Trading education

Automatic Forex Trading System

admin — Wed, 10 Mar 2010 16:45:38 +0000

The search for an automatic forex trading system that works is often seen as the search for the so called “holy grail” which is the reason why many traders have lost huge sums of money and more are still loosing. When it comes to an automatic forex trading system, the search is likely to be long and arduous, and there is the question of why is everyone not using it?

In fact, I don’t believe there can be an automatic forex trading system that can assure you of 100% successful trades as claimed by most because there is always the element of the forex market which is totally unpredictable.

It’s not far fetched for a forex trader whose automatic forex trading system is based entirely technical analysis to come back the following day and encounter an unexpected reversal due to fundamental (socio-economic) news being announced lower or higher than expected resulting. So, if fundamental analysis can not be predicted, and as one author puts it “no one knows what’s going to happen” in the forex market, how can an automatic forex trading system be possible?

The answer lies in the understanding that if you truly want to use an automatic forex trading system, you are going to have rules, such as not trading in the vicinity of news time where the market reaction can be unpredictable based on technical indicators due to the reaction of the market to the news such as the non-farm payroll data once per month.

Before using an automatic forex trading system then, the trader must know the online currency market fairly well. Must understand that nothing can replace basic education, no matter what system you use basic forex trading education will help you identify better with the system you choose to use. It is also important to have education and mentoring and at least training in some indicators and strategies to understand the reading of the market technically, as well as a sound understanding of the fundamental analysis aspects of the market.

Using automatic forex trading system with a stop loss is one way to ensure that even if your system is entering trades that agree with the technical analysis prior to news release, your stop loss is there to get you out if the news comes out on the other side and things move against you. But if you can altogether avoid using your system before important announcements I personally think it wise.

Conclusively, there are automatic forex trading systems that indeed can generate profitable trades for any trader but they are not without rules.

By: Karen Fairham

Trading Stocks – How to Make a Killing Trading Stocks?

admin — Wed, 10 Mar 2010 00:00:31 +0000

Here is a very short answer: slowly. And don’t even think about it until you learn a few basic things about the stock market.

I still remember very well my first trade. It was about 10 years ago. The stock symbol was FOTO, no longer listed as its price dropped too low over the following two years. I then sat watching its price gyrations for a few hours getting more and more disgusted that it refused to move at least 20% right after I had bought it. In fact, it barely moved in a few days that followed and so I sold it. I hate when stocks act like that!

My second stock was CUBE. The company was bought out eventually so the stock is no longer listed. This one too refused to move, so I sold it. Another stinker.

I realized later that I would have made money on both of them had I held to them longer. After all, it was still the full blown bull market of the 90s and virtually every stock you bought those days would go up. You could make money by simply throwing darts at stock charts and even if you were blindfolded, you would probably still make money with your trading “method.” But I did not know that yet, although being a quick learner I soon figured out what I needed to do to make money in stocks.

And here are the things that I learned that made me money and if you follow them you too stand a good chance to succeed at trading stocks. Perhaps you will even make a killing.

1. You need a plan to make money in stocks. This plan has to include, among other things, your timeframe, when you exit your position and under your what circumstances.

2. You need to do your research before you put a trade on. Wishful thinking is not enough. It does not work. You need to know why the stock you are about to buy will appreciate in price. Why would that be? What are the reasons to drive its price up?

3. You need a sound mindset and that includes patience and sticking to your plan. This is sometimes easier to say than to do and can be a big hurdle to overcome, especially for beginners.

4. You need to be independent. Following the herd can feel comfortable, but is a well-known way to a poorhouse. Choose to be a contrarian rather than a follower of crowds. Crowds are often wrong. Too often to follow them.

5. Never cease to learn new things and study new trading methods, but don’t change those that have worked well. In fact, being conservative in your methods is fine, try new things only if they promise to be much better than your older methods.

6. Avoid distraction from slick snake oil salesmen. There is no fast way to a million, but some are better and more solid than others. Relying on your own judgement beats all other ways, in my opinion.

Good luck then!

By: Waldemar Puszkarz

Free Forex Trading Strategies – 2 X Trading Systems the Pro’s Use That Have Made Millions in Profits

admin — Mon, 08 Mar 2010 22:24:56 +0000

It always amuses me, when traders buy Forex robots for a hundred dollars or so and thinking they will get rich with them – but none of them work as they have never been traded in real time and are simply back tested simulations. The 2 Free Forex trading strategies we will look here, have made hundreds of millions in real time profits, lets take a look at them in more detail.

