Trading education » Forex Traders

Price Action Trading – Waiting For Confirmation

admin — Mon, 14 Jun 2010 17:19:34 +0000

Many aspiring Forex traders jump into the market before their entry signal has fully completed or fail to even develop a defined trading plan. It is crucial to a trader’s long-term success that they wait until all their pre-defined parameters are met before jumping into the market. In order to define a trading strategy you must define its entry and exit method. A highly effective and highly adaptable method is absolutely necessary to enable definition of entry and exit and allow for vivid confirmation of signals.

Once traders start jumping in and entering trades before the completion of their specific setup they are essentially negating their entire trading plan. The main point of developing a written out trading strategy is that it is done when you are in an objective state of mind set and are not reacting emotionally to the market. When a trader enters a trade that doesn’t fully meet his or her pre-defined criteria they are acting on emotion, these types of behaviors are what get most traders started down the slippery slope of emotional trading.

Employing an easily definable and effective trading method such as price action analysis will allow you to stay calm and wait patiently as your price setup forms and then strike with cat-like precision when the setup is complete.

The problem with many methods that traders use to trade Forex is that they have large gray areas, or entry and exit parameters that may change depending on what time frame you are looking at. The beauty of price action setups is that they show you exactly what price is doing and give you a unique perspective to analyze the Forex market on any time frame while still remaining relevant. For example, if a price action trader sees a possible pin/reversal bar form on a daily chart the signal will be noticeable on all lower time frames as well. It may be in the form of a 2 or multiple bar reversal on the 4 hour or a head and shoulders on the 1 hour.

The great thing about price action setups is that they generally confirm themselves across all time frames and leave very little to the trader’s discretion. Price action signals like any other are stronger on higher time frames and generally will be visually evident on lower time frames as well.

When you trade Forex using price action setups you can more readily attain the necessary objective mindset that is required to be consistently successful as a trader. Having a method that is easily definable and inherently reflects the very nature of the market is great tool for any trader. Waiting for a price action setup to confirm itself via subsequent price movement is the best way to be sure you are on the right side of the trade. Many traders rely on indicators which often cover up the underlying price movement and provide them with a false sense of clarity. Take the indicators off your charts and learn a few good price setups and you will see the Forex market from a whole new perspective. Patiently waiting for your pre-defined price action setup to confirm itself in the flow of price movement is paramount to any Forex trader’s long – term financial success.

By: Nial Fuller

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

Learn to Trade the Forex

admin — Thu, 27 May 2010 13:00:48 +0000

What are the rewards of Forex investing over any other types of investments? When thinking about a variety of investments, there is one investment opportunity that really stands out and that is The Forex or Foreign Currency Market. The advantages of forex trading are as follows:

1.The Forex market is open 24 hours, 7 days a week around the clock. This is the opposite of stock markets.

2. Investments usually require a lot of upfront money, with forex trading you only need a very minute amount. Learn to trade the forex will cost you less than $300.00. For $300 dollars you can create small account that will let you trade numerous amounts of 10,000 units. 10,000 units equal 1 contract and each pip which is a move up or down in the currency pair is worth a $1 no matter if it’s a gain or loss. A standard account gives you control over 100,000 units of currency and a pip is worth $10.

3. The Forex market is also very liquid which is why the forex system is amazing. Forex trading education will suite you well in this situation.

4. Many other types of investments require investing your hard earned money for a long long time. This is extremely ghastly because if you need to use any of your money you will pay a huge penalty.on your money for long periods of time.

5. Forex traders can be profitable in any conditions and unlike stock markets because you do not need stock prices to rise in order to take a profit. Forex traders can make a profit at any point in time no matter how the economy is doing. Forex Trading can be uncertain, but with having the ability to have a high-quality system to follow, good quality money supervision skills, and having self discipline, learn to trade the forexc an be a fairly low risk venture.

6. The Forex market can be traded at any time and from anywhere. All you need is access to the internet and a computer, nowadays you can trade over your cell phone! It is so simple and so worth any investment. There are many forex online trading systems and forex ebooks out there on the internet which some will give you a free coarse and a “mock” trading system which will be almost like the real thing but for play money just so you can get a feel on how currency trading works exactly. Don’t be shy, the internet has so many courses to learn at such as the forex trading robot, you just need to be carefuel when you choose one to purchase for real hard earned money. Once you learn the forex trading system the sky is the absolute limit. There is no telling how much money you could make and how soon you could be doing this for a permanent living. You wanted to work from home right? Oh with forex trading you do not need to travel 2 hours a day and work a 9-5 dead end job your whole life. In whatever you decide to do, I wish you the best of luck!

