no bear markets in FX. When one currency is rising, the other is falling. Even if volatility is low, trading options can be a way to add alpha to a portfolio while the overall currency market trades sideways.

Many money managers also are attracted to FX as an asset class because they consider it a non-correlated asset. The long-term average of the correlation of the foreign exchange movements with the underlying equity exposure is close to zero1. This provides additional sources of return for money managers as it gives additional opportunities to generate alpha.

Growth of FX futures

Introduced by CME in 1972, FX futures were designed to help manage the risks of floating currency rates that resulted from the US abandonment of the gold standard in 1971. The CME FX futures marketplace has grown and changed significantly since then. In 2004 CME FX traded a notional value of $6200bn, accounting for about 5 percent of the global FX spot market. CME hosts the trading of more than 95 percent of all FX trades executed on US exchange, and is the largest regulated marketplace for FX trading in the world.

CME offers virtually 24-hour electronic trading on 16 currencies traded against the US dollar and 17 cross-rate products. The CME market appeals to a wide range of participants. American style options are offered on all the currencies, and European style options are available on the euro and Japanese yen. All CME FX options on futures can be traded electronically on the CME

Globex platform, and via open outcry on the CME trading floor. However, American style options are not available on CME Globex during regular trading hours, but can be executed via open outcry.

FX trading on the CME Globex electronic platform has grown spectacularly. About 90 per cent of FX volume at CME is now electronic. The efficiency, reliability and speed of our electronic ongoing provide opportunities for hedgers and alpha seekers alike. Fluctuations have offered ongoing opportunities.

CME FX can now also be traded on the Reuters Dealing 3000 platform, providing spot-equivalent prices with straight-through processing. CME FX quotes can be viewed by approximately 18,000 FX professionals worldwide, most of whom are interbank FX traders.

Additional advantages of FX futures

Costs: CME offers flexible, competitive pricing for a variety of different customer types. Trading fees for currency futures are comparable to OTC market prices, and in many cases, less.

Access: There are multiple providers of connectivity for trading access to CME. Customers who need a futures broker can consult a listing of brokers on the CME web site URL

Security: Counterparty risk is not a concern with CME futures, so customers do not have to worry about the performance of the other party to the trade. Through its clearing house, CME offers a system of unparalleled financial safeguards. The clearing house also matches, settles and guarantees all trades.

The basics of choosing a base currency

2007-11-18T23:23:00.000-08:00

Whether it’s for an investment account or for a portfolio held in a trust, your currency strategy should reflect your current and expected needs

Diversifying an investment portfolio into a variety of foreign markets is one of the cornerstones of investing success. Exposing your portfolio to potential gains in one market can help offset potential losses in another.

But when you invest in markets around the world, the currency in which your holdings are denominated can have a significant impact on portfolio returns. Fluctuations in exchange rates can reduce — or enhance — investment returns.

How do you decide which denomination to choose as the home currency for your investment portfolio or assets held in trust? Here are some guidelines.

Asset mix first

For most investors, currency considerations are secondary to deciding on a mix of assets — cash, equities, fixed income, and alternatives — appropriate for their risk tolerance and investment objectives.

“Investors should look at their portfolio first from an asset allocation standpoint,” says Michael Dejana, Chief Investment Officer for Royal Bank of Canada Global Private Banking. “Then consider currencies as a form of diversification. Do you want to restrict yourself to your home currency or expose yourself to the potential benefits of diversifying into investments in other markets? Many U.S.-dollar-based investors look to markets outside of the U.S. to diversify risk and boost potential returns. Or there may be a need to take into account a currency other than your base currency to begin planning for longer-term asset and liability matching.”

For example, suppose that you live in the U.K. and are planning to retire in 10 years to property you already own in the south of France . Your primary concern will be to find the asset mix best suited to your investment objectives.

Then, you can begin to consider the currency implications. If your portfolio is denominated in pounds sterling or U.S. dollars, the exchange rate when you need the funds will affect your purchasing power. You may prefer to diminish the currency effects by denominating a portion of your portfolio in the currency you will eventually need — in this case, euros.

Whose assets are they?

