Starting Tips for the Forex Trading Beginner

Starting Tips for the Forex Trading Beginner

Getting started in trading currency can be an extremely daunting task for someone with no experience in the forex market. There are many pitfalls out there that can trip up even the most seasoned trader, and it can be easy to become confused and discouraged by the many nuances of currency trading. By following a few simple tips, you can avoid these frustrations and get started on the path to becoming a successful forex trader.

The first and most important decision you will have to make is choosing the right brokerage firm. There are many different options available, and some are vastly better than others. As a rule, you should make sure that the institution is a well-established, reputable company, preferably with

ties to a bank or other financial institution. Registration with the Commodity Futures Trading Commission is an absolute must, as this is a good determining factor in a brokerages legitimacy. Another characteristic to look for is a wide range of research tools such as real-time quotes, charts, and professionally written research reports. You want to choose a brokerage that makes available as much information as possible to its account holders, as the more information you have, the more successful you will be in trading. Finally, you should choose a brokerage that has a favorable spread, which is the difference between the buying price and the selling price of a currency at a given moment. This difference in values represents the amount that the brokerage takes off the top of each trade, so a tighter spread translates into more money in your pocket each time.

After you choose a good brokerage, the next thing you should do is open up a demo account first. An account type that is offered by most brokerages, the demo account has a pretend balance that allows the beginning investor to play around with different ideas and get a general feel for currency trading before taking the plunge with real money. This is a great way to practice trading and learn how to properly research a currency pair before taking a position. As demo accounts usually last for a month, youll have plenty of time to gain experience while also learning how the software works so that you can make informed decisions and lightning-fast trades when the time comes. It is important to not rush through this phase of the learning process, to fully maximize this valuable tool that has been made available.

Once you have graduated to using a real account with actual money, it is imperative that you start small and not try to break the bank out of the starting gate. Placing calculated trades using the minimum possible amount of currency can be seen as an extension of the learning process that occurred during the demo account phase. Since your own money is being used this time, different emotions will be involved in the trading process, so this is the point at which you can learn how to correctly deal with these emotions before they can affect your trading success. The other thing to keep in mind is that it is a very bad idea to use a lot of leverage right away. Since beginning forex traders inevitably take some losses while learning the process, a margin call right at the outset is very possible for someone who is close to the margin limit, and this can be a disastrous thing. It is much better to trade a lot closer to the cash balance in the account, and to take things slowly at the outset.

By following these tips, you can give yourself a better chance of success at getting started in the world of forex trading. Remember: choose a good broker, learn the ropes with a demo account, and above all, take it slow.

Forex Trading Strategies that Even Beginners Can Follow

Forex Trading Strategies that Even Beginners Can Follow
Forex stands for foreign exchange and refers to the trading of foreign currencies. Unlike other markets the foreign exchange does not obtain a essential, centralized where for movement. The trading is done away between banks, foreign currency dealers and again curtain foreign investors. As a finish, the foreign exchange trades are considered over the separate. The trading since takes seat wound up the serviceability of computer terminals, telephones and broker desks.

The foreign exchange marketplace is the largest and most fluid importance the heavenly body. Its trades total $2 trillion every time. However, up until recently the transaction sizes and money requirements kept this market out of the hand of inconsequential special speculators.
Currently the marketplace requires a little amount of cash, forging the foreign exchange mart available to due about all investors. Learned are four basic trading strategies that should symbolize followed by beginners predominance the Forex bazaar.

Leading, you should establish a foreign exchange trading system that you can stick stow away. Having a decent animus is not enough you extremity a chipper - developed system to effectively gadget your strategies. You should inauguration by creating a plan of when you will see to your Forex trading. Neighboring, actualize on organized control to conduct pathway of the inflow and outflow of your roll. Its extensive to get that Forex trading, agnate atom bag undertaking, will posses its peaks and slumps. You should typify prepared to stick to your system despite these fluctuations to maximize profits esteem the longish flight.

Your system should epitomize planned mastery advance mark succession to impersonate serviceable. Before the marketplace opens you should posses an wager contrivance consequence city. You should scan particle trade, no matter how humble considering a critical section of your systematic drawing near to Forex flying colors.

Nearest, you should sense inadequate losses. Recognize matter how well you know the market or how long you have been a trader you will probably encounter small losses. You need to expect and accept these losses as small components of a larger plan. Be ready for these small losses and put them aside in anticipation of acquiring greater returns in the future. The key to long term success in the Forex market is patience.

Another helpful hint for beginners is to avoid Forex strategies that you do not understand. You should do your research ahead of time and draw on the information from useful Forex guides and tutorials. It is important to be cautious of Forex scams. There are numerous scams popping up where companies offer to do your trading for you, these are the ones you should avoid. You should develop your Forex methods with an expert and only make trades on your own or through a licensed broker. The bottom line is making sure that you are fully aware of all aspects of your strategy and are comfortable with the risks and benefits.

Lastly, make sure you have an exit strategy planned out. Though you should expect small losses, you need to be able to recognize when you are in to deep. Before you jump into the Forex market you should set yourself limits on how much you plan to invest. One you determine the amount that you plan devote to your Forex trading do dont surpass you limit. Be able to cut you losses once you realize the situation will not get better.

Though Forex trading can be very lucrative you need to take the time and effort to develop a strategy that will be effective for you. Even as a beginner you should start practicing good trading habits that will make you Forex trading ventures prosperous. Forex trading can be profitable without inducing stress.

Global Economies They Rock the Forex Market World

Global Economies They Rock the Forex Market World
The foreign exchange market, or forex, is currently the largest and most liquid market in the world. The forex is a worldwide market that never closes. It is open 24 hours a day across the globe. Global expansion plays a large role in the success of the foreign exchange market.

The foreign exchange market was developed in 1973. However, currency, in one form or another has always been a large part of society. The first known currency traders were in the Middle East. These traders exchanged one countrys coins for another. The introduction of paper money made currency exchange easier to do and therefore more common. The strengthening of global economies further encouraged international trade and foreign exchange while bringing benefits to all countries that
participated.

In order to get to its current state, several changes had to be to the previous methods surrounding foreign exchange. The first of these major changes took place in 1944 and is known as the Bretton Woods Accord. At the end of World War II France, Great Britain, and the United States convened to establish a new economic order.

It was at the meeting at Bretton Woods that the United States dollar became the monetary standard in currency. This means that traders and dealers would use the dollar when determining the values of other currencies throughout the market.

Before the gathering at Bretton Woods, the British pound was the standard currency. However, because of the chaos that WWII had on Europe, a change was necessary. The hope was that switching to the dollar, as the means to compare foreign currency, would stabilize global affairs and international economies.

Then in 1971 another change was made called the Smithsonian Agreement. This agreement amended the Bretton Woods Accord by allowing for additional fluctuation within the foreign exchange market. The Bretton Woods Accord was considered free floating and was officially replaced in 1978. The Smithsonian Agreement allowed governments to peg or semi peg their currencies, or allow their currencies to float freely.

Currently the market operates with all major currencies moving independently of one another. Because there are no limitations on the currency on this open market there is a growing influx of trade amongst independent investors, brokerage houses, banks, and independent dealer.

The free floating system is still in place today, and is proving to be extremely practical in a market that undergoes a change in currency rate every 4.8 seconds. The foreign exchange market boasts 2 trillion dollars in trades everyday, and play exceptional roles in participating countrys economies.

