Losing money in forex?
Every one has his days when no matter how well he has planned out his trades, he may find some of his trades not performing to what is planned. It is only natural for one to feel upset, but for the follower of a forex trading system, making money or losing money from that trade is not the paramount objective.
Why is this so?
For the trader who employs a forex trading system, he can still face the losing trade with a smile, because he has had followed through the trading signals in a disciplined way, and it is only when a trader follows a system, he can be sure of keeping his losses small and to live to trade again another day.
By using a forex trading system, the trader can have a cool head, and can face his trades rather unemotionally. He can execute his trades following pre-determined price levels of initial stop loss, trailing loss and computed and projected price profit.
He knows his tolerable level of loss, his threshold of pain - and of course, his risk to reward ratio even before he trades.
Now when a trader has a trading system and follows through the trading plan, making profits is a natural result when he makes a correct trade. But when his trade is wrong, his forex trading system will very quickly show him that the direction of his trade is wrong, so that he is out of the game fairly quickly.
I am often flabbergasted at some very broad claims of some traders who condemn day trading systems and relegate them to the garbage bin. When you look at forex trading systems, review them quickly by peer recommendation whenever possible. By peer recommendation, I mean you can ask existing traders their experience on the trading system, and how they are doing with it. Posting to the numerous reliable trading forums will allow you to receive some independent reviews fairly quickly. At the same time, my personal experience, and that of many other professional traders is that day trading can be profitable, though it is never easy to day trade. Otherwise, how is it that so many day traders are able to earn their income day trading the short swings of the market daily for a living? So it is important for you to have a broad view of forex trading systems if you are contemplating of learning or purchasing any trading system that relates to day trading.
If you ever wish to trade successfully, whether you day trade or swing trade, it is important that you have a trading system that will allow you to approach trading in a disciplined manner. It is only when you are a disciplined trader that you can see consistent large gains and small losses.
Saturday, October 3, 2009
Trend Following System - Building a System For Triple Digit Annual Gain
Forex markets trend long term, they always have and they always will as long as we have a free market and the big trends which reflect the underlying economic cycle can last for many weeks, months or even years. If you learn to trend follow correctly you can make huge long term profits in around 30 minutes a day...
Many traders like to trade the market noise and trade short term but this is doomed to failure, as all short term volatility is random. If you trade the big trends you get better odds, more profits and spend less time on your trading. Lets look at trend following in more detail.
If you want to succeed at Forex trend following, you should keep the key points in mind below when formulating your Forex trading strategy.
Simple and Robust
The best trend following systems are simple and it's a fact that in Forex simple systems work better than complex ones, as they have fewer elements to break than complex ones. A graphic example of this is the free one we have on this site which has only one rule yet, test it and you will see how much money it makes. A Successful trend following system can be based on just looking at support and resistance and have a few indictors to confirm your view and that will work just fine.
Use Breakouts
All big trends start and continue from breakouts to new market highs or lows so if you are considering trend following, breakout methodology should be used in your Trading strategy. Breakouts are simple to understand and simply trade the reality of price change and trading breakouts is a highs odds way of trading Forex.
Trade Infrequently
I know traders that trade maybe once or twice a month and make triple digit gains and that's because they focus on the best high odds trades. You get nothing for effort in Forex trading, you're judged purely on results and if you are patient and wait for the best set ups you will increase your odds of success and reduce your work rate
Acceptance of Short Term Volatility
If you are tend following in Forex you are after trends that last for weeks, months or even years and you have to accept that you cannot predict tops or bottoms, you always have to give a bit back at the end of a trend and you also have to accept short term drawdown in equity against you as you follow the trend.
Long term trend following, requires patience and discipline but if you caught just 60% of every major trend, you would make a lot of money.
About the Author
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Choosing the Best Professional Forex Brokers
If you are thinking of getting in touch with USA forex brokers, there are some important factors you need to consider. It's actually not that tough to find one considering there are lots of these professionals out in the market today. The real challenge however is finding someone who can really bring you results and assure that you are going to get quality services out of your investment. Bear in mind that forex brokers' rates vary accordingly and they may turn out to be a bit pricey.
