Trading education » Day Trading

Learn Currency Trading – 5 Common Deadly Mistakes

admin — Mon, 28 Jun 2010 06:58:59 +0000

If you want to learn currency trading you need to get the right forex education and avoid the mistakes of the losing majority. The mistakes below are common ones but there easy to avoid and you must do so if you want to enjoy currency trading success.

1. Following a Vendor Blindly

One of the most common errors is to think someone else can give you success – they can’t.

Most systems sold are junk – but even if you do find a good one, how can you follow it with discipline if you don’t know how it works?

You cant to have discipline to follow a system you must have confidence in it so you need to take the time to develop your own trading system or have total confidence in someone else’s logic.

2. Trading News Stories

We have more news at our disposal than ever before and all those stories are very convincing – but that’s all they are stories. The news reflects the greed and fear of the crowd and they lose longer term – try and trade news stories and you are guaranteed to lose as well.

The best way for any novice to trade is to simply follow the reality of price action on a forex chart and trade it – your trading the truth not an opinion and that is the only way to win.

3. Day Trading

Simply the dumbest way to trade.

It doesn’t work as all short term volatility is random and you can’t get the odds in your favour.

Don’t believe me?

Try and find a forex day trader with a real ( not simulated ) track record that’s made real dollars over the long term. Let me know if you find one I have been searching for 25 years and still not found one!

Avoid day trading at all costs!

4. Trying to Predict Forex Prices

If you try and predict prices in advance you’re hoping or guessing and that won’t get you anywhere in life and certainly not forex trading.

You must not predict wait for momentum to confirm a turn and you can look up how to do this in our other articles – it is essential to confirm a price turn, rather than simply guess when it might come.

5. Markets are Scientific

It’s amazing how many people buy into this myth yet it’s obviously not true.

Why?

Because if prices did move to a scientific theory, there would be no market, as we would all know the price beforehand and there would be no market. The reason a market moves is because we all have different opinions of where the price may go.

The far out investment crowd love scientific theories and like to follow the works and methods of gurus such as:

Gann, Elliot and Fibonacci.

Well they made no money with their theories in forex trading and neither will you.

So if you want to learn currency trading correctly avoid the common mistakes enclosed and work and getting a simple forex trading system which will help you trade the odds, you can understand and can apply with discipline.

If you learn currency trading the correct way ( and 95% of traders don’t ), then you can enjoy currency trading success and create a life changing income – good luck!

By: Kelly Price

Ready, Set, Start Online Trading

admin — Wed, 16 Jun 2010 06:46:14 +0000

With a few bucks to spare and hopes of making more, you decide to try online stock trading. So where do you begin? If you were about to start tennis or golf lessons, you would start at the pro shop to get the right equipment. That’s the same approach needed to begin online trading.

Ok, you have a computer what else? Just any computer and dial up internet connection won’t do for online trading. Toss out the dinosaur hardware that is more than three years old and buy a computer with top speed. The old 256 megabyte models make great paperweights. Anything less than 1 gigabyte is not even in the game. For frequent travelers or commuters, consider spending more for a laptop computer to get portability that is necessary to stay on top of day trading. Online trading demands quick access and a reliable computer. Think of your computer as your business part for online trading.

RAM is the all important amount of memory that is available for programs in use. You need to set any software programs not essential for trading so that they will not run automatically when the computer turns on. Serious online traders use more than one trading site plus research so they need both RAM and speed.

Whether using a desktop computer or laptop computer, buy a flat screen monitor with the highest resolution you can afford. Online trading for day traders requires staring at a computer screen for hours which is rough on the eyes. The larger monitor is more comfortable to view and only needs a hookup to work with your laptop.

Traders who want to have instant access for online trading need a broadband wireless access card for their laptop computers. Another option is to purchase a wireless card from a major provider like Verizon or T-Mobile for a monthly fee or in increments of minutes. These cards are only useful at specific locations so know before you go whether your wireless card will work when you need it.

Set up your computer with files that are easy to access. Think of electronic files the same as manila files in the desk drawer. The more specific the file name, the faster you can find the file. This is very important when searching for the trend report or chart that you need this minute to make a buy or sell decision.

