Online Forex
Available For All Levels of Investors
Archive for November, 2009
Forex Trading Tool – The Three Trendline Strategy
Nov 29th
Newcomers to trading the foreign exchange currency markets do well to accept the observation of experienced seasoned traders that the idea of a perfect Forex trading tool is an illusion.
While no perfect Forex trading tool exists, using a combination of tools to identify a converging of favorable market factors can yield a majority of high probability trades over a period of time.
Trendlines certainly deserve close consideration and many successful traders add them to their collection of Forex trading tools.
It should be stated at the outset that trendlines by themselves do not provide a strong enough signal to warrant making a trade. They are a useful addition and provide confirmation of signals from other tools. (See resource box for a visual example of using a trendline as a trade entry point)
The Three Trendline Strategy
Consider these three main types of trendlines you need to know and use if you are going to make any sense of trendlines.
Trendlines are lines drawn across significant lows in an uptrend, and significant highs in a downtrend. The more candles to the left and right of the lowest candle in an uptrend or the highest candle in a downtrend make the low or high point more significant.
1. Short Term Trendlines
Draw these lines across the most recent two lows (for an uptrend) or highs (for a downtrend). These are best observed on a smaller time frame such as a 15 minute or 30 minute chart.
2. Medium Term Trendlines
These are best observed on a higher time frame such as a 60 minute chart. Again connect the nearest significant low to current price action to the previous significant low in an uptrend or the nearest significant high to current price action to the previous significant high in a downtrend.
3. Long Term Trendlines
Use higher time frames such as the 4 hour chart or the daily chart to draw long term trendlines using the same method described for Medium Term Trendlines.
The long term trendline can be a powerful Forex trading tool. Keep in mind that the daily chart is used prominently by traders of big institutions. Such traders probably do not engage in small moves on an intra day level. They are more concerned about taking a position on a currency pair.
The daily chart is consulted by them when making decisions. So by drawing a trendline on a daily chart you can present to yourself graphically just where price is and where it is likely to either possibly bounce and retrace or continue with the current momentum.
Using Trendlines As An Effective Forex Trading Tool
Trendlines on the short time frame merely give you a defined picture of current price action. These trendlines are broken often during the course of a day. It is probably not a good idea to enter trades based on trendline breaks from a small time frame chart. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
However, here is where trendlines can prove to be a useful Forex trading tool:
If you notice price coming back to test a trendline on the higher time frames, (anything over 30 minutes), look at other factors. For example:
Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
Now, if price were to bounce or touch the trendline on the medium to higher time frames, that is, on the 60 minute, 4 hour, or even daily charts, does that price point also coincide with or match up with one of the other indicators mentioned above?
If for example the trendline intersects with a pivot point which is also a Fibonacci 50% or 62% retracement, or 127% or 162% extension, then you have a convergence of factors. If you entered a trade at that point there is a high probability you will catch at least 10 to 20 pips on the first move on the bounce.
Looking for such opportunities takes patience. They don’t come up so often but when they do you can be ALMOST guaranteed a successful trade if you keep your first profit target to a reasonable level.
If trading multiple lots, then be sure to take your first profit at the 10 to 20 pip level and let one or two other lots run if price continues in the direction you anticipate. At the same time of course you would move up your stop to break even point after taking first profit so your trade can now run without risk.
Employ trendlines as a Forex trading tool with caution and discretion. Covering your charts with every trendline possible will only result in confusion and blurry analysis.
One or two trendlines at key or significant swing points, (price highs and lows) can give you a defined, clear picture of price action, which, when coupled with your other Forex trading tools, can result in profitable trades.
By: Michael A Jones
While no perfect Forex trading tool exists, using a combination of tools to identify a converging of favorable market factors can yield a majority of high probability trades over a period of time.
Trendlines certainly deserve close consideration and many successful traders add them to their collection of Forex trading tools.
It should be stated at the outset that trendlines by themselves do not provide a strong enough signal to warrant making a trade. They are a useful addition and provide confirmation of signals from other tools. (See resource box for a visual example of using a trendline as a trade entry point)
The Three Trendline Strategy
Consider these three main types of trendlines you need to know and use if you are going to make any sense of trendlines.
Trendlines are lines drawn across significant lows in an uptrend, and significant highs in a downtrend. The more candles to the left and right of the lowest candle in an uptrend or the highest candle in a downtrend make the low or high point more significant.
1. Short Term Trendlines
Draw these lines across the most recent two lows (for an uptrend) or highs (for a downtrend). These are best observed on a smaller time frame such as a 15 minute or 30 minute chart.
