Forex Trade 24×5

Most traders think forex money management is just placing a stop and it’s much more than that. Good money management can turn a losing system into a winner and mediocre system into one that makes triple digit gains. If you want to win long term at forex trading, you need to defend what you have and keep losses small. As the old saying goes – to win you need to bet and you can’t bet if you’re not at the table! Obvious but true. Most traders pay very little attention to money management – but it’s the cornerstone of your forex trading strategy’s success, so let’s look at some tips you can incorporate in your forex trading strategy and become a winner. Leverage The first point to keep in mind is don’t use all the leverage your broker gives you. They will in many instances give you up to 400:1 and it’s tempting to use it all however, if you do you will blow your account out the water. A good leverage is maybe 10 – 20:1. Trading Frequency Cut your trading frequency back. Most novice traders simply trade too much and take low odds trades. The good opportunities don’t come around often and you need to be patient and wait for them. I know traders who trade less than 20 times a year and make triple digit annual gains so – trade only when high odds trades present themselves. Deciding Bet Size How much should you risk on one trade? Common wisdom often says 2% but for a small account this risk is so small it means 20 on 1,000 account. Well you won’t make much money doing that! Risk 10 – 20% of your account equity on any single trade. Forex trading is all about taking calculated risks at the right time and making meaningful bets – if you don’t like risk don’t trade forex. Diversification If you have a small account and a good trade and you think can make big profits, don’t dilute its potential. Diversification is not guaranteed to reduce risk and in most instances dilutes gains. Always Assume the Worst Many traders think their risk reward is their stop minus their profit objective – but that’s a trader’s opinion nothing more. When entering a trade always assume the worst eventuality and from there, things can only get better! The Biggest Mistake of Novice Traders!In money management placing a stop is normally easy, where most traders go wrong is the way they trail it. Most traders get so excited when they get a profit, they don’t want to let it get away and they immediately move their stop up to close and get stopped out on a normal counter trend swing. The market then immediately goes back the way they thought and makes thousands and their not in! To make the really big profits, you must accept drawdown in the short term in your open equity, to bank the big profits. Look at any forex chart and you will see that the big trends last weeks, months or in some instances years and you need to hold them as long as possible. A good way to do this is a key moving average and we like the 40 day MA, then look for trend line support or resistance just below it. It’s far enough back to keep you in the trend but close enough to protect you. Forex money management is all about taking calculated risks at the right time. It’s a fact that most traders try so hard to avoid risk, they take too little which guarantees they lose. The above money management tips if used correctly will balance the risk reward just right and lead you to triple digit gains.

Contrary to popular belief – it is very possible to win on the forex trading market day in and day out. I am so tired of hearing people get negative about trading. Heck, there is more liquidity and better leverage on the forex market than any other market in the world, period! This is truly the land of opportunity and in order to lay claim to big money each and every day, all you have to do is stay disciplined and not get greedy. Sound easy enough? OK, there is one thing missing of course: A proven and effective trading strategy. Problem solved, read below for more information.

The Best Forex Trading Strategy

This is not rocket science although far too many traders try to make it so. Winning on a daily basis is doable but you have to have a plan. Here is mine and it is proven to. Use two good and effective forex trading indicators to confirm a trading signal generated from a quality software program.

I like to use the Relative Strength indicator (RSI) and I gauge the forex market to be oversold or overbought depending on whether the 0 to 100 range the market or currency is at.

I then look to the 200 day moving average as this instrument tells me where the big institutions are and what they are going to do next. I am concerned about this because as the big money goes so goes the currency. If a currency is trading over the 200 day moving average then I feel better about going long. If it is under the 200 day moving average then I feel better about going short.

The most important part of the strategy is having good software for trading signals. The technical indicators previously mentioned should be confirming the move. I have included a couple of links to a review site that looks at the 3 best forex trading software on the market.

Get an Objective Review of the Most Popular Forex Trading Software Programs. Forex Trading System Review is the place to visit.