Through global expansion the forex market has become a worldwide phenomenon. Any given transaction made in one country is bound to spur additional transactions worldwide. This domino effect is due primarily to the fact that brokers will readjust their positions to manage their risks.

The foreign exchange market is truly a global entity. It spans around the entire word and is hugely popular because it is open 24 hours a day in every country. Although the foreign exchange market is worldwide, it does not have a physical, centralized location for activity. However, the major exchanges are located in New York, San Francisco, Hong Kong, London, Tokyo, Singapore, Sydney and Bahrain. Because the forex does not have specific operation site foreign exchange trades are considered over the counter. Trading takes place through the use of computer terminals, telephones and broker desks, and is highly influenced by the global economy.

Furthermore, it is expected that as more investors discover the forex, it will continue to grow exponentially. The forex already makes 30 times more trades than any other market, and will continue to grow.

Forex Quotes Can Influence your Trading Tactics

Forex Quotes Can Influence your Trading Tactics
The price of currency is determined by a number of factors. The most influential factors are political conditions, inflation, and interest rates. Governments often try to control the price of their currency by flooding the market to lower the price or buying extensively to raise the price.

However, the foreign exchange market is the largest leadership the universe, creation corporal onerous to operate over the elongate spring. A subordination may show able to control the price of their currency for a short loop of while, but inevitably market forces will touch. This certainty makes the forex one of the fairest proposition options available.

Patient quotes is an requisite component of trading effectively on the forex, but
responsibility imitate rather recondite for unlike traders. Each repeat contains a trading symbol, which is a three letter code inclined to each countrys currency. The most frequent currencies are the United States dollar, USD, the Japanese hankering, JPY, the European Euro, EUR, the United Dominion pound, GBP, the Australian dollar, AUD, the Swiss franc, CHF, and the Canadian dollar, CAD.

Forex quotes are demonstrated using pairs of currency notation. Adept are always two currencies quoted in that when you beget trade access the foreign exchange market, you are always buying one currency juncture selling extra. The most customary pairs of currency are referred to over majors and are GBP / USD, EUR / USD, AUD / USD, USD / JPY, USD / CHF, and USD / CAD.

The base currency is the premier symbol listed and is always equal to one. The second symbol is the repeat currency. The cite will reveal how much tangible costs to purchase one unit of the base currency. For part, the quote USD / EUR = 0. 8567 means one United States dollar costs 0. 8567 euros. The antithesis would interpret EUR / USD = 1. 8765, connotation that bona fide costs 1. 8765 US dollars to purchase one euro. Rates are nearly always individual considering five unit numbers.

When the quoted price increases, original means that the base currency is becoming stronger. This means that one unit of the base currency blame purchase higher of the quote currency. In addition, if the iterate currency price decreases the base currency is weakening. This means that one unit of the base currency albatross buy less of the iterate currency.

Forex quotes are displayed using a charge and needle spread. Usually the symbol is portrayed first, and is followed by the bid price, and then the ask price. The bid price is the amount buyers are willing to pay for the base currency, when selling the quote currency. The ask price is the amount that traders will sell the base currency for, while buying the quote currency.

For example, the quote EUR / USD 1. 2565 1. 2568 is meant to inform traders that they can purchase one euro for 1. 2568 US dollars, or sell Euro for 1. 2565 US dollars. This means as a trader you will buy at 1. 2565 and sell at 1. 2568. The difference between the buy and ask price is referred to as the spread, and is retained by the forex broker as their profit on the trade.

Quotes are often displayed in chart form. These cross currency charts list a variety of different currencies and the values in comparison to each other. These charts typically list the base currencies down the left side of the chart. The currencies that run across the top are the quote currencies. However, not all cross currency charts are laid out using the same format. For that reason it is essential to know at least one pair of currencies to insure that you are reading the chart correctly.

Understanding how to read forex quotes correctly can help you develop efficient trading strategies and achieve success in the foreign exchange market.

The Best Currencies for Forex Trading

The Best Currencies for Forex Trading
Of course, there are some currencies on the Forex that tend to do better than the rest of the pack. One of the ways of making money through Forex trading is by knowing not only which currencies are strong in general but also which currencies are making slow, steady gains in value. It used to be that the dollar was one of the prime currencies on the Forex. Many people all over the world were looking to buy dollars with their own currency because dollars were going up in value so much. The current state of affairs for owners of the dollar is not so good. Americans living and working in Europe, but getting paid in American dollars now wish that their paychecks were
coming in in Euros. The Euro is now a real powerhouse in terms of the world market of currencies.

The Euro has done extremely well in the world market for many years, almost since the birth of the Euro. The initial countries of the Euro are mostly powerhouse countries, but the synergistic effect of all of these countries joining together has meant that none of their individual currencies were as strong as the Euro has become. Each currency was weaker on its own, for example the franc or the guilder. Now that the currencies have joined together, the Euro has really gained a lot of ground since the beginning. The Euro is definitely one of the currencies to watch on the Forex if youre looking to gain money with strong currencies.

Another powerhouse currency is the British Pound. Though a lot of countries criticized Great Britain for not joining in on the Euro, it has proven to be a wise financial decision on the part of Great Britain. The pound is one of the only currencies that can still compete with the Euro; the dollar tried to compete with the Euro for a long time, but the battle has more than effectively been lost. The dollar is now one of the laughingstocks on the Forex market, alongside the Japanese Yen.

Another good, though not so often mentioned, currency on the Forex is the Canadian Dollar. This dollar, once extremely weak beside the American Dollar, has gained more than significant ground in the last five years. The Canadian Dollar has gained significant strength in recent years, and has shown to be continuously on an upward trend. Even if the upward trend of the Canadian Dollar is not as significant as the upward trend of the Euro, it is steadily moving upward.

The other top currencies for trade in the Forex are the Japanese Yen and the Australian Dollar. Both of these currencies have quite a long history in the world of Forex, and the recent developments are not all good, especially where the yen is concerned, but these two currencies remain at the top of the Forex Trade.

The key to success on the Forex is to really know the trends in the market. Another thing to really watch if one is looking to succeed in the Forex is the trend of interest rates in a give country. Interest rates have proven to be very indicative of the value of the currency itself. If one is watching interest rates, then one is also watching currencies, indirectly of course, but watching nonetheless. A vigilant eye and a sense for patterns in the market will result in a powerhouse career or hobby for somebody in the Forex market. Theres a lot of success to be had if one is paying attention to the market and the trends.

Kick Emotions to the Curb while Trading in the Forex

Kick Emotions to the Curb while Trading in the Forex
One individual that a forex trader cannot procure to fix is change into quite emotionally involved in currency trading. Regularly, a trader will exhibit profuse of the emotional behaviors and frequently associated hole up habitual gamblers, equal whereas chasing losses, and overtrading. By keeping your emotions in check, you restraint avoid these pitfalls and tip yourself a choice chance for sensation in currency trading.

One behavior that is not burdensome to fall into if youre not careful is chasing a loss. Unaffected is a strapping element to incur a loss of finances, now concrete sets you further back in your goals, and goes rail the identical reason you became involved in forex trading in the leading house to fudge together kitty. Subsequent all, youre not spending sustained hours recital research reports and
studying Bollinger Bands ethical for the pleasant of indubitable. In consequence repeatedly the first off understanding one has beside suffering a loss is to recoup that sugar same swiftly in the form of another trade. When these emotions run high, many times the novice trader will quickly execute a trade without putting in the required due diligence to see if the move is a smart one. This often leads to bigger losses, which just compounds the problem. Another rash decision that is sometimes made is to take on additional risk to help recoup the loss by increasing the amount of leverage the trader uses.

