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Saturday, September 28, 2013

Why Trade in Currencies?

There are 10 major reasons why the currency market is a great place to trade:

1. You can trade to any style - strategies can be built on five-minute charts, hourly charts ,daily charts or even weekly charts.
2. There is a massive amount of information - charts, real-time news, top level research - all available for free.
3. All key information is public and disseminated instantly.
4. You can collect interest on trades on a daily or even hourly basis.
5. Lot sizes can be customized, meaning that you can trade with as little as $500 dollars at nearly the same execution costs as accounts that trade $500 million.
6. Customizable leverage allows you to be as conservative or as aggressive as you like (cash on cash or 100:1 margin).
7. No commission means that every win or loss is cleanly accounted for in the P&L.
8. You can trade 24 hours a day with ample liqudity ($20 million up)
9. There is no discrimination between going short or long (no uptick rule).
10. You can't lose more capital than you put in (automatic margin call)

Fair Warning
This tutorial is designed to help you develop a logical, intelligent approach to currency trading base on 10 key rules. The systems and ideas presented here stem from years of observation of price action in this market and provide high probability approaches to trading both trend and countertrend setups, but they are by no means a surefire guarantee of success. No trade setup is ever 100% accurate. That is why we show you failures as well as successes - so that you may learn and understand the profit possibilities, as well as the potential pitfalls of each idea that we present. 

The 10 Rules1. Never Let a Winner Turn Into a Loser
2. Logic Wins, Impulse Kills
3. Never Risk More Than 2% per Trade
4. Trigger Fundamentally, Enter and Exit Technically
5. Always Pair Strong With Weak
6. Being Right but Being Early Simply Means That You Are Wrong
7. Know the Difference Between Scaling In and Adding to a Loser
8. What is Mathematically Optimal Is Psychologically Impossible
9. Risk Can Be Predetermined, but Reward Is Unpredictable
10. No Excuses, Ever

Trading is an art rather than a science. Therefore, no rule in trading is ever absolute (except the one about always using stops!) Nevertheless, these 10 rules work well across a variety of market environments, and will help to keep you grounded - and out of harm's way. 

Thursday, September 26, 2013

Tips for Successful Currency Trading

 Before the advent of the Internet, Forex trading was exclusive only to the “big players.” It used to be that banks and other large financial institutions with millions of dollars to invest are the only ones who can participate in the markets. But now, the Internet has made Forex trading possible for everyday people who have a few thousands or even hundreds of dollars to invest.
If you are looking to get started in Forex trading, then there are a number of things you need to know in order to succeed in your Forex trading venture. Below are some tips for you to keep in mind.
Define Your Trading Goals
As with any kind of business, your goal of trading should always be clear. If you feel you need a written goal posted on your wall, go ahead and do it. Leave alone the purpose of trading for itself. It’s a good idea to define your reason for trading be it for a new home, car, paying off debt, or whatever the reason may be. A clear set of objectives will help you keep sense of perspective and determine when and how to enter the market.
Learn to Control or at Least Minimize Your Emotions
Psychology is an important and often underestimated facet in Forex trading. Your emotions can either make or break your trading success. Some of the most common emotions involved in trading are fear, greed, over-confidence, frustration and euphoria or excitement. These emotions, if not controlled, can impair your ability to concentrate and focus. It’s always best to keep your emotions in check by trading money you can afford to lose, doing sports, relaxation and meditation methods which will help you dissociate your emotions with your trading plan.
Master the Basics
Many traders fail because they forget the basics and get sidetracked by different systems and strategies they hear within the Forex community. While this information may be beneficial, at times, the most fundamental ones are the building blocks towards a successful trading system. It’s advisable that you get a full understanding of the most essential aspects of Forex trading first before diving into others.
Develop a Trading Strategy and Stick With It
Tweaking and testing a trading plan until you come up with one that’s suitable for you is the key ingredient of a successful trader. A good way to manage your trading activities is to work based on a plan. This will also help keep you from trading based on emotions which could ruin your trades.  Your trading plan should consist of stop loss price and profit taking level among many others.
Don’t Shy Away From Demo Accounts
Demo accounts are not only for those who are getting started but also for seasoned professionals who are testing and perfecting their trading plans. So get the most out of these by using them until you are fully confident to trade with real money. And remember: never trade money that you can’t afford to lose.

Saturday, September 21, 2013

Six Moves Which are Dangerous for First Time Investors

First time investors whether it’s in currencies, stocks commodities or bonds should make low risk investments by using small amounts of capital.

Nowadays anyone that has a computer and has access to the internet and an online bank account has the ability to trade stocks and currencies almost immediately. This has meant that many investors now don’t have to rely on mutual funds or other money managers to manage their investments for them as they can now trade and manage their own investments. Unfortunately, to be a successful investor there is many pitfalls that first time investors should be wary of.

Six Moves which are Dangerous for First Time Investors:
The basic theory of all Forex traders is to buy low and sell high however the key thing is to able to recognize whether a stock or a currency is undervalued or overvalued, to read up on technical and fundamental analysis, recognize a diversity of ratios and metrics. The bottom line is that investors should not jump into the markets feet first without careful preparation and study. The investor needs to understand that the same metrics given to the seller and the buyer will produce different conclusions which lead to a different strategy.

