Archive for the General category.
Posted on November 5th, 2008 by admin in
General
Nearly all forex traders will usually have their own unique trading system that they use to help them find potential set-ups and actually generate returns. Well this system may be profitable or not, but there is a simple way to increase the profits of any forex trading system.
It’s based on filtering the signals that the system provides you with. What you ultimately want to do is to filter out those positions that are more riskier and those that are less likely to actually make a profit.
If you have been using a trading system for any length of time you will probably know that the set-ups generated by your system will differ greatly and there will be certain trades that you are very confident that they will be winners, and there are others where you are not so confident they will turn out to be profitable.
The key to successful forex trading is to only trade this first category of trades, ie those trades that have a high probability of being winners. This confidence in a trade is usually formed by a number of technical indicators coming into alignment and forming a clear signal, for example, or could be based on previous experience in trading identical set-ups. However when you come to view a trade, there is a simple way you can filter out your set-ups so that you only trade the ones that you have most confidence in.
All you do is to use a ranking system and before each trade give the potential position a confidence ranking out of 10. Now you will probably never have ones which get a 10 rating because no set-up is guaranteed to be a winning one, no matter how strong the signal is, but you should be able to come up with lots of 8s or 9s, for example. These are the ones most likely to generate good returns so a successful strategy is to only trade these high probability positions.
By doing this you are putting yourself in a strong position and at the same time adding discipline to your trading which is one of the key attributes that every profitable forex trader has. Furthermore this simple strategy can turn even the most unprofitable trading systems into profitable ones, particularly if you use sound money management rules, so it’s well worth scrutinising and rating each potential set-up before you decide to actually enter a position.
Click on the following link for free forex tips and strategies, including the exact 4 hour trading strategy that James Woolley uses himself to trade the markets:
http://theforexarticles.com
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Posted on November 4th, 2008 by admin in
General
Learning to trade the Foreign Exchange Markets (Forex or FX) has never been as easy as it is today with the spread of the internet. It is quit simple to learn Forex trading online with many fantastic free and commercially available resources available which are growing each and every day. After becoming educated in the finer methods of trading, the next step is to start the experimentation processes and refine the techniques you have been taught in a customized approach with meets your individualized goals related to realizable profits.
Most individuals that ask me for advice think that is a long, tedious, expensive and complicated process to become a rich professional Forex trader. WRONG! Do I need to say it any more times? Do you know that if you played basketball in the NBA and made 50% of your shots you would be considered one of the greatest shooters of all time?
If you are trading Forex you are guaranteed to make 50% of your shots, that’s right you will make winning trades 50% of the time even if you just flip a coin when attempting to decide which currency to pick. So how hard can it really be? Not to difficult is the answer!
If it is so easy then why do so many novice traders never make it to the next level and become professional traders? This can be answered with one word, GREED. What they don’t understand is your not going to make a million dollars your first week of trading, but they are going to try anyway. The financial killer to most beginning FX traders is the MARGINS offered by the brokerage firms.
If there were no margins one would simply need to make more money than the commissions charged by the brokerage firms to make money. After all, you are GUARENTTEED to be correct 50% of the time when entering a trade. There are only two paths a currency can go, UP or DOWN. They can’t go any other ways, all though some of us in the profession for a long time sometimes think they do.
So where do you learn about controlling your margins? I will first tell you where you don’t and that is the Forex brokerage firms. Of course it is not in there interest to explain the financial snake pit you are about to enter. To learn Forex trading online and how to RULE margins and NOT let them RULE you then you are going to need to sign up for a commercial available course.
If you knew nothing about the Forex markets at all, but you fully understood the concept of margins and how to make them work for you as opposed to against you then you would not be reading this article, but sipping frozen banana and rum drinks under an umbrella on a beach in Tahiti. Just sit back and think about for yourself a little bit, if you are guaranteed to make winning trades 50% of the time exactly how can you not make money at this?
