“How To” Start Trading The Forex Market? (Part 8)

3) "The number's don't lie" - all available information and its impact on the market, are already...

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forex trading, managed forex accounts,alternative investments,how to start trading forex,

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HOW TO predict the Future ?

by studying the Past (Technical Analysis):

1) The best traders don't discount one or the other but understand that having an understanding how the fundamentals influence market sentiment gives him/her an edge over those traders who don't.

2) In my opinion, TECHNICAL analysis is the easiest and most accurate way of trading the FOREX market.

3) "The number's don't lie" - all available information and its impact on the market, are already reflected in a currency's price.

4) Prices move in trends - the foreign exchange market is mostly composed of trends and therefore a place where technical analysis can be very effective.

5) History repeats itself - over time, certain chart patterns become consistent, predictable and very reliable. The question is SEEING them.

PRICES MOVE IN TRENDS

The traders who don't believe this obviously have no need to implement a trading methodology on technical analysis. But, research has shown that those who trade "with the trend", greatly improve their changes of making a profitable trade.

Finding the prevailing trend will help you become aware of the overall market direction and offer you better visibility,especially when shorter-term movements tend to clutter the picture.

HOW does technical analysis help to determine what the trend is and HOW to trade with then trend versus against it?

Even though, you learn you how to use and read various technical indicators to identify a long- term trend, spot predictable chart patters and use certain rules to enter and exit a high-probability trade, and even though a ll this involves sound logic, parameters, methods, formulas, data, and research, these technical indicators, by themselves, are not the Holy Grail of FOREX trading.

It takes discipline and emotional control to stick with trading following through the inevitable market ups and downs. Keep in mind, good technical traders expect ups and downs.

Which technical indicators are the BEST?

NONE - technical indicators should simply be components of your overall customized, personalized trading system, and not a stand alone system.

The objectives as a FOREX Technical Trader are:

1) To figure out the price action of the currency pair. Price is the main concern. If the EUR/USD is at 1.2224 and goes to 1.2020, 1.1980, 1.1940- the market is in a down trend.

Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless.

A trader should only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.

2) Always remember that technical indicators are only giving you confirmations based on what the market is telling you. So listen to the market and let it tell you which method, strategy or techniques you should use.

An Overview Of Forex Investing Strategies

FOREX trading refers to an international, 24/7, over the counter, exchange market where currencies of different nations are bought and sold. Trading is always done in pairs assuming the price of currency bought to go up and that sold to fall down. It is the largest liquid financial market making it impossible for any single investor to influence the prices of currencies.

There are two kinds of FOREX investing strategies:

TECHNICAL ANALYSIS
FUNDAMENTAL ANALYSIS

TECHNICAL ANALYSIS:

Technical analysis is mostly undertaken by small and medium size investors.
A technical analysis considers factors that are actually affecting the market rather than factors that can affect it. Thus the price quoted reflects all the factors that have influenced it. Only market generated facts and figures are taken into account and factors like fear, hope, expectations or other changes are not considered. Thus the analysis is generally based on these suppositions:

• Price reflects all actual market movements. That means price includes everything known to the market like supply and demand of foreign exchange, political factors, trade agreements etc. It is not concerned with what resulted in change rather deals with actual changes. It works on the assumption that price can take only one of the three directions:

 Upward
 downward
 sideward

• It rest on those market patterns that have been identified as significant. That means those factors which are repetitive in nature or will produce desired results.

• History always repeats itself as human psychology changes very slowly with time. That is market movements are predictable.

VARIOUS TECHNICAL INDICATORS ARE:

1. RELATIVE STRENGTH INDEX:

It takes into account the ratio of upward and downward movements in index and expresses it in the range of zero to hundred.

2.CHARTS:

Charts include various hills, slopes, curves that develop on a chart over a time and reflect some major and minor changes in pattern. Some of the chart formations include:

• TRIANGLE
• RECTANGLE
• HEAD AND SHOULDERS
• DOUBLE TOP AND BOTTOM
• SAUCERS
• V

3.GAPS:

A gap represents area on a bar chart where no trading took place.

• UPGAP: it is formed when the lowest price on a particular day is more than the highest price of previous day.

• DOWNGAP: it is formed when highest price of a certain day is less than the lowest price on previous day.