By borrowing a larger amount from the broker, the thought is that one can recoup the loss more quickly while also staying on track to reach the days profit goal. This works great if the currency moves in the right direction, but if the trader guesses wrong a market call can ensue, particularly if the amount of margin used is close to the maximum amount the brokerage will allow. Market calls lead to an even bigger loss as the entire position is sold by the brokerage to pay the outstanding debt. The best way you can avoid this happening is to treat each trade independently, and not look back at the past. Once a position is closed out, it should be finished in your mind. Theres nothing you can do to go back and change anything anyway, so the best thing to do is just start fresh with the current balance in your account, and put all your focus on making a smart decision in the next trade.

You should also avoid becoming too obsessed with watching the market and analyzing each position. While it is important to do all the required research and to pay close attention to each trade, overanalyzing can lead to overtrading, which can result in losses or at the very least leaving money on the table. Many times a beginning trader will pull the trigger too quickly to close out a position at the slightest hint of a dip or bad news, when in reality fluctuations are normal for the market. By constantly churning through positions, a forex trader will ensure that the only profit taken in the whole process will be by the brokerage, as the spread and commissions will eat his portfolio alive.

One way you can avoid this is to set at the outset a hard price limit at which you wish to close out the position, both above and below the price of the original trade. These limits, particularly the stop - loss, should be wide enough to give the currency room for its normal fluctuations without closing out the position too early. But by doing this, all of the emotion can be removed from the process, and once the price rises or falls to the target level a trade can be executed to either take the profit or limit the loss.

It can be easy to let your emotions take control of your forex trading, but this can lead to disastrous results in both the short and long term. By avoiding this tendency, you can become a cool, calculated trader and maximize your profits.

Interpreting the Impact on Forex by the Differences in Exchange Rates

Interpreting the Impact on Forex by the Differences in Exchange Rates
The foreign exchange market or forex is the largest and most liquid in the world. Many key factors affect the forex, including political activity, current events, interest rates, and the differences in exchange rates. Understanding how the difference in the exchange rate impacts the forex will allow you to be a more successful trader.
The forex exchange rate is proper seeing the assessment of two currencies and how they relate to each other. More neatly, the forex exchange rate is how much of one currency is needed to buy one unit of the other.

To possess how the foreign exchange rate works true may be easiest to glimpse at an ideal that compares the United States dollar keep from the
European euro. For prototype, on division habituated chronology lets reveal that one dollar constraint buy 0. 8567 euros, and and so the exchange rate for that extent would be 1: 0. 8567. This type of exchange rate ratio is often referred to as a pairing.

Conversely, you can use the same example to determine how many dollars a single euro can buy. Or you can determine a cross rate, which refers to an exchange rate ratio that does not include a United States dollar.

A free floating currency its exchange rate caries in comparison to other currencies and is determined solely by the forces of supply and demand on the market. These exchange rates fluctuate constantly. However, a moveable or adjustable peg system has a fixed exchange rate. This type of exchange rate matched the value of a currency to another currency or measure of value. As the item that the currency is being compared to rises or falls in value, so does the original currency. Floating exchange rates have the benefit of being more responsive to the foreign exchange market.

To have a good understanding of the forex exchange rate it is also essential to understand basis points or pips. These are two terms both used to describe forex rates that are calculated up to four decimal points. For example, if you were to exchange euros to yen at a value of 1. 3450 and then the value of the euro goes up to 1. 3453, it is called a three - pip movement.

Because forex exchange rate always involves two separate currencies they are quoted as two tier rates. In addition, forex quotes are displayed using a bid and ask spread. Usually the symbol is portrayed first, and is followed by the bid price, and then the ask price. The bid price is the amount buyers are willing to pay for the base currency, when selling the quote currency. The ask price is the amount that traders will sell the base currency for, while buying the quote currency. The difference between the bid and ask price is referred to as the spread, and is retained by the forex broker as their profit on the trade.

Another thing that should be mentioned about the forex exchange rate is that it is independently determined. The supply and demand of the buyers and sellers is the sole determinant of the exchange rate. This makes it a fair market, which is difficult to manipulate for any length of time. Some governments may try to control the market by dumping large amounts of their countries currency or buying excessive amounts of it. This approach is only effective in the short term.

Having a good knowledge of how the forex exchange rate functions will help make you a successful trader in the foreign exchange market. Experts predict that the foreign exchange market will double in size in the next three years, making interpreting the impact of exchange rates even more essential.

Trading Methods that Move the Forex Market

Trading Methods that Move the Forex Market
In a free floating exchange rate system, the rate is determined purely by supply and demand forces of the market. However, there are times that the central bank intervenes to raise or lower the exchange rate in the floating market. The central banks are often influenced by outside sources to take part in this type of market manipulation. There are many reasons behind this intervention by the central bank.
The main reason that the central bank practices intervention is to stabilize fluctuations in the exchange rate. It is harder to make international trading and investment decisions if the exchange rate is constantly moving. If a trader feels less confident about the stability of the exchange rate they will reduce their investment

activities.. For this reason investors will often place pressure on the government or central bank to intervene if the exchange rate is moving too much.

Another reason for the central banks intervention is as an attempt to stop or reverse a countrys trade deficit. This is because a higher exchange rate will make that countries goods and services cheaper. This will stimulate imports while stifling exports, creating a trade deficit. If the deficit is significant enough the central bank may be persuaded to intervene to try to reduce the value of the currency by dumping excessive amounts of it on the market.

There are two intervention approaches the central bank may take. The direct method involves intervention by buying or selling currency in an attempt to manipulate the market. Whereas indirect approaches, attempt to make changes the domestic money supply.

The direct method is a more obvious method of intervention. The central bank can reduce the value of a currency by flooding the market with it. A raise in the supply of a specific currency will lead to its depreciation n value. Conversely, the central bank can raise the value of a currency by purchasing large amounts of it. The increased demand of the currency will cause it to appreciate.

The long-term effect of this direct intervention is limited. Eventually the market will stabilize and resume its previous trends.

The indirect method of intervention attempts to change the exchange rate through changes in the money supply. By increasing the supply of money the value for that currency will decrease. Similarly if the money supply is decreased the value for it will increase. This approach is effective but often takes several weeks to have an impact. This is because it must traverse all market operations before affecting the exchange rate. Another disadvantage of this method is that it also requires the central bank to alter the domestic interest rate to compensate for the change in money supply.

Intervention in the foreign exchange market is done sparingly because of the long-term effects it may have on other domestic factors. For example, changing the money supply will affect interest rates and price levels. This will contribute to a higher inflation rate, higher unemployment rates, and less gross domestic product growth in the long run.

To avoid these long-term affects, a sterilized intervention may be used. Sterilized intervention is intended to change the exchange rate without changing the money supply or interest rates. This type of intervention happens when the central bank offsets its direct intervention by making a simultaneous change in the domestic bond market. Studies have shown that a sterilized intervention of the foreign exchange market will yield short-term temporary results but ultimately have no lasting effects on the countys currency value. A more lasting effect can be possible if the intervention leads to investors changing their future expectations in the market.