Subscribe to three to five online stock market newsletters. Start with free online news sources until you decide which is more useful. Keep what is helpful and delete the rest. Give yourself limited time for scanning newsletter or you’ll waste valuable online trading time reading.

That’s the basics necessary for online trading. You have a better chance of winning the online trading game when you start with the right equipment for the challenge.

By: Mark Crisp

The Real Secret to Day Trading Forex Currency

admin — Thu, 03 Jun 2010 07:48:45 +0000

You want to know the real secret to day trading forex currency? Well, here it is: Confidence and understanding of the market. There you go. There’s your real holy grail. If you can accomplish these two feats then you can write your own paycheck. Happy? Ok, so you probably need a little more information. Fine. Here it is:

Confidence! I cannot begin to tell you how many forex traders in the world are having anxiety attacks watching their trades just as I am typing. If you can’t handle a trade or trading or in general, then don’t do it. You’ll never have success day trading forex currency if you are watching every pip move like it’s life or death. Emotions can destroy a trader. A trader’s fear can cause him/her to hold a trade even though the obvious trend is going against them. It could also have the adverse effect in which a trader closes a trade WAY too early because he’s afraid to hold it, even though all the signs are pointing in the right direction.

I could give you the greatest trading system in the world, but it won’t do you much good if you don’t have any confidence in trading it.

The understanding of the market goes hand in hand with the confidence. When I say understand, I mean just that: Understand what you are looking at. Don’t be like everybody else who has to use indicators to tell them what the market is doing. Does anybody understand what these indicators even mean? Can you honestly tell me what using an MACD Divergence does? It’s colorful and its pretty on a chart, but what does that have to do with the tea in China? Take the time to understand the underlying causes of price and market movement.

Take off the indicators on your charts and see if you notice some repeated patterns. If you can start to see them then you can be ahead of the other 95% of forex traders who end up losing money on the markets. After all how can you have confidence day trading forex currency if you have no idea what you are looking at.

By: Jim Buhs

Emini Trading – Can Biorhythms Help You in Trading Eminis?

admin — Fri, 28 May 2010 00:54:32 +0000

Do you believe in biorhythms? Should you? Is there any advantage to taking them seriously? Would they help you in your day trading of emini markets? Or in your life in general? That’s what we will address in this article.

When I first learned about biorhythms I was only a teenager. I thought there was some science behind it or at least that’s what the sources I consulted then wanted me to believe. The truth be told, though, there is probably very little scientific evidence to support the idea of biorhythms, but a quarter of a century later, I still consult biorhythms, even if I should know it better by now. Yes, I do consult them because I have noticed that there is a good deal of positive correlation between my mood and mental acuity and my emotional cycle. And to some extent also between my energy levels and my physical cycle or my mental prowess and my intelligence cycle, though I seem to be mostly affected by the 28 day (practically monthly) emotional cycle. There are times when I really cannot understand or explain why I am feeling particularly lousy or sappy on a given day as there seems to be no good external or any apparent internal reason for that. On a day like that I usually check my biorhythms and more often than not I am presented with a plausible explanation: I am either close or I just entered a critical day or my cycles are indicating a bearish phase, meaning I am down. And so perhaps the best I can do at a time like that is to prevent myself from starting to dig in this hole. Let’s just relax a bit, it’s not likely that I am going to get done a lot today, anyway.

Biorhythms were discovered at the turn of the twentieth century. One of their earliest proponents was Wilhelm Fliess, a medical doctor in Berlin, Germany. In 1906, this specialist in ear and throat illnesses at the University of Berlin, discovered regular cycles in the development of his patient’s symptoms related to common colds, diarrhea, fever, and other common medical problems. In 1928, Dr. Friedrich Teltscher, of the University of Innsbruck, Austria, managed to prove the accuracy of the 23 and 28 day cycles after examining the results of experiments on several thousands of high school and college students. Moreover, he also discovered the 33 day intellectual cycle that he believed was related to the ability to remember and reason.