Similarly, the objective of a trust plays a key role in the selection of its currency. If a settlor who is a resident of France is placing assets into a trust for the benefit of his or her children who are living in the U.S. , then it may be desirable for the trust to have mostly U.S.-dollar-denominated assets.

“Who the assets are to benefit and where the beneficiaries intend to live long-term will ultimately determine how a trust records its assets,” says Tony Pitcher, Managing Director, Royal Bank of Canada Trust Company (International) Ltd. “It probably won’t change dramatically the nature of the assets you hold, but it will change the currency in which you record them.”

Time horizon

Because exchange rates tend to be highly volatile in the short term, investors need to keep in mind their time horizon when diversifying their holdings into other currencies.

For example, an income-oriented investor with a time horizon of less than three years may be uncomfortable with significant exposure outside his or her home currency.

“Currency forecasting is one of the most difficult investment analyses to get right consistently,” says Dejana. “To realize the higher potential rewards of investing outside your home currency, you need to have a high tolerance for risk and a longer time horizon.”

Why Forex Beats Stock and Commodity Markets

2007-11-18T22:53:00.000-08:00

It is basically fact that the forex market (Foreign Currency Exchange Market) consistently out performs the stock and commodity markets. This may be something you have heard before, and most likely assumed that was biased. There are however currently so many advantages with the forex market, that it is not hard to see the benefit of investing.

The forex market is truly a 24 hour market which never sleeps as the sun is setting in one part, the sun is coming up in another. Although the market has cycles peaks and troughs like any other market, it is not locked into the ‘bull vs bear’ mentality of the stock exchange. As forex is essentially the trading of one’s currency for another, this means when one currency is struggling another is profiting.

Further to this the market is not affected by rising interest rates as this has little bearing on the value of currency. In fact if anything rising interest rates tend to strengthen the currency, as opposed to the stock market in which it has a negative effect.

Currently the combined number of different stock issues on the NASDAQ and NYSE exchanges totals approximately 8000. This is a massive market place, and it takes considerable time and effort to accurately monitor the entire stock market. In Forex there are essentially 4 main currencies and 34 second tier currencies which drive the market place.

One does not need brokerage firms to make a profit in currency trading. Brokerage and commission fees are essentially non existent, and if anything analysts provide information on trends of the currency market, rather than dictating where it should be heading.

The forex market is the ideal platform for anyone seeking a more stable investment. When it is compared with the stock and commodity markets it is plain to see the benefits.

Get the Best Deal on The Loan

2007-11-18T22:16:00.000-08:00

Most of the people go through a phase when they run short of money at a time when they need it the most. Emergency requirements can crop up anytime. If you are well prepared to handle such a situation, you may not be in a problem. But, if you don’t have sufficient money, then you are in for trouble.

Getting a loan approved in a short period of time is the most difficult thing. The reason for this is the lengthy procedures lenders adopt while approving a loan. There are numerous factors they take into consideration before approving a loan. However, there is a way out of this situation. You can apply for a fast cash personal loan to seek instant solution for your problem.

These loans are approved very fast and are hassle free too. Read on more to find out how you can benefit by applying for this loan :

A fast personal loan can be availed by any kind of borrower.
You can do away with the lengthy procedures.
There is no credit check involved in this type of loan.
You can meet any of your personal needs like paying outstanding debts or medical bills, meet educational needs, etc.
You can meet your short term needs easily.
The loan can be paid back in easy monthly installments.

Best Personal Loan, The Best Loan Option Available
Do you think that getting a loan at a cheaper rate of interest and fast is a dream? If yes, then you are wrong. Now, you can get a loan approved fast. Yes, this is true! Apply now for a best personal loan with us to get maximum benefits. These loans enable you to save money while giving you the opportunity to meet your needs.

As compared to other lenders, you can avail these loans at a cheaper rate of interest. Not just that, you can even payback the loan over a longer period of time too. To draw maximum benefits, apply now for best personal loan with us.

Being a home owner, can be an advantage as you can get a loan fast. Lenders are more than willing to lend loans to borrowers who have some kind security to offer. A home owner can always pledge his home as collateral against the loan.