By: John Callingham

Online Forex Trading Today

admin — Sat, 15 May 2010 12:49:25 +0000

With the introduction of the internet, many new opportunities have opened up for people to make money, learn new trades and improve their lifestyle. The internet has changed our lives in many ways. One of the most popular ways to make money online is through forex trading online. Todays forex traders are granted access to the international forex market over the internet. This has revolutionized the way business is done on this market and allows every trader direct access to the productive forex market. This has led to increased popularity of forex trading around the world and and government regulation has been relaxed in the United States, making way for this revolution.

Another aspect of forex currency trading that has been affected by widespread internet access is the proliferation of innumerable websites offering training courses and advice on forex trading. Many of these are not very useful, but there is a large number that do offer excellent advice and forex trading education. Many of these services nclude access to historical data and online libraries, interactive videos, live chat with experts, in-depth advice and analysis on using forex currency trading systems and demos of forex currency trading software online. The forex trading online training courses will often include live workshops and seminars or else let you know where such an event will be scheduled near you. The experience of learning from other amateur and professional forex traders is also invaluable and many of the online forex training courses will offer message boards and forums for members.

Some courses will include video presentations by a financial whiz, generally the proponent of the forex trading system that the course promotes, and his team. These can certainly be beneficial when you’re selecting a system to use personally and help make the rationale of the system clearer. Further, live chat with the expert or members of his or her team is a great bonus and should be used to get answers to any questions you may have.

Online technical analysis software is also a highly beneficial tool, used by most professional forex traders and made available to amateurs by various websites offering forex training courses. This forex trading software is used to analyze and identify emerging trends so that forex currency traders can tap into these patterns and apply techniques to capitalize on many of them. A forex trading system works in conjunction with the software tools for technical analysis in this way. This ensures a orex trader can learn to use the forex currency trading system, understand how to successfully trade, and execute their forex trades completely online, without ever leaving home.

These elements serve to make online forex trading a popular means of livelihood for many people and contribute to its continued popularity. You can learn about forex trading in your spare time at work or at home and take a few minutes a day to keep checking your trading account, all the while making money and never leaving home or the office.

By: Andrew Daigle

Breakout Method – One of the Simplest Trading Methods

admin — Thu, 06 May 2010 18:47:38 +0000

Many new Forex traders ask what trading system is better to start. I believe the simpler the system the easier can a trader learn to trade. In my opinion trading systems based on a breakout method are the simplest and easiest to trade. I would like to discuss the advantages of breakout method and give a few examples of it.

1. What is the breakout method?

First let’s define what the breakout method is. Whenever you define a price range and the price breaks out of that range you have a trading opportunity. The range can be defined in different ways. Usually it’s a period of time where price did not move a lot. It can be the period of Asian session. Sometimes an indicator can be used to identify such a ranging period. I use Ballinger bands to identify the squeeze in price range.

2. How to trade the break out method?

It’s very simple to trade the breakout method. First you need to set a pending order to buy at the top of the range. Then you set the pending order to sell at the bottom of the range. Or if you can continuously watch the charts then you buy or sell as soon as price breaks out the range. Some people introduce more sophisticated rules into break out method. Fore example they can wait until candle closes outside of the range. The beauty of the break out method you know for sure where to place your stop-loss level.

3. Example of a Bollinger-squeeze breakout method.

This is one of my favorite trading setups. Place Bollinger indicator on your 15-minute chart. Look for the period when bands become horizontal and the distance between them becomes no more than 10-15 pips. The longer the squeeze lasts the higher the probability of a profitable breakout trade. Now place your orders on each side of the bands. The upper band is where you place your buy order, the lower band where you place your sell order. Stop-loss levels are placed at the opposite bands. With EURUSD pair this method gives at least 30 pips. But taking profit is actually art of trading. So you need to test your profit taking levels and methods with it.

By: Albert Schmidt

Forex: Money Management Principles

admin — Sun, 02 May 2010 20:35:25 +0000

Trade With Sufficient Captial

One of the worst blunders that forex traders can make is attempting to trade without sufficient capital.

The trader with limited capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading the method(s) or patterns.

Exercise Discipline

Discipline is probably one of the most overused words in forex trading education. However, despite the cliché, discipline continues to be the most important behaviour one can master to become a profitable trader. Discipline is the ability to plan your work and work your plan.

It’s the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you are uncomfortable with risk. Discipline is also the ability to continue to trade the methods and patterns even after you’ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class trader.

Employ Risk-to-Reward Ratios

The following shows you possible risk-to reward ratios, and the win ratios required to break even in a trading system.