Optimal Trading Times for Forex Trading

Optimal Trading Times for Forex Trading
The key to successful dealing in Forex is to be able to read the market and be able to effectively manage money. The biggest things to do with Forex are these skills, alongside the ability of taking risks, but taking appropriate ones. The big idea with Forex is in getting behind something thats going to make you money instead of something that is going to make you lose money. The bottom line there is ability to read the market. There are many other things that make Forex trading effective or ineffective, but perhaps one of the biggest factors is knowing how to time things well.
When reading and analyzing the Forex market, its important to be able toidentify the optimal moments for buying and selling.
Obviously, the best time to buy is when the price is low, and the best time to sell is when the price is at its absolute peak high. If the currency has begun decline and has already had a significant decrease in value, its sometimes a good idea to hold onto the currency in the hopes that the currency will bounce back and become strong once again. At other times, it is actually smarter to sell out so as to minimize losses in cases where the value is going to continue to fall and fall. This is the key to good Forex trading, knowing how to read the timelines.

Forex traders spend a lot of time analyzing graphs of the currencies that they currently trade and currencies that they are thinking about getting in on. The traders have to have a keen eye for the patterns that show up in the graphs because some currencies may often follow one pattern while another currency follows a different pattern in most cases. Knowing if a currency is likely to rebound back after a dip or continue to fall is the difference between winning and losing some of the money in ones profile. It takes nerves of steel to hold on to currency thats in a dive, but it is often the best way to minimize losses incurred by that currency. In many cases its the only way to keep from losing money.

Getting access to the timelines means having the raw materials that are needed in order to start getting a handle on what the market is currently doing and what it is likely to do in the near future. The timelines will tell you not only start and close price for the current day, but trace the currency back for a long period of time. Perhaps the most important thing that timelines can do for traders is help them learn what times of the day are good and bad times for a certain currency.

Some currencies experience a large dip immediately after opening, but then bounce back during the course of the day. Someone who hasnt seen the daily timeline might sell two hours after opening thinking that theyre preventing themselves from losing even more money by cutting their losses when they do. In many such cases, the currency regains its initial value, meaning that selling at two hours in, at a net loss, is a very different result than waiting and selling at the end of the day, when the currency has, if not gone up, is at least equal to its purchase price. Instead of a net loss, this results in a net gain or at least in breaking even for the day. Obviously, traders are looking for one of these two outcomes, preferably the outcome that means that they made money, and even at that, the outcome that means they made a lot of money today.

Helpful Hints to Follow when Choosing your Forex Broker

Helpful Hints to Follow when Choosing your Forex Broker
When getting started in trading on the forex market, one of the most important decisions you will have to make is which broker to use. There are a myriad of institutions out there that facilitate currency trading for the individual investor, and choosing the right one can mean the difference between success and failure as a forex trader. Because the stakes are high, this is a decision that should not be taken lightly, and it is crucial that you research all available information before taking that first step and signing up.

One instrument to attending for in a forex brokerage is the availability of a demo report, which is a useful tool for the trader who is scrupulous master out. This type of tally does not use honest check; the bill holder is issued a pretend bill to play around go underground for a limited title of while, oftentimes thirty days. You can use this bout to endeavor differential things, and to gratify a perceive for the pace of the forex market and how everything works. These accounts usually come with all of the research tools available to real account holders, so this is also a good way to evaluate the brokers system as a whole. Most brokerages make a variety of research tools available, but the quantity and quality of these devices vary between different institutions. You should look for a brokerage that at a minimum offers real - time quotes, multiple charting options, live news feeds, and research reports written by professionals. More information means a greater advantage over the competition, so it is important to choose a company that provides enough research tools for you to have the ability to make informed decisions while trading.

You should also check out the software the brokerage makes available to its account holders, particularly if you lack experience using computers. Some programs are easier to use than others, and user - friendliness is a significant quality to look for when evaluating this software. If the program is confusing or difficult to use, you will not have a very good trading experience, and this can translate to lost money. It is important to find a brokerage that provides software you can be comfortable with.

Another vital factor involved in picking a forex broker is the spread. In forex trading, a spread is the difference between the price to buy a currency and the price to sell it at any given moment. The brokerage makes money on this difference, and when one refers to a tight spread he is talking about two prices that are close together. This means that less money goes to the brokerage out of your trade, so choosing a brokerage that offers tight spreads is a good idea to maximize your trading success.

The availability of leverage options is something that many forex traders look for in a brokerage. When an investor uses leverage, he borrows money from the broker to trade with, keeping any profits that are made before paying the money back. Most brokerages offer the ability to trade with an amount of money that is much higher than the amount of cash in the account, sometimes reaching up to 400 times this amount. The reason forex brokerages can offer this high level of margin is that the amount that a currency pair will change in price in a day is usually very small, so the risk is much less than with equities.

Beginning forex investors should also check out how long the institution has been in business. By researching the background of the company, you can get an idea as to the legitimacy of the brokerage to see if your money will be safe in their hands. Brokers that have just sprung up overnight are usually not the best places to begin trading, so look for one that has been around for a while. Another good quality to look for is an association with a major bank or other financial institution.

Finally, you should always choose a forex broker that is registered with the Commodity Futures Trading Commission. This independent agency of the U. S. government provides oversight of the various brokerages in the United States, and helps protect investors from fraud that unfortunately is becoming more commonplace in todays society. By making sure the brokerage is registered with this agency, you can take the guesswork out of determining the legitimacy of the institution.

There is a wide range of forex brokerages out there, and it can be difficult to determine which one is the best. But by doing some research into the different options, you can do a lot to not only protect yourself from fraud, but to maximize your success in trading currencies.

How to Make Some Money Quickly on Forex Trading?

How to Make Some Money Quickly on Forex Trading

Unlike other markets the foreign exchange does not have a physical, centralized location for activity; instead trading is done directly between banks, foreign currency dealers and foreign investors. Because of this, foreign exchange trades are considered over the counter. Trading takes place through the use of computer terminals, telephones and broker desks.

The foreign exchange market is the largest and most liquid in the world. Its trades total $2 trillion every day. However, up until recently the transaction sizes and financial requirements kept this market out of the hand of small individual speculators. Currently the market requires a minimal amount of capital, making the foreign exchange market available to just

about all investors. New traders are realizing that the forex is an easy way to make quick money.

Most foreign exchange trading is done online. The growing use of the Internet to facilitate investing is playing a big role in the rapid growth of the forex. Online trading makes investing possible 24 hours a day from any where in the world. This convenience factor is one of the primary reason traders are flocking to the forex to make quick money.

In comparison to the stock market, the forex is a much quicker way to make money. This is due to the rapid and random variations seen in the foreign exchange market. Within minutes or even seconds traders can see their first profits.

Many online signal services make earning profits in the forex even easier. A signal service will monitor the market for you. It will send any pertinent findings to your computer, cell phone or pager. This allows you the freedom to do other things without the fear of missing out on important market changes.

Most signals are based on a technical analysis of the market using several key indicators. The analysis uses a combination of factors to identify market trends and potential exit and entry points. The information is the forwarded to subscribers of the signal service. Traders with up to the minute information can then make efficient trade decisions.

In addition, traders can learn how to trade on the forex by using free tutorials available on many websites. This benefit can be used as another tool for potential forex traders to make money quickly. The Internet is a great way to get trading practice using the complimentary demonstrations available online. It is a good idea to take advantage of these free services before actually opening an account and making a trade. Mini accounts are also available. These allow you to get your feet wet with smaller initial investments than a regular account would.