This collateral gives a kind of assurance to the lenders. In case of non payment of the loan, they can always claim the property. Moreover, it also helps a borrower to get the loan at a lower rate of interest. A borrower is free to make use of the loan for any purpose.

You can obtain these loans either the traditional way or the modern way. The traditional lenders are generally banks, etc. Personal bank loans are another great opportunity which can help you meet your personal needs fast.

These loans are given by the lender on the basis of the salary of the borrower. Moreover, the lender needs to furnish certain documents like his identity proof, salary receipt and similar other things. It is only after the verification that the bank approves the loan.

Going with the flow

2007-11-18T22:13:00.000-08:00

As global cross-border investment has grown, so too has the need to track currency flows, says Simon Derrick. He reports on how major banks are coming into their own by providing up-to-the-minute data on this activity.

Traditional explanations for currency movements – including the analysis of growth and interest rate differentials and purchasing power parity – have become increasingly inadequate over the years. This is largely because traditional valuation models have failed to keep up with the rapid growth in global capital markets and the associated rise in cross-border investment, particularly over the past decade.

As the importance of global investment has grown, it has now reached the point where it drives a significant proportion of all daily foreign exchange transactions. Meanwhile, international trade has also expanded over this period due to a globalisation phenomenon that has underpinned strong global growth.

However, due to the rise in cross- border investment flows, it is estimated that trade-related deals now account for less than 1 per cent of all currency transactions.

The major custodian banks are now coming to the fore as providers of data on these critical cross-border investment flows, based on their advantage in processing millions of transactions daily from large institutional investors.

A further advantage of using global custody data is that it does not suffer from long reporting lags, as is the case for data released by finance ministries and central banks. Consequently, custodian bank clients have access to extremely timely data that reflect the aggregate behaviour of institutional investors globally on a daily basis.

As one of the largest global providers of investor services, The Bank of New York (BNY) is uniquely positioned to follow a significant proportion of the world’s major cross-border investment flows. To this end, BNY has developed the world’s first internet-based interactive portfolio tool, the interactive Portfolio Flow Monitor (iPFM), based on the daily netcross-border activity within its global custody system.

The iPFM gives BNY customers the ability to chart net portfolio flows for a particular country or currency zone from one to 24 months, compare these aggregated flows with a selection of major currency pairs, fixed income and equity indices, and analyse the statistical relationships between them.

It would be wrong to suppose that simply having a clear picture of international investment flows allows an investor to predict currency movements with any degree of precision. Too many other factors come into play over time (central bank activity, mergers and acquisition flows, derivatives and model-related trading, changes in liquidity and so on) to make this a practicable proposition.

Nevertheless, portfolio flows do play a significant role in currency markets. By understanding how they have influenced currency prices in the recent past, and how in turn differing currency regimes have influenced them, investors can gain a greater insight into what may drive currency prices in the future.

Catching the Big Trends

2007-11-18T21:43:00.000-08:00

If you want catch the big profits then you need to follow the big trends and this means following the trends that last for weeks or months. These are the trends that reflect the underlying health of the currencies economy. Want to catch them?

If you want to catch the big trends you need to do the following

Establish the Main Trend
You don't do this from the daily chart you do it from the weekly chart - this will help you separate the wood from the trees and see the big picture. The its onto the daily chart to look for entry points.

Support and resistance
Simple trend lines that can help you establish trend lines are all you need to look for entry points for your forex trading signal. Look for areas which have been tested several times and are considered valid by the market if they give way a new trend is likely to develop.

Buy New Highs Sell New Lows
If you want to make money at forex trend following then you need to do this. Most new trends develop from market highs and lows so if you were thinking buy low and selling high was the way to make money, think again. You need to buy high and sell higher.

Confirm Confirm Confirm
You are not going to just buy a break you will use momentum oscillators to time your entry if you don't know what they are then you need to make them an essential part of your forex education.

We don't have time to discuss them in detail here simply check our other articles but two good ones to start with are the stochastic and the RSI. These are simple visual indicators that will tell you if price momentum supports the move or not. By using momentum oscillators, you are effectively getting the odds in your favour that the break is more likely to be valid and continue.