William R. Alheim, Jr. possesses a Masters of Accounting Degree from Florida International University. He is a Certificated Public Accountant license issued by the state of Florida.
http://www.tradingforexreviews.com
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Technorati Tags: course Forex online, Forex course, Forex trading course, learn currency trading, learn Forex trading
Posted on November 3rd, 2008 by admin in
General
Most of us desire to do what we want when we want to. Unfortunately, all too often we are tied down by our comment to our jobs, which while it pays the bills leave little over for the extras that make life worth living. That’s when thinking out of the box becomes a necessity to advance to the next level of the economic ladder and become the person you so richly deserve. One popular approach to solving this issue is trading the currency markets. A Forex class can make the transition to a highly profitable trader a seamless process ending the long learning curve that was often required in the past.
The professional FX trader is a self confident individual that realize they have concurred the ever elusive battle for self determination. They respect everyone, but fear nobody. They approach each day in the markets as if it could be there last day on earth and it is a battle to the death. They thoroughly understand the complexities they are facing and brush them away as obstacles preventing them from obtaining their rightful place in society. They succeed where others have failed, because of their will to survive and prosper despite the difficulties they face.
All that separates the average trader and the professional trader is the years of experience trading the Forex markets and the know how they obtained in the long arduous process to financial freedom. If one was able to receive that expertise without having to spend years acquiring it, then it would only make since the riches the professional traders enjoy could certainly be theirs in a much shorter period. With the tremendous expansion of the internet there now exits ways to gain that know-how and proficiency in a relatively short period.
The Forex class that provides quick access to the expertise the pros possess are called Mentoring programs. These are taught by high lucrative professional currency traders that pass along the years of experience they have gained in a few short months, thus decreasing the learning curve for the beginning trader and improving their cash flow immediately. Desiring to obtain financial independence and the freedom that accompanies it are truly glorious goals everyone should have, but only a few ever reach the status they desire due to inaction and complacency by the holder on those dreams. Some attack the problem with vigor, not allowing themselves to be overpowered while others wallow in self doubt letting their fears of defeat conquer them, which one are you?
William R. Alheim, Jr. possesses a Masters of Accounting Degree from Florida International University. He is a Certificated Public Accountant license issued by the state of Florida.
http://www.tradingforexreviews.com
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Technorati Tags: Forex course, Forex trading course, learn currency trad, learn currency trading, learn Forex trading
Posted on November 2nd, 2008 by admin in
General
You may know that the internet is a tool used by many people in making cash by having online businesses. It is a fact that the internet could deliver cash at your door if you have knowledge on how. Definitely you would like to try and earn through the internet.
One way is going into FOREX trading. Although this online business has already existed for a number of years, you have to take it into consideration and this is one of those newer income generating businesses through the internet.
The FOREX market has only been opened to banks and multinational corporations. They are only the ones that have been allowed to trade in the vast and very liquid market. The currency is traded against each other. To succeed here, one must know when to trade specific kinds of currencies and which of this currency they should trade it against with.
Because of the internet the FOREX market has now opened to everyone who can access the internet. This means that you too can become a currency trader even if you have no million dollars to spare. With just a hundred dollars, you can now start trading currency in this very large market.
The great thing about this FOREX market is that it is almost always open everyday. This would mean that you are able to trade anytime of the day. The trading here can also be very large in terms of the amount of money that is being circulated. In fact, single trading day, there are hundreds of billions of dollars are exchanged.
In this kind of market, you are definitely able to make some cash, if you know how to trade in FOREX. So, just how will you get started in trading in this market assuming that you know how to trade? All you need is a computer or laptop with an internet connection. You will need to sign up an account with a FOREX broker.
Then, you are provided with a trading software where you are going to base all your trades from.
There are FOREX brokers that will be able to advise you on what trades you should make and when to trade. This is why you must remember to go with a broker that has a lot of experience in the market. By doing this you will be able to make sure that you can make some money and minimizing the risks of losing your money.
The author writes about call center at http://www.global-sky.com.
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Posted on October 22nd, 2008 by admin in
General
To many people that sounds amazing, and perhaps it is. It can be very profitable for investors and fortunes have been made by many. The incentive to learn forex trading is the oldest incentive by far, the incentive to make profit. If you learn forex trading you are learning how to make your money make more money for you, the goal of all investors.