Biorhythms were used by sport coaches in training programs for athletes competing in the Olympic Games. Soccer coaches found biorhythms useful for selecting and training players.

In the last 10 or so years, the idea of biorhythms seems to have been discredited. The statistical studies once supporting this idea, have been found wanting and nowadays this idea is considered to belong to the same realm of scientific validity as astrology.

Should we thus totally reject it as bogus? Personally, I believe that would be unwise. Cycles do exist in nature, the most known of them being the annual one related to the Sun and the monthly cycle that has the Moon as its basis. It is well known that different seasons have different influence on humans. In particular, during the winter time we are more prone to depression when during the months when the Sun stays longer above the horizon. The monthly cycle is related to the menstrual activity in females, for instance, but may have also other effects, less pronounced. The fact the all the biorhythmic cycles have been found to be relatively close to the monthly cycle of about 28-30 days should probably not come as a surprise. This probably reflects the fact that the monthly cycle is real.

So how should we approach this issue from the practical point of view and, in particular, from the point of view of a daytrader? Well, first start by monitoring your moods and mental acuity. Whenever, you feel subpar and cannot find a rational explanation for your poor intellectual performance or lousy mood, see if this coincides with a critical day in the emotional cycle, the one that is closest to the monthly cycle and which I personally have found to be of the greatest influence on me. Or perhaps you are very deep in the negative zone of the emotional cycle, close to the bottom. If you notice such correlations, you may want to take them more seriously and simply try to take it easier and be more cautious in your work or your trading when you are experiencing one of those down periods.

It’s hard to keep working at the same strength and pace all the time, so use the periods when you feel slower, less psychically, mentally or physically fit to regenerate your energy. This will serve you well in the long run whether your main occupation is that of an emini daytrader, teacher or nurse.

By: Waldemar Puszkarz

Trading Stocks Online – The Value of a Trading Plan

admin — Thu, 20 May 2010 22:05:00 +0000

I started trading stocks online about 10 years ago and then in 2004 took some classes on trading options and moved into trading options online fulltime 2005. It was during this period that I learned the value of a trading plan. Most of you probably already have a mental plan but how many of you have actually written down? If you have a plan, how many of you are actually following it?

What Is A Trading Plan?

This is a document describing the methods you will develop and use to become a successful trader. It describes in detail how you will proceed to successfully execute your plan. Once your plan has been developed, trade according to the plan you developed. Create a Plan, Plan to Trade, Trade to the Plan.

Why Do I Need A Trading Plan?

“Every successful Professional Trader has a successful trading plan. Without one, you will lose before you even get started. You’ve heard the horror stories of beginning traders getting wiped out soon after making the move to trade professionally. In fact, only about 10% of those who start day trading the stock market are still around after three months.” Taken from “Trading Every Day with the right focus”

What Do I Include In A Trading Plan?

Here is the information that I put in my plans:

• Mission statement
• Goals that I want to reach (needs updated periodically)
• Rewards — How am I going to reward myself when the goals have been reached
• My trading styles
• My trading strategies
• My risk tolerance — How much am I going to place on a place? How much of my portfolio am I going to risk with all my trades?
• Emergency contacts — You should have at least have your brokers phone numbers here
• Anything else that you deem important

Where Can I Get Examples Of A Trading Plan

There are many examples of these plans on the web. Just search for them. There are also some trading planners for sale. Here you enter your plan information and they prepare the plan for you. I have looked at some of them, but not purchased. From appearances they looked OK but I felt I could just create my own using Word.

If you don’t have a plan you should start preparing one as it will help you in organizing your trading habits. One of the key ingredients of a trading plan is discipline. To make a plan work for you, you must have the discipline to follow it.

By: Chuck Ainsworth

Day Trading Or Swing Trading?

admin — Tue, 18 May 2010 01:08:34 +0000

Day trading has become popular in the last decade. There are many people now who make a successful living by trading different markets. Day trading or swing trading which is better?

Day trading is often depicted in a glamorous manner in the trading literature. Do you know this that day trading is stressful and day traders are often referred to as the kings of stress. Now I am not saying that day trading is something you should avoid. There are people who are masters of day trading and this trading style suits their personality.