Place Your Stop and Hold it
Placing stops with breakouts is easy behind the breakout point - you then need to be patient and hold it here.

Run the profit
Many traders never catch big long term trends because they try so hard to avoid risk that they actually create it. If you move your stop to quickly normal reactions in the trend will simply stop you out.

Volatility moves prices takes your stop out and then the trend continues piling up huge profits and your not in.If you believe the break is valid then hold your stop back and trail it very slowly. When the trend changes you will miss a good chunk of the move but consider the fact that if you only got 50 - 60% of the major trends you would be very rich and you can see how this strategy will pay off.

So there you have it a simple way to trend follow in forex.
In essence its very simple will take you less than 30 minutes a day and can learned in about a week. All you need to do is use support and resistance and few confirming indicators and your all set. It takes discipline and patience to follow long term trends but it can be very financially rewarding. Try it and you will soon be enjoying currency trading success.

Forex Trading Psychology

2007-11-18T21:22:00.000-08:00

It's a fact that most traders lose because they don't have mental discipline and the reason for this is quite complex in that to have discipline you have to have certain traits that are not considered good in normal society but there essential in forex trading. Forex success is available to those traders who understand the following:

Robust Simple Method + Applied with Discipline = Forex Success.

Of course if you don't have the discipline to apply a method with discipline, you really have no method in the first place.

Consult an Expert, The first thing to understand is that discipline comes from confidence in what you are doing. If you don't understand how and why a forex trading system works you will ever have discipline PERIOD. To many traders follow gurus or mentors and expect their forex trading system to lead them to success yet most of the systems sold are junk or the logic is simply not understandable and the traders lacks the discipline to follow it as soon as it hits a few losses (and all trading systems do) they throw in the towel. If you take the time and trouble in your forex education to learn all the reasons why a system is likely to work then you can succeed. Today we are taught that the experts know best but in forex trading this is very often not true.
Isolate Yourself, In life no one likes to be on their own man is a pack animal and since stone age times we have grouped together for safety. In the forex markets thought follow and join the herd and you will lose your equity so stay isolated.
Make Your Own Rules, In life we are taught to obey rules and our lives are structured. In the forex market however we have to make our own rules up and live by them and this is hard for many traders, they simply cannot take responsibility for their actions. The market is an all powerful force and it moves as when it wishes where it wants to and finally only you can be wrong and it's always right. You either accept this and construct rules to live by or you fail.
Money is Not Important, Of course it is but in forex trading you have to treat money as if its not. If you don't your emotions will get involved and you will never be able to run profits and cut losses. Most traders run losses as they don't want to take a small lose and when they get a profit they get so excited they want to grab it before it gets away. Most traders snatch marginal profits whereas if they had held on and had the courage of their conviction they could have made a huge profit.
Profiting From Others Failure, Your on your own in trading and its dog eat dog and you make money from others failure it's as simple as that. Obtaining discipline is simply not easy and as you can see, many traits considered great in normal society need to be re thought. Of course anyone can adapt and trade with discipline in the forex markets it just depends on whether you are prepared to adopt a new mindset.

Deciding Whether To Use A Forecasting Formula

2007-11-14T19:29:00.000-08:00

The main vogue for formulas began in the late thirties, and was primarily a reaction to the market declines of 1929-32 and 1937-38. Naturally, the market analysts who first worked with formulas were more interested in building protection against declines than profiting from advances, and they understandably assumed that the severity of future drops in market prices could match these two earlier periods.

It is almost impossible to resist the temptation to forecast stock prices, and it is difficult for a formula investigator to know at any particular time whether he is making a forecast on the basis of available facts or whether he is allowing his optimism or pessimism of the moment to dominate his efforts.

In 1949, for example, one investigator wrote about the original Keystone plan whose weakness has turned out to be too low a secular growth rate more recent stock-price fluctuations gives us some cause to question the assumption that the trend will be as strongly upward in the future as it appears to have been over the entire period from 1897 to 1946. If this commentator had been writing either three years earlier or three years later, it is doubtful that he would have made such a criticism.1

Whether or not any particular investor should use a formula is, of course, a matter of individual judgment. Some formulas, such as the Genstein Plan, require a fair amount of calculation, and many people are unwilling to discipline themselves to set aside time to manage their investments.

