Essential Elements of a Successful Trader

Courage Under Stressful Conditions When the Outcome is Uncertain
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

What is Forex?

FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.

Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.

In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.

Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.

Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.

Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.

This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).

Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.

Forecasting Forex Trading

What is Forex or Foreign Exchange: It is the largest financial market in the world, with a volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.
What about Forecasting: Predicting current and future market trends using existing data and facts. Analysts rely on technical and fundamental statistics to predict the directions of the economy, stock market and individual securities.

For those who trade using the Forex, or foreign currency exchange, knowing how to forecast the Forex can make the difference between trading successfully and losing money. When you begin learning about Forex trading, it is vital that you understand how to forecast the Forex trading market.
There are a few methods that are used when forecasting the Forex. Each system is used to understand how the Forex works and how the fluctuations in the market can affect traders and currency rates. The two methods that are most often used are called technical analysis and fundamental analysis. Both methods differ in their own ways, but each one can help the Forex trader understand how the rates are affecting the currency trade. Most of the time, experienced traders and brokers know each method and use a mixture of the two to trade on the Forex.
One method used in forecasting foreign currency exchange is called technical analysis. This method uses predictions by looking at trends in charts and graphs from past Forex market happenings. This system is based on solid events that have actually taken place in the Forex in the past. Many experience Forex traders and brokers rely on this system because it follows actual trends and can be quite reliable.
When looking at the technical analysis in the Forex, there are three basic principles that are used to make projections. These principles are based on the market action in relation to current events, trends in price movements and past Forex history. When the market action is looked at, everything from supply and demand, current politics and the current state of the market are taken into consideration. It is usually agreed that the actual price of the Forex is a direct reflection of current events.
The trends in price movement are another factor when using technical analysis. This means that there are patterns in the market behavior that have been known to be a contributing factor in the Forex. These patterns are usually repeating over time and can often be a consistent factor when forecasting the Forex market. Another factor that is taken into consideration when forecasting the Forex is history. There are definite patterns in the market and these are usually reliable factors. There are several charts that are taken into consideration when forecasting the Forex market using technical analysis. The five categories that are look at include indicators, number theory, waves, gaps and trends.

Most of these can be quite complicated for those who are inexperienced using the Forex. Most professional Forex brokers understand these charts and have the ability to offer their clients well-informed advice about Forex trading.
Another way that experienced brokers and traders in the Forex use to forecast the trends is called fundamental analysis. This method is used to forecast the future of price movements based on events that have not taken place yet. This can range from political changes, environmental factors and even natural disasters. Important factors and statistics are used to predict how it will affect supply and demand and the rates of the Forex. Most of the time, this method is not a reliable factor on its own, but is used in conjunction with technical analysis to form opinion about the changes in the Forex market.

For those interesting in being involved with Forex trading, a basic understanding of how the system works is essential. Understanding both forecasting systems and how they can predict the market trends will help Forex traders be successful with their trading. Most experienced traders and brokers involved with the Forex use a system of both technical and fundamental information when making decisions about the Forex market. When used together, they can provide the trader with invaluable information about where the currency trends are headed.
Always leave the forecasting to the pros unless you are playing the Forex as a hobby and don’t have a lot of money invested…Or like most people you will learn the hard way.

Forex Trading Methods

Forex Trading Methods - Day Trading
What is Day Trading?

Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close of the trading day. This can occur in any marketplace but is most common in the foreign exchange market and stock market. Many day traders are bank or investment firm employees working as specialists in equity investment and fund management. However, with the advent of electronic trading and margin trading, day trading has become increasingly popular among casual, at home traders. Day traders utilize high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies. They serve two critical functions in the marketplace - keeping the markets running efficiently via arbitrage and providing much of the markets' liquidity.

Trade Frequency

Although collectively called day trading, there are many styles within day trading. A day trader is actively searching for potential trading setups (that is, any stock or other financial instruments that, in the judgment of the day trader, is in a tension state, ready to accelerate in price in either direction, that when traded well has a potential for a substantial profit). The number of trades you can make per day are almost unlimited, as are the profits and losses.

Some day traders focus on very short-term trading within the trading day, in which a trade may last just a few minutes. Day traders may buy and sell many times in a trading day and may receive trading fee discounts from their broker for this trading volume.

Some day traders focus only on price momentum, others on technical patterns, and still others on an unlimited number of strategies they feel can be profitable. Some day traders exit positions before the market closes to avoid any and all unmanageable risks - negative price gaps (differences between the previous day's close and the next day's open bull price) at the open - overnight price movements against the position held. Other traders believe they should let the profits run, so it is acceptable to stay with a position after the market closes.

Day traders sometimes borrow money to trade. This is called margin trading. Since margin interests are typically only charged on overnight balances, the trader pays no fees for the margin benefit, although they still run the risk of a Margin call.

Profit and Risks

Because of the nature of financial leverage and the rapid returns that are possible, day trading can be either extremely profitable or extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. Some day traders manage to earn millions per year solely by day trading.

Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as "bandits" or "gamblers" by other investors. Some individuals, however, make a consistent living from day trading.
Nevertheless day trading can be very risky, especially if any of the following is present while trading:

- trading a loser's game/system rather than a game that's at least winnable,
- trading with poor discipline (ignoring your own strategy, tactics, rules),
- inadequate risk capital with the accompanying stress of having to "survive",
- incompetent money management (i.e. executing trades poorly).

The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for day traders. Where overnight margins required to hold a stock position are normally 50% of the stock's value, many brokers allow pattern day trader accounts to use levels as low as 25% for intraday purchases. This means a day trader with the legal minimum $25,000 in his or her account can buy $100,000 worth of stock during the day, as long as half of those positions are exited before the market close. Because of the high risk of margin use, and of other day trading practices, a day trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his or her original investment, or even larger than his or her total assets.