If you choose to learn forex trading online you are not alone since thousands of people choose this method every year. If you learn forex trading online you have the benefit of choosing an instructor from almost anywhere in the world, or to choose multiple instructors. When you learn forex trading in this fashion your virtual classmates could be from England, Hong Kong, Singapore, Paris, or any other exotic locale that you may have only read about in the past. Obviously this diversity of culture and knowledge will be beneficial. During online chats and student discussions questions will be raised that you may not have thought of yourself, and you’ll be able to benefit by hearing the answers.
The ultimate goal of forex trading is to trade currency in a consistent manner that will result in profit. For instance, buying Euros with US dollars and then selling the Euros for more than you gave for them when the market changes. This is the oldest rule of business, buy low and sell high. If you learn forex trading you’ll be able to do this on a scale you never would have thought possible, limited only by the amount of investment funds you have and by market conditions.
Forex-Resource-Pro.com - The Internet’s Ultimate Forex Resource!
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Technorati Tags: currency pairs, forex, learn forex, trading
Posted on October 19th, 2008 by admin in
General
When you start Forex trading, it is important to learn the basics of money management. If you just decide how much money you can afford to lose on a single trade, and start trading without any system, then you are not trading you are gambling. Forex trading is not about gambling and trying to win the jackpot, it is about making consistent profitable trades. Unless you manage your money properly while trading the Forex, then you just as well play the casinos in Las Vegas instead.
Some gamblers do make money in casinos, but many more people lose their money. The only people who consistently make a profit from gambling are the casino owners. Even when gamblers do win, the casino owners often bribe them with free hotel rooms, free food and drink etc. to carry on gambling, and in the end they lose all their money to the casino. When you trade the Forex, you need to think like the smart casino owner, not like a gambler.
In any enterprise, it is always easier to lose money than to make it, and trading the Forex is no different. For example, suppose you lose 50 percent of your bankroll on a trade. Now you have only 50 percent left to trade your way back to where you started. And what happens if you lose the other 50 percent on your next trade? Gamblers often talk about winning streaks and losing streaks. When they think they are on to a winning streak they keep on staking all of their winnings on the next roll of the dice or spin of the roulette wheel – and what happens? You’ve guessed it, they lose all their money, and end up broke. In Forex trading you can never rely on winning streaks, but losing streaks are a very real and ever present danger.
Suppose you have a trading system that returns a profit 70 percent of the time. You would expect 7 out of 10 trades to make a profit, and 3 out of 10 trades to make a loss. However this ratio is only true if you average out the results of hundreds or even thousands of trades. So if you make 100 trades, you will probably make close to 70 profitable trades and 30 losing trades. But what if you start trading, and your first 10 trades are all losing trades?
The answer is you must only trade with a small percentage of your trading bankroll. For example, suppose you have a starting capital of $10,000. See what will happen if you make 10 consecutive losing trades (trading with 10 percent of your bank on the left, and 5 percent of your bank on the right):
10 Percent 5 Percent
Bank Trade Bank Trade
$10,000 $1,000 $10,000 $500
$9,000 $900 $9,500 $475
$8,100 $810 $9,025 $451
$7,290 $729 $8,574 $429
$6,561 $656 $8,145 $407
$5,905 $591 $7,738 $387
$5,314 $531 $7,351 $368
$4,783 $478 $6,983 $349
$4,305 $430 $6,634 $332
$3,874 $387 $6,302 $315
If you started with $10,000 in your bank, and trade with 10 percent of your bank each time, then you would have $3,874 - $387 = $3,487 left in your bank after 10 losing trades. But you would have $6,302 - $315 = $5,987 left in your bank if you traded with just 5 percent each time. (Of course if you had traded with $1,000 each time, you would be cleaned out after 10 losing trades.)