The Forex market has understandably become one of the most attractive and popular financial markets in the world. Operating around the clock via a decentralized network of central banks, investment institutions, hedge funds, and similar institutions, the Forex market allows traders to speculate on the movement of currency exchange rates. Players of the Forex tend to like these features most:
· Round the clock action-the Forex market constantly adjusts and is open 24 hours per day between Sunday and Friday afternoon.
· Less problems with gap down (when price starts out lower than its previous ending price due to factors that occurred when the markets were closed)
· Huge leverage (can get 1:100 margins)
· High volume
· Live trading (most traders are connected to the Forex market via an Internet platform that provides them with real time exchange rates)
· Commission-free trades (but most brokers tend to get the difference between bid and ask price which tends to equal 3 to 5 tenths of a penny on most transactions)
While all of these are very attractive characteristics for any investor, the truth is that there are a lot of people who find themselves on the wrong side of a trend and suddenly in trouble because they try using day trading as an investment strategy. Day trading essentially boils down to making a series of short, small trades in hopes of making a quick profit. A rich idea with often a poor outcome.
People can and do make very good money trading on the Forex market but the most common trait of successful investors is the use of a proven investment strategy, patience, and using pre-determined stops after making certain to do your homework. The ability to understand the emergence and direction of trends through analysis is a common trait in successful Forex traders.
Because day trading often involves multiple transactions made in rapid succession in order to make a profit, it is very hard to properly analyze the day’s events and your charts. Day traders are more prone to fear-basic panic selling and other decisions that lose money and lower profitability.
Day trading is also not a good idea with the Forex market because transactions are almost always conducted at the very limit of the margins (typically 1/100, or $1,000 is all most investors have in a given Forex transaction of $100,000, or one lot of currency). Because of this, even small fluctuations in the wrong direction can and often do spell disaster for day traders.
Indeed, there are day traders out there claiming to make a good living trading Forex and they no doubt exist-but they are rare. The volatile nature of the market, the lack of information, and the extensive use of margins in Forex all combine and make day trading possibly a bad investment strategy-period.

The 2 x forex mistakes we will look at here are made by the vast majority of new traders and they simply guarantee you will lose so here they are and make sure you avoid them or you will join them… Trading a Forex Robot with a Simulated Track Record The bulk of traders don’t even bother learning forex they simply buy a forex robot from a vendor and believe the hype they can get rich with them. They see the track record and think they will do as well in real life but what they don’t realize is the system doesn’t have a real track record – it’s simulated! This means it’s never been traded and made up using past data. Most forex robots are junk and it is unbelievable that people who are sensible in other areas of life fall for them and the exaggerated claims they put forward but they do and it’s a huge proportion of new traders. If you want to make money don’t believe spending $100 on a piece of software and knowing nothing will help you win it won’t. Using Short Term Trading for Profit Most traders who want to trade forex don’t pick sensible time periods and go for forex swing trading or long term trend following but go for short term trading strategies such as day trading and scalping and these don’t work! Why? It’s pretty obvious that all daily price action is of a random nature so you can’t use daily levels and the idea that you can tell what a vast diverse of traders is going to do in a few hours is naïve. You can’t and while it may look low risk it’s a very high risk form of trading, as you will never get the odds on your side. HOW TO WIN If you want to win at forex trading forget following others and forget forex trading strategies that are destined to lose and get the right forex education. Anyone can learn to trade forex but you need to put in some effort and learn logical ways to trade and get a method you can apply with discipline – do this and you will be well rewarded for your efforts and can enjoy currency trading success.

Can you succeed at Forex Trading? Have you got the mental profile required to do the job it in the vicious, sometimes sky high, other times mine-shaft depression low world of FX Trading? OK this may sound like a coaches motivational rant, but having the right psychology WILL influence your profits – So before you lose your savings read this and ask yourself – Is this me? Or should I stay with regular shares?

There are many aspects of Forex trading that are outside the investor’s control.