The systems we will look at have worked for over 25 years and unlike the popular Forex Robots you see for sale online, these systems are from trading legends not just programmers, these systems work in real time, not just in back tested simulations.

The first free Forex trading strategy we we will look at is “The 4 Week Rule” which was devised by the grandfather of modern trend following Richard Donchian. We have written in detail on this strategy, in other articles but in summary, its a one rule, trend following system which is based on breakout trading. While incredibly simple it works and always remember, the best trading systems are simple, as they have fewer elements to break than complex ones.

If you apply the 4 Week rule correctly, you can make some great long term Forex profits with a system that has stood the test of time.

The next strategy we will look at which you can get for free, comes from Richard Dennis, who incidentally, was also a fan of the 4 Week Rule; His strategy was based on the same logic, trading long term trends via breakouts and it made huge profits. The rules he devised, were used by a group of novice traders to show that anyone, with the right education and system, could win at Forex. Dennis was proved right and in just two years, his group of novices made $200 million real time dollars with it!

The system rules are available free and if you look at the strategy it has all the elements a good strategy has and I personally think, any traders should look at it for the money management rules which are a great example of how to preserve equity. The system is less effective today than when it was first used, as markets have become more volatile but for showing you the basics a good strategy needs to succeed its a great system to look at.

Two simple systems, by true trading legends you can learn from and there both free! Look them up and make them part of your essential Forex trading education and if you learn from them, they will help you enjoy currency trading success.

By: Samuel Leslie Berkovits

Forex Trading Terms Simplified

admin — Sun, 07 Mar 2010 18:42:10 +0000

If you are a beginning trader in the foreign exchange (FOREX) market, you may be initially mystified by the terminology associated with this type of investing. In some cases the terms utilized do not seem to be even remotely related with the concept involved. Let’s take a look at a couple of basic terms which may help you better understand the fascinating area of currency trading.

Going Long

After you have gained a proper trading education and formulated a well-tested trading plan via your demo account, you will begin walking down the serious path of trading real money. Eventually, you will take a position as determined by your strategy. One possible position involves going long. This means that you have decided to buy a particular currency based on your belief that the price of the same will increase, allowing you to make a profit when you close out the position. Going long, therefore, is the same as buying the currency.

Because currencies are traded in pairs, it is important to note that when you say that you are going long on the EUR/USD, for example, you are really saying that you are going long on the Euro rather than the U.S. Dollar. That is because the reference as to the position taken is made specifically to the base currency, i.e. the currency that appears in the first position of the pair, as does the Euro in this case. Incidentally, the currency occupying the second position in the pair is known as the quote or cross currency.

Going Short

This term is perhaps a bit more difficult to understand at first than the previous one. Fortunately, as you might guess, going short is the opposite of going long. Here, the trader is selling a particular currency. Confusion may occur here in trying to understand how you can sell something you haven’t previously purchased. One way to clear your thinking about this is to think of purchasing the “right” to sell as opposed to selling the actual currency you do not have in hand. Although not necessarily a perfect analogy, let’s borrow from the real estate investment arena, particularly regarding the technique of house-flipping. Many real estate investors involved in house-flipping may contract to buy a house, but before the actual purchase, an arrangement will be made with a new buyer to whom the house will be ultimately flipped or sold very quickly. In the FOREX market, the broker is responsible for facilitating the bringing of the buyer to the transaction in which you are simultaneously selling the same currency.

Trading Tip

In the event you utilize charts to view the movement of the currency pair you are trading, remember that when the line graph moves upward, the base currency is going up in value as against the cross or quote currency. Obviously, when the line goes downward the opposite is true. By way of example, if you go long on the EUR/USD and the graph line thereafter moves upward past your entry point, then you are in the profit zone. If you go short on the same pair and the line graph goes downward past your entry point, you are likewise experiencing profitability.

Sandy Robinson, J.D., Copyright 2007

By: Sandy Robinson, J.D.

Forex Education – Why Retail Traders Fail

admin — Sat, 06 Mar 2010 23:13:39 +0000

There are many reasons why Forex traders often wipe out their accounts. In fact, there are so many factors that cause Forex traders to lose money, that only 10% of all traders are consistently profitable.

Almost all of these loss-causing factors, however, can be generally narrowed down to 4 basic reasons:

1. Not understanding what the Forex market is about

Many retail traders make the mistake of treating the currency markets the same way they treat other financial markets. I knew of a well-performing stock trader that lost more than $50,000 because he traded Forex the same way he traded stocks.