2. Medium Term Trendlines
These are best observed on a higher time frame such as a 60 minute chart. Again connect the nearest significant low to current price action to the previous significant low in an uptrend or the nearest significant high to current price action to the previous significant high in a downtrend.
3. Long Term Trendlines
Use higher time frames such as the 4 hour chart or the daily chart to draw long term trendlines using the same method described for Medium Term Trendlines.
The long term trendline can be a powerful Forex trading tool. Keep in mind that the daily chart is used prominently by traders of big institutions. Such traders probably do not engage in small moves on an intra day level. They are more concerned about taking a position on a currency pair.
The daily chart is consulted by them when making decisions. So by drawing a trendline on a daily chart you can present to yourself graphically just where price is and where it is likely to either possibly bounce and retrace or continue with the current momentum.
Using Trendlines As An Effective Forex Trading Tool
Trendlines on the short time frame merely give you a defined picture of current price action. These trendlines are broken often during the course of a day. It is probably not a good idea to enter trades based on trendline breaks from a small time frame chart. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
However, here is where trendlines can prove to be a useful Forex trading tool:
If you notice price coming back to test a trendline on the higher time frames, (anything over 30 minutes), look at other factors. For example:
Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
Now, if price were to bounce or touch the trendline on the medium to higher time frames, that is, on the 60 minute, 4 hour, or even daily charts, does that price point also coincide with or match up with one of the other indicators mentioned above?
If for example the trendline intersects with a pivot point which is also a Fibonacci 50% or 62% retracement, or 127% or 162% extension, then you have a convergence of factors. If you entered a trade at that point there is a high probability you will catch at least 10 to 20 pips on the first move on the bounce.
Looking for such opportunities takes patience. They don’t come up so often but when they do you can be ALMOST guaranteed a successful trade if you keep your first profit target to a reasonable level.
If trading multiple lots, then be sure to take your first profit at the 10 to 20 pip level and let one or two other lots run if price continues in the direction you anticipate. At the same time of course you would move up your stop to break even point after taking first profit so your trade can now run without risk.
Employ trendlines as a Forex trading tool with caution and discretion. Covering your charts with every trendline possible will only result in confusion and blurry analysis.
One or two trendlines at key or significant swing points, (price highs and lows) can give you a defined, clear picture of price action, which, when coupled with your other Forex trading tools, can result in profitable trades.
By: Michael A Jones
Forex Mentor Course – My Full Story
Nov 29th
I began my first forex trade three years ago, at this time, information sources of trading available were very limited, I could not get the the suitable information on online forex course for free trading to allow me to begin a live forex trading successfully, all my sources of information and trading strategies were obtained from forex forums posts and the trial and errors of former forex traders and their trading strategies, which were evolved to suit their needs and their potential financial capabilities.
I had a long time with a forex demo account for several months, I did not dare to enter into a real live forex trading, because my capital was very limited, and there were no free online forex courses which I can get to help me in my trading. But one day I landed on a website which sell a forex training course package, this website claimed that the its strategy results in a profit rate around 80% in all cases, I read more on this course enough to to be motivated to buy it, especially its price was very suitable to me ($99 total for the 5 ebooks). Once I got the ebooks, I began reading every single word in them with voracity, and – for honesty – it was the first time for me to read in details about forex money management and risk management and their vital rule in forex trading, but this was all I had gotten from this course, nothing otherwise.
I tried to contact the author of the forex course to query him about several points regarding his training program, and guess what? I did not get any response from him, I contacted him up to 10 times, however I did not hear one word.
This was the lesson #1 I learned: It is not about the training program, it’s about the AUTHOR of this program, is he alive man? is he a real forex trader OR: he’s just a teacher of theoretical lectures in forex trading!
The lesson #2 I learnt was: What is degree of the technical support provided after purchasing his forex training program? shall I find him when I need him?
After a whole year, I would have left almost forex trading and preoccupied by other businesses, but one day while surfing on the internet, I found by accident the Forex Mentor website, and once landed on the main page, at the first sight I cynically laughed and said to myself: “Another Scam!!”
However, I started reading all the information on his training program and the main idea behind it: Pivot Points. I began once again thinking seriously to return to forex trading, and decided to purchase this program of Peter Bain, but for the first glance, I was disappointed for its high price ($495 for a hard copy on CDs, or $349 of the digital copy). After a short time of deep thinking and trying to decide whether I’ll buy or not, I said to myself, I lost in the forex trading in the past several thousand of dollars, let them be several thousand PLUS $495!!