However, in my opinion swing trading is a much better option. In day trading you have to sit in front of your computer terminal watching the different charts and waiting for the trading signals. You can do that for a few days but after that fatigue and stress will overtake you especially if you have been making losing trades.

In day trading you open and close a trade within the same day and don’t carry forward your trade overnight to the next morning. As compared to that in swing trading you can open a trade anytime of the day when the moment is right and can keep it open for days as long as your profit target is not met.

In swing trading the profit targets are also much higher as well as your stop loss is also more wide so you have more space. Swing trading depends on riding the trend at the right moment and continue riding it as long as it lasts. Day traders are looking for short term trends that may not last more than 24 hours but sometimes as a day trader if at the end of the day you have a profitable position and you feel that you should keep your trade open for a few more days you decide to carry it forward to the next few days.

So sometimes you start as a day trader but end up as a swing trader. In swing trading you don’t need to monitor your trade all day. After opening your trade and putting your stop loss and take profit orders you are free as the market will take its own course after that. You only need to take a look at your trade for 10-15 minutes a day anytime of the day that suits you. As long as your technical analysis was correct, your trade will work. So you have much more freedom in swing trading specially for those who do a regular job and trade as well.

By: Ahmad A Hassam

Learn Currency Trading – 3 Simple Tips Anyone Can Apply to Make Triple Digit Gains

admin — Tue, 11 May 2010 14:18:21 +0000

If you want to learn currency trading then most of the information online will not help you win, as the majority loses. The information in this article is not commonly accepted wisdom and that’s why it works…

Let’s look at how to make more money from currency trading

Tip 1 Cut Trading Frequency

How many traders try forex scalping and day trading – a huge amount and how many win long term – none. Why? Because they are trading random moves and cant get the odds on their side and lose.

The first tip is all about trading less and making more – because you are focusing on the high odds trades.

I know traders who only trade a few times a month but make huge gains, because they understand that they should only hit the best opportunities and you should do this to.

Forget day trading and focus on the big longer term trends that make the big profits, these trends last for weeks months or years and you only need to catch a few each year to turbo charge your gains.

Tip 2 Risk More Per Trade

This isn’t being rash this is common sense.

Read most so called experts online and they say risk up to 5% only! Well that’s fine, if you are trading 100,000 – but most traders are not, there trading an average $1,000 so 5% risk = $50.00, well you are going to get stopped out by random volatility.

These traders, really ought to brush up on an essential bit of forex trading education which is – standard deviation of price and they will see why it doesn’t work.

If you are trading a high odds trade – risk more – Up to 20%.

Keep in mind that most traders risk so little, their guaranteed to be stopped out. They try and avoid risk so much, they actually create it.

If you don’t want to risk a meaningful amount, you won’t make a decent profit.

Tip 3 Trail Stops Slowly

This is really related to the above point – don’t trail your stop to close, give the market room to breathe so you stay in the big trends as long as possible. You have to do this and it takes discipline and it’s not easy to take open equity dips but have the discipline to do it and you can make huge gains.

The above is really common sense and seeing currency markets for what they are – a risk market where you need to take meaningful risks at the right time to win.

If you try and restrict risk to much you will lose.

Learn to Love Risk!

See risk as opportunity, have the courage of your conviction, trade high odds trades only have the courage of your conviction, trade with discipline and you will be well rewarded and enjoy currency trading success.

By: Kelly Price

Commodity Futures Trading- The S&P 500 and E-mini – Preparation For A Big Move Up – Part 3

admin — Mon, 10 May 2010 05:05:13 +0000

As traders all we really need to know is when a market is going to stop moving in one direction then turn around and head in the other. The rest is noise. I try to concentrate most of my energy on identifying these times. The day trading information presented here is applicable to longer term position trading. Read on to learn what a market requires to make a turn.

Observation From Trading Notes:

“Higher lows on the five minute chart.”