Even though the trading charts used in the stock and currency markets are similar (or even identical), the underlying natures of both markets are vastly different. To be able to trade profitably in the Forex market, you’ll have to first understand its characteristics and nature – don’t think that Forex trading is the same as other forms of trading!

2. Not understanding your position in the Forex market

There are many players in the Forex market, and each type of trader has different strengths and weaknesses. Many losing traders don’t realize that the trading strategies of one type of trader won’t work for the other types. For example, the trading strategies used by institutional traders will fail miserably for retail traders. This is because the strategies used by institutional traders are based on their strengths and weaknesses, which are very different from that of retail traders.

3. Not understanding the effects of greed, fear, impatience and pride on traders

This point is self-explanatory. Instead of using this knowledge as a tool to trade well, losing traders often fall into the habit of suffering from these emotional effects instead.

4. Listening to bad trading advice

It’s easy to find Forex trading information and advice on the internet today.

Unfortunately, most of this advice is provided by people who aren’t profitable traders themselves. While their advice is generally well-intentioned, the fact is that much of it is pure hogwash and cannot be practically implemented into any sustainable trading strategy. Be careful about where you learn about Forex trading from.

By: Harold Hsu

Forex Trading – The 3 Key Building Blocks for Huge Forex Profits

admin — Fri, 05 Mar 2010 07:32:04 +0000

Here we are going to look at the 3 key points you must consider if you wish to achieve forex trading success. Fail in any of these areas and you will lose.

1. Get the Right Education

To make money at forex trading you don’t need to work particularly hard – but you do need to get the right knowledge and learn it. Most traders don’t and fall victim to common forex trading myths. Here is a list of them, believe any of them and you are guaranteed to lose.

- You can make money with forex day trading

- You can predict forex prices in advance

- You should buy low and sell high to make money

- You can trade off news stories

- You need a complicated forex trading strategy to win

- You can follow a simulated system from a vendor and make money

- Forex trading is easy

Believe any of the above and you can say goodbye to your equity.

If you want to get the right forex education and knowledge you need to spend some time learning the basics and developing a strategy you understand, because this leads onto the next vital ingredient for currency trading success:

2. Confidence

Most novice forex traders simply think they can make money following someone else or trading news stories. They have no idea how and why the markets move and when they hit a few losses, they have no confidence in what their doing and that’s the end of their forex career and their equity.

Now let’s look at the vital ingredient all traders need to succeed that flows from confidence:

3. Discipline

If you don’t have confidence in what you are doing, then you will never have the discipline to sit through a period of losses and wait for winning trades to return.

One of the biggest myths of forex trading is that you can earn a consistent living and a regular monthly income – its rubbish you can’t!

Even the best traders will spend weeks or months in periods of drawdown and you will to. Sure, you can make huge gains over the longer term – but there not spread evenly across the year.

If you don’t have discipline to take short term periods of drawdown and still keep trading, you don’t have a trading method at all.

If you want to win at forex trading the good news is:

If you work smart, you can learn to trade in just a few weeks.

If you have avoid the myths and get the right knowledge, you will be confident in what you are doing. From this understanding and confidence you will achieve discipline. You need the discipline to stay with your method through short term losses and stay with your system to achieve longer term success.

95% of traders lose and this group simply do not understand that to make big profits, you need to have a simple robust trading system; you have confidence in and the discipline to follow it.

If you understand the above you will be able to put the 3 building blocks together and achieve forex trading success – it really is that simple.

By: Kelly Price

Forex Education – Scientific Theories of Market Movement

admin — Tue, 02 Mar 2010 01:33:30 +0000

Many forex traders think that prices move to a scientific theory and that they have to predict to win at forex trading but this is one of the biggest trading myths and will ensure you lose. Read on and find out why and learn a better way to guarantee currency trading success.

The myth that forex prices move to a scientific theory has been spread by vendors who sell predictive trading systems that they say will make a trader rich and they appeal to greedy or naïve traders.

Of course they don’t work – why?

If prices could be predicted with scientific accuracy we would all know the price in advance and there would be no market!

Markets move because they are uncertain.

Of course if somebody really had found a scientific theory, they would be to busy making money to sell it to you.

Predicting forex prices is simply another word for hoping or guessing and if you base your forex trading strategy on that you don’t have one!

Famous Scientific Theories that Don’t Work

There are lots of scientific theories and many are based around the Fibonacci number sequence (which was actually devised to solve a problem to do with the copulation of rabbits in the 12th century) this is not to insult Fibonacci who was a brilliant thinker – but even he would be surprised at how his theory has been hijacked by the far out investment community.