The reason why it is important to hire a forex broker that specifically trades in the US dollar currency is that it gives you exposure to experiential and technical aspects. The US currency is one of the most widely used trading money in the market today. It's like the base where other currencies peg their rates at so when the US dollar fluctuates, it tends to change the course of the trading market as well. Liquidity is something that you must expect when it comes to the trading game.
Here are some important points you might need to consider when it comes to choosing among USA forex brokers.
1. Is the forex broker duly regulated? - The US bank and its related financial agencies have a say on the players in the forex market. Therefore it is important that you get in touch with these types of people. The great thing about using forex brokers who are regulated is that they are quite meticulous with their process. They need to do this because aside from liaising with you and their business spread partners, they also need to submit their financial standing and reports to regulating authorities. This way, you are assured that you are getting in touch with reliable people with a solid reputation.
2. Be the one to specify your trading platform - Although forex brokers are known to employ their own trading platforms, it would still be best if you are the one who will be giving directions for this system. Your trading platform should depend on the amount of time you can devote on the project and your work system. There are many different kinds of trading systems which you can use. You can either choose to have your trading run on autopilot, you may want to purchase a licensed trading software, or simply log online to an open source trading network. If you are not yet familiar with these things then you can also ask the expertise of forex brokers to help you choose the platform that would suit you best.
3. Trading methods used - Aside from the trading platform being used, you should also delve deeper into the specifics of the trading methods being used by your preferred forex broker. Here is where things such as spread, funds safety, and fractional trading would come into picture. All of these key ingredients to facilitate your forex business.
Do not let yourself be overwhelmed with having plenty of choices for USA forex brokers. Make sure you trim them down to qualified individuals whom you feel comfortable to work with.
About the Author
Finally, here's a website to give you an unfair advantage over other traders and always keep you on top of the forex market: Online Forex News Trading.
10 factors to consider when choosing a forex broker
There are a number factors to consider when you choose a Forex broker and to help you do so here is a list of 10 of the key factors you should consider when you select a Forex Broker that will suite you.
1. Reputation This may seem like an obvious place to start but surprisingly this is quite often overlooked in people's quest for profits. A simple place to start is to check out several Forex forums to see what other traders have said about their experiences with brokers and this will help you to get a good idea of the general user experience as well as details about the level of service and support you are likely to get from particular brokers and probably most importantly, payments.
2. Foundation and legitimacy Most Forex brokerages are usually either associated with or are part of a bank or large financial organization but with the rising number of online Forex brokers there are a number of checks concerning their foundation that should be made. Brokerages that are associated with large financial organizations or banks are not only backed up by funds from their Forex trading but also have other income streams and investments which means they don't have all their eggs in one financial basket. Having fund insurance against fraud or bankruptcy is good to have as this means you aren't relying just on being paid from their backup investments which might otherwise mean a longer wait for your money should they be experiencing any financial difficulties. Are they registered with the appropriate regulatory organizations? Legitimate Forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC) Note: It is also worthwhile checking out any parent company's website for any financial information that can assure you that your funds are covered and secure.
3. Execution Quite simply this is how they conduct their business. There are two main business models that Forex brokers use, Electronic Communication Network, (ECN), and Market Maker. The ECN model is one where a Forex Broker provides a marketplace for Market Makers, traders and banks to enter their competing bids and offers into this trading platform and have them filled by liquidity providers. All trades made in this environment are made in the name of the ECN broker which means that your trades are all performed completely anonymously. The Market Maker model provides pricing and liquidity for a particular currency pair and then stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of whatever your trade is and has the option of either holding that position fully or to partially offset it with other market traders in order to manage their aggregate exposure to their clients. Other aspects of the Forex brokers' execution of their business are: Do they use automatic execution for trades? If they do not have this as part of their model then how fast is their average order execution? How much are you allowed to trade without having to request a quote? Do they offset client trades?