The Controversy

The profit potential of day trading is perhaps one of the most debated (and misunderstood) topics on Wall Street. Countless internet scams have capitalized on this confusion by promising enormous returns in a short period. Meanwhile, the media continues to promote this type of trading as a get-rich-quick scheme that always works. The truth lies somewhere in the middle. There are those who engage in this type of trading without sufficient knowledge (or some even admittedly for a gambler's high). However, there are day traders who are able to make a successful living. Many professional money managers and financial advisors shy away from day trading, arguing that in most cases the reward does not justify the risk. They often cite that no day trader is world renown, whereas icons like Warren Buffett and Peter Lynch are a testament to the success that can be attained by more traditional forms of investing. Conversely, those who do day trade insist there is profit to be made. They say the success rate is inherently lower as a result of the higher complexity and necessary risk of day trading, combined with all the related scams. Overall, the street remains divided on the issue. At the very least they agree that day trading is not for everyone and involves significant risks. Moreover, it demands an in-depth understanding of how the markets work and various strategies for profiting in the short term.

Day Trading For A Living

There are two primary divisions of professional day traders: those who work alone and/or those who work for a larger institution. Most day traders who trade for a living work for a large institution. The fact is these people have access to things individual traders could only dream of: a direct line to a dealing desk, large amounts of capital and leverage, expensive analytical software and much more. These traders are typically the ones looking for easy profits that can be made from arbitrage opportunities and news events. The resources to which they have access allow them to capitalize on these less risky day trades before individual traders can react. Individual traders often manage other people's money or simply trade with their own. Few of them have access to a dealing desk; however, they often have strong ties to a brokerage (due to the large amounts of commission spending) and access to other resources. However, the limited scope of these resources prevents them from competing directly with institutional day traders, instead, they are forced to take more risks. Individual traders typically day trade using technical analysis and swing trades, combined with some leverage, to generate adequate profits on such small price movements in highly liquid stocks.

Day trading demands access to some of the most complex financial services and instruments in the marketplace. Day traders require:

1. Access to the Trading Desk

This is usually reserved for traders working for larger institutions or those who manage large amounts of money. The dealing desk provides these traders with instantaneous order executions, which can become important, especially when sharp price movements occur. For example, when an acquisition is announced, day traders looking at merger arbitrage can get their orders in before the rest of the market, taking advantage of the price differential.

2. Multiple News Sources

In the move "Wall Street" Gordon Gekko says that 'information is the most important commodity when trading’. News provides the majority of opportunities day traders capitalize on, so it is imperative to be the first to know when something big happens. The typical trading room contains access to the Dow Jones Newswire, televisions showing CNBC and other news agencies, as well as software that constantly analyzes various other news sources for important stories.

3. Analytical Software

Trading software is an expensive necessity for most day traders. Those who rely on technical indicators or swing trades rely more on software than news.
Combined these tools provide traders with an edge over the rest of the marketplace. It is easy to see why, without them, so many inexperienced traders lose money.

Techniques

The following are several basic strategies by which day traders attempt to make profits. Besides these, some day traders also use contrarian (reverse) strategies (more commonly seen in algorithmic trading) to trade specifically against irrational behavior from day traders using these approaches.

Some of these approaches require shorting stocks instead of buying them normally: the trader borrows stock from his broker and sells the borrowed stock, hoping that the price will fall and he will be able to purchase the shares at a lower price. There are several technical problems with short sales - the broker may not have shares to lend in a specific issue, some short sales can only be made if the stock price or bid has just risen (known as an "uptick"), and the broker can call for the return of its shares at any time. Some of these restrictions (in particular the uptick rule) don't apply to trades of stocks that are actually shares of an exchange-traded fund (ETF).

1. Trend Following

Trend following, a strategy used in all trading time-frames, assumes that financial instruments which have been rising steadily will continue to rise, and vice versa with falling. The trend follower buys an instrument which has been risin,g or short-sells a falling one, in the expectation that the trend will continue.

2. Contrarian Investing

Contrarian investing is a market timing strategy used in all trading time-frames. It assumes that financial instruments which have been rising steadily will reverse and start to fall, and vice versa with falling. The contrarian trader buys an instrument which has been falling, or short-sells a rising one, in the expectation that the trend will change.

3. Range Trading

Range trading is a trading style in which stocks are watched that have either been rising off a support price or falling off a resistance price. That is, every time the stock hits a high, it falls back to the low, and vice versa. Such a stock is said to be "trading in a range", which is the opposite of trending. The range trader therefore buys the stock at or near the low price, and sells (and possibly short sells) at the high. A related approach to range trading is looking for moves outside of an established range, called a breakout (price moves up) or a breakdown (price moves down), and assume that once the range has been broken prices will continue in that direction for some time.

4. Scalping

Scalping was originally referred to as spread trading. Scalping is a trading style where small price gaps created by the bid-ask spread are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. Scalping highly liquid instruments for off the floor day traders involves taking quick profits while minimizing risk (loss exposure). It applies technical analysis concepts such as over/under-bought, support and resistance zones as well as trend line, trading channel to enter the market at key points and take quick profits from small moves. The basic idea of scalping is to exploit the inefficiency of the market when volatility increases and the trading range expands.

5. Rebate Trading

Rebate Trading is an equity trading style that uses ECN rebates as a primary source of profit and revenue, considering the payment structure of ECN paying per share. Traders maximize their returns by trading low priced, high volume stocks. This enables them to trade more shares and have more liquidity with a set amount of capital.

6. News Playing

News playing is primarily the realm of the day trader. The basic strategy is to buy a stock which has just announced good news, or short sell on bad news. Such events provide enormous volatility in a stock and therefore the greatest chance for quick profits (or losses). Determining whether news is "good" or "bad" must be determined by the price action of the stock, because the market reaction may not match the tone of the news itself. The most common cause for this is when rumors or estimates of the event (like those issued by market and industry analysts) were already circulated before the official release, and prices have already moved in anticipation---the news is already priced in the stock.