Forex market players number in the millions – traders from the world’s banks, governments and private people – just like you. Unlike shares, even the biggest traders have a minute effect on exchange rates.

Even when setting interest rates and other actions that influence inflation, the largest governments can have no immediate impact on exchanges. The Forex markets are simply too large – $2 trillion daily – for any one player to dominate the action.

Trading strategies, which are essential, can increase the odds of making profits and help minimize or avoid losses. They give the knowledgeable trader that tiny edge that can make the difference between winning and losing on a given trade, or over time.

But before looking at market influences, and even before developing a set of technical strategies that help guide trading choices, the novice Forex investor has to honestly and objectively examine his or her own attitudes.

Currency trading is very fast, complex and needs a well considered strategy. That game plan has to be executed with nerve and skill. Trading successfully in a demo account for several weeks is essential but can lead to unwarranted confidence. Traders who invest Monopoly money will often take chances, leading to successful trades, that they wouldn’t dream of taking with real money.

Real trading requires answering honestly a number of questions that can be difficult to answer objectively when the subject is the self-same trader asking them. What are your financial trading goals? Looking for a quick buck? Seek elsewhere. You will have losses that wipe them out. Looking for secure, low-risk capital accumulation? Try AAA bonds instead.

Currency trading can be a stimulating mental game and an exhilarating adventure at the same time. The thrill of victory! The despair of (temporary) defeat! The mastery of the intricacies of Fibonacci, Parabolic SAR, Stochastic Oscillators and Doji Stars. All this, and much more, is part of Forex investing.

As a result, you have to be very honest with yourself and decide how (and whether) you are prepared to deal with the fear and pressure. Even professional traders do not have any certain system of ensuring profits and avoiding losses.

The pressure of deciding when to buy and when to sell is many times larger than in stock trading. The fear of loss is greater, in part because of the amplification provided by 100:1 or larger leverage.

Even winning can be problematic. With practice and persistence, provided you don’t quit too soon or run out of money too quickly, you will have periods when it all seems laughingly easy. That can lead to euphoria, which is great. But it can also lead to cockiness, which is fatal. Nothing will wipe out a trader quicker than arrogance. Confidence is essential, vanity is suicidal.

The other side of the coin to be avoided is too much second guessing. Successful trading requires bold moves based on sound judgment and confidence. Every decision is a small leap of faith, since no one can know in advance for certain what the outcome will be. Probability of one degree or another is the best that can be achieved.

All this will be accompanied by the fear of loss of capital, which often leads to panic selling in the face of what would have been a temporary price movement. From such panics are depressions made, both psychological and economic.

Forex is a roller coaster ride. But if you have a good inner ear and a strong stomach, bolstered by the brain of a statistician and the nerves of a pro billiards player, you will be well suited to end the ride with full pockets.

Using the British Pound’s July 24th chart taken at 9:30pm CET, the forex trading strategy taken from its short side is illustrated in a step-by-step manner showing exactly how the trade was executed using signals from the forex market as well as a number of indicators in trade that is focused on the bearish side despite overly bullish market sentiments. This trade came off with profits, but this still does not mean that this same stance can yield the same results every time. Successful strategies simply trade the odds and try to be right more times than being wrong.

The charts showed the British Pound to have extremely bullish forecasts at that time with speculators piling into it with greed for profits. The CFTC Net Traders Positions show that speculators are trading at record longs with an 80% bullish indicator. In this scenario, it is clear that a correction in the market is impending. The only thing left to do is to time the market properly. In the forex trading market, timing is everything. There is no way to predict the exact time when a currency is going to move a certain way. This is where momentum indicators come in. With a good free chart service such as those provided in futuresource.com, you can analyze the charts using the Relative Strength Index and stochastic indicators.

The charts will show that the RSI is at bullish extreme and has double topped. While this shows a tapering of the momentum, it does not necessarily signal going short. It is the stochastic that shows a short position to be a profitable trade. Seeing the crossing of the two lines in a bearish convergence triggered an execution of the trading signal. With the odds in favor of the trade, prospects of profits remain to be in upward movement.

