Usually most beginner traders after failing to make a profit in Forex start looking for a perfect system that could make them successful। They ask successful traders what Fx trading system they use. In my opinion the system is not the most important thing to your success as a trader. The most important thing is your discipline and mindset.
Yet there are some things that need to be looked in a trading system to figure out if it is profitable or not। The most important thing is what the traders call “the edge†or mathematical expectation of a trading system. The system can have a positive edge or negative edge. If it is positive you will build up you account over long period of time if you keep executing your trades. If it is negative you will drain you account no matter how big profit you are making in a single trade.
How do you find out if your system has a positive expectation or negative? The only way to figure it out is to test it। Go all the way back in time on your charts and test it on the historical data. After that forward test �" trade on a demo account. Execute at least 100 trades.
Let’s say in your trading system you are taking profit at 30 pips and cut your loses at 15 pips। After testing you find out that 40 trades out of 100 hit the take profit level and the rest 60 stopped out in loss. Mathematical expectation for this system is 30*40/100-15*60/100=3 pips. In other words average profit of each trade is 3 pips. While it seems not a lot but with this edge you can consistently grow your account.
What if you find that your system loses 65 times out of 100 and wins 35 times। Then the expectation is 30*30/100-15*70=-1.5. The expectation is negative. Even if you are losing only pip and half per trade you will be consistently decreasing amount of money in your account.
This is one of the reasons why I strongly recommend practicing execution of your trading system। It will do two things for you. It will develop discipline to act upon your trading system signals. The second very important thing it will give you data to calculate the mathematical expectation of your system. If after long period of testing you find that expectation keeps being negative then switch the system.
It always surprises me when I see people trade a system and have no clue what is the mathematical expectation of their system। Even more surprisingly I see some people trade systems with negative expectations. You need to know the edge of your system and if it is positive you need to be disciplined to follow through your trading plan of executing it.
About the Author
Albert Schmidt is a part-time currency trader. After quite a long period of struggle he learned to make consistent profit trading in Forex. Review a trading system with a positive edge that can help you to become a successful trader.
Sunday, September 07, 2008
Tuesday, September 02, 2008
Forex Trading Tips - 4 X Trading Tips to Supercharge Your Profit Potential by kelly Price
The forex trading tips enclosed can turn a mediocre forex trading strategy in to a winner and anyone thinking of trading should consider incorporating them because they work - here they are...
1. Leverage Stops and Risk
Most traders get 200:1 leverage from their broker and want to use it but this is a huge mistake - a trader should use leverage wisely and 10 20: 1, is enough. This allows you to risk more to your stop and this is vital to success.
Most traders put stops so close they are guaranteed to get stopped out by normal volatility. They get the direction right, see their stop hit and then see prices reverse back the other way and make thousands and their not in!
If you want to win, your stop must be far enough back so you don't get hit by random price moves in the trend. This isn't being rash this is sensible investment strategy.
2. Risk More Per Trade
In line with the above forget all the rubbish you read about risking 2% per trade.
On a small account its so little risk it guarantees you will get stopped out.
Sure if you have 100k you can do this - but not on a small account.
Many traders try to restrict and control risk so much they create it and lose. To make meaningful gains, you need to risk 10 - 20% on a small account.
3. Learn Patience
Most traders think the more they trade the more profits they are going to pile up - dead wrong.
You don't get rewarded for your trading frequency; you get rewarded for being right!
The high odds trades only come around a few times a month in each currency - hit these and hit them hard.
Hitting the high odds trades and hitting them hard can make you a lot of money. I know lots of forex traders, who only trade a few times a month and still pile up big triple digit annual gains, because they are hitting good risk to reward trades and hitting them hard.
4. Forget Diversification
OK on a 100k account there is an argument for doing it but not on a small account.
If you have a great trade, why potentially dilute its profit potential by taking trades for the sake of trading? It doesn't make sense and will dilute your potential profits.
Hit the high odds trade you like and focus on it.
Keep in mind:
You Don't Get Rewarded for Effort in forex trading.
Many traders make this mistake.
They want to trade and force profits but this is not possible. They spend a lot of effort looking for trades that it blinds them to the fact most are dogs and should be passed by.
In forex trading your success is determined by the accuracy of your trading signals and your market timing and the money you put in your pocket - that's it.
So the forex trading tips here mean you need to be patient, hit high odds trades, hit them hard and take meaningful, calculated risks so, you can make a triple digit annual income.
The above is really common sense and these forex trading tips, should be the cornerstone of your forex trading strategy and if you use them wisely and have a good forex trading system then you can enjoy the currency trading success you desire.
1. Leverage Stops and Risk
Most traders get 200:1 leverage from their broker and want to use it but this is a huge mistake - a trader should use leverage wisely and 10 20: 1, is enough. This allows you to risk more to your stop and this is vital to success.
Most traders put stops so close they are guaranteed to get stopped out by normal volatility. They get the direction right, see their stop hit and then see prices reverse back the other way and make thousands and their not in!
If you want to win, your stop must be far enough back so you don't get hit by random price moves in the trend. This isn't being rash this is sensible investment strategy.
2. Risk More Per Trade
In line with the above forget all the rubbish you read about risking 2% per trade.
On a small account its so little risk it guarantees you will get stopped out.
Sure if you have 100k you can do this - but not on a small account.
Many traders try to restrict and control risk so much they create it and lose. To make meaningful gains, you need to risk 10 - 20% on a small account.
3. Learn Patience
Most traders think the more they trade the more profits they are going to pile up - dead wrong.
You don't get rewarded for your trading frequency; you get rewarded for being right!
The high odds trades only come around a few times a month in each currency - hit these and hit them hard.
Hitting the high odds trades and hitting them hard can make you a lot of money. I know lots of forex traders, who only trade a few times a month and still pile up big triple digit annual gains, because they are hitting good risk to reward trades and hitting them hard.
4. Forget Diversification
OK on a 100k account there is an argument for doing it but not on a small account.
If you have a great trade, why potentially dilute its profit potential by taking trades for the sake of trading? It doesn't make sense and will dilute your potential profits.
Hit the high odds trade you like and focus on it.
Keep in mind:
You Don't Get Rewarded for Effort in forex trading.
Many traders make this mistake.