I read every word on the Forex Mentor Website, I collected every information available about the Author (Peter Bain) and his history in the forex and stocks market, I read many indpendent reviews about this course. Despite of that, The most important factores encouraged me to buy forex mentor course were as the follows:
The Concept of Forex Mentor Trading System
1- The Program Author: Peter Bain, I read a lot more about him on the internet and on his long experience in the area of trading in stocks, currencies, and the large number of successful traders who trained by him who achieved good trading results with the favor of his forex trading advises.
Peater Bain has developed a very successful trading strategy based on Pivot Points, which depends primarily on the concept of support and resistance: When you see price violate a pivot point convincingly, there are automated trading systems out there that automatically kick in and buy or sell, depending upon where price is going. So, in essence, these two factors alone account for why other indicators are left breathing dust. Bar patterns, MACD divergence, different time frame readings, and trendlines are definite precursors to price changing direction but, in the final analysis, where price is in relation to its nearest pivot point, is the big clue. Tie all these indications together, and you are sure to out-fox price’s next move.
2- This coach always exists whenever you need him, he provides One-on-one feedback, he believes that every forex trader trainee has different needs and requires special attention, this feature adds high value to his forex training program.
3- Members only forum, where members can talk just about everything related to the Forex market and the Forex training program. This is the most important characteristic of this program, getting in touch with other forex traders add to your learning experiences.
4- Free membership for 6 months ($ 199 value) membership alone equal times the value of this course, after the period of six months, you will be deducting $100 for renewal, through this membership you will receive on a daily basis the following material:
Daily Video Questions and Answers – That’s right! I will personally answer your email trading questions via live streaming video. You probably think we’ve gone off the deep end! But again, we are fully committed to your success! Daily Trading Examples and Reviews – Success by repetition! Everyday, I will illustrate successful forex trading techniques using the most recent trading markets. These videos streamed to your PC put you right in front of the action! No more reading static charts and text. You can watch these videos any time for as many times as you like. Daily Pivot Data for the 6 Major Pairs – We calculate the daily pivots for all the major currency pairs & make them available to you. So you don’t have to do the work! Forex Online Pivot Calculator – Fine-tune your forex trading by calculating your own pivot points. Trade other markets using these same pivot point principles. Meet Local forex traders in your area through one of our dozens of local user groups all over the world. Member Discussion Forum – Discuss forex trading strategies and tips with thousands of other like-minded traders from around the world in our member discussion forex forum.
Fore more Details on the Forex Mentor Course Components: http://www.4x-course.com
By: Hatem Serag
I had a long time with a forex demo account for several months, I did not dare to enter into a real live forex trading, because my capital was very limited, and there were no free online forex courses which I can get to help me in my trading. But one day I landed on a website which sell a forex training course package, this website claimed that the its strategy results in a profit rate around 80% in all cases, I read more on this course enough to to be motivated to buy it, especially its price was very suitable to me ($99 total for the 5 ebooks). Once I got the ebooks, I began reading every single word in them with voracity, and – for honesty – it was the first time for me to read in details about forex money management and risk management and their vital rule in forex trading, but this was all I had gotten from this course, nothing otherwise.
I tried to contact the author of the forex course to query him about several points regarding his training program, and guess what? I did not get any response from him, I contacted him up to 10 times, however I did not hear one word.
This was the lesson #1 I learned: It is not about the training program, it’s about the AUTHOR of this program, is he alive man? is he a real forex trader OR: he’s just a teacher of theoretical lectures in forex trading!
The lesson #2 I learnt was: What is degree of the technical support provided after purchasing his forex training program? shall I find him when I need him?
After a whole year, I would have left almost forex trading and preoccupied by other businesses, but one day while surfing on the internet, I found by accident the Forex Mentor website, and once landed on the main page, at the first sight I cynically laughed and said to myself: “Another Scam!!”
However, I started reading all the information on his training program and the main idea behind it: Pivot Points. I began once again thinking seriously to return to forex trading, and decided to purchase this program of Peter Bain, but for the first glance, I was disappointed for its high price ($495 for a hard copy on CDs, or $349 of the digital copy). After a short time of deep thinking and trying to decide whether I’ll buy or not, I said to myself, I lost in the forex trading in the past several thousand of dollars, let them be several thousand PLUS $495!!
I read every word on the Forex Mentor Website, I collected every information available about the Author (Peter Bain) and his history in the forex and stocks market, I read many indpendent reviews about this course. Despite of that, The most important factores encouraged me to buy forex mentor course were as the follows:
The Concept of Forex Mentor Trading System
1- The Program Author: Peter Bain, I read a lot more about him on the internet and on his long experience in the area of trading in stocks, currencies, and the large number of successful traders who trained by him who achieved good trading results with the favor of his forex trading advises.