Conclusion

Although day trading has become somewhat of a controversial phenomenon, its prevalence is undeniable. Day traders, both institutional and individual, play an important role in the marketplace by keeping the markets efficient and liquid. Some argue that individuals should stay away from day trading, while others argue that it is a viable means to profit. And although it is becoming increasingly popular among inexperienced traders, it should be left primarily to those with the skills and resources needed to succeed.

the Real Deal in Trading

Money Management in Forex: the Real Deal in Trading

In comparison to the amount of time, money and energy spent by some traders on Forex robots, error-proof technical strategies, and quasi-magical foreign exchange trading courses where we are promised to be made super-traders, it is a pity that money management receives insufficient attention. Although almost every trader worthy of the title is aware that success in Forex is largely dependent on careful management of losses, as well as profits, this aspect of trading is somewhat neglected in preference to indicators, statistics, analysis and strategy. Yet the first issue faced by a beginning trader is losing money while trading, and strategy or analysis doesn't say much about how to cope with it. As such, careful study and practice of money management methods must be paramount in the mind of the trader who is committed to achieving success in trading Forex.

What is analysis? It is the identification of high probability scenarios for profits. Probability does not involve any certainty, and by definition, any analytical scenario, however solid it may be, will lead to losses sooner or later. In the case of the beginner, whose skills are underdeveloped in best cases, and undeveloped in the worst, losses will come a lot sooner than profits. It is clear, then, that any trader's education must begin with a good understanding of the importance and necessity of money management skills.

Money management teaches us how to manage losses, and how to maximize profits. It all commands us to cultivate a responsible and disciplined attitude to trading by acquiring consistency in our habits. We are taught not to be erratic in trade sizes, to be consistent about the entry of stop loss or take profit orders, and above all, to regard loss as a natural, and indeed, inseparable part of a trading career. There are many ways of managing loss, but there is no way of avoiding it altogether in a trading career. Even George Soros has had a number of serious, sometimes massive blunders in his long career, but he is still regarded as a master trader by many. Warren Buffet bought the shares of an oil company at the peak of the oil bubble in 2008, and he made wrong choices with Salomon Brothers in the 90's as well. But all these traders were quick to recognize errors, and mange losses instead of denying them and letting them fester and achieve huge proportions. What happens to those who refuse to accept losses, and choose to add to them with the hope of eventual gains is obvious in the case of Nick Leeson and Jerome Kerviel, one of who bankrupted a U.K. bank, and the other lost $7 billion. Both went to jail eventually.

So money management is the heart and soul of trading, the safety valve against errors, and the shield against fear and irrationality. Forex trading brokers may give you the tools of technical analysis and tens of indicators, but money management skills can only be acquired by diligent and patient practice, and a total commitment to success in trading. On the other hand, a master of money management is a master trader, and it is but a matter of time before he perfects his skills in analysis and strategy and acquires the great riches which he deserves.

Learning about the stock market

Stock markets world over are considered to be the best earner of the returns on the money. That said not everybody who invests in the stock markets becomes rich like Warren Buffet . However millions of people have become rich to some extent by the stock markets or at least they have earned above average returns on the money they invested.

Next is the issue of getting your feet wet in the stock markets before you take the plunge into the choppy waters of the stock markets. The best advice they have given on the stock markets is that it is not for the faint hearted. Also, the other advice is that stock markets carry more risk than any other type of investments but as they say higher the risk higher the gain. If you need to learn about the functioning of the stock markets then your best bet is to actually trade yourself. Your next step should be to open up an account at either an on-line trading company or brokerages or go to a full service broker which can guide through the whole investment process.

If want to learn the stock market without the hassles opening up a brokerage account then your best bet is to buy a stock market simulator software or a stock market basics learning DVD which can teach a few basics about the stock market without investing in the stock market.

Another factor to consider while learning the stock market is that you have to be very cautious in the early stages so as to learn the basics and not make any big gambles on the market. Those gambles and making huge bets that you hear people made and got huge amounts of profits will come later once you have got perfection in the art of picking the right stocks

The Various Types of Forex Trading Charts

Charts are the most fundamental aspect upon which the world of Forex technical analysis is based. There are several ways to display price charts. However, the selection of the specific chart depends on the analyst in question, and his or her preference as to which chart provides the best signal at the earliest stage. It is also important to note that some forex brokers offer charts as part of their trading platform, while others do not.

Line chart
The line chart is the simplest chart. The Y-axis represents time whereas the X-Axis displays the price. We can plot the position of the market per minute, hour, 15 minutes, daily, or a weekly bases. This kind of chart only shows the closing price over a period of time. A line chart does not provide additional information such as high, low, and opening price. The greatest benefit to the analyst of a line chart is its simplicity and the ability to understand price movements very easily. A line chart also depicts trends by simply viewing its slope.


Bar chart
The Bar chart uses vertical bars to display price action for a particular day with the help of a line from the lowest to the highest price as shown below. The bar represents the day’s high, low, and closing price. Bar charts allow traders to see patterns easily. The bar chart is a set of four prices for a given day, hence it is also referred to as a price bar.


Candlesticks
The candle stick chart is similar to a bar chart but differs in the way that it is visually constructed. The chart is plotted over a one day, weekly, as well as monthly period as it gives a detailed picture of longer time price action. The chart displays a thick body called the real body and a line extending above and below called the upper and the lower shadow. The top of the upper shadow represents the high price and the bottom of the lower shadow represents the low price. The opening and closing values depend on the color of the chart. If the color of the chart is black, it means the top is the opening value, and if it is white then the top represents the closing value. The white body of the chart indicates bullishness and the black body represents bearishness.

Point and figure chart This type of chart is rarely used in forex analysis. This chart plots day to day increases and declines in the price of a currency vis-à-vis another currency. A rising X represents increase in currency value whereas a declining O represents decrease in the currency value. This kind of chart is typically used by the traders for intraday charting and estimation.

Three Line break chart
This chart displays a series of vertical boxes that reflect changes in currency prices. The method is so named because of the number of lines typically used. Each line may indicate buy, sell, and trend of the market. The basic application of this method is to buy when a white line appears after three adjacent black lines and sell when a black line appears after three adjacent white lines.

Conclusion: There are various charts for technical analysis out there, although the most commonly used charts are candlesticks, line charts, and bar charts. Each comes with its advantages and drawbacks, although each chart can be used as the result of personal preference or perceived accuracy.

What Currency Pairs To Trade?