They want to trade and force profits but this is not possible. They spend a lot of effort looking for trades that it blinds them to the fact most are dogs and should be passed by.
In forex trading your success is determined by the accuracy of your trading signals and your market timing and the money you put in your pocket - that's it.
So the forex trading tips here mean you need to be patient, hit high odds trades, hit them hard and take meaningful, calculated risks so, you can make a triple digit annual income.
The above is really common sense and these forex trading tips, should be the cornerstone of your forex trading strategy and if you use them wisely and have a good forex trading system then you can enjoy the currency trading success you desire.
Monday, September 01, 2008
FREE Forex Robot - This One is Free and Makes Money by kelly Price
The free forex robot we are going to look at is free and makes money, yet most traders never consider it. Lets look at how and why it works but despite this most traders wont use it...
Automated Forex trading systems are big business online - but the vast majority don't make money. They simply promote paper track records which fail in real time trading and destroy the traders equity.
The one we are going to look at here has worked in real time and many of the top traders have used it in their forex trading strategies, to make big profits.
This is a simple system it only has one rule to follow. The system was devised in the seventies by one of the great traders Richard Donchian, who used it to trade commodities markets.
It doesn't just work on commodities it works on any trending market and currency markets are therefore ideal, as they offer excellent trends.
Let's take a look at the rule of the system which is called the 4 Week Rule.
Buy a new 4 week calendar high - stop and reverse the position, on a break of a new 4 week calendar low and then look to stop and reverse again on a new 4 week calendar high and continue to do this always keeping an open position in the currency.
That's it and while incredibly simple, it works for the following reasons.
It's based on breakout methodology
It's a fact that most big trends, start and continue from new market highs or lows, so this forex robot will make sure you are in on all the big trends and profits.
Long Term Trend Following
It's based on catching and holding the long term trends.
A look at any forex chart will reveal trends that continue for many months or years and this trading system will keep you in them without getting bumped out by short term volatility.
It's Totally Objective and Disciplined
You don't have to think or make subjective judgements; you get a clear cut signal which you simply execute in the market.
It's Time Efficient
It will take you around 15 - 30 minutes a day to operate and that's it, you can go and do something else.
Like any forex trading system it will have a weakness and this one will generate losses, when markets don't trend or are in periods of consolidation, so you can consider adding another exit rule:
Place a stop at a one or two week high or low and then go flat and wait for the next signal.
This can help combat a non trending market but whichever way you choose this free forex robot will make big long term gains.
Most traders don't even consider this system, even when they know it works!
Why?
Quite simply because they think it's too simple (even though all the top trading systems are), also it's not a system that goes for pinpoint market timing and many traders want to predict highs and lows, even though its obvious this is not possible.
Finally, it just isn't packaged nicely - you get no flashy box, or name that indicates it's vicious animal, or a load of garbage sales patter.
For some reason traders will buy forex robots that have never been traded but one that can make them money - they ignore it!
If you want to make money in forex trading, this free forex robot will help you and you should try it. The system doesn't cost you anything and has been used for over 20 years by numerous traders, to improve their forex profits and it can help you achieve forex trading success too.
NEW! 2 X FREE ESSENTIAL TRADER PDFSESSENTIAL FOREX TRADING COURSE
For free 2 x trading Pdf's and more on the best FREE Automated Forex Trading System and an exclusive risk free Currency trading Course visit our website.
Automated Forex trading systems are big business online - but the vast majority don't make money. They simply promote paper track records which fail in real time trading and destroy the traders equity.
The one we are going to look at here has worked in real time and many of the top traders have used it in their forex trading strategies, to make big profits.
This is a simple system it only has one rule to follow. The system was devised in the seventies by one of the great traders Richard Donchian, who used it to trade commodities markets.
It doesn't just work on commodities it works on any trending market and currency markets are therefore ideal, as they offer excellent trends.
Let's take a look at the rule of the system which is called the 4 Week Rule.
Buy a new 4 week calendar high - stop and reverse the position, on a break of a new 4 week calendar low and then look to stop and reverse again on a new 4 week calendar high and continue to do this always keeping an open position in the currency.
That's it and while incredibly simple, it works for the following reasons.
It's based on breakout methodology
It's a fact that most big trends, start and continue from new market highs or lows, so this forex robot will make sure you are in on all the big trends and profits.
Long Term Trend Following
It's based on catching and holding the long term trends.
A look at any forex chart will reveal trends that continue for many months or years and this trading system will keep you in them without getting bumped out by short term volatility.
It's Totally Objective and Disciplined
You don't have to think or make subjective judgements; you get a clear cut signal which you simply execute in the market.
It's Time Efficient
It will take you around 15 - 30 minutes a day to operate and that's it, you can go and do something else.
Like any forex trading system it will have a weakness and this one will generate losses, when markets don't trend or are in periods of consolidation, so you can consider adding another exit rule:
Place a stop at a one or two week high or low and then go flat and wait for the next signal.
This can help combat a non trending market but whichever way you choose this free forex robot will make big long term gains.
Most traders don't even consider this system, even when they know it works!
Why?
Quite simply because they think it's too simple (even though all the top trading systems are), also it's not a system that goes for pinpoint market timing and many traders want to predict highs and lows, even though its obvious this is not possible.
Finally, it just isn't packaged nicely - you get no flashy box, or name that indicates it's vicious animal, or a load of garbage sales patter.
For some reason traders will buy forex robots that have never been traded but one that can make them money - they ignore it!
If you want to make money in forex trading, this free forex robot will help you and you should try it. The system doesn't cost you anything and has been used for over 20 years by numerous traders, to improve their forex profits and it can help you achieve forex trading success too.
NEW! 2 X FREE ESSENTIAL TRADER PDFSESSENTIAL FOREX TRADING COURSE
For free 2 x trading Pdf's and more on the best FREE Automated Forex Trading System and an exclusive risk free Currency trading Course visit our website.
Saturday, August 30, 2008
Forex Training - Will it Make You a Successful Trader? by Winston McCafferty
Why is good training/coaching so important to both new and seasoned Forex traders? Because the right training and coaching will keep you focused, provide discipline, weed out bad trading habits, and sharpen your skills. Whether you're a newbie or a veteran a good Forex training course couple with an experienced mentor/coach will make a huge difference in your success.