NUMBERS:

Various number theories are used in technical analysis like:

• Fibonacci theory
• GANN

STOCHASTIC OSCILLATOR:

This indicates the overbought or/and undersold condition. It uses a scale of zero to hundred percent.

FUNDAMENTAL ANALYSIS:

It is the one where current economic, political, financial situation of the country of currency is studied. A country’s economical and political condition depends upon many factors like the interest rate, unemployment level, exports and imports, per capita income, percentage of population living above and below the poverty line, inflation, trade relations with other countries, tax policies etc.

A fundamental analyst studies and evaluates all these factors before coming to any decision. Thus it helps in long tem decision making and making profits in short term by extra ordinary developments.

Some of the indicators that help in fundamental analysis include:

1. GROSS DOMESTIC PRODUCT:

It reflects total market value of all the goods and services produced in a country during a given year.

2. RETAIL SALES:

This reflects total receipts by all the retail stores in a country.

3. CONSUMER PRICE INDEX:

It reflects change in prices of consumer goods.

4. BUSINESS CYCLE:

It reflects various phases through which a business passes. These phases include:

• EXPANSION
• PEAK
• RECESSION
• DEPRESSION

5. MONETRY POLICY:

It controls the supply of money in an economy.

Trading successfully needs knowledge, time and understanding of a market. You cannot earn continuously in a Forex market due to its volatile nature. Thus as a trader you should try to consider both technical and fundamental strategies of forex trading and make decision based on market expectations and trends. Try trading with money that you can afford to loose without any regrets. Trade with logic and if you are not sure quit and take rest for some time.

6 Advantages Of Trading Forex

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Forex is the popular term for foreign exchange markets. The banks and brokerage firms are linked via electronic network to do business in the stock markets. The network allows them to convert currencies worldwide.

It became the chief and largest liquefied financial market around the globe. Take for instance, the volume of dollar currencies can rapidly increase in trillions of dollars within a day in currency markets. It even goes beyond the total volume of the total equities in the U.S. as well as future markets.

Forex trading is dominated often by commercial banks, investment banks, and government central banks. This is the main reason why many private investors are dealing on currency exchanges. They find it easier to access the market through technological innovations such as the internet.

It also provides the needed information in the stocks market regarding trading forex. The currencies which are widely traded include British Pound, US Dollar, Japanese Yen, Swiss Franc, Australian Dollar, and Canadian Dollar. Forex trading is done 5 days within a week and the traders can have constant access to various dealers all around the world. The trading does not mainly focus on any exchange or physical location and the transaction happens between two persons via electronic network or a phone line.

Forex trading has grown rapidly on the global market. The restrictions on the flow of capital have even been put off in various countries. This factor leads to market independence settling the forex rates on its perceived values. There are different reasons why forex trading is very popular. It include utmost liquidity, available leverage, lower trading costs.

There are different advantages of forex trading in the stock markets. Traders are making bigger sums of money by selling and buying foreign currencies. However, some people might ask of its advantages on the stock market.

1. Liquidity. Forex market can handle transactions even if it reaches 1.5 trillion dollars every day. Take note, this is a very large volume. It only denotes that sellers and buyers are always available regardless of the currency types. So, if the trader wanted to buy, there is always an available seller, and if the trader wanted to sell, there is always an available buyer.

2. There is no insider in the trading systems. Remember, constant value fluctuations of several currencies are caused by economic change. Some traders may obtain the information before others get it. So, they can sell or buy it within the stock markets. However, the nation’s economy is accessible to every trader so nobody can take an inside advantage to anyone.

3. It has accessibility. It is operational for five days within a week and accessible for twenty four hours. Trading can be made during this period.

4. It has more predictability. It always follow the market trends even the trends that are well established.

5. It can allow smaller investments. The potential traders can open mini accounts even for a few bucks of dollars. Forex trading has high leverage which is around 100:1. It only signifies that your assets can be controlled 100 times over your invested money.

6. It has no commissions. The forex trading brokers can earn money through setting their spreads where they weigh the process between selling and buying currencies.

Forex trading can be one of the best systems in day trading. Since it deals with currency trades, it can have the largest volumes of trading. Although it can be labeled as high risks trading systems, it can bring the traders higher returns within minutes.