At the high points of big bull markets, many investors are ready to scoff at formulas. It is true that any portfolio containing bonds is at a disadvantage during bull markets, but how many individual portfolios perform as well as the Dow-Jones during a bull market? Besides, who is to predict that the market will always be one big bull market after another?

A formula is powerless to take maximum advantage of a straight-up price rise, but the more normal pattern of stock prices is to undergo frequent periods of decline also. The “ideal formula timing plan,” as summed up by one authority “is not that which secures the greatest gain for a given assumed pattern of security-price fluctuations but one which achieves the greatest gain for a degree of risk appropriate to the circumstances of the investor.”

Undoubtedly, the prestige of formula investing is at its lowest ebb during periods of steadily rising prices, but after every decline a new revival of interest occurs, simultaneous with the discovery by many investors that they are not the analytical geniuses they had previously thought themselves to be.

In 1949, for example, formula investing had proved itself superior to the average investor’s judgment, and Business Week reported: “Despite the steep hills and valleys on market price charts, formula-investing during the past two decades would have produced far better results than those achieved by most individual money managers.”

Using formulas is a personal choice, but if you’re serious about investing, it’s something you should at least consider.

Emotions Kill Formulas

2007-11-14T18:47:00.000-08:00

Poor advice and erratic, emotional behavior result in stock market and investment losses, regardless of how good your advice was. Poor advice can come from friends, brokers or advisory services who just happen to get it wrong. Obviously, it is impossible to detect just how poor the advice is until it is too late, and guarding against it is virtually impossible — unless it is disregarded altogether.

Emotionalism is another matter. Carefully controlled classroom experiments in speculative behavior have shown that, even when relieved of paying commissions on numerous transactions and of the emotional involvement of handling real money, people tend to chalk up heavier losses than gains very much as they do in actual investing. Furthermore, the lack of correlation between speculative success and intelligence or professional investment experience, suggests that some set of as-yet-unknown emotional factor is at work.

Donald I. Rogers, Business and Financial editor of the New York Herald Tribune, quoted an unnamed broker to the effect that many investors lose money intentionally (on an unconscious level) in order to assuage deep feelings of guilt. Whether this is so, the fact is that few investors are really successful in the market. They tend to buy a stock on the crest of its rise, hold it while it goes down, and sell in disgust either before it recovers or when it rises barely enough to produce a slim profit.

There is no reliable method of finding out how successful individual investors are today. But if the Wendt study of investor experience in the thirties is any indication, we may assume that many of them have little reason to be satisfied with their results.

For those investors whose results are somewhat less than brilliant, formulas can supply an” answer, and probably can be said to “work,” by any reasonable standard. They most certainly help to protect the investor against the dangers of emotionalism, and offer a guide to action that can protect him from acting under the perhaps unwise impulse of the moment. Furthermore, they do not freeze him in an inflexible vise that prevents him from exercising his own judgment or irritates him through lack of action, but they do supply a measure of self-discipline. And if the formula is adhered to with some degree of tenacity, the investor’s results should be improved to a great extent.

While it is probably an exaggeration to assert that “any plan is better than no plan,” even a mediocre plan may produce better results than those attained by the average hit-or-miss investor, alternately subject to panic, agonies of indecision, impulsive action on ill-advised tips and a hundred other damaging influences.

The essential element for success in the use of a formula is consistent and unwavering application of its rules of operation. Once an investor selects a plan, he can expect satisfactory results only if he sticks reasonably close to it, no matter how bleak the short-term outlook may be. As will be seen, the route to an impressive record of profitable performance is littered with brief periods of relatively unfavorable action. But the simplicity of formulas, and their clear-cut indications for action, make them much more practical even under such adverse circumstances than most other investment techniques.

In short, formulas will not endow the investor with brains if he doesn’t already have them, but they do reduce the quantity of brains necessary to come out of the market with a profit. And remember to remain cool-headed at all times, as emotions will at the very least cloud one’s judgment.