One of the reasons you got into Forex trading was because you recognized the potential it represents. The market size and liquidity make it ideal for individual traders. The ability of traders using proven trading methods to make a living trading just a few hours a day from their own homes is very appealing.
You Can Succeed Magnificently With The Right Forex Training
It can certainly be that way for you as well if you'll recognize that it does take knowledge and training to avoid the very real dangers of Forex trading. The most successful people in any walk of life recognize the power of training and coaching/mentoring. Talk to any successful person and they will tell you they had a mentor or coach to help guide them and the training to know how to succeed.
Is it any wonder that professional athletes at the top of their game rely on coaching to maintain the winning edge? Someone like Tiger Woods recognizes that a good training regimen and coach allow him to see things about his game that would not be possible by himself alone. The same is true in Forex training as well.
Some traders rely on software based "systems" to help them trade better - and while some may appear to work they cannot teach you the fundamentals and critic and reinforce your trading strategies and mindset. A good coach will do that and more.
Training And Coaching Are Keys To Long-Term Consistent Trading Success
So many people who get into Forex trading do so for all the right reasons but proceed to flounder and lose money because they don't acquire fundamental knowledge and trading methods. Sometimes they will try a trading strategy once and then move on to another if the results weren't what they expected.
Instead, winning traders know that there are many ways or methods to trade successfully, but the key is to pick one and become proficient at it. They also know that the best methods are the ones that rely on simple fundamental indicators and analysis not complex "magic" systems or software. They also know that there is no substitute for being personally active in your Forex trading.
Why Automatic Trading Isn't Magic!
Sure there are "automated" trading systems and managed accounts etc. but if they were so accurate everybody would be using them - and they're not! So don't be fooled by pie-in-the-sky promises. Get plugged into a good Forex training course that is taught by a seasoned trader who is using a proven Forex trading methodology.
About the Author
Winston McCafferty writes about investing and early retirement. Discover a powerful way to generate wealth and improve your Forex trading with rock-solid Forex training by attending one of the FREE "Forex Trading Strategies" Webinars hosted by the The Trading Institute.
One of the reasons you got into Forex trading was because you recognized the potential it represents. The market size and liquidity make it ideal for individual traders. The ability of traders using proven trading methods to make a living trading just a few hours a day from their own homes is very appealing.
You Can Succeed Magnificently With The Right Forex Training
It can certainly be that way for you as well if you'll recognize that it does take knowledge and training to avoid the very real dangers of Forex trading. The most successful people in any walk of life recognize the power of training and coaching/mentoring. Talk to any successful person and they will tell you they had a mentor or coach to help guide them and the training to know how to succeed.
Is it any wonder that professional athletes at the top of their game rely on coaching to maintain the winning edge? Someone like Tiger Woods recognizes that a good training regimen and coach allow him to see things about his game that would not be possible by himself alone. The same is true in Forex training as well.
Some traders rely on software based "systems" to help them trade better - and while some may appear to work they cannot teach you the fundamentals and critic and reinforce your trading strategies and mindset. A good coach will do that and more.
Training And Coaching Are Keys To Long-Term Consistent Trading Success
So many people who get into Forex trading do so for all the right reasons but proceed to flounder and lose money because they don't acquire fundamental knowledge and trading methods. Sometimes they will try a trading strategy once and then move on to another if the results weren't what they expected.
Instead, winning traders know that there are many ways or methods to trade successfully, but the key is to pick one and become proficient at it. They also know that the best methods are the ones that rely on simple fundamental indicators and analysis not complex "magic" systems or software. They also know that there is no substitute for being personally active in your Forex trading.
Why Automatic Trading Isn't Magic!
Sure there are "automated" trading systems and managed accounts etc. but if they were so accurate everybody would be using them - and they're not! So don't be fooled by pie-in-the-sky promises. Get plugged into a good Forex training course that is taught by a seasoned trader who is using a proven Forex trading methodology.
About the Author
Winston McCafferty writes about investing and early retirement. Discover a powerful way to generate wealth and improve your Forex trading with rock-solid Forex training by attending one of the FREE "Forex Trading Strategies" Webinars hosted by the The Trading Institute.
Friday, August 29, 2008
The Secret of the Forex Software ,you must know to make money!
Author: Santhosh Yadav
Forex trading is a huge marketplace where trillions of Dollars are traded every day , before until recent times it was big trading houses and large institution are allowed to trade the currencies, but recently ordinary individuals like you and me can trade the Forex Market through the help of some intermediate brokers.
So until recently only the full time traders used to trade and as they are more aware and have knowledge about these markets they trade them professional and now as this is vide open for the common man to participate and quite obvious is the fact that the little knowledge and the time he can cater to learn this trading is limited.the Situation gave rise to the need of automatic forex trading systems and as a result the search for the best automatic forex system started.
A trader being human can always have two opinions for a given situation like he may be in the indecision process that if we enters the trade whether he will face profit or loss, even though the system is clearly defined and the signals are showing clearly he will be always in decision blindness and unable to decide in which way he trade.Where as the Mechanical Forex Trading software are programmed to trade when only a predefined setup appears, they do are not prone to decision blindness and trade without emotions.
An automated system allows you to trade at the same time in quite a number of fields . It makes it possible for you to trade in varying markets as well as an different of time zones. Many trading models can be used by the trader since the system will be the one managing each trading model. Short term data can be analyzed by the system and this provides you with an advantage since you can use the data analyzed for making decisions based on what is currently happening in the market. Analyzing where the market will go in the next 15 or so minutes is impossible without using an automated forex trading system.
The automatic forex trading signals gives the indication for best buy or sell condition through various means and the most common form of indication is given on the trading terminal of the forex trader and he can make use of these signals and trade currency pair with least doubt and fear as the automatic system developed by the best minds in trading forex is behind them in the form of software.Forex Trading System.The best one.
The Author has traded forex and explains the reasons he needed Automated Forex Trading System. .Why reinvent the wheel when you can find it at http://autoforexsoftware.blogspot.com
Forex trading is a huge marketplace where trillions of Dollars are traded every day , before until recent times it was big trading houses and large institution are allowed to trade the currencies, but recently ordinary individuals like you and me can trade the Forex Market through the help of some intermediate brokers.