Another mistake which is often made by investors is to trade right away with their own money. This is a major error because until the investor has learned and mastered the p/e ratios, dividend yields and book values for stocks and technical and fundamental analysis for currencies it is wise to practice investment/trading strategies on a dummy trading account. As you get better and test more complex strategies on a demo account you can analyze the results without being afraid of losing your hard earned money.   

First time investors tend to look for what they believe is easy profits. Stock investors look at penny shares and see opportunities to make a lot of money quickly. Why buy 4 $25 shares and make a profit of $2 per share because they went up by $2 for a total of $8 when you can make $200 if you bought 100 $1 shares and they went up by $2 each. Sounds easy stock doesn’t it? Unfortunately, ‘penny stocks’ are prone to extreme volatility and whereas they can rise aggressively they can also fall aggressively and cause the investor to lose all his money. This one characteristic makes ‘penny stocks’ a bad option for investors who are still learning the ropes. In the currency markets this is akin to investing in minor currencies which due to illiquidity can make large swings. Again the swing could be such that the investors capital is wiped out.

Another dangerous move is not diversifying in any market, whether it’s in bonds, currencies, commodities or stocks. Putting 100% of your capital into one market is not the best move an investor could make. It is always prudent to risk a small amount of capital at a time. In this way mistakes are minimised cost wise while lessons are learned.

While using leverage seems like a good idea as the investor can invest a smaller amount of capital than would be necessary for the same profit potential. It is also works the other way as there is a risk that the profit potential is the same as the downside potential. The new investor if he is going to leverage should do it in small increments.

Never put all your cash into the market. Keep some set aside for emergency use or to take advantage of investing opportunities in the future. It is better to have a portion of liquid funds not earning anything than having all your liquid funds in danger of being wiped out.

Low risk investing requires having done your homework through technical and fundamental analysis. This takes the guesswork out of investing and makes it more likely that your investments will be sound. Never invest in rumours for in most cases they are just that, and don’t have any sound economic or business sense.

If you as a new investor can avoid these six dangerous moves and invests wisely using small amounts of capital then you will begin to have good returns on your investments.

Wednesday, September 18, 2013

Three Tactics for Trading Forex Around a Busy Schedule

How can you trade Forex… even if you don’t have much time to dedicate to trading?
(Even if you only have a few hours each week to trade)
I’ve been doing it for years now.
You probably do not want Forex to become another full time job. Sitting at your computer ten hours a day, five days a week trading.
I know I don’t!                                                                                                                              
And thats why my style of trading is built around the concept of making consistent profit while investing as little time as possible.
I use three tactics to minimise my trading time, and I am going to reveal each of them below.
Tactic 1: Trade low Maintenance time frames
Trading Forex would be a lot easier if you only had to check your charts two or three times a day right?
With eight hour charts you only need to check your charts two or three times each day. When a new candle opens, you look for a setup. If you see no setups you can check back in eight hours later.
Daily charts require even less time. You only need to check daily charts once per day for trade setups.
Compare this to a five minute chart which you must constantly scan for trade setups. If you leave your computer for a few hours you could miss three or four setups on a five minute chart.
The other benefit of large time frames is that you do not need to act quickly. You can see setups coming hours before they actually trigger. You could check your charts at 8:00 am, see a setup, come back three hours later and take the trade.
Low maintenance time frames are a key tactic in trading around a busy schedule.
I recommend the eight hour time frame and the daily.
Tactic 2: Simplify Your Trading
In Forex, simple is better.
Most new traders are trading a complex indicator based strategies. These strategies usually have several different types of setups.
Why trade something complex when something simple works so much better?
So how do you simplify your trading?
Price Action!
With Price Action you trade clean, indicator free charts and use only price to enter profitable trades.
I could go on for a long time about how Price Action simplifies your trading. And I could go on about how low maintenance Price Action is…
… but you would probably rather just find out how to trade Price Action.
Well I got you covered. I did three free webinars recently in which I revealed my Price Action trading technique.
If you have any questions about trading Price Action, use the comment section at the end of this post to ask.
Tactic 3: Trade a Lot of Pairs
This may seem counter intuitive, how do you simplify your trading by trading a lot of pairs?
Usually, I recommend people to trade one to three pairs. However, if you have a busy schedule, you need to trade a lot of pairs.
The problem with low maintenance time frames is that they do not provide a lot of trades. To counter this you need to trade a lot of pairs.
If you are trading eight hour charts you should trade at least five pairs. If you are trading daily charts you should trade at least ten pairs.
I know this sounds a like a lot, but stick with me here.
You will be trading Price Action on large time frames. Your charts will be simple and clean. You will only need to look at your chart for ten or twenty seconds to check for setups.
Even if you have twenty charts to look at, it would take less than five minutes to check them all. So trading ten pairs is a lot easier than it sounds.
I trade a mix of eight hour and daily charts and I trade eight pairs.
·         EUR/USD
·         GBP/USD
·         USD/CAD
·         USD/CHF
·         USD/JPY
·         GBP/JPY
·         EUR/JPY
·         EUR/GBP
Even with all these pairs I only spend a few hours per week looking for setups and trading.
Now that you know my three tactics…