Starting Your Constant-Ratio Plan

2007-11-14T18:37:00.000-08:00

Before beginning a constant-ratio plan, there are two decisions the investor must make. First, there is the problem of what ratio to adopt. Many times a 50-50 ratio is used, and in fact the plan is sometimes called the “equalizing” formula, because the stock and bond portions are “equalized” periodically.

But there is no reason to stick to the 50-50 ratio. Some conservative investors prefer a higher percentage of bonds, and the more venturesome choose a higher percentage of stocks. The investor who can afford the risk will still obtain some of the advantages of using the formula method even if he hikes the stock percentage to 75 percent, and will profit more in case the market heads upward. And the investor who decides to use a higher percentage of bonds will get the advantage of equity investments protected to some extent by his use of the formula method while maintaining a higher degree of safety because of the larger bond portion of his account.

Another problem to be met is the question of when to start the plan. As in the case of the constant-dollar method, the level of the market at which the plan is begun is of no small importance. The effect on final results will not be as great as in the constant-dollar method, since the constant-ratio plan is continually adjusting the amount of stocks held as the market shifts.

One study, comparing plans with various starting dates, points up the importance of this.8 A hypothetical fund started in 1935 shows a profit immediately, while an account begun in 1930 shows an immediate loss and takes about 15 years to move into a profit position.

Obviously, the investor can never be sure whether the market level at any particular time will turn out to be high or low, and there is no ready answer to the problem of the starting date. If the investor who wants to use a constant-ratio formula is to be expected to predict the future direction of the market, then the formula method is not as “automatic” as its supporters claim, and if he is capable of making such a prediction, he doesn’t need a formula.

One solution is to combine the constant ratio plan with a dollar averaging approach. Assuming a 50-50 stock-bond ratio has been decided on, 10 percent of the account can be invested in stocks immediately, say, with the account being treated as a 10-90 constant-ratio plan for the first year, after which time the account is adjusted to a 20 percent position in stocks. After another year, the account is adjusted again to a 30-70 proportion, and so on, until it reaches the 50-50 point, in four years.

This would not necessarily mean buying exactly the same dollar amount of stocks each time, since market fluctuations would inevitably change the percentages between adjustment points. Let us assume, for example, the investor starts with a $10,000 fund, and buys $1,000 of stocks and $9,000 of bonds. After a year, when he is ready to re-adjust, the market has gone up 10 percent, bringing the value of his stockholdings to $1,100, which makes his total account $10,100. He now adjusts to a 20 percent stock position, or $2,020 of stocks. Since he already holds $1,100 of stocks, he buys $920 more, leaving the bond account at $8,080.

The intervals and percentages used above are arbitrary, of course, and can easily be modified by the investor to suit his own preferences. This procedure is a solution — and a workable one — although it does delay putting one’s formula to good use for a time.

Forex Trading Tips

2007-11-14T18:35:00.000-08:00

At Easy-Forex?, we believe that proper training is essential to achieving trading success. Without the appropriate preparation and expertise, a trader's chances of succeeding are substantially reduced. Our free Forex training was created to teach our clients a strategy to day-trade currencies. Traders that use a strategy, or system to trade, tremendously increase their probability of success as Forex traders. Easy-Forex? offers the following Forex Training resources:

This book as well as other Easy-Forex? books;
A Guided Tour on the Easy-Forex? website;
Information (?Info-Center?) on the Easy-Forex? website;
Technical analysis;
Fundamental analysis;
Access to charts, news, outlooks and research, once a trader has registered with the system;
Free, live 1-on-1 training online;
And finally, you can start trading ? and learning ? for as little as USD 25. This is your best actual training, and we recommend you view it as such, ?playing small? while you learn the market step-by-step.

Easy-Forex? not only advises you to start with a small amount of money, but makes the first step easy for you. However, before you start:

Carefully read the Terms and Conditions
We strongly advise that you read the Disclaimers and the Risk Warning
Remember: Forex is a risky business!

It should not take more that a few trades to familiarize yourself with the Easy-Forex? Trading Platform. Ideally, you will start by making a few smaller trades in order to become familiar with the market and the platform. Only then should you consider making larger trades.