If your system returns 50 percent profitable trades, and 50 percent losing trades, then you would expect to get 10 consecutive losing trades once in every 1024 trades. (And they might be your very first 10 trades!) If your system returns 70 percent profitable trades, and 30 percent losing trades, then you would expect to get 10 consecutive losing trades once in every 169,350 trades. This is not very likely to happen in your first 10 trades, but it is still more likely than your chances of winning your state or national lottery. This also demonstrates the importance of developing a system that returns a high percentage of profitable trades.
By risking no more than 5 percent of your bank at any one time, you should be able to ride out even long losing streaks. The other advantage is, as the overall amount in your bank increases you can trade with larger margins, and hence make larger profits. Note: When you trade with an odd amount, e.g. 5 percent of $6,302 = $315, always round down. So you would buy 1 mini lot at $100 (with a 1 percent margin) and leave the other $200 in your account, just in case the trade moved against you.
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Posted on October 19th, 2008 by admin in
General
If you do a search on “Forex trading systems” in any internet search engine, you will see thousands of ads for the perfect trading system. Many of then state you can make big profits every day, and promise you will never make a single losing trade. The advertisers then go on to tell you they will sell you their secret system for just $5,000. Now anyone who says they never make a losing trade is talking baloney. In any case, if their system is so wonderful and they are such a smart trader, why would they need your money?
Without a doubt, some of these systems do work, but it is far better for you to develop your own personal trading system. Use your $5,000 to fund your trading account instead. If you develop your trading system using a free demo account, it won’t cost you a cent. Although you can never expect every one of your trades to make a profit, you can ensure you make many more profitable trades than losing trades. It is not very difficult to develop a profitable trading system. The difficult part is sticking to your system, no matter what, and this is where many inexperienced traders fail.
The main aim of any trading system is to identify trends as early as possible to gain maximum advantage from them. While at the same time, avoiding false trends and blips, where the market stands still or even moves against you. The earlier you catch a trend the more likely it is to be a false trend. However, if you wait until you are certain of your trend, before you start trading, the more likely the market is to stand still, or even move against you.
A good method to identify trends early is by using moving averages. Use two moving averages, a fast moving average (i.e. averaging over a small number e.g. 5, of time periods), and a slower moving average (i.e. averaging over a larger number e.g. 10, of time periods). Plot both on the same chart, and find the point where they cross over. This is called the “moving average crossover” system. When you have identified what you think is a trend, then you need to confirm it by taking into account other market indicators in addition to moving averages. By using at least two different indicators is the best method of avoiding false trends and blips.
Always decide how much you are prepared to lose on your trade, before thinking about how much profit you will earn. You must allow some for at least some movement against you, but at the same time you don’t want to risk losing too much on your trade. When you have decided how much you are prepared to lose, you can set up a stop-loss order. Finally, you need to decide at what price you will open your trade, and also at what price you will close your trade to get maximum profit. Whatever you decide, always stick to your decision, even if the trade moves against you.
You must develop a successful trading system, (by demo trading) that gives you consistent profits. Provided you develop the system while demo trading, you should not be influenced by emotions (e.g. worried about what will happen if you lose all your money). When you have perfected your system, write it down. Write down your stop-loss amount (e.g. if the price falls by 30 pips), and when you will close your trade (e.g. if the price rises by 50 pips). You must test your system for at least 2 months using a free demo account before trading for real. Always stick to your system, and remember, trading systems only work if you have the discipline to stick to them.
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Technorati Tags: currency trading system, forex system, forex trading, forex trading system, online trading system
Posted on October 18th, 2008 by admin in
General
Moving averages is one of the most useful of a number of different charting tools, you can use to forecast future Forex prices.
Simple Moving Average (SMA)
The simple moving average is calculated by dividing the sum of the past N period, closing prices by the number of periods. Moving averages all operate with a delay, because you are using price data from the past to try and forecast what will happen in the future. (N.B. There is no absolute guarantee that past trends will continue into the future.)
For example, suppose you want to plot the 5 period simple moving average on a 30 minute chart. This will be the average of the closing prices of the last five, 30 minute periods. (Your charting software will do all of this for you, the examples below are for information only.)
