Tag Archives: forex

Forex Trading Articles

Forex Trading Tip – 3 Tips to Super Charge your Profits

Leave a comment

The forex trading tip enclosed is all about increasing your profitability and there logical, easy to apply and work. So here are your 3 trading tips, to increase the profitability of your forex trading strategy.

1. Learn The 80 – 20 Rule

It’s a fact that in many areas of business work etc that 80% of your profits come from 20% of your efforts and it’s also true in forex trading.

Most traders over trade and trade for the sake of trading, they think that if their not trading they will miss a move or the more they trade the better and this is not true. What you need to do is:

Cut you’re trading dramatically and only focus on the high odds set ups.

I know traders who trade less than once a month but earn triple digit profits.

They know trading frequency has nothing to do with forex trading success and you should learn this to.

2. Don’t Diversify

Diversification is seen as a way to cut risk – that’s only true if you diversify into good high odds trades, but most traders think they should trade a spread of positions, take marginal trades but all that does is dilute profit potential.

Most forex trader’s accounts are so small they simply can’t diversify and have meaningful gains. No you need to concentrate on high odds trades and then use the next tip to milk them for all their worth.

3. Load up The Risk Reward

How many times do you read that you should only risk 2% per trade well for a small forex account of say $5,000 you wont make much doing that that’s $100!

No you need to risk up to 20% on the high odds set ups – if you don’t take a risk, you won’t make big gains, its as simple as that.

You are not being rash, you are taking a calculated risk based upon the odds and like a good card player, you are going to load up your trade.

The tips above are simple and mean that you have to see forex trading for what it is a high risk – high return odds based game, where you need to be patient, to wait for the right trades and when you see them – hit them hard.

Think about the above simple forex tips and you will see they make total sense.

They will help you enhance your forex trading strategy and enjoy forex trading success.

Forex Trading Articles

Inverted Pyramid Based Forex Trading Strategies

Leave a comment

As a trader, you must develop a Forex trading strategy that will allow you to quickly identify flaws and make adjustments while continuing to trade. A classic approach used to evaluate risks in the currency trading system is the inverted pyramid approach. All macroeconomic factors that affect a chosen currency pair are a function of the top of the inverted pyramid. All technical factors are considered as you move down to the bottom of the pyramid. Traders assign weight to different parts of the pyramid. Purely technical traders may apply more weight to the bottom of the inverted pyramid (upside down triangle) while fundamental traders may apply more weight at the top.

In order to make use of the inverted pyramid you will need to understand the macroeconomic factors that are a function of the top of the inverted pyramid. These include international issues that influence the global trading community. These types of issues may be gauged from news reports and news feeds with global coverage. News networks, such as CNN, provide up to date coverage of terrorism, oil prices and other such issues.

In order to account for the technical factors that apply to the pyramid, you will need to determine specifics and sediment in the particular market within which you are trading and also for any market that impacts the market within which you are trading. You must decide the type of technical indicators that will be used in your Forex trading strategy. Some traders rely upon randomness and chance while others engage more complicated mathematical computations to calculate weighted moving averages. You must be able to develop and visualize a picture of the market, which identifies events that are of importance to affect the market. You also need to develop a general feel about the market. News reports and specific market reports will assist you in developing a picture of the market and also indicate of the direction in which the market is headed.

You will need to determine which currency pairs are volatile in relation to the macroeconomic environment and market conditions that have been identified. You will need to have knowledge of the market in order to identify and differentiate market indicators from events that bear no real significance. Your analysis of acquired data should indicate whether price movements represent a trend or volatility in the currency trading system. You will then be able to use this analysis to narrow your options to trades that offer the most potential.

You must be able to set floors and ceilings in your technical analysis to establish trading levels and then use those levels in your Forex trading strategy. Technical patterns that indicate the direction of trades in specific currency pairs should be developed. Once you have narrowed down to a specific currency pair for trade, you will then need to reexamine its market sediment as it applies to the technical analysis. You will have to identify entry and exit points for your chosen trades.

Forex Trading Articles

Forex Trading – the Big Disadvantages of Forex Trading

Leave a comment

I constantly read articles about the advantages of forex trading but these are actually disadvantages for most traders and that’s why 95% of traders lose all their equity quickly and here we will look at the two specific reasons, most forex traders lose…

1. Leverage

Today, you can leverage your investment with an online forex broker by 200, or even 400 to 1 and this creates tremendous profit potential – but it’s a fact that most traders actually over leverage and lose.

With leverage you need to be very accurate with the execution of your trading signals and very careful with your stop loss protection. When trading on leverage if you are not careful, a quick equity spike will wipe your position.

In stock trading you can buy and hold and you only risk what you have paid for the stock and so long as it comes back you make a profit and you can wait.

In forex trading its different – you have losses that are open ended and they pile up quickly. You can’t just sit back – you need to take action.

As most traders lack discipline, they very often hope a position turns around and don’t have a get out point. A small loss soon ends up being a big loss and their equity is gone. Most traders hate admitting their wrong – they want the big profit potential leverage gives them but don’t think about the downside.

2. Volatility

Forex prices are volatile and make big moves everyday – combine this with leverage and you have a powerful tool for profits which of course can also cause losses.

Most traders have no idea about how volatility affects their trading and how to deal with it. Most forex traders have never heard of, let alone understand “standard deviation of price” yet it’s an essential part of any traders forex education.

You have to know what is normal volatility and what isn’t, to have any hope of succeeding with your forex trading strategy.