Risk-to-Reward Ratio (in pips)and Win Ratio Required to Break Even(%)

40/20 (2 to 1) = 67%, 40/40 (1 to1) = 50%, 40/60 (1 to 1.5) = 40%,

40/80 (1 to 2) = 33.5%,

60/20 (3 to 1) = 75%,

60/60 (1 to 1) = 50%,

60 /90 (1 to 1.5) = 40%,

60/120 (1 to 2) = 33.5%

Important Note

Never risk more pips on a trade then you plan to make. It doesn’t make sense to risk 100 pips in order to make only 10. Why? See below example.

Profit taking level (pips): 10

Stop used or pips at risk: 100

You win 10 times which makes 100 winning pips.
You ONLY lose once and have to give back all profits!!!

This type of trading makes no sense and you will lose on the long term guaranteed!

By: Toby Smitz

Forex News Trading System – 3 Cautions Related to Any System Based on Trading Forex News

admin — Thu, 22 Apr 2010 12:29:27 +0000

Forex System based on trading news should be selected very carefully. Primary reason being that trading during any fundamental announcement or news is one of the most explosive time during a trading session. The market can move 100s of pips in matter of seconds. Thats why the risk involved are more than trading using technical analysis.

Still, because of profit potential, trading during forex news announcement is one of the most tempting proposition for forex traders. When you are selecting any forex news based system, please make sure that it covers below mentioned 3 risks -

1. What is the strategy to protect forex account when market moves against your trade direction – The beauty of forex news is that it cannot be predicted which direction it will move. Naturally, it is very necessary that a strong strategy should be in place to protect the account incase market moves in the opposite of anticipated direction. If such strategy is not in place, your complete account is under big risk.

2. How much will be the profit target – The way forex market reacts to fundamental news is based on a factor of “Expectation”. For example, Lets imagine that the trader community believes that as per next Non Farm Payrolls the unemployment will be 8% as against 6% during last months announcement. But when NFP comes out and unemployment is said to be at 7.9%, market will treat this as positive for US economy and Dollar will become stronger and market will move in USD direction. How much it will move will be based on much better the results are from expectations. The forex news trading system should definitely cover what should be a realistic profit target based on the news results.

3. Is your forex broker cooperative – No forex news system will work if the broker cannot allow you to trade using live prices during fundamental announcements. During some volatile announcements, the currency pair prices are delayed by the some of the forex brokers. Thats because they discourage trading news. If thats the case, then either you drop idea trading forex news or you must choose a new broker.

By: Rahul G

Forex Online Trading Systems

admin — Mon, 29 Mar 2010 06:51:28 +0000

When it comes to selecting a system out of the many Forex online trading systems that are now available there are a few things that a person should be aware of. As with anything that you do in life you should first carry out some research into the various systems available before you make your final decision on which system it is you are going to be using.

Forex trading is considered one of the most complicated types of trading and yet still has the potential for a person to make some easy money from it. Unfortunately this often results in people willing to take money from those who are a little naive and will then not deliver what they promised.

The first thing that you should be doing is to compile a list of around 3 or 4 systems that you like the look of and will fit in with your requirements. Although you are able to find such systems using search engines such as Google or Yahoo this is not the most preferable way of doing it. Normally what will happen is that the results will include review sites which will compare different systems, but the problem with looking at these types of sites is that they are not always impartial. Unfortunately for some of these sites there is a tendency for them to recommend the system where they have been paid the highest commission.

Also you should steer clear of those sites that are reviewing a number of different systems as it is really not feasible for one person alone to be able to review more than say a couple of systems at any one time.

Instead what you should be doing if you wish to compare different systems that are available is to type in such words as “Forex online trading systems forums”. By doing this you will be able to bring up a number of different sites where lots of Forex traders will be discussing the various advantages and disadvantages relating to systems that they are using or have used.

However it is best that you look for those forums which are properly moderated. Many of the frequent users as well as the moderators of these sites will be able to spot spam posts immediately and so will help you to avoid choosing those systems which do not work. As well as finding a site that is well moderated also spend some time going through their archives and this will help you to see whether the Forex online trading system that you are interested in has been receiving good reviews for some time or whether it is just a one hit wonder.

Just by spending a few hours of your time carrying out research in relation to the various Forex online trading systems available will probably not only save you a lot of heartache but also a lot of money in the future.