Examples of Simple Moving Average calculations for the GBP/USD currency pair:
10 Minute 30 Minute 1 Hour
Time Quote Time Quote Time Quote
10:00 1.9722 10:00 1.9722 10:00 1.9722
10:10 1.9723 10:30 1.9726 11:00 1.9730
10:20 1.9725 11:00 1.9730 12:00 1.9732
10:30 1.9726 11:30 1.9731 1:00 1.9720
10:40 1.9728 12:00 1.9732 2:00 1.9716
SMA 1.9725 SMA 1.9728 SMA 1.9724
The 5 period moving average on a 10 minute chart for the GBP/USD currency pair = 1.9725.
The 5 period moving average on a 30 minute chart for the GBP/USD currency pair = 1.9728.
The 5 period moving average on a 1 hour chart for the GBP/USD currency pair = 1.9724.
The longer the period you use to calculate your moving average, the smoother the chart. However, the longer time period also makes your moving averages slower to react to price changes. This is especially the case with simple moving averages, where the contributions to the moving average is the same for all the individual periods.
A single moving average is of little use. In order to find the price trends in the Forex market you need to plot a series of moving averages.
Exponential Moving Averages (EMA)
Simple moving averages are a very good tool for quickly establishing Forex market trends. However, they are very susceptible to spikes, and also rely just as much on older prices as newer prices. In your Forex technical analysis you need to base your forecasts on the most recent prices available. In other words you need to base your forecast on what traders in the Forex market are doing right now, not on what they were doing yesterday, or last week, or last month.
Exponential moving averages give us a method of placing more emphasis on recent currency quotes, than on earlier quotes.
Suppose the daily closing prices for the GBP/USD are:
Day1 1.9722
Day2 1.9727 (1.9650)
Day3 1.9737
Day4 1.9742
Day5 1.9747
The 5 period simple moving average, on a 1 day chart is 1.9735. This is higher than the price on Day1 and suggests a rising trend for the GBP/USD pair. Now, suppose the quote for Day2 was 1.9650, perhaps due to an interest rate change by the Bank of England. The simple moving average would then be 1.9720, pointing to a downward trend for the GBP/USD currency pair. (Although the price has since increased consistently from Day2 through Day5.)
The answer is to use the exponential moving average that places more emphasis on the more recent prices. In other words, the exponential moving average, places more reliance on what the market is doing now.
In the above example, with Day2’s closing price at 1.9650, the exponential moving average would be 1.9723, with a weighting factor (α) of 0.1, and 1.9726, with a weighting factor of 0.2. (The higher the weighting factor, the more the emphasis on recent prices).
You need not be concerned with the nuts and bolts of calculating exponential moving averages, because your charting software should do all this for you.
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Posted on October 18th, 2008 by admin in
General
The object of Forex analysis, is to try and predict which way the market is likely to move. If you get your predictions right, you will make a profit, but if you get them wrong and you will lose your money. There are two types of Forex analysis, Fundamental Analysis and Technical Analysis.
Fundamental analysis involves taking into account the social, economic and political forces that influence the value of a particular country’s currency. If the economy of the country is strong, and the country has a stable government, then the value of that country’s currency can be expected to rise against the currencies of countries with weaker economies.
The most extreme example of a country with a weak (collapsed) economy (at the time of writing - early 2008) is Zimbabwe. The poor state of Zimbabwe’s economy is largely due to horrendous government, with the theft of farm land and plundering of Zimbabwe’s currency reserves by corrupt government officials. The rate of inflation in Zimbabwe is currently over 1,000 percent, so that the currency loses over 90 percent of its value every year. The value of Zimbabwe’s currency is so low, that its value is now literally worth less than the paper it is printed on.
Even in stable healthy economies however, the actions of in particular, reserve banks (e.g. Federal Reserve in the U.S, Bank Of England in the UK etc.) can influence the value of the currency.
Technical analysis involves examining currency prices over a period of time to try and identify trends and patterns. For example, if the value of a particular currency has been steadily increasing over a period of several weeks, then it is likely that the trend will continue in the future, at least in the short term. The trend is the most important aspect of technical analysis. If you can correctly identify a trend, and trade in the same direction you are likely to make profitable trades. Also, the earlier you identify a trend, the more chance you have of making profitable trades.