Are you being patriotic and trading currency from your country of origin? Is that the best way to select the currency pairs to trade? Definitely not.

It is surprising that so many new trades select pairs based on their geographical location. For example an Australian would trade AUD against USD and NZD or even JPY. Someone in Switzerland would be more inclined to trade towards CHF against USD and EUR. Somehow traders believe that their geographical location gives them an advantage over others regarding certain pairs. How much of it is true?

The criteria of choosing a currency pair should be its liquidity, volume and average trading range. A higher value of all three parameters is most desirable. Based on these criteria our choice of pairs are EUR/USD, GBP/USD, USD/JPY,EUR/JPY,CHF/JPY,USD/CHF,USD/CAD and GBP/EUR.

Another important criteria to consider is Spreads. Spreads varies from session to session. If you trading in Asian session then you would find that USD/CAD would have higher spreads compares to US session. So if you are a scalper or your profit target is usually small then wider spreads can take a good chunk of your profits. It is wise to monitor the spreads and analyze to see if they fit your trading style in your preferred trading time zone. You many also perhaps want to consider a commission based broker who offers tighter spreads.

Forex Tips To Help You Achieve Success

A Few Forex Tips To Help You Achieve Success
You can earn a lot of money through Forex and it in fact only requires that you learn from some tips that will show you how to maximize your profits from dealing in foreign currencies. The simplest Forex tip is to use weekly charts to boost your profitability. This means that you have to take the trouble of checking the weekly charts so as to be able to gain a proper perspective of the currency market.

Such weekly charts are ideal for learning and finding out more about the major trends that are taking place and they will also help you understand the proper support as well as resistance levels as too gains insights about entry points.

Don't Overtrade

Another simple Forex tip is learning to avoid from doing too much trading. It pays to understand that fewer trades you enter into the better are the chances that you can realize a handsome profit. It is more important that you concentrate on getting things right rather than indulging in quantity trading. Smart Forex operators earn money from doing the right things well and avoiding doing the bad things. In fact, the more successful traders earn high amounts of money from doing only limited amount of trades.

A healthy appetite for risk is essential to succeeding with Forex and so you have to learn how and when to take risks which however must be judiciously taken and which should not deteriorate into starting to gamble in the hope that you will make a major killing. At the very least a person that is averse to taking risks must abstain from doing Forex deals.

For those people that do small Forex trades it is not a good idea to branch out because it is in fact necessary that they concentrate and focus on their limited trades instead of trying to expand their dealings without having already tasted success.

You can also succeed with Forex by setting yourself realistic targets. The more realistic you are the better are the chances that you will be able to work hard enough to realize your objectives. You should decide to engage you in Forex and then give your all to succeeding and also keep in mind that your targets are not too farfetched or unrealistic.

With these tips in mind you should get started with Forex and bear in mind also that to be successful you will need
to learn how to focus your efforts on the best trades that should be used with best odds of succeeding. Weigh your options and set realistic targets and then do your best to realize a profit.

FOREX: Exiting positions at a right time

FOREX: Exiting positions at a right time

The presented article covers one of the most important (in author's opinion) aspects of trading in general and Forex trading in particular — managing of orders and positions. This includes choosing entry points, making decisions about exit points, stop-loss and take-profit of the trader. I hope this article will help new traders, who just began to work with Forex, and also to experienced traders who trade regularly and regularly make or loose their money to the market.

When I started to trade Forex and made my first big losses and profits I began to notice when very important thing about the whole trading process. While the right time to enter a position was rarely a problem for myself (nearly 80% of all my open positions had gone into the "green" profit zone), the problem was hidden in the determining the right exit point for that position. Not only was it important to cut my risk on the potential losses with stop-loss orders, but to limit my greediness and take profit when I can take it and make it as high as I can. There are many known guidelines and ways to enter a right position at a right time — like major economic news releases, global world events, technical indicators combinations, etc. But while the entering into a position is optional and trade can decide to miss as many good/bad entry point moments as they wish, this is untrue if we talk about exiting a position. Margin trading makes it impossible to wait too long with an open position. More than that, every open position in a certain way limits trader's ability to trade.

Choosing the good exit points for positions could be an easy task if only the Forex market wasn't so chaotic and volatile. In my opinion (backed by my trading experience) exit orders for every position should be toggled constantly with time and as the new market data (technical and fundamental) appear.

Let's say, you took a short position on EUR/USD at 1.2563, at the time you are taking this position the support/resistance level is 1.2500/1.2620. You set your stop-loss order to 1.2625 and your take-profit order to 1.2505. So now, this position can be considered as an intraday or 2-3 days term position. This means that you must close it before it's "term" is over, or it will become a very unpredictable position (because market will differ greatly from what it was at the time you have entered this position). After the position is taken and initial exit orders are set, you need to follow the market events and technical indicators to adjust your exit orders. The most important rule is to tighten the loss/profit limit as time goes by. Usually if I take a middle term position (2-4 days) I try to lower the stop and target order by 10-25 pips every day. I also monitor global events, trying to lower my stop-losses when very important news can hurt my position. If the profit is already quite high, I try to move my stop-loss the entry point, making a sure-win position. The main idea here is to find an equilibrium point between greed and caution. But as your position gets older the profit should be more limited and losses cut. Also, trader should always remember that if the market began to act unexpectedly, they need to be even more cautious with exit order, even if the position is still showing profits.

Every trader has their own trading strategy and habits. I hope this article will make its readers think about such an important aspect of trading as the exit orders and this will only improve their trading results.

College Financing 2009: Tips for Getting Aid

Stressed out about paying for college this year? Then it's time to brush up on your financial aid know-how.

Here's a tip about paying for college: starting up your own university, like Bartleby Gaines did in the movie Accepted, isn't a reasonable action plan. It's much easier to secure the money you need by learning how to navigate through the college finance system. To help you out, here are the top college finance tips for locking in aid in 2009.
It can be difficult to qualify for federal need based aid but that's not the only source of funding available. There are also student loans via government and private channels, as well as merit scholarships, community scholarships, grants and even sponsorships.
Be first in line
The federal government, state government, and each school impose their own deadlines on submitting financial aid applications, but waiting until the last minute is a bad idea. Always apply as early as possible. You can sit down with your parents and fill out the Free Application for Federal Student Aid (FAFSA) on January 1 for the school year that begins the following September. You may have to use estimated figures for income and year-end assets, but this is acceptable as long as you provide updated information once you and your parents have completed your tax returns. It's worth the extra step, since those who submit the FAFSA sooner have a better chance of securing financial aid.