By: Ricky Lim

Highly Successful Forex Trading Systems

admin — Sun, 28 Mar 2010 18:32:25 +0000

Forex trading systems are key to turning a profit in the foreign exchange market. Forex trading systems are strategies used to determine how the market will treat a currency. They are formed around companies and investors from around the world, and most are systems that are tried and true. Some systems are strictly about exchanging one currency for another, while others exchange currency as well as invest in stock from around the world. Following a trading system is a wise way to break into forex trading.

While a forex investor will be able to create their own forex trading systems as they learn about trading through book study, courses, workshops, and personal experience, most begin their investing following a mechanical system devised by an experienced forex trader. These mechanical systems are built around forex signals that a successful trader has come to recognize. Many of these professional forex trading systems are built into automated computer programs that will indicate to a trader when it is wise to sell or purchase a currency. Experienced traders will sell these systems to beginning forex traders so that they too can make a profit with forex.

Automated forex trading systems are popular because they are known to help beginners earn money while simultaneously teaching them how the market works. The systems, based on how stock exchange works, are constructed around the actions of global investors, companies, and currencies. They are reactive, judging how stocks and currencies will grow or shrink when they act a certain way. Though it isn’t always certain, systems assume that when a commodity does a particular action, it will follow trends other commodities have done in the past. The stock market calls traders who rely on these trends momentum players. Momentum players rely on their systems to always be true, otherwise they will face a financial loss. Be wary of fully automated forex trading systems. Though they offer a way to get into forex, the course of the forex market can’t be accurately predicted by a computer program. Your own intuition and insight are necessary to make worthwhile trades.

Automated forex trading systems are not the only type of trading systems available. There are also discretionary systems available. These systems allow more freedom. Though they show signals of when to buy and sell stocks and currencies, they allow personal judgment, intuition, and experience to play a more dominant role in trading than automated forex trading systems do.

As stated above, there are traders that will give or sell their forex trading systems to beginning traders as they learn the market for themselves. New investors can pick apart systems to discover why they work. It helps quicken the understanding of the forex market. In time, a successful investor will be able to create their own systems in hopes of gaining even larger profits.

By: Peter Flemming

Forex Trading – These Traders Had No Experience But in 14 Days Became Super Traders – How?

admin — Thu, 25 Mar 2010 11:34:17 +0000

Imagine having no experience of forex trading, being trained for 14 days and you then went on to make millions – sounds far fetched? Well, it happened in the 1980s in one of the most famous trading experiments of all time which is enclosed and should become part of your essential forex education.

In the nineteen eighties, trading legend Richard Dennis wanted to prove a point and the point was simple:

It doesn’t matter what you do, how intelligent you are, if your young, old male or female, you can become a successful trader, if you have the right mindset and a willingness to learn.

He set out to prove his point.

He gathered a group of people who met the above criteria and they included:

An actor, a security guard, a kid fresh from school and a female auditor – diverse they were but they were all about to get a trading education.

In 14 days, Dennis taught them to trade and set them up with live accounts and they went on to make hundreds of millions of dollars and go down in trading history.

This group was nicknamed “the turtles” and proved Dennis right – anyone could learn to trade with the right education and the right attitude.

That’s interesting you may say… but 95% of traders lose, so how come this group was so successful?

The answer lies in the way they learned.

They learned a simple long term trend following trading system (essentially a breakout system) and it was so simple anyone could understand it. It’s a fact also, that simple trading systems always work best, because they have fewer elements to break than complicated ones.

Now Dennis didn’t just say off you go and trade – he rammed home why it worked, gave strict money management rules and made sure they would be prepared to trade it with discipline, to achieve success.

The above is the important part.

Learning a trading system is not enough, you need to execute it with discipline and take loss after short term loss, without quitting and then profits follow. You need to take losses to win and stay on course.

To trade you need to follow your system with discipline and you need confidence to do this. He taught them to stand on their own two feet and appreciate – learning a trading system is easy – executing it with discipline is the hard bit.

You can learn from someone else – but you have to make the system work for you!

Most traders can’t do this, they like to ask experts, trade worthless robots with simulated track records, or believe drawdowns don’t last and trading is easy and they all lose.

Trading is all about having the mindset to succeed and to execute a plan. Most traders are to lazy or naïve to do this and most think forex trading is easy. Well, when big money is on the line and to be earned – it’s not easy. However, there is a big difference between something being easy and something being achievable.

Sure you might not become as successful as the above group life simply isn’t like that but the opportunity is there – they did it you could to.

Even if you don’t achieve such great success, you can find success which more than makes up for the effort you have to put into your forex trading.

Sure forex trading is not a walk in the park, it’s a challenge but accept it – work hard, have the mindset to succeed and you can find success – it’s up to you.

By: Monica Hendrix