Peater Bain has developed a very successful trading strategy based on Pivot Points, which depends primarily on the concept of support and resistance: When you see price violate a pivot point convincingly, there are automated trading systems out there that automatically kick in and buy or sell, depending upon where price is going. So, in essence, these two factors alone account for why other indicators are left breathing dust. Bar patterns, MACD divergence, different time frame readings, and trendlines are definite precursors to price changing direction but, in the final analysis, where price is in relation to its nearest pivot point, is the big clue. Tie all these indications together, and you are sure to out-fox price’s next move.
2- This coach always exists whenever you need him, he provides One-on-one feedback, he believes that every forex trader trainee has different needs and requires special attention, this feature adds high value to his forex training program.
3- Members only forum, where members can talk just about everything related to the Forex market and the Forex training program. This is the most important characteristic of this program, getting in touch with other forex traders add to your learning experiences.
4- Free membership for 6 months ($ 199 value) membership alone equal times the value of this course, after the period of six months, you will be deducting $100 for renewal, through this membership you will receive on a daily basis the following material:
Daily Video Questions and Answers – That’s right! I will personally answer your email trading questions via live streaming video. You probably think we’ve gone off the deep end! But again, we are fully committed to your success! Daily Trading Examples and Reviews – Success by repetition! Everyday, I will illustrate successful forex trading techniques using the most recent trading markets. These videos streamed to your PC put you right in front of the action! No more reading static charts and text. You can watch these videos any time for as many times as you like. Daily Pivot Data for the 6 Major Pairs – We calculate the daily pivots for all the major currency pairs & make them available to you. So you don’t have to do the work! Forex Online Pivot Calculator – Fine-tune your forex trading by calculating your own pivot points. Trade other markets using these same pivot point principles. Meet Local forex traders in your area through one of our dozens of local user groups all over the world. Member Discussion Forum – Discuss forex trading strategies and tips with thousands of other like-minded traders from around the world in our member discussion forex forum.
Fore more Details on the Forex Mentor Course Components: http://www.4x-course.com
By: Hatem Serag
How to Save $5000 on Forex Trading Training and Get it Free
Nov 29th
forextradingseminar.com This video exposes how so many Forex training programs provide very little useful content for the price and how you can obtain more … all » information for very inexpensive and even for free. This video is part of a series that is created to enable persons who are interested in Forex trading to save months of years of frustration and quickly achieve the results that very few achieve.
Forex Trading & Fast Tracking
Nov 28th
Is it possible to find a way to reduce the time it takes to learn how to successfully trade foreign currencies – Fast Tracking?
The answer to this is YES, but with a proviso. First you need to ask yourself a very important question.
Why do I want to learn to trade foreign currencies?
If the answer is “just for the money”, you may find that learning the art of trading is really a bind.
To be successful in any endeavor, it helps a very great deal if you actually enjoy the subject.
My wife – Virginia – recently decided that it would be great if she could learn to play the guitar. She did not decide that it would be great if she could become a rock star and earn millions of dollars (although that would be great too). Virginia simply likes guitar music and wanted to learn to play for her own enjoyment.
She too wanted to Fast Track the learning curve and so she purchased a couple of “Learning Systems” that would speed up how to learn the chords and how to learn some well known guitar solos.
In just a few weeks, Virginia can play the intro to “Hotel California” and one or two other famous rock songs, so Fast Tracking is working out well for her. But how would it turn out if she really didn’t like the guitar.
What if she was only trying to Fast Track a way to earn millions of dollars.
Now you may think that there is no similarity between Virginia learning to play the guitar and someone wanting to make their fortune by trading foreign currencies, but you would be wrong.
By using a well proven trading system, it is possible to Fast Track the learning curve necessary to trade successfully, but you will still need to enjoy the subject.
Virginia has had to put in a lot of practice and continues to do so (oh the joy of a sound proof room) and she actually enjoys the guitar which makes the practicing much easier than if she didn’t.
It never fails to amaze me when a would be trader writes to me saying that they wish to get a copy of my forex trading system to trade on the foreign currency exchange and they state “but I do not want to have to waste time sitting in front of my PC” and “how quickly can I open a live trading account?”
So what is the best way to Fast Track your route to becoming a proficient trader?
By all means purchase a well proven trading system and be prepared to spend time practicing with a demo account while learning to use your trading system.