So until recently only the full time traders used to trade and as they are more aware and have knowledge about these markets they trade them professional and now as this is vide open for the common man to participate and quite obvious is the fact that the little knowledge and the time he can cater to learn this trading is limited.the Situation gave rise to the need of automatic forex trading systems and as a result the search for the best automatic forex system started.
A trader being human can always have two opinions for a given situation like he may be in the indecision process that if we enters the trade whether he will face profit or loss, even though the system is clearly defined and the signals are showing clearly he will be always in decision blindness and unable to decide in which way he trade.Where as the Mechanical Forex Trading software are programmed to trade when only a predefined setup appears, they do are not prone to decision blindness and trade without emotions.
An automated system allows you to trade at the same time in quite a number of fields . It makes it possible for you to trade in varying markets as well as an different of time zones. Many trading models can be used by the trader since the system will be the one managing each trading model. Short term data can be analyzed by the system and this provides you with an advantage since you can use the data analyzed for making decisions based on what is currently happening in the market. Analyzing where the market will go in the next 15 or so minutes is impossible without using an automated forex trading system.
The automatic forex trading signals gives the indication for best buy or sell condition through various means and the most common form of indication is given on the trading terminal of the forex trader and he can make use of these signals and trade currency pair with least doubt and fear as the automatic system developed by the best minds in trading forex is behind them in the form of software.Forex Trading System.The best one.
The Author has traded forex and explains the reasons he needed Automated Forex Trading System. .Why reinvent the wheel when you can find it at http://autoforexsoftware.blogspot.com
Thursday, August 28, 2008
Forex Trading Companies Geared Towards Beginners
Are you searching for a Forex trading company, yet you are also new to trading Forex and aren't sure which trading company is best for you to use? Let's discuss some unique Forex trading companies and the various advantages as well as disadvantages of each one. A first step to take is getting a little background on Forex in general.
What Exactly Is Forex?
The word Forex is actually a slang term for "foreign exchange" trading. What Forex traders do is to leverage the exchange rate differences of money that is used throughout the world to make a profit through trading foreign currency. What Forex trading companies do is hire brokers who end up making trades for investors.
Forex For Beginners
If you are a new person to the arena of Forex trading, search for several elements in a company that does trading that will assist you in acquiring Forex trading experience while not end up losing too much money in the process.
Training Account For Free
For those that are beginners in Forex, you should attempt to locate a Forex trading company that allows you to do trading of foreign currency without cost. This is accomplished in many places as a 'game account'. They let you play with 'virtual money' for a trial period of training. Numerous Forex trading companies are hoping to aquire your Forex trading business, so they make available free virtual $10,000 account that you can experiment with in a simulated Forex trading scenerio. Ten thousand dollars in virtual money is typically enough money to get your feet wet, so to speak, in this type of trading prior to you taking the plunge with your own real actual money.
Forex Education For Free
It is a good idea to take advantage of the Forex education available for free that many companies offer. Numerous trading companies make available seminars that are online to present to new investors ways in navigating the Forex trading system. If you are a do-it-yourself type of person and prefer to educate yourself, you can try an online tutorial; you would be surprised at the amount of information you can learn when watching a short tutorial. If you would rather have an in person experience compared to the isolation of cyberspace, you can also attend a free in person seminar.
Course For a Fee
An additional option for learning the Forex trading environment is to spend a fee for these courses. The benefit of these types of courses is that you take away an individualized strategy for your Forex trading account.
Forex Discussion Board And Chat Forums
One of the methods that many up and coming forex investors use is that of going through discussion boards and chat rooms. These boards have plenty of information in regards to ways to begin in Forex trading and some recommendations on which Forex trading companies are available.
Recommendations
Based on some criteria such as free training accounts as well as free educational Forex offerings, you might want to do your research and due diligence into some of these; Signals-Forex, CMC Markets, Forex Systems, GFT Forex, FXSolutions, and Pro-Forex. You assume full responsibility in your choice of course.
Sunday, July 09, 2006
How To Prosper At Forex Trading - Leverage & The K-Factor
by Peter Amaral
One of the big reasons that forex trading is an entirely different animal than stock trading or futures trading is leverage. Forex trading leverage can be enormous, as high as 400:1, and in most cases you get to choose the amount of leverage or gearing you want to trade with.
Super high leverage is a selling point for many online forex brokers. How many times have you seen the tout 'control $100,000 of euro for $250'? Those numbers are correct, and, yes, the profit potential of super high leverage is compelling.
This article neither encourages nor discourages forex trading at super high leverage. That's a personal decision, but a decision that can only be made sensibly with a professional understanding of all the implications of leverage and what they mean to your chances of prospering at forex trading. It's probably fair to say that unless you have a professional understanding of leverage that your chance of even surviving at forex trading is slim to none.
One of the fundamental terms of forex trading is PIP. You will see that XYZ Broker charges 3 PIP per deal, or that the XY currency pair has an average daily range of 100 PIP. We all know that the value of a PIP is a variable that differs with each currency pair, but did you know that the value of a PIP also varies with the current price of the base currency, and with the gearing on your account?
For example, with EUR/USD at 1.2723 and leverage at 100:1 the amount of a PIP is $7.86. At 200:1 leverage the PIP value doubles to $15.72.
For forex traders with different gearing a 100 PIP move means entirely different things to their account equity.
Here's a new way to look at leverage with the 'K Factor'. The three most common leverage ratios available from online forex brokers are 50:1, 100:1 and 200:1. The K Factor for the 100:1 leverage ratio is 1. The K Factor for the leverage ratio of 50:1 is .50, and the K Factor for the leverage ratio of 200:1 is 2.
How can you use the K Factor?
There are three ways to use the K Factor. The first is using the K Factor to calculate the value of a PIP for the currency pair you are trading.
Since 100,000 individual currency units (usually dollars or euros) is the normal size of a single lot you can calculate the value of a PIP with this formula:
(100,000/current price with no decimal) * K Factor = PIP
Here's an example: The EUR/USD current price is 1.2723 and your leverage is 100:1. With these facts the formula is:
(100000/12723) * 1 = 7.86.
The value of a PIP is $7.86. If your forex broker executes your trade at a spread of 4 PIPs you are paying $31.44 for executing the trade whatever euphemism the broker happens to be using for 'commission'. If your leverage or gearing is 200:1 that execution will cost you $62.88.
