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.

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!

If you want to catch the biggest trends in any Financial market and make money from them then a breakout trading strategy is the best way to trade. In this article we will look at how this simple strategy could lead you to currency trading success…

A breakout trading strategy will work and continue to work because it is based on these facts which you can see for yourself on any Forex trading chart.

1. Forex prices trend for sustained periods of time up or down.

2. All big trends start from breakouts to new chart highs or lows

3. All trends continue by breaking to new highs or lows

Many traders however never consider breakout trading because they want to predict where prices will go and breakout trading doesn’t do this – it simply trades the reality of price change.

You cannot predict Forex markets in advance, no ones knows what they will do next but if you trade a breakout you have the odds in your favour and while you may not win every trade, if you do breakout trading correctly, you will win far more trades than you lose and be on the side of every major trend.

While it looks like you have missed a bit of the move at the start that’s ok, – because the odds of a continuation are so high.

Forex trading is all about trading the odds and a Forex breakout trading strategy, will get the odds on your side and in addition, a breakout strategy is very easy to understand and simple to implement.

The best way to trade breakouts is to use support and resistance and use a couple of momentum indicators, to confirm the move. If you do this, you have a strategy which can lead you to currency trading success and will always work.

An essential part of Forex education for a new trader is knowing the key elements that a successful Forex trading strategy must contain to succeed. Here we will look at all the salient points. Most traders lose, so make sure you have all these key elements in place before you start to trade.Let’s take a look at the key points 1. Trade Valid Time Frames Not Market Noise Most Forex traders try scalping or day trading but this is doomed to failure; all short term volatility is random so you can’t win. The majority of Forex robots also trade short term and I saw one that generates 20 trades a week! I know traders who make triple digit gains and trade less than that in a year. Trading frequency is not linked to profitability, so trade valid time frames and that means either long term trend following or swing trading. Leave day trading alone unless you want to lose quickly… 2. Simple Methodology and Not Curve fitted Ideally your system should be simple just a few rules and that’s it. Complicated systems lose because they have too many elements to break and in Forex keeping it simple is the way to make profits so, forget about being clever. Also your system must not be a curve fitted system in hindsight. Curve fitting is where you keep bending the rules, until they make a profit on historical data but of course, the data never repeats exactly again and the system losses. If you want to see a good example of curve fitting, look at any Forex robot, great gains in hindsight and losses in real time trading. 3. Trade the Reality of Price Change Forget the people who tell you prices move to some higher theory and there is order in price movement there isn’t. You are trading an odds based market and dealing in probabilities not certainties. When dealing with an odds based market you need to trade the reality of price change and not predict. Prediction is hoping or guessing and doomed to failure, so leave it to the far out investment crowd. Trade the reality of price change, not where you think prices may go and you will have the odds on your side and that’s what Forex trading success is built on. 4. Money Management and VolatilityMost traders think that money management takes care of itself but it doesn’t and when working out stops, you need to take into account the standard deviation of price of the market you are trading- don’t know what it is? Make it part of your essential Forex education! You need to place stops to protect yourself but make sure they are outside of random volatility. If you want to win at Forex, you need to learn how to do this; it’s the very basis of Forex trading success. Summing Up Your aim is to make money and that means working smart not hard. Forget about trading a lot, being clever or trying to predict. Keep you Forex trading strategy simple and robust and pay attention to the volatility of the market traded. If you follow the points in this article, understand them and build your strategy around them, they will lead you to currency trading success.