Take time to find a style of trading that best suits you and your personality. Some people find that short term trading suits them best while others find that position trading is more their style. We are all different and what suits one may not suit another.
Try to get more involved. Don’t stop at just using a trading system. Read the fundamental reports, there are many available on the internet – some free and some by subscription. Become a regular visitor to the Commitment of Traders (COT) website.
Study some of the acknowledged great analysts such as John J Murphy, Thomas R DeMark, Steve Nison & John Bollinger to name but a few.
If you can afford to, subscribe to one of the specialist forex news services. So much useful information can be picked up from these services.
Your trading system will help you a great deal, but if you fully understand what moves the market and why, your performance will be greatly enhanced.
You can Fast Track your way to successful trading but your performance improvement will be immeasurable if you learn love the whole subject of forex trading.
By: Martin J Bottomley
The answer to this is YES, but with a proviso. First you need to ask yourself a very important question.
Why do I want to learn to trade foreign currencies?
If the answer is “just for the money”, you may find that learning the art of trading is really a bind.
To be successful in any endeavor, it helps a very great deal if you actually enjoy the subject.
My wife – Virginia – recently decided that it would be great if she could learn to play the guitar. She did not decide that it would be great if she could become a rock star and earn millions of dollars (although that would be great too). Virginia simply likes guitar music and wanted to learn to play for her own enjoyment.
She too wanted to Fast Track the learning curve and so she purchased a couple of “Learning Systems” that would speed up how to learn the chords and how to learn some well known guitar solos.
In just a few weeks, Virginia can play the intro to “Hotel California” and one or two other famous rock songs, so Fast Tracking is working out well for her. But how would it turn out if she really didn’t like the guitar.
What if she was only trying to Fast Track a way to earn millions of dollars.
Now you may think that there is no similarity between Virginia learning to play the guitar and someone wanting to make their fortune by trading foreign currencies, but you would be wrong.
By using a well proven trading system, it is possible to Fast Track the learning curve necessary to trade successfully, but you will still need to enjoy the subject.
Virginia has had to put in a lot of practice and continues to do so (oh the joy of a sound proof room) and she actually enjoys the guitar which makes the practicing much easier than if she didn’t.
It never fails to amaze me when a would be trader writes to me saying that they wish to get a copy of my forex trading system to trade on the foreign currency exchange and they state “but I do not want to have to waste time sitting in front of my PC” and “how quickly can I open a live trading account?”
So what is the best way to Fast Track your route to becoming a proficient trader?
By all means purchase a well proven trading system and be prepared to spend time practicing with a demo account while learning to use your trading system.
Take time to find a style of trading that best suits you and your personality. Some people find that short term trading suits them best while others find that position trading is more their style. We are all different and what suits one may not suit another.
Try to get more involved. Don’t stop at just using a trading system. Read the fundamental reports, there are many available on the internet – some free and some by subscription. Become a regular visitor to the Commitment of Traders (COT) website.
Study some of the acknowledged great analysts such as John J Murphy, Thomas R DeMark, Steve Nison & John Bollinger to name but a few.
If you can afford to, subscribe to one of the specialist forex news services. So much useful information can be picked up from these services.
Your trading system will help you a great deal, but if you fully understand what moves the market and why, your performance will be greatly enhanced.
You can Fast Track your way to successful trading but your performance improvement will be immeasurable if you learn love the whole subject of forex trading.
By: Martin J Bottomley
Money Management and Forex Trading – The Key to Bigger Gains
Nov 26th
Money management is a bit like sex, we all do it but we don’t talk about it much yet, if you don’t employ proper money management you won’t win. Let’s look at some basics to do with money management.
Money management is the difference between making stellar gains or wiping your account out. Here are some important points to keep in mind when adding it to your forex trading strategy.
Risk & Reward
Risk goes with reward this is common knowledge yet, many traders try to restrict risk so much they actually create it and ensure they lose.
For example day traders think their taking small risks as their stops are close but their 100% guaranteed to lose over time because all short term volatility is random.
The risk looks small but the odds are stacked against them.
Another example of trying to restrict risk to much is trailing a stop to close and getting stopped out by normal volatility and sees the trader get stopped out to soon.
These traders need to make a study of standard deviation of price part of their forex education.
Betting to Win
Just like the successful card player you need to load up your bets on high odd hands and fold losers quickly. When you have a high odds trade denoted by your forex trading system up your bet size.
You here many traders bang on about risking 2% per trade but this is ridiculous for most traders.
For example on $10,000 account that’s $200! How close would your stop have to be?
To close and guarantee your stopped out by volatility.