The second way you can use PIP and the K Factor is to quickly determine the potential profit in a trade, or to know to a certainty the actual dollar risk in a stop-loss setting.
For example, if you go long the EUR/USD at 1.2723 and anticipate a move to 1.2850 what profit can you anticipate at 100:1 gearing?
12850 - 12723 = 127 PIP * 7.86 = $998.22 - execution cost.
If you objectively set your stop loss at 1.2715 what amount are you risking in this trade?
12723 - 12715 = 8 PIP * 7.86 = $62.88 + execution cost.
The third way to use the K Factor is to avoid what the forex brokers call the 'safety net', and what I call 'kill but do not dismember.'
Margin is not a down payment. It's cash-on-hand, your cash, that the broker uses to protect its own capital account from your mistakes. That's all well and good because the global forex market will continue to work only if all participating brokers have adequate capital to meet their customers' settlement obligations.
If losses from current open positions cause the equity in your account to fall below that required to maintain the total number of open positions, the broker's trading platform will immediately close all your open positions, even when the unrealized loss on any individual position is quite small. Your loss is the aggregate number of PIP per position * K Factor + execution costs. In almost every case that's just about everything in your account. This is the broker's safety net because you will not lose more cash than you had in your account (as can and does happen with commodities futures accounts.)
The formula is:
(Starting Balance - Open Position Losses) / (($1,000/K Factor)* No. Open Positions) -1 <>
Most if not all broker platforms keep a running balance of your available margin to help you avoid this fatal situation. If you intend to trade multiple positions and fade into suspected price turning points you should consider setting up this formula in a spreadsheet so that you get an early warning long before the situation goes critical.
Mini accounts are based on 10,000 individual currency units with different margin requirements so make the necessary adjustment in the above formulas before doing the calculations.
About the Author
About the Author
(c) 2006 by Peter Amaral. Peter is the creator of the www.tradingfives.com website and author of several easy-reading ebooks on the exotic trading techniques of the legendary master traders like JM Hurst and WD Gann. Much of the information about stock, futures and forex trading on Tradingfives is unique and not available anywhere else.
Sunday, July 02, 2006
Start Your Forex Career Off In Winning Fashion
by Holly Dodd
Forex trading has created a buzz. If you're tired of listening to all the talk and it's time YOU take action, it's time to learn more about the Forex trading system. Forex is short for "Foreign Exchange." What Forex traders do is trade foreign currency around the world. Yens for Dollars, Dollars for Pounds, you get the idea. Forex trading is very easy to learn and can be a great way to invest.
There are many places you can go to learn the ins and outs of Forex trading but perhaps one of the best places to start is right here online. Most Forex brokers are anxious to have you as a new client so they are more than happy to teach you what you need to know to start trading. Look for online tutorials and courses that are designed to teach the beginner how to get started in Forex trading.
One of the things that make Forex trading so appealing to people working from home is that trading can be done literally 24 hours a day. There is no central Forex office like the New York Stock Exchange, so trading is taking place in some location in the world at any hour of any day.
When you sign on with a broker, check to see what services they offer. One of the great services some brokers offer is software that will be allow traders to make trades right off their own computer.
To get started, you need to open up an account with the broker of your choice. Many brokers offer beginner accounts that can be opened for a little as $250. There are even some that will let you virtual trade with their system. You do this by joining their "simulation trading platform." You get the real life experience in real time but with out having to risk real money. This is a great way to get the hang of Forex trading before you put any real money at risk.
Each day, 1.9 trillion dollars are traded around the world. Many of those dollars are winning bids but the other side of every winning bid is a losing bid. Like any other type of investment, Forex trading is not a sure, no matter how much you research, no matter how much data you've accumulated; your trade can always lose money. Make sure that you have the personality to work under the situation of knowing this. If the money you are investing in Forex is money that you can't afford to lose, then it may be best to hold off on trading until another time. But, if you do have the personality and you do have a couple of dollars to invest, Forex trading can be very rewarding.
About the Author:
Webmaster Holly Dodd loves finding answers to questions. More forex trading tips can be found at: www.OnlineForexTradingTips.info and Holly's blog at: www.blog.buckstopper.com
About the Author:
Webmaster Holly Dodd loves finding answers to questions. More forex trading tips can be found at: www.OnlineForexTradingTips.info and Holly's blog at: www.blog.buckstopper.com
Tuesday, June 27, 2006
Currency Trading - Big Profit Opportunities For The Week Ahead
by sacha tarkovsky
Please find below currency trading opportunities for next week based upon the same style of analysis we recently published to catch the big moves in energies.
There look to be some great opportunities in the currencies this week, so let's look at some of the major currencies and the best ones to focus on for Monday.
Dollar getting short - With good risk reward
The dollar primary trend is down against the majors with the exception of the Yen.
While the primary trend is down, we have had a good bounce but it looks like it could run out of steam and this will be a good time to enter new dollar shorts.
As per usual were using charts and three indicators the stochastic, the Bollinger band and RSI and you can get some great free charts at futuresource.com
Get confirmation before trading
Don not try and predict the moves, always wait or confirmation of short term momentum shifting to the upside by using the stochastic indicator to time market entry.
Currency trading opportunities
The Euro
The primary trend is up and the sort term trend is down
We favour the long side and would look to key off the 1.24 level
Watch for stochastic momentum to turn up with bullish divergence above or at this level to initiate longs into the market.
If prices can steady resistance is at the mid bollinger band, if this and the recent double top gives way look for an advance to the highs.
RSI 44
The Dollar Index
The primary trend is down and short term trend is up
Resistance is at the 88.00 level. Look for a selling opportunity into this level.
Stochastic momentum is up, but is overbought look for selling opportunity into this level and sell on stochastic crossing to the downside with bearish divergence. Dont jump to soon, wait for confirmation.
RSI 58
Comment: This is a trade we like and we will be looking to get short as soon as short term mometum falls.
The Yen
The primary and short term trends are down and prices are looking to test the critical 86 level.
A test of these lows looks imminent and traders should go with market action by selling a break of the lows.
If prices, however steady at these levels and hammer out support take a stochastic crossover as a signal to go long for a quick pop to the upside.
We would not try and trade this move and would wait on the sidelines for now
RSI 30.48
The British Pound
Primary trend is up and the sort term trend is down.