This is the obvious and classic rule to define an uptrend. Sometimes in our wish to buy the bottom of an e-mini futures move, we fail to see the market is still making lower tops and lower bottoms. But isn’t that what we want to see? No. We want to be buying a correction within a bigger uptrend. If the one minute bar chart is making lower lows while the five minute chart has already established itself as an uptrend, that’s what we want to see.

The market might continue down after we buy,. but that’s what taking risk is all about. There are few perfect set up outcomes. If we wait long enough for perfection, we will hardly ever trade. And when we do, the e-mini futures market has a way of taking the best set ups and going the other way to take out the followers of this “perfect” technique.

I’m convinced all commodity futures markets are simply live organisms that do whatever they need in rotation to beat up every participant they can. The e-mini futures market has clever tricks to beat up the trend followers, the break-out guys and the counter-trend traders. It will sometimes even take out a few different types of traders at the same time.

Ever see a “search and destroy” move? That’s when the previous high gets spiked, then the previous low gets spiked, then the market goes back into a middle chop. At that point, it’s disappointing no matter what technique you used. Just grin and bear it and keep watching for your next set up. If you survived with a small loss, you were successful. Remember, you don’t have to be perfect to make money – just better than most.

Observation:

“Daily chart is UP. The last 2-3 days was just a correction.”

This is a repeat of the last point. It’s the same basic pattern, but on a larger scale. When looking to go long the e-mini, you want the main trend to be going up, while the minor trend is correcting. A 2-3 day daily bar correction can look devastating on a 15-minute bar chart. That’s why it pays to continually scan all your time frames to put things in perspective and be ready for the big turns. “Don’t wish it to happen – don’t want it to happen – just let it happen.” (quote from the movie, “The Untouchables”)

Observation:

“The bearish advance-decline line has improved throughout the last day. The A-D numbers were better than 1:1 and bullish at day’s end.”

When the A-D line starts out one-sided, but improves throughout the day, add this to the indications that MAYBE a big change of trend is about to take place in the e-mini futures contract. The bigger the price clean-out that has occurred, the more likely its indication is true. There’s nothing like a gap opening and negative A-D line below 3:1, with multi-bottom chopping and the A-D line improving. You may not see the e-mini futures market make its big move up that same day, but if it opens higher and holds firm in a flat price plateau the next day, this is another indication that it wants to rally.

Part Four of Five Parts – Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

By: Thomas Cathey

Futures Trading – Methods to Trade The S&P 500 and E-mini Futures Contracts, PART 2

admin — Sat, 24 Apr 2010 05:53:18 +0000

After twelve years of watching and day-trading the S&P 500 almost every day, I’ve come to some conclusions of what works and what doesn’t. These methods can also be applied to other markets as well, for both long and short-term trading.

There’s a danger of having too much stuff on your commodity charts. Too much useless noise is the problem to avoid. Analysis paralysis. It makes me laugh when I see those colored charts in the magazines with five oscillators, four moving averages, Fibonacci and Gann angles like spider webs, price projections, volume indicators, open interest lines, Bollinger bands, disco ducks, dual anchovies and high rise pepperonis. Gads! It’s too much noise. How could I possibly know what to do with all of these conflicting indications?

And yes, like many of you, I’ve spent a lifetime studying and practicing Gann, Elliot Wave theory, Fibonacci techniques, cycles and the like. I even spent money on neural networks trying every input combination known to man. GIGO still rules. It’s simply optimized mush in the end. It all looks good until you trade it into the future in a real market.

My rule goes like this: The more optimized the results are, the more likely the odds are about to swing the other way in the future. It’s like optimizing a system to a raging bull market. You squeeze every historic data penny out of it. It’s 100% winners on paper. Then real time trading starts and the market goes into a chop. Now it’s 100% losers. If the trading system had been loosely designed to handle BOTH trending and chops, then the balance would have been better, but STILL a wash over time.

Probability has a way of evening things out over time. Streaks end and go the other way. Losing periods start and then swing the other way. No way to know. Well, enough of that. I’m hoping to save a few new commodity futures traders the time and heartbreak of searching for that elusive trading system and software that does not exist.