Another document to complete right away is College Board's Profile which is used by private schools and scholarship programs to determine eligibility for non-federal aid. For more information, visit CollegeBoard.com.
Read the fine print
Don't rush through the FAFSA; you could radically reduce your eligibility just by filling out the form incorrectly. Your list of total assets, for example, shouldn't include exempt retirement accounts. If it does, you could miss out on a very large chunk of aid.
Pay off debt
Cash balances hurt your eligibility for financial aid, but debt balances make no difference. Use your stash of cash to pay off the debt; you'll improve your eligibility profile and reduce your cost of living at the same time.
Keep your student loan options open
The number one rule of college finance is to keep your options open. If you have good grades, don't get hung up on the idea of an Ivy League education-particularly if you can earn high-dollar merit awards elsewhere. As an example, California State University, Long Beach offers a President's Scholars Program that awards full scholarships (including tuition, housing, and books) to selected students who meet certain academic qualifications.

Student loans are usually a paying-for-college option, too. But make them your last option-that is, just before you decide to establish your own school, a lá Bartleby Gaines.

The Importance of a Good Investment Program on Forex Trading

Have you ever thought about doing a trade globally? Some people might be a bit hesitant to do such a thing, but the opportunity is just waiting for you out there. You don’t actually have to travel outside your country, if that’s your concern. With the the Internet facility, you can in fact do forex trading on a global scale even in your own home, at work, and regardless of your location.

The FX market seems sophisticated, especially to new traders, and they find it rather complicated to go about the trade. But nothing is impossible once you’ve learned the trade. It is a worthwhile venture that you might want to consider even on a tight office schedule.
Being employed in a particular company may not provide you with all the money that you would need to finance your everyday living. Doing some extra work is often advisable specially in today’s times when money is difficult to find. Don´t worry anymore; the FX market is not far from your reach.
Identify your objective upon entering the FX market. This is the first step, so that you will stay focused in your endeavor. Once you’ve set up a goal, you have to do all that is necessary to reach that goal, but it should be in a reasonable manner.
In going through forex trading, you will need an investment program, and a good one. Don’t settle for anything less because a good program is essential to succeed in forex trading.
Most rookies commit the biggest mistake of their lives by availing fraudulent programs. The FX market is an enormous industry, and the fact is that there are many scams and con artists in the Internet, which actually provide useless materials for beginners. This often leads to frustrations of beginners because they’ve already failed even before they get to start the actual trade.
Find a legitimate forex investment program. Although it might require a bit more research, as well as a bit of your time, once you get what you’re looking for, you’re in a good position to start.
You don’t need to settle with expensive programs, nor with programs promising easy and quick profits with less the risk. You must be aware that though the FX market offers a lot of opportunities, it has also a lot of risks related. To become like the pros, you need to learn the forex trading system; and you have to be serious in learning it.
A good program is dynamic. It provides daily advice, manuals, DVD materials, computer disks, and other important forex trading stuffs or resources to turn you into a successful trader. Verify if their previous clients are satisfied with their services, and see if the company has built a good reputation in the business.
Professional traders conceive forex trading as a science, some thinks it’s an art; and to start the real trade, you must undergo a lot of practice. After all, practice makes a perfect trader. Demo accounts are surefire ways to learn and apply the different techniques used in the FX market. After you’ve dominated it, you can proceed to a mini account. Here you can do an actual trade but the risks are minimal. If you think you’re quite ready, then get a regular trading account. This is a highly effective step-by-step process because you get to learn a lot of things while you are practicing. Always maintain calmness, and act like the pros. You are about to make big money, one that you probably never imagined in your entire life.



Forex trading is done on a margin. Margin trading allows you to control more money than what you actually avail. For you to trade one million US dollars, you should have a security deposit worth ten thousand US dollars. This is a typical example with the rate at 1%.
The FX market expands around the globe, so you can trade twenty-four hours a day. If you choose to do margin trading, the spread rate is much lower compared to futures trading. The requirements are also very low.
Get acquainted with all the in and outs of forex trading. Trading globally implies a lot of risk; you must learn to overcome all these risks in order to earn big profits. Get a good forex trading program.

forex trading with an automated trading application

Enhance your forex trading with an automated trading application

One of the differences between the stock market and the forex market is the vast trading that occurs on the forex market. The foreign exchange market
(currency, forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. The forex trading market is a volatile industry. It is also a very lucrative market. However, to be a successful FX trader you need to educate yourself and have a long term plan. The lack of a forex trading strategy will guarantee failure. When starting out as a forex trader it is easy to abandon your plan or lack of a plan. A good forex trading education is a must.

Being well verse in the stock market will assist you with your forex trading. However, to enter into the foreign exchange market it is not necessary to have any prior trading experience. Some basic forex strategy systems are the fundamental analysis and the technical analysis.

Fundamental analysis
The fundamental analysis is performed on historical and present data, but with the goal of making financial forecast. The data used in this analysis is; money policy, government policy and economic indicators. Some examples are GDP, exports and imports. The analysis of this data is for a specific business cycle.

Technical analysis
Forex technical analysis is a security analysis technique that claims the ability to forecast the future direction of prices through the study of past market data, primarily price and volume. In its purest form, technical analysis considers only the actual price and volume behavior of the market or instrument. Technical analysts, sometimes called "chartists", may employ models and trading rules based on price and volume transformations.

Before you dive head first into the forex market open up a demo account. A forex demo account is a simulated account where you get virtual money of $25,000 to $1, 00,000. You get live quotes and bids that are part of real forex trade. Once you have master that are ready to take the plunge into the real thing open up a mini account.