Also in the hall of fame is Elliot and his Wave Theory (lets ignore the fact he died a pauper) and look at his trading system.

There is nothing scientific about the theory.

It’s all subjective! If a theory is scientific it should be by definition objective.

Finally we have Gann and natural law – well if he knew how the markets moved why did he lose all his money and have to sell courses to make a living?

None of the theories are scientific.

They appeal to the lazy, naïve and the far out crowd, who love them.

The problem is they don’t know the scientific theory of market movement and no one does – because there isn’t one.

Let’s get in the real word and focus on making money with a forex trading system based upon sensible logic

The Good News!

The good news is that human nature is constant and you can spot repetitive price patterns that can be traded for profit. You won’t win every trade – but if you trade the right set ups and execute your trading signal at the right time, you can win longer term.

Forex trading is simply a game of odds but that doesn’t mean you can’t win – you can and the rewards can be huge.

Trade The Reality and The Odds

The best way to trade forex markets is to use forex charts and look and act upon the reality of price change. A trader who uses technical analysis doesn’t care how or why the markets move, he is just wants to make profits when they do.

If you are looking for a level to hold or break wait for confirmation that it has first and go with the trend. Don’t anticipate – wait until you see the reality and then execute your trading signal.

So if you want to learn forex trading the right way and get good forex education, understand that trading is a game of odds not certainties – but if you learn to trade them you can make a lot of money.

By: Kelly Price

Forex Trading – 5 Deadly Reasons Forex Traders Lose Money

admin — Sun, 28 Feb 2010 19:01:21 +0000

In Forex trading, there are five common reasons traders lose money when developing and implementing their Forex trading strategy.

If you can avoid making these errors, you can enter the elite 5% of online Forex traders that make big consistent profits from the markets.

Here’s the five common mistakes that you need to avoid when you’re trading in the Forex markets.

1. They Work Hard but don’t Work Smart

Many new online currency traders work hard – but they don’t acquire the right Forex education.

FOREX trading attracts some of the cleverest people in the world – these traders are smart, and think that they can win simply because they’re clever.

Being too smart however, can be a bad trait to have in Forex trading.

A clever trader tends to see the market the way they want to see it – and they don’t see the reality of how the market really is.

Do you want to make money or feel clever? The market won’t accommodate both – so decide before you start trading.

If you want to make money, leave your ego behind, and simply focus on the main objective of Forex trading – making money.

If you only focus on making money, you’ll out perform a clever trader with an ego, who’s obsessed with beating the market.

2. They don’t keep it Simple

As you can gather from point 1, being clever doesn’t mean you’ll achieve success in online Forex trading.
Not only should you leave your ego behind, you should also concentrate on trading using a simple system.
Many Forex traders think the more complicated their system is, the more successful the system is likely to be – however, this logic is incorrect.

Simple systems tend to be more robust than complicated systems, in the face of ever changing market conditions.

When developing your own Forex method, keep it simple – and you’ll have a better chance of making consistent Forex profits.

3. They don’t accept Responsibility

When you’re trading currencies, it’s tempting to follow a guru whose made money – or claims to have made money.

The Internet is full of Forex education you can buy for $100 or so – and they all claim it’ll make you rich – but this is not the reality of currency trading.

The only way to succeed is to rely on yourself – no one else can give you success. If you can’t take responsibility for your actions – don’t trade in the currency markets.

4. They’re too subjective

In Forex trading, most traders like to use technical analysis, and study Forex charts.

Studying charts can make you a lot of money – however you must be aware of the trap that many traders fall into – being too subjective.

Avoid methods that need a lot of subjective analysis, such as Elliot Wave and cycles – instead use indicators that define trends.

Good indicators to use in conjunction with trend lines are:

Moving averages, and momentum oscillators – such as RSI, stochastics and Bollinger bands.

This will keep you disciplined, focused, and allow you to trade without your opinions and emotions getting in the way.

5. They lack Patience

Many traders get impatient when Forex trading, and want to achieve success too quickly.

They start trading using one method, get frustrated with it when it doesn’t make money – and then switch to a different method. They then end up like a dog continually chasing its tail.

Bad periods are normally followed by good trading periods – and profits, (if you’re using a soundly based Forex trading system) so you need to stick to your plan.

Stop changing systems and have the patience to follow your Forex signals with discipline.