Though there are many options available to traders to assist the in making quick money in the foreign exchange market, it is important to be cautious of forex scams. There are numerous scams popping up where companies offer to do your trading for you, these are the ones you should avoid. You should develop your forex methods with an expert and only make trades on your own or through a licensed broker. Never allow someone else to do your trading for you.

There is no doubt that the foreign exchange market can be a fast place for traders to make quick money. The main reasons that making money on the forex is considered easier than other markets are the high accessibility of the market because it never closes, and its superior liquidity in comparison to other markets. The availability of online broker services, free tutorials and demonstrations, as well as helpful signal services all contribute to traders being able to make money quickly with little or no real qualifications.

Know the Trading Rules for Forex Markets

Know the Trading Rules for Forex Markets
Ones behavior can often become jaded by excessive emotion when trading on the forex market. Taking a huge loss can sometimes prompt the less experienced trader to get back into the market too quickly at an inopportune time in an attempt to gain back the money that was recently lost. Or, a forex trader can get caught up in the excitement of the fast-paced market and trade too much, churning positions to the point where the only one making money is the broker. A great method of dealing with these issues is to come up with a list of rules to follow when trading currencies, and to make sure never to deviate from the list. The following are some rules every forex त्रदेर should follow to ensure a better chance of success:

1. Leave your emotions at the door. Trading currencies is a business, and it should be treated as such. While its tough to separate oneself emotionally from a loss, once its in the books there is nothing anyone can do to go back and fix it। So the best course of action is to try and learn from any mistakes that may have been made, and to treat the next trade the same as if money had been made on the previous one. Chasing a loss is a common mistake as forex traders tend to want to make up for lost ground, but this usually leads to rash decisions, which can be detrimental to ones account balance.
2. Never overtrade. This is related to rule #1 in that often, emotions lead a forex trader to trade too much. Whether it is to compensate for a loss or the trader feels that more trades equals more money, overtrading is always a bad idea that can eat up ones account balance in a hurry. All of those commissions can add up, along with the money that is lost due to the spread. Also, making many trades in a short period of time generally means that the required due diligence was not done, which can only lead one down the path of mounting losses.

3. Follow the trend. One thing on which thousands of traders who practice either fundamental or technical analysis (or both) agree is that the forex market follows trends, and recognizing these trends can mean the difference between success and failure. By following the overall direction of the currency, one can capitalize on the current momentum until there is evidence that the trend has reversed itself. Traders who try and go against the trend by shorting a bullish currency or buying into a loser often find themselves with mounting losses.

4. Stay out of the market if there is any doubt. If a trader cannot identify any trend that the currency is following, it is usually a good idea to sit on the sidelines for a while until a better picture can be formed as to what is going on with the price action. Too many times, forex traders try to jump into a volatile market because they feel like they are missing out, but this can lead to losses due to the markets unpredictability. In this situation, traders should take this time to do more research on the currency so that when a trend is finally determined, they will be ready to jump back in.

By following these basic rules, forex investors can do a lot to keep themselves out of the trouble caused by making hasty decisions based on emotion or lack of research. As it can be easy to become carried away when trading, it is important for a trader to have a set of rules to keep him well grounded.

Starting Tips for the Forex Trading

Starting Tips for the Forex Trading
Getting started in trading currency can be an extremely daunting task for someone with no experience in the forex market. There are many pitfalls out there that can trip up even the most seasoned trader, and it can be easy to become confused and discouraged by the many nuances of currency trading. By following a few simple tips, you can avoid these frustrations and get started on the path to becoming a successful forex trader.

The first and most important decision you will have to make is choosing the right brokerage firm. There are many different options available, and some are vastly better than others. As a rule, you should make sure that the institution is a well-established, reputable company, preferably with ties to a bank or other financial institution. Registration with the Commodity Futures Trading Commission is an absolute must, as this is a good determining factor in a brokerages legitimacy. Another characteristic to look for is a wide range of research
tools such as real-time quotes, charts, and professionally written research reports. You want to choose a brokerage that makes available as much information as possible to its account holders, as the more information you have, the more successful you will be in trading. Finally, you should choose a brokerage that has a favorable spread, which is the difference between the buying price and the selling price of a currency at a given moment. This difference in values represents the amount that the brokerage takes off the top of each trade, so a tighter spread translates into more money in your pocket each time.

After you choose a good brokerage, the next thing you should do is open up a demo account first. An account type that is offered by most brokerages, the demo account has a pretend balance that allows the beginning investor to play around with different ideas and get a general feel for currency trading before taking the plunge with real money. This is a great way to practice trading and learn how to properly research a currency pair before taking a position. As demo accounts usually last for a month, youll have plenty of time to gain experience while also learning how the software works so that you can make informed decisions and lightning-fast trades when the time comes. It is important to not rush through this phase of the learning process, to fully maximize this valuable tool that has been made available.

Once you have graduated to using a real account with actual money, it is imperative that you start small and not try to break the bank out of the starting gate. Placing calculated trades using the minimum possible amount of currency can be seen as an extension of the learning process that occurred during the demo account phase. Since your own money is being used this time, different emotions will be involved in the trading process, so this is the point at which you can learn how to correctly deal with these emotions before they can affect your trading success. The other thing to keep in mind is that it is a very bad idea to use a lot of leverage right away. Since beginning forex traders inevitably take some losses while learning the process, a margin call right at the outset is very possible for someone who is close to the margin limit, and this can be a disastrous thing. It is much better to trade a lot closer to the cash balance in the account, and to take things slowly at the outset.

By following these tips, you can give yourself a better chance of success at getting started in the world of forex trading. Remember: choose a good broker, learn the ropes with a demo account, and above all, take it slow.

Fibonacci Forex Trading

Fibonacci Forex Trading

What is Fibonacci Forex trading, you ask? The platform of a majority of Forex trading systems, Fibonacci Forex trading is used by numerous professional Forex brokers all over the world.

An Italian mathematician Fibonacci is famous for his creation of the Fibonacci sequence. You can define this sequence as a series of numbers where each number is the sum of the two preceding numbers; 1, 2, 3, 5, 8, 13.

When dealing with currency trading, what's even more important than the actual Fibonacci sequence is the rations derived from this sequence of numbers; .236, .50, .382, .618, etc.

Many man-made creations use these mathematical proportions known as ratios as well as many structures and places in nature.

Forex traders can benefit from using these proportions when trading. The oscillations in the Forex charts are indicators of support levels and resistance. While it can't guarantee it to the last cent, the closeness it does get is unbelievable.

When using a Fibonacci Forex day trading system, you must calculate your Fibonacci price points so that you know.

Some new Forex traders get overwhelmed by all the numbers involved and are stressed to make a profit. New Forex traders should feel encouraged to get help grasping the basics and some good practice using Fibonacci levels in addition to secondary indicators. By doing this, you can greatly improve the accuracy of the points for every trade.

Fibonacci forex trading system has been the foundation of many forex trading systems used by professional forex brokers around the world, and billions of dollars are profitably traded every year using this technique.

Milos Pesic is an expert in the field of Forex Trading and runs a highly popular and comprehensive Forex Trading web site. For more articles and resources on Forex related topics, online forex trading, trading tips, forex software and much more visit his site at:
=>http://forex.need-to-know.net/

Online FOREX Trading – If You Want To Win Understand Price Momentum

Online FOREX Trading – If You Want To Win Understand Price Momentum

If you want to win at online FOREX Trading you need to understand the importance of price momentum in putting the odds on your side.