If you want to win bet 10 – 20% on your high odds trades.
Stop placement
In forex trading most traders like to trade with stops behind support and resistance and you will notice on many occasions how many times a price spikes through the stop in the day and then closes below it.
If you can always use a “stop close” this will prevent from daily volatility hitting your stop in the day session or if you cant keep an eye on the market use “at or in the money options”
Trailing a stop
If you are long term trend following you need to give the market plenty of room to breathe and keep your stop back. Don’t jack it up after a day or so like most traders do – leave it alone. When you have good profits move it behind key support say at 40 day moving average penetrated on a close basis which works well.
If you want to follow long term trends, you are going to have to accept that you will give a lot back at the turning point – but if you get 60% of the major trends you will do well.
Targets
I find stop trailing hard and like to work with a target and get out when its hit.
If the move carries on so what? I am happy, as I got what I want.
In shorter term swing trading, targets are essential as these smaller profits can disappear quickly.
Finally Remember This:
How you deal with risk, will be the difference between you losing or winning at forex trading. Try and restrict risk to much and you will guarantee you lose, but take meaningful risks at the RIGHT time, with courage and conviction and you could enjoy fantastic currency trading success.
Remember the old gamblers saying:
“There’s a time to hold them, a time to fold them and a time to get out of town fast”
Its very applicable to forex trading and money management!
By: Monica Hendrix
Money management is the difference between making stellar gains or wiping your account out. Here are some important points to keep in mind when adding it to your forex trading strategy.
Risk & Reward
Risk goes with reward this is common knowledge yet, many traders try to restrict risk so much they actually create it and ensure they lose.
For example day traders think their taking small risks as their stops are close but their 100% guaranteed to lose over time because all short term volatility is random.
The risk looks small but the odds are stacked against them.
Another example of trying to restrict risk to much is trailing a stop to close and getting stopped out by normal volatility and sees the trader get stopped out to soon.
These traders need to make a study of standard deviation of price part of their forex education.
Betting to Win
Just like the successful card player you need to load up your bets on high odd hands and fold losers quickly. When you have a high odds trade denoted by your forex trading system up your bet size.
You here many traders bang on about risking 2% per trade but this is ridiculous for most traders.
For example on $10,000 account that’s $200! How close would your stop have to be?
To close and guarantee your stopped out by volatility.
If you want to win bet 10 – 20% on your high odds trades.
Stop placement
In forex trading most traders like to trade with stops behind support and resistance and you will notice on many occasions how many times a price spikes through the stop in the day and then closes below it.
If you can always use a “stop close” this will prevent from daily volatility hitting your stop in the day session or if you cant keep an eye on the market use “at or in the money options”
Trailing a stop
If you are long term trend following you need to give the market plenty of room to breathe and keep your stop back. Don’t jack it up after a day or so like most traders do – leave it alone. When you have good profits move it behind key support say at 40 day moving average penetrated on a close basis which works well.
If you want to follow long term trends, you are going to have to accept that you will give a lot back at the turning point – but if you get 60% of the major trends you will do well.
Targets
I find stop trailing hard and like to work with a target and get out when its hit.
If the move carries on so what? I am happy, as I got what I want.
In shorter term swing trading, targets are essential as these smaller profits can disappear quickly.
Finally Remember This:
How you deal with risk, will be the difference between you losing or winning at forex trading. Try and restrict risk to much and you will guarantee you lose, but take meaningful risks at the RIGHT time, with courage and conviction and you could enjoy fantastic currency trading success.
Remember the old gamblers saying:
“There’s a time to hold them, a time to fold them and a time to get out of town fast”
Its very applicable to forex trading and money management!
By: Monica Hendrix
93. How to Calculate Forex Trading Profits and Losses
Nov 20th
www.informedtrades.com A lesson on how to calculate profits and losses in the forex market for active traders and investors in foreign exchange and currrencies.
Forex Training – Price Action
Nov 19th
Forex Training here www.learntotradethemarket.com … forex “price action” strategies trading methods training “nial fuller” review course “learn to trade”
Forex Money Management – How Do I Go About It?
Nov 16th
If you’ve read my earlier articles, you’ll know that I consistently stress on the importance of money management because good techniques and setups alone won’t save you from bad money management. So it only makes sense to know what good money management is. Fair enough?
Ok, let’s move on to the good stuff.
Money management with regards to trading is pretty broad and can cover several topics. I’m most concerned with trading sizes and monthly maximum drawdowns here.