Key off current levels and look for the 1.80 level to provide strong support.
Watch for downside momentum to ease and time entry on stochastic crossover to the upside with bullish divergence.
RSI 39
The Canadian Dollar
The primary trend is up and the short term trend is down.
The dollar advance is looking like it will run out of steam and resistance is at the 8900 level, which is the bottom of the recent channel.
RSI 43
This is a great long term trend and we are keen to go long and with the dollar index is our favorite trade of the week.
We have covered other majors but these two are our favorities while we are keen to be long the CD adn short the DX we need to see price momentum shift in our favor and will watch closely for short term strenght to enter. As per usual dont jump to soon.
About the Author:
About the Author:
More FREE info
On making money fast including a FREE trader CD acked with over 100 pages of wealth building material and to receive a special situations FREE newsletter
as well as other valuable material to make you a successful trader visit http://www.wellingtoncr.com
Saturday, June 24, 2006
The Best Time to Day Trade the Forex Market
The three major forex trading ‘sessions’ are as follows (all in Eastern Standard Time):
1. New York open 7:00 AM to 4:00 PM
2. Japanese/Australian open 7:00 PM to 3:00 AM
3. London open 3:00 AM to 11:00 AM
** Often, the best times to trade is at the beginning 3-5 hours of the above mentioned opening times, because the major currency pairs tend to move the most in a particular direction. Especially when there are economic news releases.
THE ABSOLUTE BEST TIME TO TRADE IS FROM 3 AM TO 11 AM EST.
The New York and London trading sessions overlap between 7 and 11 am EST. The volatility is much higher and trading opportunities are much more frequent with bigger moves, especially in these four hours.
The currency pair that moves the most during these hours are the Usd/Chf (#1), then the Gbp/Usd, then the Eur/Usd, then the Usd/Jpy.
This is when you can make 30-100 pips trading in just a few minutes or hours, using any of our strategies in any time frame, especially around news releases.
If you need help in converting EST time zone to your time zone, please use this world time zone converter:
http://www.worldtimezone.com OR
http://timeanddate.com/worldclock
DAILY FORECAST WEBSITES
First thing in the morning, I go to http://www.fxstreet.com to check out some forecasts and news release times for the day. I always check before I start trading and I write down the support/resistance, trend, trading range, target highs & lows, news release times, etc. on my Daily Trading Sheet, which is provided in the Day Trade Forex Advanced course.
This is an interesting forecast site that I also like:
http://www.fxstreet.com/nou/content/107780/content.asp?menu=technicalanalysis
Another place to find out when the world economic news releases are: http://www.forexnews.com and scroll down to the bottom of the website for the list of the current week news releases that impact the Forex markets.
Most often, the economic news release is scheduled for 8:30 AM EST. If you are in a trade at this time, make sure you have your stop loss at a place you are happy with.
The volatility is scary and fast, but if you aren\'t already in a trade, you can jump in once you see the major trend, usually after the first 5-15 minutes. Look at a 30 min chart to see the major trend.
IMPORTANT NOTE: Most of the forex brokerages have now stopped guaranteeing their stops during fundamental news release times, as the volatility is so extreme, that the price can often move faster than their servers can keep up with. Thus, please be very aware that getting into and out of a trade when you want, can sometimes be next to impossible. You can possibly encounter several things during news release times: whipsaw of the price, slippage, freezing of the platform, disconnects, re-quotes of price, loss of money, etc. Don\'t bother calling up any dealing desk to complain, as they are all now distancing themselves from this problem, and they all have a disclaimer on their websites. It is a buyer-beware type of situation. If you choose to play the news, you have to be aware of it\'s risks. The rewards can be very great in just a few minutes, or it can go against you. Make sure that you immediately put in your stop.
1. New York open 7:00 AM to 4:00 PM
2. Japanese/Australian open 7:00 PM to 3:00 AM
3. London open 3:00 AM to 11:00 AM
** Often, the best times to trade is at the beginning 3-5 hours of the above mentioned opening times, because the major currency pairs tend to move the most in a particular direction. Especially when there are economic news releases.
THE ABSOLUTE BEST TIME TO TRADE IS FROM 3 AM TO 11 AM EST.
The New York and London trading sessions overlap between 7 and 11 am EST. The volatility is much higher and trading opportunities are much more frequent with bigger moves, especially in these four hours.
The currency pair that moves the most during these hours are the Usd/Chf (#1), then the Gbp/Usd, then the Eur/Usd, then the Usd/Jpy.
This is when you can make 30-100 pips trading in just a few minutes or hours, using any of our strategies in any time frame, especially around news releases.
If you need help in converting EST time zone to your time zone, please use this world time zone converter:
http://www.worldtimezone.com OR
http://timeanddate.com/worldclock
DAILY FORECAST WEBSITES
First thing in the morning, I go to http://www.fxstreet.com to check out some forecasts and news release times for the day. I always check before I start trading and I write down the support/resistance, trend, trading range, target highs & lows, news release times, etc. on my Daily Trading Sheet, which is provided in the Day Trade Forex Advanced course.
This is an interesting forecast site that I also like:
http://www.fxstreet.com/nou/content/107780/content.asp?menu=technicalanalysis
Another place to find out when the world economic news releases are: http://www.forexnews.com and scroll down to the bottom of the website for the list of the current week news releases that impact the Forex markets.
Most often, the economic news release is scheduled for 8:30 AM EST. If you are in a trade at this time, make sure you have your stop loss at a place you are happy with.
The volatility is scary and fast, but if you aren\'t already in a trade, you can jump in once you see the major trend, usually after the first 5-15 minutes. Look at a 30 min chart to see the major trend.
IMPORTANT NOTE: Most of the forex brokerages have now stopped guaranteeing their stops during fundamental news release times, as the volatility is so extreme, that the price can often move faster than their servers can keep up with. Thus, please be very aware that getting into and out of a trade when you want, can sometimes be next to impossible. You can possibly encounter several things during news release times: whipsaw of the price, slippage, freezing of the platform, disconnects, re-quotes of price, loss of money, etc. Don\'t bother calling up any dealing desk to complain, as they are all now distancing themselves from this problem, and they all have a disclaimer on their websites. It is a buyer-beware type of situation. If you choose to play the news, you have to be aware of it\'s risks. The rewards can be very great in just a few minutes, or it can go against you. Make sure that you immediately put in your stop.
