skip to main |
skip to sidebar
by: Chris Rohrer
The foreign exchange market, also knows as FOREX, originated in 1973 has become the largest e-currency trade market in the world today. FOREX trading occurs 24 hours a day, 5 days a week. The FOREX market offers a unique trading opportunity to those seeking a substantial profit in a market that trades over 1.2 trillion dollars each day.
FOREX market is primarily traded between central banks, commercial banks, non-banking International Corporation, hedge funds, private investors and speculators. Previously small investors were unable to trade in the FOREX market due to the large deposit required. However until recent years, with the continuing growth of the internet and competition, Forex trading has made it so small investors can now open a FOREX trading account with as little as $250.
There are a few factors as to why FOREX investing is starting to attract more small investors. For one, FOREX can be traded 24 hours a day 5 days a week. Previously trades were placed by phone, the internet has made it possible for traders to monitor their FOREX trading accounts from home and execute trades in real time with the click of a mouse button.
In order to start trading in the FOREX market, one must first open an account with a broker. It is recommended to obtain a list of brokers and do some research before deciding on which broker to deal with. Each broker offers different policies and different spreads on each currency that is traded.
Before trading in FOREX, one must first understand the risk and reward behind
margin trading in FOREX. A margined account can be leveraged, which means trading in FOREX can be done with solely cash or a combination of cash and collateral such as a security deposit. The main risk involved in margin trading is that margin trading tends to inflate loss. In addition the rate of loss and leverage makes FOREX a high risk investment. However, regardless of the downside in margin trading, FOREX is still very profitable as huge gains can be made.
There are plenty of resources on the internet that will discuss trading strategies, emotions and what it takes to become a successful trader. Most of these web sites are going to tell you that emotions play the largest roll in your success as a trader.
by: Frank Hague
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.
by: David Jenyns
Surprisingly, many profitable speculators have success rates between 30% and 50%. Futures traders are not successful because they predict prices well. They`re winning because their profitable trades far exceed their losses. The truth of the matter is all Futures systems win and lose.
Psychologically, this can make following a system difficult. Futures market professionals achieve success in this environment by controlling risk with money management rules. But, controlling risk goes against our natural tendencies. Most Futures traders don`t want to manage risk, they want to be right. Despite the proven fact that money management is so important, when Futures traders first come to me, many of my clients focus their time looking for the perfect entry. It`s their search for the Holy Grail. They want a perfect Futures indicator.
Not only is this Futures indicator going to get them in right at the bottom of the trend, but it`s also going to tell them at the exact point at the top of the trend when to get out. Here`s the best part and about this indicator: apparently, it can guarantee success and it`s never, ever wrong.
Unfortunately, though I don`t like to disappoint my clients, I need to let them know the hard truth. It does not matter whether you are trading in the Futures or any other market, the simple fact is this; there is no perfect indicator. Instead, there are carefully set money management rules that will place you in control. With this control, you`ll be able to follow the two cardinal rules in your Futures trading – you`ll be able to let your profits run and cut your losses short.
Once these money management rules are in place your system can be set on autopilot. You won`t need to worry…
by: Mark Crisp
that discipline contributed more to their success than their trading philosophy itself. Remember that the key to any plan is how well it holds over time.
2. There is no "sure thing", and there is no trading system that is 100% accurate. Your goal, as a trader, is to usethe tools available and try to develop an edge. Base your trades on sound fundamental and technical reasoning,
rather than on hunches and long shots. If you can develop an edge, however small, over time you will be successful.
3. A trader must be able to admit they have made a mistake. Do not become emotionally or financially committed to a losing trade. Avoid the pitfall of becoming emotionally involved with any trade.
4. An investing edge is only part of the equation. A trader should diversify sufficiently so that the growth in equity can be consistent and the likelihood of a catastrophic loss can be diminished. The lower the percentage of a traders' account dedicated to any one trade the greater the chance of the trader being successful.
Even if the trader has a perceived investing edge, it is unwise to run the risk of ruin, and bet it all on one trade. The goal is not only to make money, but also to be able to continue to make money consistently for an
extended period of time. A trader must learn the basic concepts and the importance of money management.
5. Lack of experience in the market causes many traders to make the mistake of taking small profits and letting losses run.
Fundamental trading wisdom dictates the exact opposite. When in a winning trade, be patient and fully capitalize on the success. The trading axiom is, "cut your losses short and let your profits run".