However traders should be aware that forex trading needs a thorough research before starting it. Never confine yourself with only one source. Always make it a part of your plan to research first before engaging yourself in the real forex trading. It is not enough to know its advantages. As a trader, you need to clearly understand the systems involved in forex trading. It is helpful if you read the latest forums posted in the community boards.

It is also important to find the best forex trading systems. In this manner, you can incorporate a course, software, or method developed by forex trading experts. Take note, there are various system types that are available. It is important to find the right system that will fit in your goals in the industry of trading forex to achieve success.

7 Reasons To Trade The FOREX Market.

More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds and commodities and building their fortunes in the foreign exchange (forex) marketplace.
The reason why they are turning to the all electronic world of Forex trading is its numerous advantages over any type of investments.
Even if you are an experienced Stocks or Commodities trader you will discover how powerful the Forex is.
You can make $200 to $3000 in less than 30 minutes of work everyday.
Forex Trading is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.
Why should you trade the forex market?
Here are the reason why...

1) The forex market is open 24 hours, it never sleeps.
You can enter a position, or exit whenever you want, whenever you are six days a week. You do not need to wait for the opening bell like if you was trading stocks. it is excellent for you as you choose the best time for you to trade.

2) The daily trading volume of the Forex is around $1.5 trillion dollars
It is 30 times larger than the combined volume of all U.S. equity markets. This means that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock would have daily!

3) You profit in both raising market or falling market.
You have equal potential to profit in both a rising or falling market, because it' s up to you to buy a currency, or to sell it, after you determined the market trend tendency.

4) You can trade from anywhere.
If you like to travel, this is a dream business, you just take your lap top with you and that' s it, you can make money from anywhere in the world, all that you need is to be sure that you can access an Internet Connection.

5) The leverage is considerable.
In fact, you don' t need a lot of money to trade forex, it is recommended to start with $2000, but you can start with $300, then if you have a proved strategy, your investment will grow consequently, as you can trade up to 200 times your investment. You can trade 100,000- unit currency lots with as little as 1% margin, or $1,000. there is no comparison with the stock market where you need a big amount of money to start, if you want to see real profits. And beside that, you need to post 50% margin.

6) Price Movements Are Highly Predictable.
Price movement or highly volatile in the forex, however, the foreign currencies market is moving in trends, and you can identify these trends - as they repeat in cycle- with the technical analysis.

7) No commission fees.
Unlike the stock market, brokers don' t take commission on transaction.

To trade forex, you don' t need to have a lot of money to start; you can trade at any time, from anywhere, with a Internet connection, you will not have an order pending because of lack of liquidity, you will not have to work all during the day.

The forex market has many advantages over the other traditional investments, and for sure, it will give you more freedom, and more money.

What You Didn’t Know About The Psychology Of Forex Market Trading – And How It Might Bankrupt You

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When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who’s been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind – and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn’t take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others – including the mass psychology of the people that use the currency on a daily basis – but neglect to know what moves you, you’re going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying ‘Huh?” about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged.

All right. You’ve heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you’ll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info – if it’s math, there’s only one right answer, right?

The answer lies in interpretation. The numbers don’t lie, but your mind does. Your hopes and fears can make you see things that just aren’t there. When you invest in a currency, you’re investing more than just money – you make an emotional investment. Being ‘right’ becomes important. Being ‘wrong’ doesn’t just cost you money when you let yourself be ruled by your emotions – it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It’s that little thing inside your head that says, “I KNOW I’m right on this, dammit!”

Bottom line: You can’t keep emotions out of the picture, but you can learn not to let them control your decisions.

To most people, being right is more important than making money.

Here’s the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You’ve got to accept that picking a loser is NOT an indication of your self-worth, it’s not a reflection on who you are. It’s simply a loss, and the best way to deal with it is to stop losing money by moving on – and really move on. Moving on means you don’t keep a running total of how many losses you’ve had – that’s the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning.

Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didn’t work. But he didn’t give up – because he knew that creating a source of light from electricity was possible. He believed in his overall theory – so when one design didn’t work, he simply knew that he’d eliminated one possibility. Keep eliminating possibilities long enough, and you’ll eventually find the possibility that works.

Winning traders see loss in the same way. They haven’t failed – they’ve learned something new about the way that they and the market work.

Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I’m wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades – but I made $250,000, making my overall profit $175,000. It’s a pretty clear numbers game – but how do you keep on trading when you’re losing in trade after trade? Simple – just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you’ve set up – but define yourself by what really matters – the overall record.

Which Forex Brokers Should You Give Your Money?

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If you are interested in earning income as a FOREX trader, the first thing you must do is sign up with a FOREX brokerage firm. There are many of them out there, especially online, so you should carefully consider your choices before choosing one. You will find there are all types of FOREX brokerage firms, including small brokers, market makers, and market operators.

Most individuals interested in becoming a FOREX trader will choose a small broker. These types of firms allow individuals to invest a few hundred dollars. Many people will usually trade in this manner because the risks of loss are only as much as the capital they invest. Since most traders usually don't have enough to invest $50,000 or more, going through a small broker is a good option.

Market Makers

Then, there are market makers who are constant buyers and sellers of the FOREX market. When an investor buys a currency and decides to sell it a second later, market makers stand by and buy the currency, even when there is no buyer interested in that currency at the moment. You can look at market markers as the go-between, buying and selling currency when they become available.

Some market markers work with small brokers. Because small brokers have various individual investors, there is always someone looking to buy as well as those looking to sell. When an investor is ready to sell, the small broker collects and assigns the currencies to a market maker. In this way, market makers are literally creating a market by acting as a central dealer.

Large Banks

For investors with millions of dollars in capital, they go through market operators. This type of brokerage firm is usually run by large banks that follow a set of rules and regulations. These brokers are reliable in minimizing risks, but this market is relatively small because there are not many individuals with millions to invest.

As mentioned previously, most individuals go through a small broker. These days, there are no shortages of small brokers with the presence of the internet. With a simple search, you will be able to find all types of small brokers, each wanting a different minimum investment. They make the process more convenient by offering an online trading platform that can be accessed day or night through your home computer.

Trading Platform

Through this valuable trading platform, you can buy and sell currencies as you please, and set up stop loss points to minimize losses. Because everything is automated, you can watch the numbers all-day if you please. But most people have other ties throughout the day, so the trading software has options where you can set up to sell when a certain amount of pips have been reached. You can set both the upper and lower limits.

With this free-flowing investing where you can buy or sell currencies at the click of a button, FOREX is quickly gaining in popularity. As with any investing activity, you should properly educate yourself by learning to invest wisely, analyze the market, and predict currency changes.

Why Forex is a great trade

The Forex market seems to be one of the hottest markets right now.

Let’s take a look why

It takes small amount of capital to get going and you get leverage with it.

This is important because a lot of people entering the market are looking for ways to make money and not just to invest their spare cash.

Leverage means that you can use other people’s money to make your investment bigger. Not to try to scare you but this also introduces greater chance for Loss. This is not for the faint hearted or people not willing to learn how to trade, understand their trading phycology and follow money management rules. Having been duly warned please keep reading about the great potential and positive aspects of Forex trading.

Leverage is a very powerful tool to make money very quickly.

The Forex Market is the largest in the world worth more than a Trillion dollars a day. This is important for many reasons:

It provides amazing liquidity. There are always people ready to buy and sell so you can always enter and exit your position easily. Smaller markets may not always give you the ability to exit your trade so easily.

It is difficult for larger players to influence the market. In the stock market the larger players can influence a particular stock and cause movement just by their trades.


The sun is always shining somewhere.

There is always trading going on 24 hours a day Monday to Friday. It goes from city to city following the sun. Plus you still get your weekends of to relax. With stocks the markets closes and news is released and the stock can gap at the open leaving you in a worse position. When you can trade a very liquid market open 24 Hours it makes it a whole lot easier to manage your positions and relax.

You are trading so that you can have a better life right?, not just stuck in front of a computer. It is important to get clear on why you are trading or you can just be just swapping one situation for another and not really improving your life. Pep talk over with let’s get on with it.

Volatility

Stocks may go in sideways movements and suddenly rush up or down and there are a lot of stocks to choose from. Sure there is some stocks renown for being volatile but it is easier to find consistent volatility in the Forex market. The market is always moving so there are always plenty of opportunities for day trading

So I obviously think that the Forex Market provides great opportunity for people to enrich their lives. It gives people willing to learn a little a great lifestyle that many will envy.

I hope that you enjoyed that simple summary. There are many more great reasons to trade forex.