Ideally, you need to employ both fundamental and technical analysis in your Forex trading.
For example, suppose you were charting the value of the UK pound (GBP) against the U.S. dollar in October - November 2007, using technical analysis only. You would have noticed that for several consecutive days, the GBP was increasing against the USD by around 100 pips every day. So, on November 8, 2007 (the first Thursday in November), you discover the Forex quote: GBP/USD = 2.1104/2.1109. You figure, that by the end of the trading day this should have increased to around: GBP/USD = 2.1204/2.1209. So you buy one standard lot at a rate of 1 GBP = 2.1109 USD, = 47373 GBP. You expect the GBP to rise by 100 pips, so you can sell your 47373 GBP for 2.1204 USD each = $100,450 and earn a nice $450 profit on the day’s trading.
You check the exchange rate a few hours later and you discover that it has moved against you, and the Forex quote: = 2.0906/2.0911. You decide to cut your losses, and sell your 47373 GBP for 2.0906 USD each = $99,294. So instead of making $450 profit, you make a loss of $100,000 - $99,294 = $706. So what happened? The Bank of England sets the UK base interest rate on the first Thursday of every month. On Thursday November 8, 2007, The Bank of England was expected to increase the UK base interest rate, and hence lower the UK inflation rate and increase the value of the GBP. However, the Bank of England unexpectedly left the UK interest rate on hold, which caused the GBP to fall in value instead.
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Technorati Tags: forex, forex analysis, forex fundamental analysis, forex market, technical analysis
Posted on October 17th, 2008 by admin in
General
Choosing Your Account Type
If you are trading the Forex part time as a (hopefully paying) hobby, then you can open an account in your own name. However, if you intend to trade the Forex full time, as a full time income earner, then it is best to open a business account. Of course you can use your own name as the name of your business. Opening a business account makes it easier when dealing with the IRS (HMRC in the UK).
You will also need to decide whether you want to open a standard account, (dealing in standard lots of $100,000) or a mini account (dealing in mini lots of $10,000), or if available, a micro account (dealing in micro lots of $1,000). Always aim to open the smallest account possible when you first start trading. If you want to trade with larger amounts, you can simply trade with more than one lot at a time.
Make sure you read, and understand the fine print. Also make sure you open a Forex Spot account, and not a “forward” or “futures” account. After all, you want to be able to trade in real time.
You will most likely need to print and fill out paper forms, and mail or fax them back to your broker before you can start trading. When your broker has approved your application they should contact you with instructions on setting up your account. They will also explain how you can fund your account. They should also send you your user name and password so you can log onto your account online.
Warning: Only trade with real money after at least two months practice with a free demo account.
Maximizing Your Chances Of Success
You must be realistic. Although the Forex has the potential for making large profits, it is not a get rich quick scheme. You are not going to profit from all of your Forex trades. Even the most experienced Forex traders sometimes get it wrong and make losses. The best you can aim for is to make more profitable trades than losing trades.
Don’t trade with money you cannot afford to lose. You should have at least 10 times your margin in your account. If you lose all the money in your Forex trading account, it should not leave you broke, without cash to buy food or pay your electric bill. Do not expect to open an account with a couple hundred dollars today and become a millionaire by tomorrow.
In reality, only a very small number of Forex traders are successful. The reason most traders fail is because of one or more of the following:
They do not have the discipline to demo trade for long enough.
They expect to profit from every trade.
They are reckless, and trade with money they cannot afford.
They let their emotions influence their trading strategy.
They trade with margins that are too small, i.e. too much leverage.
They don’t take their trading seriously enough, and don’t trade in a businesslike manner.
They try to make bigger profits by taking unwise risks.
They start trading with (and losing) real money, before they have learnt their craft properly through demo trading.
They start trading with multiple currency pairs, before they are competent with just one currency pair.
It is essential that you become competent demo trading, before you risk one penny of real money. Would you expect to become a doctor, surgeon or a lawyer overnight? So don’t expect to become a competent Forex trader overnight.
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