4. Trading Platforms Forex trading is a rapidly moving environment and it pays to have a home computer that can keep up with the processing involved because time lag could mean you are not trading on the latest figures. If your current computer is not as up to date as you would like it to be and you are not in a position to bring it up to a faster processing specification or replace it with a faster workstation, then it is worth considering only using Forex Brokers that operate the ECN platform because this software requires less processing power to run at full speed as it is simpler software Some Forex brokers have restrictions on the number of currency pairs you can trade so check how many of these you are allowed to trade. Get used to the trading platforms and the features they have, such as one click trading, mobile trading, orders types and other features. The best way to do this is to sign up for a Demo account as these use the same software you would use with a live trading account. These accounts are free and if you are considering several Forex brokers then why not try them out with a demo account to see which one you prefer?
5. Account Size If you are starting out you aren't going to go gungo-ho and open large live trading accounts that have high minimum trades, but having said that you might want to increase your amounts later and so need some flexibility. Ascertain what the minimum trade size is as well as whether or not you can adjust the standard lot traded. Unsurprisingly the minimum account opening balance a broker requires is important in deciding which broker to use. It is also very worth checking whether or not unused equity will earn you interest.
6. Spread The spread is the difference between the ask price (the price you buy currency at) and the bid price (the price you sell it at). These are quoted in pips. An example of this is: If you are trading the currency pair US dollars and Euros you might see a spread like this, 1.2700/05, the spread is the difference between 1.2700 and 1.2705, or 5 pips. In order to make the most from your trades you need to know the brokers spread so find out if they use a fixed or variable spread? How tight is the spread? Is the spread larger for small accounts?
Note: Fixed or variable? This choice depends on your trading pattern. If you make trades only or mostly influenced by news announcements--when markets tend to be volatile--you might be better off with fixed spreads. Although this is only if the quality of execution is good. Some brokers have different spreads for different clients. Clients with larger accounts or that make larger trades can receive tighter spreads. Clients that are referred by an introducing broker might receive wider spreads so as to cover the costs of the referral. Other brokers though might offer everyone the same spread regardless of whom they are or the size of their account. It can be difficult to determine a company's spread policy so the best way to find out is to try various brokers, or talk to other traders who have, and of course check out the forums.
7. Slippage Slippage is the time between when your order is placed and the transaction is completed, so find out how much slippage can be expected for fast and normal moving markets.
8. Commissions This is probably the simplest thing to find out. Check your prospective Forex broker's commissions to see if they are built into the spread, as with most Market Makers, or if they charge a separate commission.
9. Margin The margin is the amount of deposit required to either open or maintain a trade position. Margins are either "free" or "used". A used margin is the amount which is being used to maintain a position that is open, and a free margin is the amount that is available to open a new trade position. Check what the broker's margin requirement is. Is this margin the same for both standard and mini accounts? Does the margin change for different currency groups or change for different days of the week?
10. Rollover Policy Rolling over will either accrue you interest or cost you interest depending on whether you bought a currency with a higher interest rate or sold a currency with a higher interest rate. Check the broker's conditions or requirements regarding earning rollover interest. There may be a minimum margin requirement before can earn interest on overnight positions so make sure you know your position. visit www.forexandoil.blogspot.com for daily forex signal and powerful trading system
About the Author
A veteran forex trader who have trained a lot of succesful traders all over the world.visit www.forexandoil.blogspot.com for daily forex signal and powerful trading system
The Forex Trading Basics
The Forex Trading Basics
Trading is probably as old as mankind itself. It's been there since man learned that he could trade his extra stone knife and five arrow heads for somebody else's nice warm fur blanket. These days we call it bartering, but it's the same process.
And these days we've gotten more sophisticated with our trading. Now we use something called money to stand in for the blankets and the knives, but we're still trading our ability to work and produce something useful in exchange for somebody else's goods that we want.
But now, trading is not only about goods or services, it has grown into something much more than that.
Now we're trading one region's money for another region's money because we've learned that their relative values can vary, sometimes significantly. The first enterprising souls to notice this were the world's first currency traders, taking their profits from the buying and selling of actual banknotes and coins.
But today the whole process has been formalized into what we call the Foreign Exchange (or Forex) market. And it has attracted a lot of action. Up to $3 trillion a day worth of action, in fact.