1. Establish Stop Loss : Before making any forex trade what soever, decide before how much you’re willing to lose and you just follow that amount. Set a stop loss level before entering a trade and place it as soon as possible. Never alter your stop loss if your position is losing.2. Let your profits Run : Never let your emotions govern a trade. Keep in mind why you are entering the market and of course you follow these reasons. You’ll be less emotional, you will be better. Do not turn your trading plan, move your stop loss as the market moves in your favor and let your profits run.3. Do not influence them : You must have your own forex trading strategy and you will comply. If you are influenced by others, you change your mind so incessant, learn to ignore the outside once you have made your choice. You will always find someone who can give you a logical explanation to take a position opposed to yours.4. Keep sizes and positions within acceptable limits : Forex Traders have a real success when they know that trading is a game of probabilities, and in long term if you stick to your strategies and you implement healthy strategies that you follow, it is likely that you will succeed. To be a successful trader, you will never take a position that could jeopardize substantial capital. In fact, you will find only very rarely win trader risk that more than 10% of its capital in a trade, and 10% is already extremely high. For example, if you deposit 25, 000 USD from your trading account, your maximum loss should be USD 2, 500, representing a maximum loss of 250 pips for a standard lot of 100,000 units (on a trade EUR / USD for example) . Generally, try to put more than 2 to 5% of your available capital.5. Know your risk ratio Vs your earnings ratio : The ratio of benefit / minimum risk you should use is 2:1. For example, if you are trading long GBP / USD and you want to gain 50 pips, you should not risk more than 25 pips. Another example, you should never risk 40 pips to gain 15. If you do, you lose trades will ruin your chances of profits. The analysis of risk Vs profits is an extremely important for any forex trader.6. Have a suitable capital : Always make sure you have enough credit, for example you can ask the following question: “If I lose 50% of my starting capital in a period of 6 months, can I still enable as a trader? . Only if the answer is yes you can start trading. One of the keys to success is independence of mind in the trading, which means your trading freedom must not be influenced by your fear “crippling” to lose.7. In Trend or Neutral : Learn how to analyze the forex market, is this a trend or rather neutral? In a market trend, follow the trend, in a neutral market, buy low and sell high, since you are using stop loss, and you control your risk.8. Do not fight against the trend : Do not try to sell high in a bull market or to buy low in a bear market. Follow the good old adage “the trend is your friend!9. Average : One of the most common mistakes made by traders is the continuous addition of positions on a losing position. I have personally never seen a trader profits on the long term by using such techniques. For short-term trades, preserving capital is the most important, involve too much capital will undermine your success. Trading in the short term, if your strategy is good, the market will evolve in the desired direction in a relatively short time, however if the market gives you wrong, the short-term traders will have to accept that they trade so incorrectly, gets cash losses and seek a new trading idea. Do not leave room for pride in your trading. 10. The idea of yesterday is no longer necessarily valid today : Regularly we may detect a potential trade and decide to wait until the following day to see if he is confirmed. When you see that everything went exactly as you thought, remember that it may already be too late. Back over your reasoning for this trade, make sure your original reasons are still valid, if not forget this trade. There will always be opportunities for trades, be patient and attack.11. Understand how the market thinks : Everbody should accept that any information (except for newly published information that the market adjusts immediately) is already included in the price of a currency pair. You must know the indicators to come (especially the most important), and you need to know what is already anticipated by the market. The vast majority of the publications of the market is already anticipated and prices by the market.12. Trading – a game of probabilities : Nobody can get 100% results in forex trading, you must accept it. Trading is a game of numbers, you win sometimes and lose other times, the idea is simply to win more than you lose. Trading is a game of probability and if you act properly in the long term, you will come out winner. Learn from your mistakes, when you begin, you’re more likely to lose in the beginning, look what you’ve done wrong, try not to get into the emotions, if you meet your strategy and learn from your mistakes, you should see your profits exceed your losses.13. Know why you are in a trade : Keep a journal of your trades and record exactly why you went into each trade. Do not be impulsive, follow your strategy, that way you will learn what strategies work for you long term and which do not work.14. If the logic disappears, exit : If you think you are on a low and that it breaks down, exit the trade, and then reassess the situation to make a new decision.15. Establish a follow up : If you chain 3 or 4 losing trades, take a break! It is obvious something is not working, leave, go drink a coffee,Do not be afraid to take a break.16. Study : Learn new ideas, keep up to date, and do not trade on the ideas of others, you should always know why you are in a trade.17. Fun : Enjoy what you do, have fun! However, keep calm, stay as uneffected and never give up – you’ll have more success.If you want a Best Automated Trading Robot…… Click Here

Your chosen Forex trading strategy will drive the trading decisions that you make in the Forex trading system. If you are new or a novice to Forex trading systems, you will need to develop an appropriate strategy that will evolve over time. The following steps outline the approach to building a Forex trading strategy that may be adapted and tailored to your needs.