A mini account is a great stepping-stone to the big leagues of FX. It allows you to open up an account where the leverage is higher in comparison to standard accounts. With a mini account you are dealing with mini contracts. You can open up a mini account with $250. When you are ready you can move onto a standard account

The forex market welcomes traders 24 hours a day. Forex market opens on Sunday 5 pm EST (10:00 pm GMT), closes on Friday 5 pm EST (10:00 pm GMT). No matter what region of the world you live in you can trade on the forex. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs. An example of forex trades in the western region of the world is USD/EUR and USD/GBP. An example of a forex trade in the Asian Economic regions or the world is JPY/USD and JPY/GBP.

Technology is a beautiful thing. To be involved in these markets you don't have to be awake for every different time zone. Automated analytical forex software applications allow you trade during the middle of the night while you sleep. There are many, different type of automated forex software applications on the market. Some of the most commonly used applications are forex killer, auto- pilot and forex-funnel to mention a few. These applications are used by; professionals and beginners alike with no experience whatsoever. These applications can assist you with a forex trading strategies

Day Trading the Forex Market Profitably

Being a forex day trader can be very lucrative. The currency market is by far the most liquid and volatile market in the world and with this come various opportunities. No matter what type of market you chose to day trade you must know the “personality” of the market you are trading.

Every market has it’s own characteristics and it is important to know what they are before attempting to profit from it. The forex market is no different. In this article we will go over very important general day trading principles/rules and then we will see what a day trader has to recognize when specifically day trading the forex market.
As the term implies, day traders are concerned with what happens in the market today. Not tomorrow, not next week and not next month, but today. The day trader’s job is to capture intraday price swings. Depending on the system or trading method employed, this can mean capturing one intraday swing or various intraday swings. The general job of a day trader is (then we will go over the more specific job of the forex day trader):
To control risk
One of the most important jobs as a day trader is to control your risk exposure. Sure, controlling risk is a concept you must use in any type of trading, however in day trading you must look at this issue from a different angle. Since your job is to capture various price swings during the day naturally your profit objectives will be much smaller than that of a swing trader (who places a single trade aiming for a much larger profit objective). So, when placing several trades during the day it can be easy to “drift” away from your pre-determined stop loses. A common (very common actually!) day traders thought is “if I extend my stop loss just a bit I hope the market will turn around”! Hope is one of the trader’s biggest enemies. These little extensions of stop losses add up and suddenly without noticing you are losing more dollars per trade than planed making your risk/reward ratio turn against you.

To be disciplined
This principle is key for any type of trading but particularly for day trading. If I had to name one single aspect of a day trader that can make him or her a winner or a loser it is discipline. You can have a so-so system but still make money if you are disciplined. However, you can have the best trading system in the world but if you are not disciplined I guarantee you will not be a successful trader. So, what is all this discipline everyone talks about when discussing trading? Very simple, it’s respecting and strictly following your trading plan, your trading system, your money management rules, and your commitment to the business. Being disciplined with regard to each and everyone of these components is essential for your success.
It is so easy to deviate from your trading plan, the rules of your trading system or any of the above mentioned components, especially when day trading. Why? Two reasons. First, because the trader is trading very frequent and does not have time to cool down, think, and evaluate. Second, because reality is replaced by hope. Your trading system rules (reality) says: “get our of the trade” hope says “hang in there, maybe it will still be profitable”. Your money management rules (reality) say “risk only 2% of your account on this trade” hope says “since I lost on the last trade I will risk 4% on this next one so I can make up for the loser and also be profitable”. Your trading plan (reality) says “trade each day 4 hours, give yourself Wednesday or Thursday a vacation to rest” hope says “Since I am not doing very well now I don’t need this rest day, and I will also trade 7 hours per day to make up”. I know (not hope!) you now understand the point!
To focus on the appropriate time frame
As a day trader your primary concern is to catch intraday swings. Your trades start and finish the same day. Your world is the day you are trading in. You don’t care what will happen in the market tomorrow or the day after tomorrow. Your objective when trading is focusing on the appropriate time frame chart. My opinion is that day trading should be done on a 1, 5 or 10 minute bar chart. Remember, you are looking to capture several fast moves during the day and hence you must focus on the charts that best illustrate events as they happen in a short period of time. However, the fact that you are day trading on a 1,5 or 10 minute bar chart does not mean you can’t use a larger time frame chart for the purpose of analysis. This however, is very subjective and depends very much on the traders strategies and methods of trading. As an example, many day traders would look at one hour bar charts in order to have a view of how the market has been behaving in the last week. Is it moving sideways (and so maybe I should only place trades between support and resistance areas)? Is it trending (and so maybe I should only be looking at placing trades in the direction of the higher time frame trend)? Are there any major support and/or resistance levels I should be aware of (areas where I should refrain from placing trades since it is uncertain how the market will react when reaching them)? Did the market brake out of a congestion area?
Again, it is very subjective. Some day traders believe that with proper larger time frame analysis they can select better day trades. My personal opinion is that the more you analyze the more conflicts you will have and the more uncertainties will appear (especially if you are new to trading). I like making things simple and I found it very useful when trading (proof of this is that all of the trading systems I use are 100% mechanical). Don’t get me wrong, this is not to say that larger time frames should not be used at all for analysis purposes. But, try to keep it simple and if you see that looking at larger time frame charts interferes with your correct decision process when placing day trades then simply stop.
To trade volatile and liquid markets
Since your job as a day trader is to capture intraday swings it is crucial that the market you are trading has enough movement to allow you to do this. It is also important that the market you are trading has enough liquidity so that order fills do not suffer from excessive slippage. You have to select a market that it’s volatility is permanent and not a temporary occurrence. Since you are basing your trading method on catching intraday price swings you have to know that you are trading in the right place. As a day trader volatility is your allay and you have to know that you can count on it every single day (or at least 90% of the days). Liquid markets will provide you with good order fills. As a day trader this is very important since you are aiming at smaller profit objectives and hence larger slippage will eat away more of your profits. When trading several times a day this adds up and can be the difference between success and failure.
As a forex day trader you have to apply all the above rules and principles plus other criteria that are unique to the forexmarket.