If you don’t understand price momentum you will lose.

Let’s look at why it is so important and how to put the odds in your favor.

A common error

Most traders like to trade in the following way in online FOREX trading.

They like to buy into support and sell into resistance but they don’t pay attention to price momentum.

They hope resistance and support hold as they enter their positions and this is a recipe for disaster.

Why?

Well keep in mind this well known phrase.

A trend moving in one direction is more likely to continue than reverse.

So if prices are moving strongly to test support and resistance and price momentum is strong these levels can and do give way.

WAIT FOR CONFIRMATION!

A better way to trade is to use support and resistance and wait for them to hold before trading against these levels.

The odds will be vastly increased, as you will be looking for resistance and support to hold before taking your position and seeing price momentum weaken as the levels are tested.

This increases the odds of success for you and allows you to trade with price momentum on your side.

You won’t get in at such a good level as if you predicted correctly without using momentum, but as you can’t predict where price will go anyway always:

Wait for confirmation of a momentum change and your trade is more likely to be successful.

What indicators should I use?

By far and away the best indicator to use is the stochastic indicator.

We don’t have time to explain it in detail here, so simply read our articles.

The best set up you can get is:

For the stochastic lines to reverse and cross with either bullish or bearish divergence as the price tests support or resistance.

This will show price momentum changing and falling as the test is made, allowing you to enter a trade with momentum on your side, increasing your chances of success.

Another useful indicator to use is:

The Relative Strength Index RSI devised by Wells Wilder.

Again, if you don’t know how it works read our other articles.

Watch it to turn down as support or resistance are tested.

Get the odds on your side

The above two indicators are great for helping you judge price momentum and decide if support or resistance are going to hold.

Support and resistance levels give way frequently, but get price momentum on your side before trading and you will dramatically increase your chances of success.

Remember:

To increase your chances of success trade with price momentum on your side, the trend is your friend as the old saying goes – Act on price confirmation and don’t PREDICT.

Good luck!

FREE ESSENTIAL TRADER PDF'S AND MUCH MORE

On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html

Ask Yourself This Question if you Want To Trade in Forex

If you want to win at FOREX trading you must have an edge remember this fact:

Around 95% of traders lose – so if you don’t know what your edge is you will join them.

Let’s look at the basis of having an edge and what you need to win.

FOREX Trading is HARD – and anyone who says it’s easy, is lying.

You need an edge that allows you to win while the vast bulk of traders lose, it really is that simple.

The basis of what you need to do to achieve an edge is outlined below:

1. You can’t buy success

If you think you can consult a guru or get anyone else to give you success you need to wake up and need to “smell the coffee”!

If guru’s made money in the vast majority of cases they wouldn’t need clients.

Some are good and genuine, but that’s probably less than 1%.

If you want to follow one, you need to understand what they are doing, have total confidence in their method and see a real time track record of success.

You then need the confidence to follow their method with discipline.

2. You need a method you understand and know why it makes money

This means in most cases means deriving your method on your own and trusting it.

You need to trade it through losses and know you will end up a winner longer term and remember, all methods have long periods where they lose.

To win longer term you need to have total confidence in what you are doing and stick with your method through good times and more importantly, the bad.

If you don’t have discipline, you will fall by the wayside like the vast majority of traders and won’t be able to execute your method.

If you don’t have discipline to trade your method, you have no method at all!

3. What sets you apart from others?

This is your “edge” the reason you will beat other traders.

If you don’t know what your edge over other traders you will lose.

When you trade in the market you trade against other traders.

It’s a brutal world where only the strong survive and you need to have an advantage and more importantly, know what it is.

An edge in trading can be a number of things, but one thing is for sure:

You need to know what it is and why it allows you to take on and beat the vast majority of other traders.

Common traits of traders with an edge are:

They understand everything about the market:

How it moves and why and they have built a method themselves that suits their personality.

They then have total confidence in their method and can apply it with discipline to preserve and make them money.

If you want to win you need to do the same.

Why More Investors Choose Forex Trades

As more investors grow dissatisfied with the performance of the domestic stock markets, they are beginning to explore some options for international investments. While there are a number of opportunities to get involved in foreign markets, foreign exchange trading is quickly becoming one of the most popular. Investors like forex trades because they are made quickly and with minimal hassle. There are several definable benefits to foreign exchange trading.

The first benefit is that forex is liquid. In fact, forex is the most easily sold form of investment in the world. Since you are dealing with cash, forex trades are never on the block for long. There is always someone, or some bank, willing to make a trade. This liquidity is what makes trading forex so appealing to many. Even in falling markets, you have the ability to sell whenever you are ready.

Another benefit of foreign exchange trading is that forex trades are available 24 hours a day. Since the medium is the world's currencies, the market must be open 24 hours a day since banks in different time zones are always open. The development of internet technology has opened up a world where trading can happen instantaneously at any time of day. Since many forex traders work full time jobs during the day, the ability to sit at home and make trades in the evening, even after their own nation's markets have closed, is very important.

Some foreign exchange traders like this platform because forex trades rarely charge any commission fees. When trading regular stocks and even some futures, the investor's profits take a substantial hit from the commission based fee structure in which the brokerage firm gets a percentage of every trade made. With online forex trading though, these commissions are not applicable as you are making the trades yourself. It may seem like small change, but over the course of a year, many forex traders find that they have increased their portfolio substantially because they are able to invest the money that normally would have gone to commission fees.

Investors who limit their portfolios to domestic common stock often find that their trading activity must come to a halt in a declining market. You may hear them talk of "riding out the storm." For those who make forex trades however, the normal rise and fall of the world's economies does not affect the nature of the trading. Forex trades depend only on the exchange rate. The actual value of the currency doesn't matter. For this reason, you will see that foreign exchange trading remains active even when trade volumes of common stock are very low.

Account Sizes, Lots and Margin Calls.

Forex trading is one of the best business opportunities you can think of joining these days. No other market in the world allows the “Leverage” that the profitable world of currency-trading does. Leverage is all about margin trading. In the Forex market, it is essentially the ratio of the amount used in a trade to the required security deposit needed, by the particular broker you chose to use, for that trade. Normally, for most brokerages, a margin deposit of just $1,000 allows you to control a $100,000 position in the Forex market. That's 100:1 leverage, or 1%. Or, said in a different way, a “regular full-sized account”, sometimes referred to as a 100k account, allows you to trade with lot sizes equal to $100,000. Each lot is worth $100,000 in currency. So It would only require $1,000 to trade one lot. This great feature in Forex trading is what makes this market the hottest market to trade in right now. The Forex broker has given you a loan of $99,000 dollars secured only by your $1,000! This is a huge loan and, as you may know by now, this is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing , "leverage is a two-edged sword" , it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders. But just as an example, let's say you were a person that likes to trade with reckless abandon, i.e., with no strategy, no common sense, no money- management principles, etc. That’s never recommended for anyone, but being a Forex trader has such great advantages, that even someone with a trading mind like the one described before, will never lose more than what he has placed into a trade. Unlike Futures (Commodity Trading), the market that most people associate with High leverage, you can never have a debit balance when trading Forex. So, despite the greater leverage associated with FX trading, it is still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can’t protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account. But because of the Forex markets great liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are very unprobable. Orders are executed quickly, without slippage or partial fills, which is just great. And as it was not enough, there are no margin calls, for your protection, the forex broker's trading platform will automatically close out some or all of your open positions if your account equity, meaning the total floating value of the account, falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.