The X Factor – Your Trading Edge

Anyone thinking of getting involved in Forex trading should ask themselves this simple question: What advantage over the majority of unprofitable Forex traders do I have, that will make me big consistent profits?

This is your trading edge – if you can’t think what it is – you don’t have one!

A trading edge is something that all successful traders have.

Now you’ve read this article, you’ll realize that getting an edge in Forex trading is not as complicated, or as hard as many traders think.

You simply need to work smart not hard, focus your Forex education in the right areas and you’ll give yourself the chance to achieve consistent profitability.

The good news is that anyone prepared to learn Forex trading the right way, can become consistent and profitable.

By: Stephen Todd

Forex Education Is The Best Teacher

admin — Sun, 28 Feb 2010 17:13:28 +0000

If you want to become successful as a Forex trader, you have to educate yourself continually on the markets and trends. Your motto should read constant and never ending improvement through continuous Forex education. It isn’t enough to simply read Forex books, or the business section of a newspaper for currency price fluctuations. Learning to trade Forex is a participation activity. Most business newspapers and TV business channels only report the spot price, the price of a currency pair at an exact and static moment in time. You have to dig a little deeper in order to fully understand the reasons behind the current prices and the factors that are contributing to the increase or decrease in value of the currency. Even more important, you need to know the factors that may have a potential effect on the price of currency pair and upcoming scheduled economic news releases before you pull the trigger on that trade.

If you think that only economic issues influence the price of currencies, you are quite uneducated in the workings of the Forex market. Although everything is tied to an economic cycle with its unique data points, some things that are not directly monetary in nature may have an effect on the price of currencies. For example, global geo-political events can have volatile actions and any and all currencies. On May 29, 2005, voters in France rejected in a binding referendum the European Constitution. This event occurred on a Sunday in France and the Asian Forex trading session saw a massive devaluation of the Euro against all the major currencies. Another example is the impact the war in Iraq had on the U.S. Dollar/Swiss Franc currency pair at the beginning of the conflict. Forex Education is the currency trader’s guide.

Other non-economic factors that may affect the currency price include sentiments, country specific laws that impact capital flows (Sarbanes -Oxley), natural disasters and the cyclical processes in other financial markets, especially for those commodity currencies. Traders have a tendency to be fickle, and they do not wish to invest in a country’s whose currency does not offer value (think interest rates) and stability.

A successful Forex trader must be fully aware of all of the different factors that may affect spot price, so that if issues arise that will likely affect price on a downturn or upturn; they will now which side of the trade to take for profit. Some incidents may turn a technical Forex trader into a fundamental trader because the trader knows the economic factors that will cause volatility in the price of the currency, and wants to profit from a subsequent movement. For instance, cutting of interest rates by a country’s Central Bank. The decision could have been a surprise, which would result in volatility, but the announcement was a scheduled event. Being informed prevents you from taking the loss that changes in the market create and furthermore, being able to profit from such events.

Forex education is the key to bringing it all together. It is the foundation for which your Forex trading business will stand. If built with knowledge it can withstand the events that test all Forex traders.

By: Todd Judkins

Understanding Forex Trading – Trading Currencies

admin — Sat, 27 Feb 2010 07:08:56 +0000

Forex Trading is trading the currencies of two different countries. As there is a difference between the base prices of currency that is unique to every country – trading them would fetch a trader a profit or a loss depending upon the trends.

The base prices and the fluctuations there on are dependent upon various facets like the political stability of a particular country, the monetary well being, the stature the country has in the world economy & politics and many like factors. These variable facts on which the prices of a country depend are too varied to be analyzed. Traders who are able to make sense through the patterns in these are the better players in the Forex market.

The returns are good provided people invest in the trade considering it to be a professional and analytical trade. People lose when they assume this to be a game of speculation and want to take their chances in there.

In the past few years, the number of people who have invested in the trade has consistently increased. Awareness and the shift of Forex Trade from the real world to the virtual world is the reason for the same. Since the time online Forex Trading and the aids facilitating the same has increased, the volume of trade in the Forex market could be compared to that of the world’s largest stock markets of the world.

Without formal education, any profession would be a risky game to play. When it comes to Forex, the risk is even higher. There are free online introductory courses make available by the Forex Broker’s site that you would get associated with. However, these are very basic once. One might consider a paid education alternative before entering into Forex.

Nevertheless, there are various Forex Trading software that can help your life easy. The choice of the right Forex Trading software could take you places. These are automatic Trading software, also called as Forex robots that could trade on your behalf with very less or no human intervention.

By: Francis Murphy