Time of day trading
The forex market is a 24 hour market. Never stops except on weekends. Within this 24 hour period different currencies behave in different manners. As a day trader it is very important to know the “personality” of the currency you are trading. For example, the GBP/USD is more volatile in early to mid European session than any other liquid pair. For a day trader trading in these hours it would be wise to take advantage of the price swings the GBP/USD pair offers instead of trading some other currency pair that constantly shows no movement. The USD/CAD pair is “silent” in the early to mid European session but starts to have more price movement toward the start of the US session. Every time Non Farm Payroll is released most if not all currency pair have a very small price range up to release time. As a day trader it wouldn’t be wise to trade during these pre-announcement hours with strategies that are based on breakouts. It would probably be smarter to use strategies that are based on range support and resistance.
Spread and liquidity

Most forex brokers will provide you with a very narrow spread for the most liquid currency pairs. As an example, many brokers are now offering a 2 pip spread for EUR/USD and USD/JPY and a 3 pip spread for USD/CHF and GBP/USD. These are the most liquid pairs and the ones a day trader should focus on.
Volatility
As a day trader volatility is you friend, a friend you cannot afford to trade without. In it’s basic definition, volatility is simply the amount of price change with relation to time. Volatile currency pairs have various price swings (price changes) during a small period of time (one day). These price swings are what a day trader lives on. In the forex market volatility many times comes hand in hand with liquidity. The most liquid pairs are the ones that are the most volatile. The big 4: EUR/USD, GBP/USD, USD/JPY and USD/CHF are the most liquid pairs that provide the best volatility and hence opportunity for the forex day trader. Within these four pairs, the GBP/USD is the most volatile. Although it’s not the most liquid (the EUR/USD is), but it’s the most volatility. This pair, traded with the right broker (one that provides a 3 pip spread) can present many profitable opportunities for the astute day trader.

Specific news announcements
Currency rates are affected by rumors, news, economic indicators and government reports. As a day trader you must always be aware of what economic reports are scheduled on the day you are trading and at what time. Why? Simply because many of these reports can have a strong momentary impact on the market once they hit the news wires. This impact can be of 10 pips or 100 pips depending on the report and it’s difference from the market consensus. The most important and impacting economic indicators and government reports are issued by the US government. They affect every USD/X or X/USD currency pair. Again, always know what are the release times and the importance of the economic report. For example, suppose you are in a EUR/USD trade at 8:25 a.m. You know that an economic report is scheduled for release at 8:30 a.m. You might consider either exiting the trade before the release (in order to avoid unnecessary speculation as to what impact the report will have on the market) or entering your profit objective and stop loss into your deal station (for risk exposure reasons).
In conclusion, the forex day trader has to be prepared not only with the basic day trading rules, skills and principles. His job is to incorporate into his trading the characteristics and uniqueness of the forex market. Remember, every currency pair might present different opportunities and it is your job to always focus on the ones that best fit the purpose and objectives of day trading. I hope to have contributed to your forex trading education and I thank you for taking the time to read this article

Forex and Foreign Exchange - Trading with Strategy

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint. ACM does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers.
As market professionals, we can however point the novice in the right direction and indicate what are correct trading tactics and considerations and what is total nonsense.
Anyone who says you can consistently make money in foreign exchange markets is being untruthful.
Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.
Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side:
Trade with money you can afford to lose:
Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.
Identify the state of the market:
What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.
Determine what time frame you're trading on:
Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term.


This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.
Time your trade:
You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.
If in doubt, stay out:
If you're unsure about a trade and find you're hesitating, stay on the sidelines.
Trade logical transaction sizes:
Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.
Gauge market sentiment:
Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.
Market expectation:
Market expectation relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.
Use what other traders use:
In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

HOW TO MAKE MONEY IN FOREX?

What is Forex? Foreign Exchange popularly known as Forex or FX is a market for the buying and selling of different currencies and it is one of the fastest growing avenues to making money online. Transactions on the market are done through electronic means (internet and telephone) through an intermediary called the Forex broker. However, major trading 'centers' exists in London, New York, and Tokyo. Other trading 'centers' are: Singapore, Frankfurt, Geneva & Zurich, Paris and Hong Kong. Forex market is made up of different players: individual trader, institutional traders, banks, other financial institutions (investment firms, pension funds and hedge funds etc), and governments through their Central Banks. An estimated $3.5trillion worth of transactions are being traded daily on the market and it is opened 24/6. Forex market is an unregulated market, making it accessible to everyone and easily exited by its players. This makes it impossible to know the total number of players in the market at a particular time.

The history of Forex trading could be traced to the abandonment of the Bretton Woods Agreement in 1971, and the US Dollar would no longer be convertible into gold. This led to currencies of major industrialised nation becoming more freely, controlled mainly by the forces of supply and demand, which acted in the Foreign Exchange Market. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970's, giving rise to new financial instruments, market deregulation and trade liberalisation. In the 1980s, cross-borders capital movements accelerated with the advent of computers and technology, extending market continuum through Asian, European and American time zones. Turnover on foreign exchange rocketed from about $70 billion a day in the 1980s, to more than $3.5 trillion a day in 2008.

The avenue to make money on Forex market was created since the Bretton Woods Agreement was abandoned in 1971, allowing for changes in prices of currencies as dictated by the forces of demand and supply. Making money in Forex is as simple as buying a currency and holding it for few minutes, hours, days, weeks or months depending on your kind of trading and selling it when it has appreciated in value or vice-versa. This simple act could fetch you more than 100% of your capital in few minutes! But as simple as it sounds, it requires adherence to a golden rule which is our trading principle at forexseed.

The Golden rule of trading Forex successfully is taking position in the right direction, at the right price, with the right stop loss and the right target. Following this golden rule must, however, be with precision. The precision can only be achieved by formulating a profitable equation in which risk is minimised to the bearest minimum. Whether or not money will be made in Forex is not the issue because the market is huge and highly liquid; the real issue is how to reduce the risk on your trade because the market is very volatile. You will succeed trading Forex only if you appreciate this fact and inculcate it in your trading style.