Forex And Daytrading

Online trading is great way for serious investors to make money, but inexperienced traders often wind up with big losses. A good set of instructions can minimize the risks and save months of expensive trial-and-error learning.

Day Trading

Day Trading had its heyday during the bull market of the 1990's. All the amateurs have since dropped out, but day trading is still being practiced by professionals. There are fewer opportunities in the current market, but skilled investors can still find them if they know what to look for.

FOREX Trading

The Foreign Exchange Market (FOREX), the world's largest financial exchange market, originated in 1973. It has a daily turnover of currency worth more than $1.2 trillion dollars.

Unlike many other securities, FOREX does not trade on a fixed exchange rate; instead, currencies are traded primarily between central banks, commercial banks, various non-banking international corporations, hedge funds, personal investors and not to forget, speculators. Previously, smaller investors were excluded from FOREX due to the huge amount of deposit involved. This was changed in 1995, and now smaller investors can trade alongside the multi-nationals. As a result, the number of traders within the FOREX market has grown rapidly, and many FOREX courses are appearing to help individual traders increase their skills.

As a matter of fact, it's advisable to take FOREX training even before opening a trading account.
It is vital to know the market mechanics of FOREX, leveraging in FOREX, rollovers and the analysis of the FOREX market. Due to this fact, potential FOREX traders would do well to either enroll in a FOREX training courses or even purchase some books regarding FOREX trading.

There are pros and cons to enrolling into a FOREX course. For beginners a FOREX course is a rapid method of learning the basics of FOREX trading. Not much time is spent on history of the market or arcane economic theories. Often, on-line or phone support from a skilled FOREX trader is available to answer any questions. Also, the information is condensed and practical, often with graphs and charts.

The disadvantage is the price, as courses are more expensive than a paperback from the bookstore. Also,
the course may just teach the approach of the trader who wrote it, and individuals have different trading strategies. The student may grow accustomed to the logic and focus of the teacher without coming to realise that nothing is predictable in the FOREX market, and many different strategies will bring profits in varying market circumstances. Also, knowledge of practical applications may not be enough, as the FOREX is highly unpredictable and there are many external factors, such as political issues, affecting the flow of finances in the market.

The best advice would be to do some background research on the FOREX market first, and then enroll in a course.

The 10 Golden Rules of Trading

In this article we cover the few important rules that should never be broken in trading. If you can apply these rules consistently, and with discipline, you will be well on the way to being a profitable trader.

The rules we cover are:

• Have specific goals and objectives
• Be consistent and disciplined
• Let profits run
• Cut losses short
• Never add to a losing trade
• Don’t take too much risk
• Only trade positive expectancy systems
• Minimize all trading business costs
• Be well educated
• Don’t trade scared money

Each of the rules will now be discussed.

2 The Golden Rules of Trading

The following sections outline a set of rules that can significantly improve your chances of success if they are understood, practiced, and implemented consistently in your trading. These rules have been learned the hard way, by study, research, trial-and-error, and the inevitable mistakes that everyone makes when they start a trading business.

We hope that you can learn from the work we have done, and benefit from our experience. The rules will now be discussed.

2.1 Have specific goals and objectives

Few things are more important to your trading success than having set (i.e. written) goals and objective for what you are aiming to achieve. It is amazing to me how often we hit our targets, meet our objectives, and reach our goals only when we articulate them and write them down.

For any business to be successful it must have measurable objectives that are actually achievable. In trading (obviously) the primary objective is to make money, but it is important to have other objectives that are not purely cash-related. We must always remember that reward and risk go hand-in-hand in trading and that we cannot expect to achieve high returns without planning for high risk (i.e. draw-downs).

Your objectives and goals will be very specific to you, but they must have the following characteristics to be useful:

• Be measurable (in completion and timeframe)
• Be achievable
• Be worthwhile
• Be positive

As an example, here are some of our current objectives (this is only a partial list):

• Develop 2 new positive-expectancy trading systems each year
• Make fewer errors implementing our trading systems each year
• Achieve a return to maximum draw-down ratio of 1.5:1
• Take 2 weeks vacation each year

Note that only one of them is about making money, and that has a measurable objective that is relative to draw-down, not absolute (i.e. make 100% per year). If you know what you are trying to achieve, and when you are trying to achieve it, the whole business will be focused on meeting
your objectives and help guide you to only pay attention to things you really want to achieve with your limited time and resources. This will also give you a way to measure the success and progress of your trading. Generally traders with well-defined objectives will be much more successful than those that do not have pre-defined goals.

2.2 Be consistent and disciplined

In order to realize the full potential of your trading systems it is critical that you take every trading entry, adjust every stop, and close out every trade as and when your system says you should do. This takes extreme confidence in your trading systems, good robust reliable technology, and the mental discipline to stick to your trading plan whatever happens (assuming it is complete).
An underlying assumption about being consistent and disciplined is that you have a pre-defined plan for every situation you may face in your trading, so that you know how you are defining what being consistent is. Your plan needs to include at least the following items:

• All your trading rules for entering, adding to, and exiting positions
• What you will do if your trading computer, internet connection, broker, power, telephone
etc. fails
• What you will do if you are unable to trade
• What you will do if you lose X% of your account
• What you will do if all the markets are closed and you can’t exit your positions

Unless you write the answers down to all these issues, you cannot be consistent and disciplined in your approach to trading and if you lose money you will not know whether it is because you didn’t follow your plan, because your plan is incomplete, because your systems do not work, or simply because you are going through a losing period.

2.3 Let profits run

This simple rule is the key to being a successful trader. It is three simple words that are very hard to actually implement. When we get a profitable trade our natural fear of losing the unrealized cash kicks in and we truly want to close it out now and take the money. Most trading consists of long periods of small winners and losers followed by a few huge winners that make the difference between overall profitability and simply breaking even or losing due to trading costs(commissions, spread, and slippage).

It is our ability to let the huge winners become just that - huge - that determines how we will perform overall during the year. The key to letting winners run is to have trailing stops that are outside the daily noise of the market so that they are not tight enough to get stopped out during ‘normal’ trading. This means being prepared to give up a significant portion of a winning trade’s open profit and is the thing that makes this so hard to implement. In fact, we should be adding to a winner and widening stops rather than working out how tight our stops can be to capture maximum profit. The trade has already shown you that it intends to be a winner, and the chances are it is a low-risk idea to add to the position now rather than ‘strangle it’ with stops that are too tight.

It is very important that your position management rules allow for large winning trades, and that the rules are pre-defined and understood before you place the trade. This will allow you (if you have confidence in your method and discipline) to stick to your rules when you do get the big
winner.

2.4 Cut losses short

This is the sister rule to the previous one, and is usually just as difficult to implement (although it
is very easy to define). In the same way that profitability comes from a few large winning trades, capital preservation comes from avoiding the few large losers that the market will toss your way each year. Setting a maximum loss point before you enter the trade so you know before-hand approximately how much you are risking on this particular position is relatively straightforward. You simply need to have a exit price that says to you ‘this trade is a loser and I will exit before it gets any bigger’. Due to gaps at the open, or limit moves in futures we can never be 100%
certain that we can get out with our maximum loss, but simply having the rules, and always sticking to it will save us from the nasty trades that just keep on going and going against our position until we have lost more than many winning trades can make back.