Just get yourself an old copy of TradeStation 4.0 [with a security block] for $150, or something that will let you CUSTOM write your own indicators and methods. That’s all you need to compete computer-wise. You need to do things the majority hate to do. You must act differently and think differently from the trading crowd. This is one piece of commodity futures trading folklore that is correct.

The next step is fun and of utmost importance. It’s accumulating market patterns. I still do this every day after the futures market closes. You need to set up a 1-minute bar, 5-minute bar and 60-minute bar chart of the E-mini. Use Open-High-Low-Close bar prices. No need for complex stuff like candlesticks, but use them if you feel it gives your brain more info. It’s not critical at all. Have the feed and plotting set for 24-hour futures contract data. You will have your proprietary indicators plotted on the future charts. I will get into these later.

Now, with a second computer word processor or pencil and pad, you type or write down every pattern you see. There are hundreds of general patterns that repeat over and over in the S&P 500 futures contract market. And there are many variations of these. I’m not talking about the common chart price formations, like head and shoulders, triangles and stuff like that. I’m talking about situational set ups. These take time to find and make sense of. These are patterns that have a series of events linked together that forecast a price turning point and a potential sharp move. We are trying to identify specific turning points to minimize risk of entry.

I try to look for futures trades that will last between 30-60 minutes. No scalping for me. As of December 2006, you must get winning futures contract swings of at least three points minimum to cover your expenses and produce a profit overall. Losses should average no more than 1- 1.5 points if possible. If you do your homework, you will find many trades will go your way right from the start. If the market starts to break the low you just bought, be ready to average in once or hit that mouse for an exit, reevaluate and look to enter again at a better price if the set up still holds.

You might average down a very high probability trade once or twice. Otherwise, let it go. There is only ONE situation where you can risk reversing your position to chase the market. I’ve coined it a “snuff.” I’ll write more on snuffs later.

Part Three of Four Parts – Next

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

By: Thomas Cathey

Automated Forex Trading – The Expert Advisors – 5EMAs

admin — Thu, 22 Apr 2010 23:26:17 +0000

The Forex currency exchange is getting more popular everyday, but everyone seems to think it is just evil, another way for the big corporations to stick it to the little guy. 95% of the people who trade forex WILL LOOSE THEIR MONEY, they will consistently give their money to the other 5% and they couldn’t be happier. Now, with the introduction of forex currency trading software the currency exchange market is getting easier to manage and easier to profit from.

Consider this, if you found out there was a way to automate everything you needed to do in the forex currency exchange to make money, would you do it? Most people think this forex currency exchange market can only be traded by a genius or someone who can stand to sit at their computer for hours, even days on end…watching the forex markets every move. There is system that is as close to fully automated as it gets, and as with any other Expert Advisor, you only need to configure the software and then let it do its thing.

The 5EMAs forex trading system has just recently been released to the public as an actual product. The formula for the trading system is relatively simple since its very name employs that it can accommodate 5 different trading styles from scalping, swing-trading or day-trading. The 5EMAs forex trading system can be used for long term as well as short term goals, thus allowing the average joe to keep his/her job while still making money on the forex currency exchange.

The 5EMAs forex trading system shows you how to, in a step-by-step guide, identify accurate trades with the potential for huge returns, this alongside forex money management strategies that were specifically designed for this system. This currency trading software is but a fraction of the cost of many of the other forex trading systems out there, it is a wise investment simply because of the value of the knowledge this system offers, it has the potential to be incredibly invaluable if its put to good use.

Most currency trading software enters a trade when the trade is either already at its peak or already over, the forex system triggers trades in the very beginning of a move. You wont be losing out on the meat and potatoes of a big move with this forex system in place. This system is very easy to use, even for a beginner with no forex experience can put together a solid strategy with the guide that comes with this 5EMAs forex trading system. Taking the time to read it can make all the difference in the world, it can be the difference between quitting your job or loosing the next mortgage payment.

Don’t expect to just set it and forget it, the system needs to be properly setup, so reading the guide front to back before starting is a VERY good idea. Some forex trading software wont give you a follow up report after the trade is over or signals to use to watch the market for big moves.

By: Luis Aguirre