Saturday, October 24, 2009

Forex Trading

Foreign exchange trading is possibly one of the most active occupations of today, so that is why anyone who wants to go into this line of business must be as lively and as driven as possible.

This is because the spirit of the business is continually vigorous. For example, if Tokyo is having their sleep time, New York is on its normal demanding day.

Forex trading is not just about making proceeds as most young entrepreneurs would deem. It may not be that easy if you don’t understand the total picture. You may be exceedingly good in math but not in financial vocabulary. You may well be a very good hotel manager but you lack the expertise in worldwide economics. Initially, one may not be as rapid as the ones who are already into the industry, but when you have learned the ins and goings of it, you may find yourself enjoying it and profit much from it. Or, profit first and then benefit from the rest.

Due to the strain of this work, forex training has become all the more critical. Being a thriving trader in forex,means you have to to put some investment into training and development so as to understand the business, improving yourself with it and creating fresh strategies. As with any other business, forex trading requires investment and training and should at all times be on your priority list. Some folks may have entered into the business but failed it big in the end. Why? It is for a lot of reasons but statistically, it is mostly because of lack of knowledge.

One has to be constantly updated by indicators that have an effect on this trade industry. Factors that shape forex market would include social, political and economic situations and policies of a country. This should be tackled all through forex trainings to be able to understand certain behaviours. It does look difficult but that is what forex is all about. This is also the main reason why it is perilous to depend on inside information like trading stocks.

A number of businessmen judge themselves already superior and may even act repulsive and prideful about going into trainings. But the reality is everybody learns something different each day. With this ever-changing planet it is no longer prudent to stick to only one idea alone. For example, in opening new markets, one should understand the cultures and whatever existing systems the group has. This comprehension should be integrated into the working plan.

World trends like globalization is varying the normal ways of businesses. over are the days of finishing trouble-free objective deals because any person can write his or her own rules nowadays. Like power, this liberty should be used sensibly. Though the business may seem like a survival of the fittest, it is really impossible to last exclusive of somebodys assistance. While it is crucial to be aggressive, it takes continual practice to perfect tactfulness on this character.

Training is not only about learning financial jargon and technical terms but it also teaches how to grow to be a agile and quick to recover businessman in these modern times. The Foreign Exchange Market known as FOREX Market or Currency Exchange Market is the largest market in the world in terms of finances and trades.

It is where world banks, financial institutions and governments post trades for foreign currencies. The currency exchange is open twenty four hours a day, 7 days each week, unlike in the Stock Exchange Market. Before, only great banks and financial institutions had entrance to the Forex Market but thanks to the development of the Internet, all day traders now have a door to the foreign exchange market.

The earnings one can accumulate in trading currencies can interest lots of people but investing in the Foreign Exchange market can be risky since it is the most volatile market out there. To ensure you invest your funds properly and safely to the Foreign Exchange Market, there are a number of things you will need to take into account:

KNOWLEDGE IS POWER: Learn the common terms that are used in FOREX trading like pip, margin, leverage etc. You can learn this by seeking out and consulting a dependable broker. Do some extensive research before turning over your assets to any person, even if it is your broker. Search for a broker who does not battle against his clients and who offers a flexible margin and is always on hand anytime of the day.

One more way is to read Forex Books or Forex eBooks. You can seek these in bookstores or you could download an eBook from the internet. Read one book at a time so that you could take in more information compared to reading a lot of books all at the same time.

Lastly, go to trading seminars or Forex Trading courses. This is usually offered by some brokers who had been successful in their trades. Just remember not to over spend paying for such courses. Choose the appropriate one that you think will profit you the most.

FOREX PLATFORM: Download a trading platform which is programming used to calculate current market trends employing tools and charts. It will assist you to get information like the current exchange rate of currency pairs. You will find Forex trading platforms on the internet but keep in mind to download those platforms made by highly esteemed brokers in particular if there is a fee for downloading.

FOREX MINI ACCOUNT: Open a Forex mini account to get you going in trading online in the Forex Market. This is an account for beginning traders to the Forex market that do not have the cash to begin a standard account. A Forex mini account can be open with a tiny amount of money.

STAY UPDATED: Remain updated on current affairs. Read broadsheets and business magazines. Watch the cable news channels for business news. Factors that can shape the changes in the currency market are the rise and fall of interest rates of banks, importing/exporting of a country and political/economic factors.

BE FLEXIBLE: Adjust your sleeping patterns seeing as the currency market is open 24/7. You have to be up to date and on hand to trade at any time since you do not know what may happen to your investment since the Forex market can change at anytime.

Sunday, September 27, 2009

Forex Trading Philosophy

Keen on starting Forex trading? Why would you not be: Many beginning Forex traders are captivated by the allure of easy money. Forex websites offer 'risk-free' trading, 'high returns' and 'low investment' — these claims have a grain of truth in them, but the reality of Forex is a bit more complex. As with anything in life, what you put in will determine what you get out.

There are two common mistakes that many beginner traders make — trading without a strategy and letting emotions rule their decisions. After opening a Forex account it may be tempting to dive right in and start trading. Watching the movements of EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don't enter the market immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.

This kind of undisciplined approach to Forex is guaranteed to lose you money, and have you waste your time. Forex traders need to have a rational trading strategy and not allow emotions to rule their trading decisions.

The two emotions prevalent in the above example is greed (entering the market immediately) and fear (selling when the market temporarily moves against you). Investing and these two emotions do not gel at all. Keep them out of your trading and you will see results.

To make rational trading decisions the Forex trader must be well-educated in market movements. He must be able to apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.

The first step in becoming a successful Forex trader is to understand the market and the forces behind it. Who trades Forex and why? Who is successful and why are they successful? This knowledge will allow you to identify successful trading strategies and use them as models for your own.