As far as I am concern, the real opportunity to make money in Forex trading lies in directional trading. Most often than not, the market moves in a particular direction. A trader must be able to detect and follow the markets direction or trend. This could be a short-term trend or a long-term trend. A careful study of the chart especially higher time-frame chart will reveal the trend. It should be noted that a trend on a lower time-frame chart could be a mere consolidation on a higher time-frame chart. So, it is advisable to study the market from a holistic point of view.

As much as making the trend your friend is important, so is entering and exiting the market. The secret of successful Forex trading is in entering the market at the optimal point. The optimal point or price is where the trader could trade with the bearest minimum risk while at the same time maximising possible profit. A good trader would not enter the market to make just some pips without considering the risk at stake. A good Forex trader will never play around with his/her capital. He would only trade when the risk level is very low and profit margin high. I would recommend a risk-reward ratio of at least 1:3.

However, it is equally important for a trader to know when the party is over and exit the market. A trader should have a definite target in mind when opening a trade and this should be set in the trading platform. Many a time, the market may not get to your target; a good trader must be able to read the charts to envisage this and close the position. I have seen many promising trade go bad at the end of the day. It is necessary for a traders to manage their trades by using trailing stop loss to protect some of the gains made. This will help you to rank in some pips if the market goes against your trade. This is why the use of trailing stop loss is inevitable.

Having the right psychology is paramount in currency trading. You must appreciate the fact that absolute no one can influence the market. So you must develop the right mind set that you have done your own part by applying your strategy and the golden rule and it is left for the market to play out. No matter how good your trading strategy is, you can never by right every time. There will some bad trades. As a matter of fact, expect it - that is why you cannot trade without stop loss. This will help you to control your emotion. The most important thing is to develop a working trading strategy and adopt sound money management. You will definitely make a success trading the foreign exchange market.

In summary, the underlying principle of our trading success at forexseed has been revealed in this article. With our trading strategy, we simply trade in the right direction, at the right price with the right stop loss and target coupled with a sound money management policy. If you can apply this principle, you would have joined the 5% of successful Forex trader.

UpdateAsian Market

UpdateAsian Market

Nikkei financials lead the slide again; GBP sinks on Lloyds turmoil, seen as the new funding currency; IMF looking to cut gold holdings
Investors in Asia are taking some profits from recent gains in this week's final session, with regional markets trading lower nearly across the board. Coming out of midday break, Nikkei225 is off 1.2% as financials weigh on the index for the second straight day on fresh concerns in consumer financing space. Shanghai Composite and Sydney are down 1% - materials and technology are the worst performing sectors in both markets. Korea's Kospi is the only gainer in Asian bourses, rallying 0.5% on press speculation the government would assist borrowers with poor credit history. Ahead of the Friday session in the US, Dec S&Ps are down marginally at 1,058.
After the Bank of Japan disappointed Nikkei financials by not extending its asset purchase program in the prior session, today's slide was attributed to consumer financing firm Aiful defaulting on its debt obligations, looking to reschedule some of its loan payments with lenders. Sumitomo Trust and Aozora were some of the affected financials disclosing their exposure with ¥90.8B and ¥55.3B respectively. Aiful traded limit down, while Sumitomo and Aozora fell 2% and 4%. Elsewhere, Japan Airlines was speculated to be the target of a joint alliance offer from American Airlines, British Airways, and Qantas.
Incoming finance minister Fujii said Japan's administration is looking to suspend a part of its extra budget as part of its plan to eliminate wasteful spending and possibly cut issuance of new government bonds. The new administration is targeting a saving of several trillion yen but deferring more details until October. In the mean time, local press reported that the new party has 2nd highest approval rating for an incoming administration in history at 75%. Bank of Japan Deputy Gov Yamaguchi spoke again, reiterating slight pick-up in economy and forecasting a more robust recovery in the second half.
Over in China, an official at the Ministry of Commerce said it may look to sell off holdings of US treasuries at spots of strength for the US Dollar. Mainland steelmakers offered a mixed assessment of conditions, with Tangshan Steel noting September output cuts at certain mills and Hebei calling for higher steel prices amid falling supplies. Australian miners traded lower, with commodities sector dragging S&P/ASX to its worst levels late in the day. Treasurer Swan said the administration is targeting a return to surplus by 2015-6 as administration implemented a more responsible fiscal policy.
In currencies, Sterling was heavily sold across the board as concerns over UK financials resurfaced after FT report that Lloyds may have to remain in UK toxic assets insurance plan. Separately, a WSJ feature referred to cable as a new funding currency, citing recent depreciation against the high-yielding commodity FX after monetary authorities left the door open for further interest rate cuts. Bank of England's Miles said UK recession would not end for another 6 to 9 months, and return to normal activity would likely take some time. GBP/USD fell nearly one big figure to 1.6370, just as GBP marked fresh 4-weeks lows against EUR and CHF. In commodity FX, risk aversion sank AUD/USD below 0.87 and NZD/USD below 0.71, while USD/JPY traded higher despite the bearish sentiment on overall greenback strength.
Crude oil prices are declining and have traded near $72/bbl, for most of the session. Oil prices are being weighed down by the declines in the Nikkei 225 equity index and the firmer US dollar. Spot Gold prices are little changed. In terms of news related to the gold market, an earlier released unconfirmed report disclosed that the IMF's executive board may consider the organization's previously announced gold sales plan later today. According to the report, the IMF is planning to sell about 13M ounces of gold, which equals about 12.5% of its total gold holdings. According to estimates from early 2008, the IMF was the world's 3rd largest holder of gold with approximately 103M ounces or 3,200 tons. Today's report related to the IMF follows the announcement in Aug by the various European central banks that starting in late Sept they would sell a maximum of 2,000 tons of gold over the next 5 years. In other metals, Shanghai Copper prices are declining, tracking the early declines in Chinese equities. Later today, the Shanghai Futures Exchange will release its weekly copper inventories data, which will give further direction to copper. During the prior week ended Sept 11, Shanghai Futures Exchange copper stockpiles rose by 12% to more than 97K metric tons