Develop a Forex Trading Plan – A Forex trading strategy should never be considered absolute or complete. Part of having a Forex trading strategy is incorporating a plan for making adjustments to the strategy. You will need to be able to make adjustments without completely revamping your strategy. Though you may consider your trading strategy to be more technical than fundamental or vice versa, you should take advantage of any available market data in making your trading decisions regardless of which discipline it falls under.

Initiate a Forex Trade – You must decide on the currency pairs that you which to trade and the number of units to trade. You must establish either a buy or sell position. You are then ready to initiate a trade as either a market order or a limit order. A market order initiates a trade at the current market price while a limit order permits a trade to be executed when the market price reaches a limit that is predetermined by you. As a safeguard for online trading, particularly with limit orders, you should also establish limits to take profits or stop losses. Take profit and stop loss limits become particularly important with online trading when your Internet connection is loss. In the time it will take to reestablish a connection, the market price may change and fall outside of any established limits. Your trading platform may be able to calculate a suitable set of limits. Limits are set as either the percentage of the trading range or as distance from the market entry price. If you have established an open position, you may adjust these calculated values to suit your needs.

Determine When to Exit a Forex Trade – If a trade moves in favor of your established position you must evaluate the move. In a long position, a move is considered significant if it is in the range of 15 to 20 pips. In response to such a move, it would be advantage to raise your stop-loss limit above the market entry price and your take-profit limit by about 20 pips or the number of your choice. If the trade continues to move in your favor you should continue to raise the stop-loss and take-profit limits. This aspect of a trading strategy allows you to continue to generate profits while the market is working in your favor. Unless, for some reason, you feel you need to manually exit the trade, you should not exit the trade until the market reverses to trigger your stop-loss order. A take-profit limit should not be used to signal an exit from the trade. If a trade moves against your established position, you have two options. You may manually exit the trade before your stop-loss limit is reached or stay in the trade until either the stop-loss or take profit limit triggers an end to the trade. It would not be beneficial to lower the stop-loss limit with the expectation that the market price will reverse for a short period of time. While such a reversal is possible, the odds of this type of market action are low and your Forex trading strategy should not depend on this type of anomaly.

Regardless of the forex trading strategy you use, it must contain the key element enclosed yet, most traders never even consider it and when asked what it is get it wrong! If you don’t want to join the majority of losers, make sure your strategy has it and get in the winning minority… The key to success in forex markets is: A trading edge which you can define and which you have confidence in can help you NOT join the losing majority or the 95% of traders who burn their money. Obvious? Yes it is – but most traders think the statements below are trading edges and they are not! If you think they are, you will soon see your account wiped out. Agree with any of the following statements and you are odds on to lose – I have a forex robot with a simulated track record in hindsight and think it will make me money- Forex day trading and scalping are a great way to trade – I like to trade breaking news stories and react quickly – I like to predict forex prices in advance. – I believe in a scientific method of trading and science is the answer – I am clever so am bound to succeed – I work hard and will get there in the end – Knowledge is power and I will learn everything I can about forex There are many more – but show me anyone who agrees with the above and I Will show you a loser. The problem is most forex traders just don’t understand what an edge is and the above are either myths, thinking forex trading is a walk in the park, or they can follow other people. Forex trading is hard and that’s why the rewards are so big for the small minority who can get a trading edge. The good news is anyone can learn to trade and get an edge with the right education. A trading edge is personal but it is the key factor which will give you confidence and allow you to follow your chosen forex trading strategy through periods of losses (and don’t believe anyone who says losing periods don’t last – they can last for many weeks and this happens to even the worlds top traders) and stay on course with discipline until you hit a home run. In forex trading its dealing with the losses that is the hard part and if you think it’s easy to stay disciplined when the market makes you look a fool time after time, you have never traded. In forex trading you must love your losses and see them as part of being successful. A trading edge has nothing to do with being clever or working hard or having a complicated strategy. It’s a fact that simple systems work best and always will, as they have fewer elements to break. Furthermore, your strategy on its own even if its logically based still needs to be applied for this you need confidence and this will lead to discipline. Lack of discipline is the key reason most traders fail because, if you can’t follow your trading system with discipline you don’t have one. To win at forex trading you need to work smart not hard; you can learn forex trading in a few weeks, gain confidence, get discipline and then start trading and get on the road to currency trading success.