Being a very conservative trader, I always tell my fellow traders and students that I trade with a true positional leverage of just 1:2. I never fail to get shocked looks from them. And I can tell that they are in disbelief because they feel you can never profit sufficiently with such leverages. Nothing can be further from the truth. It’s about capital preservation … I’m sure you’ve heard about it before.
This means that if I wanted to trade standard lot sizes, I need to ensure that I have at least $50,000 in available equity. Here’s my secret formula … Lot size to be traded = Total Capital / 5000
Got it?
Ok, now let’s spend a bit of time talking about max drawdowns in a month. Different traders have different mental sets and levels of aggressiveness. For a long time running, I’ve always been using 5% as a guideline for my monthly maximum drawdown. That means if I start the month with $5000 in available balance, should I ever hit a loss of $250, I will not allow myself to take another trade until the next calendar month.
This will train your trader’s muscles which can only help you in the long run. Hope this little article has helped you somewhat. As always, good trading!
By: Kelvin Chan
Ok, let’s move on to the good stuff.
Money management with regards to trading is pretty broad and can cover several topics. I’m most concerned with trading sizes and monthly maximum drawdowns here.
Being a very conservative trader, I always tell my fellow traders and students that I trade with a true positional leverage of just 1:2. I never fail to get shocked looks from them. And I can tell that they are in disbelief because they feel you can never profit sufficiently with such leverages. Nothing can be further from the truth. It’s about capital preservation … I’m sure you’ve heard about it before.
This means that if I wanted to trade standard lot sizes, I need to ensure that I have at least $50,000 in available equity. Here’s my secret formula … Lot size to be traded = Total Capital / 5000
Got it?
Ok, now let’s spend a bit of time talking about max drawdowns in a month. Different traders have different mental sets and levels of aggressiveness. For a long time running, I’ve always been using 5% as a guideline for my monthly maximum drawdown. That means if I start the month with $5000 in available balance, should I ever hit a loss of $250, I will not allow myself to take another trade until the next calendar month.
This will train your trader’s muscles which can only help you in the long run. Hope this little article has helped you somewhat. As always, good trading!
By: Kelvin Chan
Forex Trading Systems and Robots – An Honest Review
Nov 9th
There’s been a lot of talk about forex systems and forex trading robots. The question that we have to ask ourselves is, “do they really work”? In short the simple answer is yes they do, however only a few of them have been tested and tried enough to be considered a profitable forex trading system.
Many trading systems operate on what’s known as an EA, or expert advisor. More simply put a set of parameters that when triggered executes entry points of a trade then closes the trade based on a set of rules. Good systems have been back tested and forward tested and have consistently yielded positive returns.
Just about any forex system or robot can be very profitable. What it really boils down to is your money management or the type of money management the automated system is using. A good example would be a system that trades daily that has a success rate or 75 percent or more. Meaning it’s winning 75 percent of its trades. However, when it loses in the other 25 percent of its trades, it’s losing such a large portion of the account that even with a 75 percent success rate it’s still losing money. A sound forex trading system applies concrete money management, and believe it or not a lot of these systems can be right just 30 percent of the time, yet due to their money management their still able to make a profit.
There are a few forex robots and automated systems on the market out there that really do work. The people having the greatest success are the ones who are able to go by the books and by that I mean the ones who can follow the rules and discipline themselves to work a proven automated trading system. The best advice for anyone looking into forex robots is to find a quality system that’s been back tested and stick to the rules, let the trades do what their suppose to do.
By: Timothy Rohrer
Many trading systems operate on what’s known as an EA, or expert advisor. More simply put a set of parameters that when triggered executes entry points of a trade then closes the trade based on a set of rules. Good systems have been back tested and forward tested and have consistently yielded positive returns.
Just about any forex system or robot can be very profitable. What it really boils down to is your money management or the type of money management the automated system is using. A good example would be a system that trades daily that has a success rate or 75 percent or more. Meaning it’s winning 75 percent of its trades. However, when it loses in the other 25 percent of its trades, it’s losing such a large portion of the account that even with a 75 percent success rate it’s still losing money. A sound forex trading system applies concrete money management, and believe it or not a lot of these systems can be right just 30 percent of the time, yet due to their money management their still able to make a profit.
There are a few forex robots and automated systems on the market out there that really do work. The people having the greatest success are the ones who are able to go by the books and by that I mean the ones who can follow the rules and discipline themselves to work a proven automated trading system. The best advice for anyone looking into forex robots is to find a quality system that’s been back tested and stick to the rules, let the trades do what their suppose to do.
By: Timothy Rohrer
Forex Trading – What About Commissions, Spreads and Trading Costs?