Author:
Erol Bortucene and Cynthia Macy are co-authors of ‘The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading’.
Visit:
http://www.daytrade-forex.com
Sign up for the free \'Trade of the Week\' for examples of actual trades using the Day Trade Forex System.
Visit their other websites at:
http://www.successtrading2000.com
http://www.shortterminvestingsite.com
http://www.professionalforextrading.info
Thursday, June 22, 2006
Forex Trading - The Next Hottest Home Based Business?
by Richard Stranberg
When running a home-based business, a person quickly gains knowledge of how the business world works. Whether it be selling crafts, doing a home delivery business, or selling real-estate, after investing a lot of time and effort into a home or small business, a person quickly becomes aware of the few basic business truths that govern business.
One of those truths is that you have to have time and money to start a small business or any business for that matter. More often than not, the people that have the time don't have the money to invest in a home-based business and the people that have the money don't have the time. With Forex Trading, it is quite possible to generate an income with a small time investment per day, after studying FOREX for a few months, and a very small investment as little as $50 in some cases.
The second truth, and these are probably quite obvious to most people, is that in order to make money a business has to have some sort of product to sell or perform some type of service. In the FOREX world, nothing is being sold and no service is being performed, but rather money is being exchanged. You are making a profit based on the actual exchange value of one currency against another currency. This eliminates the need for employees, such as customer service personnel and human resource people if your company were to become that big.
Also, because of the huge size of the FOREX market, trading nearly $1.5 trillion dollars a day, such things as social events, bad publicity, and changes in political climate will have no effect on your business. In fact, after studying FOREX, you will be able to see how these things will actually benefit your FOREX business.
The third and last classical business truth is that most people are prevented from starting a home-based business because they don't feel good enough about themselves. They don't feel like they're educated enough. I read stories all of the time about people that feel passionate about something or they just pick something that they are relatively good at or have done before and start a business. They just take a chance. If you want to do it, step out. Take that first step. Don't drop any huge sums of money, of course, but do a little research, make a small investment and start your adventure down to the road to FOREX trading. You don't need a doctorite degree to get involved with FOREX trading, but after a couple of months of good study, it's quite possible to generate a significant source of cash from FOREX trading.
Richard Stranberg is an experienced forex trader and has made a lot of money with his Forex Trading System. He contributed this article to the Forex Trading Guide. Visit the Forex Trading Guide at www.forex-trading-guide.us.
About the Author:
Richard Stranberg is an experienced forex trader and has made a lot of money with his Forex Trading System. He contributed this article to the Forex Trading Guide. Visit the Forex Trading Guide at www.forex-trading-guide.us.
Richard Stranberg is an experienced forex trader and has made a lot of money with his Forex Trading System. He contributed this article to the Forex Trading Guide. Visit the Forex Trading Guide at www.forex-trading-guide.us.
Saturday, June 17, 2006
A Good Forex Trading System And Its Main Characteristics. by Adrian Pablo
Forex trading is one of the great money making opportunities available these days. People from many walks of life, men and women, decide to join the forex trading world everyday looking for the great style of life a profitable forex trader can achieve.
But once you enter the world of Forex trading the first thing you will realize is that it's not easy to become a profitable trader. The more you learn about the currency markets the more you realize the urgent need of a good forex trading system in order to make money and not just spend your time entering trades as a hobby taking you nowhere.
There are many companies and individuals out there offering you forex trading systems that promise to be the real thing and that will teach you how to earn tons of money easily. But you must be aware that not all of them are always sincere and you should be ready to look for some specific characteristics good forex trading systems must have. For example; they must be willing to let you know part or the basics of their trading system for free, so you can evaluate their claims and be sure of what you will be buying from them. Also, they should offer you a money back guarantee in case the complete system doesn't stand to their initial claims. A very good sign of the "goodness" and utility of the system would be if the company offering you their services offers to follow up with you about any doubts and questions arising from the use of their trading system. This follow up can include a users forum, contact phone number, email direct contact, etc. Also the forex trading system you are acquiring should be recession-proof and go beyond the traditional linear models that are based mostly on past results, it is difficult to make decisions about the future moves of the currency markets based just on past performance. Ideally, the currency trading system you get should allow you to go with the market direction, either up or down, instead of hoping and believing it will go one way or another, and then find out it was all wrong. And, of course. 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. Look for these main characteristics in the forex trading system you are planning to buy, and if it full fills them; then you are quite certainly making a good decision by planning about using it in your trading career.
About the Author
Adrian Pablo is a Forex freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of forex trading , visit:
Sunday, June 11, 2006
Winning Strategies With Forex Charts by Joseph Plazo
As you read forex charts, remember that the two fundamental approaches for online forex trading: fundamental analysis and technical analysis.
Fundamental analysis doesn't rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.
Technical analysis on the other hand, attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.
The most actively traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left side. Looking at the typical EU-USD, chart you will notice the last price displayed per given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.
The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks-- the most favored method. With the candlestick method there is a large, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at all the candles on a chart it is apparent that bodies come by difference sizes. Sometimes no body exists at all.
The same is true with wicks. Candle wicks come by many difference sizes; there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick's bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.
Forex charts don't offer bullet proof trading hints, but they can help a trader. Past trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.
The online investor typically joins a service that provides realtime charts that updates on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can ease the burden of prediction.
Most forex traders however use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural and economic indicators within a region. They might use charts and other techniques to check correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks... and invest money that is not needed for the immediate future.
Fundamental analysis doesn't rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.
Technical analysis on the other hand, attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.
The most actively traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left side. Looking at the typical EU-USD, chart you will notice the last price displayed per given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.
The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks-- the most favored method. With the candlestick method there is a large, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at all the candles on a chart it is apparent that bodies come by difference sizes. Sometimes no body exists at all.
The same is true with wicks. Candle wicks come by many difference sizes; there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick's bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.
Forex charts don't offer bullet proof trading hints, but they can help a trader. Past trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.
The online investor typically joins a service that provides realtime charts that updates on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can ease the burden of prediction.
Most forex traders however use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural and economic indicators within a region. They might use charts and other techniques to check correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks... and invest money that is not needed for the immediate future.