Trading with momentum can work for any forex trader who balances trades with low risks and high rewards. Again, there is absolutely no way to predict how the forex market will move so never duped into putting money into ebooks that promise success in the forex market. You can actually set up your own forex trading system that you can trust and understand to be logical.

If you read a lot of material on the net you would be forgiven for thinking forex trading is “a walk in the park” but if you are serious about getting the right forex education you will realize this is not the case and you wouldn’t expect it to be with the rewards on offer. You can however enjoy currency trading success, if you understand the following.

The reason most forex traders lose is simple they fail to understand that success is based upon these key traits.

Taking Responsibility

Most novice traders buy junk systems that promise them riches beyond their wildest dreams all for $100.00. They are either naive stupid or both.

Most systems sold on the net are junk and come with a made up, simulated track record done in hindsight which vendors tells you to follow yet, the reason there is no real time track record is the vendor knows it doesn’t work.

If you want to make money with your forex trading strategy, understand you’re on your own and success rests on your shoulders and if you don’t like this feeling, do something else and forget currency markets.

Now the Good News!

If you have a desire to succeed and a willingness to learn and you’re eager to control your own financial destiny here are some other key points you need to understand to separate yourself out from the majority of losers.

Work Smart Not Hard

The effort you put into currency trading has no bearing on the amount of money you make. Forget working hard work smart and learn currency trading the right way – if you do this you will be able to up and trading in around two weeks and commit about 30 minutes a day, to your forex trading strategy.

There are a lot of currency trading myths out there – but if you hunt around the net for the right info you can avoid them – here are the most common ones traders fall for:

- Day trading makes money

- You can predict markets in advance

- Buy low sell high is a great way to make money

- I don’t have a money management strategy I just place a stop

- I like to trade the news, as its expert opinion

If you believe any of the above, you will lose – so you need to get the right forex education and avoid myths.

If you work smart, the next thing you need to do is take on a few character traits that would make you an outcast in normal society – but could make you a big winner in currency trading.

Essential Character Traits

To trade you need to have inner understanding of yourself and your trading method and this leads to confidence which leads to the all important trait of discipline.

- Trade in isolation don’t give or seek advice

- Don’t listen to the news

- Trade the reality of what you see on a forex chart

- Maintain discipline and focus on the facts only

In normal society being a loner and isolating yourself is frowned upon but in the forex markets it’s the only way to stay disciplined.

You must not get sucked into the herd mentality, man is pack animal and has sought the safety of the pack since stone age times, it helped man survive but in the forex markets the bulk lose – so you need to step to one side.

If you want to win, you are going to find yourself trading the exact way to the normal logic of the markets, it can be lonely – but will help you enjoy currency trading success and remember only a small minority win!

So there you have it – how to get the right forex education and the mindset you need for currency trading success.

What forex education should you learn you may well ask?

Well were going to look at that in part 2 of this article series.