Nov 8th
The foreign currency market, also known as the Forex market, is turning into one of the most successful and popular investment methods. Many new traders are flocking to the Forex market because of its tremendous potential for money-making. Experienced traders are seeing its worth also and turning to it.
Forex offers many advantages over its competitor investments. A few of those benefits are:
1) Great leverage. In the Forex market the leverage can be 100:1 or even 200:1!
2) The trading costs are low.
3) Amazing liquidity. Nearly 2 trillion dollars are traded on a day to day basis. This is larger than any other financial market in the world.
4) There are no commissions! But we will talk about this more later…
However, currency trading, like any form of investment, does require some costs. That is what I want to concentrate on today.
Paying The Price
Though the costs are much, much lower in the Forex market than in most others, it is crucial to know what they are and how to manage them. In order to understand the profit of “no commissions”, let’s compare the stock market to Forex.
In the stock market, you need to have a broker who will have control over your investment funds and trade for you. But of course the broker will require a percentage of what you earn. Normally, the broker will earn commissions for each trade executed. These commissions can be charged for both selling and buying stock, therefore costing you much money.
With Forex trading, the brokers don’t require commissions. And, except for a few brokers, this really is true.
No Broker – No Problem
Also, the great thing about Forex is not just that brokers don’t require commissions, but that you don’t require a broker! Your capital can be in your own control and you can made decisions on your own. Though the responsibility sounds scary at first, it really is quite liberating. With your own future in your hands, you can trade confidently and successfully and your own freedom can be a great motivation.
But if you do need to use a broker, there are some things that you should understand. First of all, instead of charging commissions, the brokers will charge a “spread”. Though it is not strictly a commission, it is similar in some ways.
However, unlike commissions, spreads are only charged for one side of the transaction. This way you don’t have to pay to buy and sell Forex. Usually the spread is only required for buying Forex units.
Spreading The Wealth
Spreads will differ from broker to broker. They can change on account of what currencies you are trading and what kind of account you have. The more popular the currency, usually the less the spread will be. The currencies that are less commonly traded (and therefore have higher risk) will require higher spreads.
Be sure to decide first of all on what currencies you will be trading and to make sure what the spread will be for those certain Forex units.
All in all, it is very important to know what the spread will be before you trade and invest your money. Though brokers will still cost you money in the Forex market, it is dramatically less than in any other financial market. This is one of the great advantages of Forex trading.
By: Ferris Malone
Forex offers many advantages over its competitor investments. A few of those benefits are:
1) Great leverage. In the Forex market the leverage can be 100:1 or even 200:1!
2) The trading costs are low.
3) Amazing liquidity. Nearly 2 trillion dollars are traded on a day to day basis. This is larger than any other financial market in the world.
4) There are no commissions! But we will talk about this more later…
However, currency trading, like any form of investment, does require some costs. That is what I want to concentrate on today.
Paying The Price
Though the costs are much, much lower in the Forex market than in most others, it is crucial to know what they are and how to manage them. In order to understand the profit of “no commissions”, let’s compare the stock market to Forex.
In the stock market, you need to have a broker who will have control over your investment funds and trade for you. But of course the broker will require a percentage of what you earn. Normally, the broker will earn commissions for each trade executed. These commissions can be charged for both selling and buying stock, therefore costing you much money.
With Forex trading, the brokers don’t require commissions. And, except for a few brokers, this really is true.
No Broker – No Problem
Also, the great thing about Forex is not just that brokers don’t require commissions, but that you don’t require a broker! Your capital can be in your own control and you can made decisions on your own. Though the responsibility sounds scary at first, it really is quite liberating. With your own future in your hands, you can trade confidently and successfully and your own freedom can be a great motivation.
But if you do need to use a broker, there are some things that you should understand. First of all, instead of charging commissions, the brokers will charge a “spread”. Though it is not strictly a commission, it is similar in some ways.
However, unlike commissions, spreads are only charged for one side of the transaction. This way you don’t have to pay to buy and sell Forex. Usually the spread is only required for buying Forex units.
Spreading The Wealth
Spreads will differ from broker to broker. They can change on account of what currencies you are trading and what kind of account you have. The more popular the currency, usually the less the spread will be. The currencies that are less commonly traded (and therefore have higher risk) will require higher spreads.
Be sure to decide first of all on what currencies you will be trading and to make sure what the spread will be for those certain Forex units.
All in all, it is very important to know what the spread will be before you trade and invest your money. Though brokers will still cost you money in the Forex market, it is dramatically less than in any other financial market. This is one of the great advantages of Forex trading.
By: Ferris Malone