Forex trading simply involves the buying and/or selling of different foreign currencies in the global market. Many investors today don't consider it enough to have a portfolio stuffed only with bonds, mutual funds and stocks.
One of the strongest appeals of the Forex market is its 24-hour open door. On the world clock, a trading day starts in Sydney, Australia and steps from time zone to time zone around the world until it reaches New York city, the last market to open each day. And it does this five days a week, closing only on the weekend.
Almost every country has its own currency, but on the Forex market, it's mostly the so-called "major" currencies that are traded. These currencies are highly regarded because their issuing countries are politically and economically more stable than most other currencies (most of the time).
The major currencies that are traded in the FX market are the Euro, the British Pound, the Japanese Yen and the Swiss Franc, as well as the dollars of Canada, Australia and the USA.
Most people, when they first learn of Forex trading, find it all a bit strange. Typically, money is used to buy goods and services, not other types of money. However, it's not really all that hard to understand. Just think of traveling to another country. Once you arrive, you go to a currency exchange or a bank and trade your dollars or Euros to buy ringits or yen. Then when you return home, you do the same in reverse. Sometimes the value has changed between the two exchanges, and you make a small profit or lose a bit.
Well, that's exactly what a Forex trader does, but he does it much more often, and usually with much larger sums of money. Also, he's not doing it because of travel but because he believes he foresees a coming shift in the exchange rate. In other words, he sees an opportunity to make a profit and seizes it. If he knows what he's doing, the profits can be both big and consistent.
So how do you get into the Forex market?
It's surprisingly easy to enter, although it's not quite as easy to rack up steady profits.
You'll need a computer and fast Internet connection. You'll also need seed money to cover your first trades. Minimum deposit requirements vary, but considering the opportunities available, even the higher entry fees are surprisingly low.
You can choose from among many software programs available for logging in to your account and placing your trades. The software also allows you to receive alerts on market conditions, rates, and other important information. The more sophisticated software can recommend when to buy or sell.
Forex trading can be an exciting way to make money, but when done in the wrong way, it can get very expensive. Learning what you're doing before you start trading is crucial. Do your research and your due diligence. Learn what the business is about. Set up a dummy account with a broker and do lots of paper trades so that you fully understand the entire process. Stay with this long enough to become comfortable.
In addition, read comments and advice from other traders... many other traders. It's important to have a strong grasp of the strategies you'll need day-in and day-out. This is a business, and it's important that you treat it with the respect that a sophisticated, highly profitable business deserves.
This mindset of professionalism and responsibility are fundamental to any success you expect to build. Without such a mindset, you're nothing but another gambler and you'll lose more than you win.
Forex trading is more risky than stocks and bonds. But it also holds out the promise of much higher returns. Lightning can strike within seconds or minutes sometimes.
Don't ever forget, ordinary mortals can take part in Forex trading. Just because 98% of all trading is done by huge financial institutions and multinationals, don't think there won't be any "left-overs" for you. People from all walks of life are involved in that other 2% of Forex trading. Consider - just 2% of Forex's daily $3 trillion volume leaves some very large chunks of opportunity up for grabs.
When you go looking for a system or strategy to guide your trades, don't just seize the first one you find. Do your homework. Take advantage of free trial versions of software. Look for customer testimonials. And after carefully considering all the factors involved, you can choose a system for your trading.
Another important factor - check out the brokers and choose one who can effectively help you devise a trading strategy that fits your goals and your personality.
If you truly want to make it big in the Forex market, use all available resources to learn your new business well. The average newcomer to Forex trading is impatient and wants to go straight to the "good stuff." Their impatience assures they'll never get to the good stuff and instead suffer mainly losses and disappointment.
Be determined. Be disciplined. Take the long-term view always. This will instantly set you apart from the losers. Once you have a good, solid knowledge of Forex trading basics, coupled with a well-tested strategy, you have a much better than average chance of making consistent profits in currency trading. After all, isn't that exactly what you're aiming for?
About the Author
Next, get Max Conner's FREE 15-Day Forex mini course - Get your fast headstart at http://www.ForexTradingNewbie.com today.
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