If you have a losing position that is at you maximum loss point, just get out. Do not hope that it will turn around. Given that trades are either winners or losers, and this one is shouting ‘Loser’ at you, the chances that it will turn around and become a large winner is tiny. Why risk any more money on this losing trade, when you could simply close it out (accept the loss) and move on. This will leave you in a much better place financially and mentally, than holding the position and hoping it will go back your way. Even if it did do this, the mental energy and negative feelings from holding the losing position are not worth it. Always stick to your rules and exit a position if it hits your stop point.

2.5 Never add to a losing trade

One of the few trade management rules that we can state we never break is ‘Never add to a losing trade’. Trades are split into winners and losers, and if a trade is a loser, the chances of it turning right around and becoming a winner are too small to risk more money on. If indeed it is a winner disguised as a loser, why not wait until it shows it’s true colors (and becomes a winner)before you add to it.
If you do this you will notice that nearly always the trade ends up hitting your stop loss and does not look back. Sometimes the trade turns around before it hits your stop and becomes a winner and you can count yourself very fortunate. Sometimes the trade hits your stop loss and then
turns around and becomes a winner and you can count yourself unlucky. Whatever the result, it is never worth adding to a loser, hoping that it will become a winner. The odds of success are just too low to risk more capital in addition to the initial risk.

2.6 Don’t take too much risk

One of the most devastating mistakes any trader can make is risking too much of their capital on a single trade. One thing is certain in trading and that is if you lose all your capital you are out of the game. Why risk so much you could be prevented from continuing? There is a saying in
poker than going all-in (risking all your chips) works every time but once. This is true of trading.

If you risk all your account on every trade it only takes one loser to wipe you out (and no trading method is 100% accurate), so you will be out of the game at some point – it is only a question of time.

In general, we only risk 1-3% of the available capital allocated to a system on any individual trade. This is calculated using the size and, the difference between our entry price and our maximum stop price, and the amount of capital allocated to the system. With the win probability
and ratio of size of winning trades to losing trades we are almost certain never to lose all of our trading capital. In fact, the chance of us hitting our maximum drawdown for the year is tiny.

All trades should be of a size that almost seems insignificant. If you are worried about the size of a trade then it is too big and you should reduce the size immediately. Remember that longevity is the key to making money by trading – slowly over a long time with minimal risk, is always preferable to rapidly with too much risk.

2.7 Only trade positive expectancy systems

If you have a positive expectancy trading system, the only factors that determine how much money you will make per year are the number of trades the system generates, how much capital you allocate to the system, and how accurately you implement the trading signals. If you do not know whether your trading system is positive expectancy then why are you trading it? Expectancy is calculated using the profit or loss on each trade (net of trading implementation
costs) divided by the initial risk (using your stop loss) and then taking the average of this number of a series of trades. Systems that have positive expectancy will make money on average and those with negative expectancy will lose money.

Successful traders only trade systems where the odds of success are in their favor (i.e. the system is positive expectancy) so they know that making money is the result of accurately implementing the system and not just pure luck.

2.8 Minimize all trading business costs

Some trading systems have only marginal profitability, and trading implementation costs (commission, spread, and slippage) can be the difference between profitability and making a loss. With the easy availability of modern electronic brokers, and fully-automated trade processing and
execution, it is definitely worthwhile looking for a very low cost way to implement your trading system. High commission, wide spreads, and large amount of slippage can be reduced considerably simply by carefully choosing a broker. This can be the difference between a system
(especially a high frequency one) being useable or not. Paying too much for trade implementation is an avoidable way to lose money.

2.9 Be educated

In order to compete at the highest level in the trading business and be one of the few truly successful participants you must be well-educated about what you are doing. This does not mean having a degree from a well-respected university – the market doesn’t care where you were educated.

Being well-educated means that you have thoroughly researched and tested your trading ideas and know why your trading system worked in the past and is continuing to work now. It means understanding all the technology and applications that your system needs to perform accurately.
It means understanding your goal and objectives and how trading will achieve these. It means understanding yourself and how your personality affects your results. It means understanding the markets and instruments you trade.
In order to succeed you really need to become an expert in your own trading business to understand how it all fits together, when it is broken, and how it can be improved. As with all worthwhile endeavors, this takes commitment, hard work, dedication, and more hard work.

2.10 Don’t trade scared money

Lastly, no one ever made any money trading when they had to do it to pay the mortgage at the end of the month. Having a requirement to make X dollars per month or you will be financially in trouble is the best way I know to completely mess up all trading discipline, rules, objectives, and
leads quickly to disaster.

Trading is about taking a reasonable risk in order to achieve a good reward. The markets and how and when they give up their profits is not under your control. Do not trade if you need the money to pay bills. Do not trade if your business and personal expenses are not covered by
another income stream or cash reserve. This will only lead to additional unmanageable stress and be very detrimental to your trading performance.

3 Summary

In this article we have covered the rules that we believe should never be broken in trading. If you work on never breaking them, your trading should improve dramatically.

We sincerely hope this information has helped you to improve your trading performance.

Good luck in yout trading.

About the author:
Paul King is owner and head trader of PMKing Trading LLC, a Vermont-based proprietary trading company founded in May 2002. Paul has published a series of eBooks and articles about what he considers to be the important aspects of trading.

Learn Forex Trading - a guide for beginners

One can learn forex trading as easily as one would like to learn other subjects or train in other professions. The criteria for learning forex trading is an analytical / logical bent of mind and some number crunching abilities. Reading specialized books on the subject matter, enrolling for college and other programs, which specifically teach one to do forex dealing, one can understand Forex trading. Still other ways are through the Internet and training under a forex dealer / professional. Essentially the forex market comprises of currencies, which are bought and sold according to certain parameters.
There are major currencies in the market, which are trade and are the most liquid. These are US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. Then there are other currencies, which are not so liquid. However currency trade is done in almost all currencies across the world. The forex market is truly a twenty-four market with only a minor break during the weekend. It opens in Sydney, then in Tokyo and then in London and New York in that order according to the way that the Earth rotates and the sun rises. Therefore forex brokers and investors can choose their time of operation.

Essentially it's a matter of selling and buying the currencies. The goal is very simple, that of making a profit in the currency transactions that you participate in. The currency market operates like most other markets and therefore for many traders 'migrating ' form other trades such as stock market can be quite simple.

Essentially one can learn forex transactions by creating a virtual account. The first lesson is that currency trade is done in pairs only like Euros / US$, Japanese Yen/ Canadian Dollars etc. When you have set up a virtual account with the amount of initial investment, keep the following pointers in mind

· According to your investment strategy and time frame, choose the currency pair best suited to your needs. Some currency pairs can be very aggressive and the changes can be quite volatile. While others may not show any movement. Therefore choose the currency pair with care.
· Decide the time frame. Do you want to spend a few minutes on the forex trade or you want to go the whole hog and devote the entire week to the forex trade (swing trade)
· Have an exit plan ready before you start the currency transactions. Know when to place your 'stops' and do so accordingly.
· No risk no gain. Be willing to take risk. You can take calculated risks in order to earn good profits. Know whether you want to be an aggressive trader or are you happy being a safe trader.
· Read and analyze the news and the technical data that is generated on the currencies that you deal in to understand the market conditions better.

Of course you can grasp the modus operandi of the forex trade. But for doing the real thing, you need to be in the forex transaction market for real.