Most traders make the error of placing stops to close to their entry point and they get taken out by normal volatility and this is because they are normally over leveraged.

Most traders try so hard to avoid risk they actually create it for themselves.

The way to make money in forex trading is:

Use low leverage and stops outside of normal volatility – NOT high leverage and stops within normal volatility.

In forex trading seeing the longer term trends on a forex chart is easy – making money from them is anything but. The correct execution of trading signals, in line with the odds and placing of sensible stops is what separates the winners who pile up big profits from the rest.

Forex trading is high risk / high reward – the bigger the risk the bigger the reward – period. You need to be aware that you need to manage risk and build your own set of rules within your forex trading system to combat it.

REMEMBER

The advantages of currency trading can be disadvantages as we have seen and you need to think lower leverage wider stops rather than higher leverage closer stops. Most traders do the latter and get wiped out quickly don’t make the same mistake.

Forex Trading Articles

Online Forex Trading Software – Things to Bear in Mind

Leave a comment

There is potential to make a killing in Foreign Exchange Trading or FOREX trading, and more and more people are turning to FOREX as their source of living, with the help of tools to keep them on track – such as online FOREX trading software.

Just like the stock market, FOREX trading typically should take a lot of study and research. Nobody would start trading on the stock exchange one fine day without any preparation, and the same goes for FOREX trading. The FOREX market is very sensitive and you need to have a keen sense of which way a trend is going to swing to make a living from FOREX trading.

This is why online FOREX trading software is so important. For an expert, keeping track of the FOREX market and keeping pace with its changes is difficult, but not impossible. For a beginner, this will be quite daunting. You need a reliable source of information that will be updated every minute, if possible sooner, and will give you all the information you need, neatly analyzed and presented in a way that you can understand and understand quickly. If you choose the right online FOREX trading software, this is exactly what you will get.

There are certain features that the online FOREX trading software you opt for must have. The first is that it must have access to buying and selling markets all over the world at all points of time, because FOREX is a constantly mobile market.

The second is that it should give you the information from these markets in neat graphs, if possible, so that you can see where each trend is going. A graph makes much more sense than statistics in a list, and is much easier to read.

It should have adequate charting tools that will help you plot your transactions and the progress of your investment. Without this, you will soon be at sea.

Mobile online FOREX trading software is a great option. You cannot possibly be at your computer all the time, so getting the information you need on your phone will be an added advantage.

The interface of the online FOREX trading software must be fairly easy to use and understand, and quickly accessible. All the features in the world will not help you if you cannot access them in time.

Web-based software will suit you better if you have a good Internet connection, which is mandatory for FOREX trading, anyway. With this, you can access your account and trade from anywhere at all. They need no download. Client-based software, on the other hand, will be on your computer. Security is a very important consideration.

To know more about what kind of online FOREX trading software will be best for you, visit my blog and read more about it.

Forex Trading Articles

Avoiding Three Common Mistakes in Forex Trading

Leave a comment

Forex trading may seem simple enough once you get the hang of it. Buy a currency at a low price and then wait a while and sell it at a higher price. This apparent simplicity is deceiving.


While forex trading may seem simple it actually is a demanding professional activity. To trade at a profit over long time periods demands a lot of knowledge, skill, and discipline.


No matter how simple forex trading may be as to the basic mechanics most forex traders make frequent mistakes that cost them money. The reason is that human emotions often get in the way of common sense and judgement. A successful forex trader often has to have the ability to make independent decisions and fade, go against, what the average trader is doing.


At critical times the profitable forex trader has to have the ability to not run with the crowd. He has to be able to step in and sell when it seems like the rest of the world is buying. And to buy when the market has sold off on a wave of selling. Not many people are able to do this as it is against human nature.


So before you get into the business of forex trading, be sure that you have enough information about the forex markets and that you have an understanding of economic and emotional forces that move the market. Above all have a good understanding of your own trading strengths and weaknesses and be able to constantly strive for improvement.


Here are some of the most common mistakes that novice forex traders often commit.


1. Over reacting to the news:


There will be too much news every day. From the television, the newspapers, the radio and the Internet. You will be flooded with news that is related to forex trading in some way. But remember that there is news and there is important news. You have got to know how to separate the facts from embellished background noise and important data from ordinary data releases. When important news does break you if you are inclined to trade it you must be able to react swiftly. Keep in mind that most important news is unexpected news. It is surprises that are major market movers.


This is very crucial in this field because currencies can be highly volatile. A simple news report that catches the market by surprise can trigger a large move. Following daily news stories and reports about currencies is something that forex traders should be careful about. What they should do though is to learn how to read forex charts and learn what are important support and resistance levels.


2. Getting involved in day trading:


Day trading involves the buying and selling of currencies within the same 24 hour day. This takes advantage of the numerous fluctuations of the currencies that happen within a day trading period. Do not do this unless you are a very disciplined skillful trader. For most traders day trading may provide small short term gains but in the long run it will cost you to miss major moves where the real money is made.


3. Entrusting someone with your money:


One of the very common mistakes that people do when forex trading is to entrust one person with your money and follow their advice. This may be good in some cases as having the right mentor in the business to teach you about the ins and outs can be helpful. However, putting your faith in one person and just following their advice like a robot with no thought or effort to learn the business for yourself is not the way to develop your own skills.


Forex trading offers the opportunity to make large amounts of money in a short period of time. But like most professional activities realizing that potential is not as easy as it may at first look. Avoiding common trader mistakes will help you to stay in the game while you develop your trading skills.