About the Author
A master of manifestation to his associates, Joseph R. Plazo offers intense executive coaching so people can find jobs and build careers.
Sunday, June 04, 2006
Online FOREX Trading - The Secret of Building Huge Profits Quickly
The secret of how to make big profits with online FOREX trading is staring traders in the face - but most traders don't see it. The secret is ...
Ignore the usual advice you are given, on how to make money in online FOREX trading - and do the opposite!
Read each myth outlined below - which are touted as the great ways to make money on the FOREX - then, when you know what's false, read the truth in the "Reality" that follows each myth.
Myth 1: Day Trading Makes you Money
No, it doesn't - and it's obvious why.
Daily movements are totally random - and by the time you throw in commission, and slippage, you're guaranteed to lose money.
This myth is perpetrated by brokers, and vendors on commission kickbacks - that's why it's such a common myth. Remember you lose they win - period.
Reality - the way to make money in online FOREX trading is to follow the longer-term trend.
The big currency trends last for months, or years - so lock into them, and pile up huge profits.
Myth 2: You can Buy Success - by Following a Guru or Tip Sheet.
For just a few hundred dollars, you can learn systems that trade with 90% accuracy or more. - Yeah, right. If that's the case, why don't the vendors and gurus simply keep quite, and make money for themselves? Answer - because they can't - it's all sales hype.
Reality - if you want to make huge profits by FOREX trading, the reality is - no one can give you success - you need to take responsibility, and do it for yourself. All the great traders do this - and you must too.
Myth 3: There is a Safe Way to Trade Currencies
Most traders don't like risk - they believe people that say that you can trade "safely".
Traders try and follow scientific theories - and believe it when told, that they only need to risk a few hundred dollars, to make thousands.
Reality - online FOREX Trading involves risk - pure and simple. If you don't want to take risks, put your money in the bank, and earn interest.
If you want to make money, be selective on the trades you make - and have confidence in your own judgement.
If you take calculated risks on trades with good odds, you will pile up huge profits.
Myth 4: Buy Out of the Money Options for Leverage
In FOREX trading, options give you unlimited profit potential with limited risk - so brokers tell you to buy out of the money, cheap options with little time value. These options give you greater leverage - and you can then make huge profits, when your option trades "in the money"
Reality - out of the money options, with large time decay, are cheap - because the odds of them trading in the money are small.
In FOREX trading, this is the same as backing the outsider in a horse race - of course, you can be lucky, but over time, you lose.
Buy in the money options, with lots of time value. You won't make as much per trade, but you will make huge profits over time - and your odds of success are far better.
Myth 5: Timing the Entry to a Trade is Crucial
Many brokers and gurus say you need to be in, ahead of the move - and predict the market tops and bottoms. You will then get all the profit from the move.
Reality - trying to pick tops and bottoms is a mugs game - wait for confirmation, and then catch the trend as it gets underway. Sure, you'll miss the absolute top and bottom, but no one can pick those anyway - so don't even try. If you get even 70% of the big moves in FOREX trading you'll make huge profits. Read articles on breakout systems, for more information on how to do this.
Step Away from the Crowd
As you can see, the way to make money in online FOREX trading is to step away from the 90% of traders who lose money - and join the elite 10%, who make the big profits from the big moves.
Ignore the conventional wisdom, and understand the reality - and get rich!
Ignore the usual advice you are given, on how to make money in online FOREX trading - and do the opposite!
Read each myth outlined below - which are touted as the great ways to make money on the FOREX - then, when you know what's false, read the truth in the "Reality" that follows each myth.
Myth 1: Day Trading Makes you Money
No, it doesn't - and it's obvious why.
Daily movements are totally random - and by the time you throw in commission, and slippage, you're guaranteed to lose money.
This myth is perpetrated by brokers, and vendors on commission kickbacks - that's why it's such a common myth. Remember you lose they win - period.
Reality - the way to make money in online FOREX trading is to follow the longer-term trend.
The big currency trends last for months, or years - so lock into them, and pile up huge profits.
Myth 2: You can Buy Success - by Following a Guru or Tip Sheet.
For just a few hundred dollars, you can learn systems that trade with 90% accuracy or more. - Yeah, right. If that's the case, why don't the vendors and gurus simply keep quite, and make money for themselves? Answer - because they can't - it's all sales hype.
Reality - if you want to make huge profits by FOREX trading, the reality is - no one can give you success - you need to take responsibility, and do it for yourself. All the great traders do this - and you must too.
Myth 3: There is a Safe Way to Trade Currencies
Most traders don't like risk - they believe people that say that you can trade "safely".
Traders try and follow scientific theories - and believe it when told, that they only need to risk a few hundred dollars, to make thousands.
Reality - online FOREX Trading involves risk - pure and simple. If you don't want to take risks, put your money in the bank, and earn interest.
If you want to make money, be selective on the trades you make - and have confidence in your own judgement.
If you take calculated risks on trades with good odds, you will pile up huge profits.
Myth 4: Buy Out of the Money Options for Leverage
In FOREX trading, options give you unlimited profit potential with limited risk - so brokers tell you to buy out of the money, cheap options with little time value. These options give you greater leverage - and you can then make huge profits, when your option trades "in the money"
Reality - out of the money options, with large time decay, are cheap - because the odds of them trading in the money are small.
In FOREX trading, this is the same as backing the outsider in a horse race - of course, you can be lucky, but over time, you lose.
Buy in the money options, with lots of time value. You won't make as much per trade, but you will make huge profits over time - and your odds of success are far better.
Myth 5: Timing the Entry to a Trade is Crucial
Many brokers and gurus say you need to be in, ahead of the move - and predict the market tops and bottoms. You will then get all the profit from the move.
Reality - trying to pick tops and bottoms is a mugs game - wait for confirmation, and then catch the trend as it gets underway. Sure, you'll miss the absolute top and bottom, but no one can pick those anyway - so don't even try. If you get even 70% of the big moves in FOREX trading you'll make huge profits. Read articles on breakout systems, for more information on how to do this.
Step Away from the Crowd
As you can see, the way to make money in online FOREX trading is to step away from the 90% of traders who lose money - and join the elite 10%, who make the big profits from the big moves.
Ignore the conventional wisdom, and understand the reality - and get rich!
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