Foreign exchange trading, more commonly known as forex trading, refers to the act of trading the different currencies of the world. With its roots dating back to 1970s, foreign exchange trading caters to the Forex market. This market started with the introduction of floating currencies and free exchange rates and has grown to become the biggest market in the world, trading in more than USD1.5 trillion in a single day.
An investor’s goal in forex trading is to generate profit from the movement of foreign currency and is typically done in currency pairs. When trading foreign currencies, you should always remember to trade only if you expect the value of the currency you are investing in or buying to increase. If the currency you bought increases in value, you must then simply sell the other currency so as to gain a profit. An open trade, also referred to as an open position, is a type of trade where in a trader has bought or sold a certain currency pair but is still yet to sell or buy back its equivalent amount.
It is estimated that about 70% to 90% of the foreign exchange market is speculative. This means that the individual or institution that has sold or bought the currency has no definite plan of taking a delivery of the currency; instead, these traders are exclusively speculating on that specific currency’s movement.
If you are new to this domain, you might find yourself at a loss once you have decided to take on the foreign exchange market. Firstly, you should know that the forex trading provides its investors more chances to earn and generate profit as compared to the stock market. Money moves relatively faster in forex trading which prevents any single investor from affecting the market price too much. Trading also opens and closes within seconds – something not possible in the stock market. Here are a few tips on how to get started on forex trading.
To begin trading, you will need to create a Forex account. This can be done by filling in an application form and signing the margin agreement which allows the broker to step in at any point in time. You will then have to come up with a trading strategy that works for you. Different traders use different strategies, and no one strategy is guaranteed to work for everyone. So, do not just copy a trading strategy from a successful investor, instead, find the right style for yourself.
Study and understand the trends and movement of prices. You may also opt to study historical trends to gain a deeper understanding of the movement of the prices of currency. Getting familiar with the top five currency pairs is also important. These currency pairs are USD/Yen, Euro/Yen, Pound/USD, Swiss franc/USD, and the Euro/USD.
Now that you have a bit of insight into the world of forex trading, you should get in there and start churning in your profits.

If you want to trade and win and Forex, you can get all the information you need for free to build a Forex trading strategy for success. Let’s look at where to get the best free Forex education… Let’s first of all tell you the places that you shouldn’t even consider!Forex forums are waste of time, only losers hang around them dispensing their so called wisdom, to make them feel better as they can’t trade. Another group are the Forex robot affiliates, telling you the route to success is a $100 trading system! Avoid Forums. Broker research is another source of information you should pass by; if brokers made money, they wouldn’t be brokers. Most of the research is designed to open accounts, so it reflects the majority view and that of course is wrong. Also don’t bother with e-books that ask for email address before giving you anything most of the information is common sense. Now let’s look at the good sources and the first thing you need to do is to learn Forex technical analysis, as it’s the simplest and most time efficient way to trade. Simply type in the phrase and you can learn all about it and you should also learn specifically about, over support and resistance, overbought and oversold and breakout trading, as an understanding of this infomration is the basis of any succesful Forex trading strategy. Next find a good chart service, there are plenty of free ones and look through the indicators offered and learn them. There are numerous ones but any trader should learn these: Bollinger Bands, the Stochastic, the RSI, ADX and moving averages. You will then have the basis of a simple, robust, Forex trading strategy you can enjoy currency trading success with.

A fatal mistake made by many novice Forex traders is they think they need to predict where prices will go to win in there Forex trading strategy. You don’t have to predict to win and if you try predicting you will lose – let’s examine why in more detail.

If you are predicting the future you are simply hoping or guessing – know one knows what will happen.

Let’s look at a common example in currency trading.

A trader sees a support level and wants to buy a dip into support so he waits for the price to dip to the level and executes his trading signal.

What he is doing is doing what many currency traders do – buying a dip but he is simply hoping the level will hold.

The professional forex trader knows that predicting is a waste of time and money and acts on confirmation only.

Use Momentum To CONFIRM

Rather than buying into a support level and hoping it holds they wait for proof that it has held by watching momentum indicators – when the prices turn up above support they enter.

They are not predicting they are trading the reality of price change and this is what you must do to if you want to win with your forex trading strategy.

Great momentum indicators to put in your Forex trading strategy are: The Relative Strength Index and the Stochastic. If you don’t know how they work look them up.

Scientific Theories

A common myth in currency trading is that you can predict the future. Step forward all the scientific theories that predict such as WD Gann and Elliot wave.

They don’t work and the reason is pretty obvious – if prices could be predicted we would all know the price in advance and there would be no market. It is the uncertainty and different opinions that make a market.

When you are trading currency markets you can’t predict as although human nature is constant it is also un predictable and this makes trading an odds game.

If you are trading the odds then you need to act on the reality of confirmation NOT Hope or guess.

So if you have been simply buying dips to support and not getting proof that it will hold before trading look up how momentum indicators work now!