There are 5 major groups of investors who participate in Forex — Governments, Banks, Corporations, Investment Funds, and traders. Each group has varying objectives, but the one thing that all the groups (except traders) have in common is external control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading decisions. Individual traders, on the other hand, are accountable only to themselves.

If you do not keep yourself in check, nobody else will. Why should they worry if you aimlessly waste your money?

This means that the trader who lacks rules and guidelines is playing a losing game. Large organizations and educated traders approach the Forex with strategies, and if you hope to succeed as a Forex trader you must play by the same rules. That is studying these strategies and rules before starting to trade is so important.

Forex Trading Philosophy — Money Management

Money management is part and parcel of any trading strategy. Besides knowing which currencies to trade and recognizing entry and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan. Position size, margin, recent profits and losses, and contingency plans all need to be considered before entering the market.

This may sound like Greek now! If it does, you have more reason to get to know these terms. Knowledge will empower you on any investment market, including Forex.

There are various strategies for approaching money management. Many of them rely on the calculation of core equity. Core equity is your starting balance minus the money used in open positions. If the starting balance is $10,000 and you have $1000 in open positions your core equity is $9000.

When entering a position try to limit risk to 1% to 3% of each trade. This means that if you are trading a standard Forex lot of $100,000 you should limit your risk to $1000 to $3000 — preferably $1000. You do this by placing a stop loss order 100 pips (when 1 pip = $10) above or below your entry position.

As your core equity rises or falls you can adjust the dollar amount of your risk. With a starting balance of $10,000 and one open position your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and you should limit your risk to $900. Risk in a third position should be limited to $800.

By the same principal you can also raise your risk level as your core equity rises. If you have been trading successfully and made a $5000 profit, your core equity is now $15,000. You could raise your risk to $1500 per transaction. Alternatively, you could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized profits ($5,000 on a $100,000 lot) for greater profit potential.

How to Take Control in Forex Trading

Forex Trading is not that easy, all FX traders before they enter this business, they think that they will be rich very quickly and make $20 000 in one or two weeks, but when they begin trading currencies they discover it is not true, it is not easy to make money especially when we work with money. Very tricky business, many of us think that there is a conspiracy planned by "THE BIG GUYS", they know what we think what we plan to do and they do the opposite to steel our money, many times we think to make the opposite of our decision (if I see the market is going up then I will sell). And we begin searching for someone to help us making at least 200 or 300 pips a month, probably many of us work with signals advisors who simply took our money and probably do not help us making decent profit. Many of us thought stop trading many of us quit FX trading but I think most of us will not quit easily because we see in it a golden opportunity to have our own business and make our fortune!

Foreign exchange is an opportunity to make a fortune and in same time it is an opportunity to loose our money, we can make a fortune if we knew how to handle Forex, if we don't know how to control Forex it will destroy us, so we must be stronger than it, and if we don't know how to control it with our own hands it will destroy us too. So how I can be stronger than this ferocious beast? It is simply by learning, observing, and practicing. The FX market will not go anywhere it will be trending and ranging for ever, so learn from experienced traders how they became that good, observe charts and look for common points look for the reason why the price change direction, and when you discover the reason which influence a currency you will have in your hand the first tool that gives you control. And each new thing you discover, try it on a demo account, see if it is valid and develop it. In this Forex article I am helping you to find your way, this Forex article does not give you the fish but it teaches you fishing. There is no conspiracy theory in this business, no big or small guys, we loose because we don't know, and the first thing we must do to become good traders is to admit that we don't know and we must always learn.

In this Forex Article I will give some clues and I will leave you learn, observe and practice.

First of all you must know that you must use fundamental and technical analysis in conjunction, both complete each others, so don't rely on one and leave the other. Fundamental is one of the reasons which influence the market, so if you are in a long trade and suddenly the trading currency went down so go and see if a report was released and see what its forecast and what was the released data and compare this data to your chart and you will have your first tool to control your business.

Second, in my opinion all the technical indicators didn't help me at all, I tried all the combinations nothing work, and indicators describe the status of the market but don't give you information about the next direction. I read a Forex article about a guy who describes his Forex Trading strategy in a Forex article, I was completely lost, he uses a combination of 12 indicators EMA340, SEMA890, EMA2900 etc: and he inserted FIBONACCI in it. I was totally lost. Even if his strategy worth 95% success I will not use it because I can control the market by using simpler techniques. So we don't need to seek indicators, only one indicator I use the Bollinger Bands which is the perfect weapon in my battle against Forex trading. So I want you to look at the Bollinger Bands and see how it affects a currency, focus on it and read well this Forex article and you will discover a lot of things, and you will have your second tool.

Third, suppose you are in a long trade and suddenly for no reason the Forex Trading price went down, there are no released reports it just turned down, this is weird. But weird things are those we don't understand, but if you observe your chart and go back several hours or days and drop a break line from higher swing points you will see that the price turns down because it reached that break line, you see there is no mystery. So this break line will be your Resistance and if price breaks it, it will continue going up, but going where and till when? Observe very carefully and you will learn as I did. And no need for midnight or afternoon candles, be simple as you can, that beast is not as ferocious as you think. So breakout is your third tool.

Fourth, what timeframe to use, it is up to you to choose the suitable timeframe, H1, H4, D1: I don't know, compare the charts and you will see the suitable timeframe. Timeframe is important and when you find it you will have your Fourth tool.

And that's it, I repeat observe your charts and focus and think in these clues in this Forex article and the more you think the more you discover, read Forex article, learn strategies and get foreign exchange books.

I do good profit from my Forex trading strategy because I program it, I gave my system the data and leave it do his job. This eliminates the fear factor and gave me more time to go out and have fun.

I hope this Forex Article gave some tips and techniques which help traders in their Foreign Exchange trades.