6. A trading system does not have to be difficult, time consuming, complicated and stressful in order to be profitable.
In trading systems, as in many other things in life, simple can be better
7. As a trader, be cautious, and never let greed take control of a winning position.
8. Be aware that declining volume usually indicates the market is not accepting higher or lower prices, and this could indicate a market turn.
9. Learn from your trading mistakes. Never make a trading mistake without asking yourself why.
10. Do not make trading decision based solely on margin requirements, and always trade within your capabilities.
Remain true to your trading plan and follow the trading style that works best for you.
11. Do not trade markets that you don't understand. Trade with confidence and conviction. Trade only with risk capital and be aware of the risk of losing. Divide your capital into 6 equal parts and never risk more than one-tenth of your capital on any one trade.
12. After a long period of success or a period of profitable trades, try to avoid the natural tendency toward increasing your trading activity. Conversely, use self-discipline when a trade goes against your position. Take your loss and wait for another opportunity. Never increase your trading after a loss.
13. Avoid getting into the market because you are anxious from waiting and/or out of the market because you have lost your patience. Never over trade and adhere to your risk management rules
14. Do not make a trading decision to buy just because the price of the stock is low or sell just because the price is high. Never change your position in the market without a good reason that is based on a fundamental or technical rule indicating a change in trend.
15. Trade the most active stocks and refrain from trading the slow moving markets. Trade "at the market" whenever possible and try to avoid a fixed buying and selling price.
16. When the market is moving with your position and you are using a stop loss order, then raise your stop loss so as to lock in your profit. Protect yourself against the possibility of turning a profit into a loss.
17. The "trend is your friend," and never buy and sell if you are insecure of the trend according to your fundamentals and technical rules. If you are in doubt, then exit the market. Only trade when you feel confident with your trading strategies.
18. Trade in five or six different stocks at a time, so as to avoid tying up all of your capital in any single stock.
19. A trader should establish a "surplus account" after a series of successful or winning trades. The goal is to retain the "surplus account" for times of emergency or panic 20. It is difficult to try and guess where the top and bottom of the market is, instead let the market prove its top and bottom.
by: Raul Lopez
Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.
Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.
The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.
The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:
Forex trading basics.
Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.
Main drawbacks of Forex traders.
Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.
Technical and fundamental analysis.
These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.
The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.
Forex trading system development.
Having the right system is a must if you want to have consistent profitable results. Having a system that doesn’t fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)
Money management.
This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)
Trading psychology.
Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.
by: Cynthia Macy
There are many benefits and advantages to trading Forex. Here are just a few
reasons why so many people are choosing this market as a business
opportunity:
1. LEVERAGE: In Forex trading, a small margin deposit can control a much
larger total contract value. Leverage gives the trader the ability to make
extraordinary profits and at the same time keep risk capital to a minimum. Some
Forex firms offer 200 to 1 leverage, which means that a $50 dollar margin
deposit would enable a trader to buy or sell $10,000 worth of currencies.
Similarly, with $500 dollars, one could trade with $100,000 dollars and so on.
2. LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid.
This means that with a click of a mouse you can instantaneously buy and sell at
will. You are never 'stuck' in a trade. You can even set the online trading
platform to automatically close your position at your desired profit level (limit
order), and/or close a trade if a trade is going against you (stop order).
3. PROFIT IN BOTH 'RISING' AND 'FALLING' MARKETS: On the stock
markets, you can only make money if shares are rising, but in economic
recession and falling 'bear' markets, there is little chance of making big money.
Forex is different. One of the most exciting advantages of FX trading is the ability
to generate profits whether a currency pair is 'up' or 'down'. A trader can profit
by taking a 'long' position, (buying the currency pair at one price and selling it
later at a higher price), or a 'short' position, (selling the currency pair and buying
it back at a lower price). For example, if you think the US dollar will increase in
value vs. the Japanese Yen then you will buy Dollars and sell Yen (go long). If
you think the Yen will increase in value against the Dollar then you will sell
Dollars and buy yen (go short). As long as the trader picks the right direction, a
potential for profit always exists.
4. 24 HRS: From Sunday evening to Friday Afternoon EST the Forex market
never sleeps. This is very desirable for those who want to trade on a part-time
basis, because you can choose when you want to trade--morning, noon or night.
5. FREE 'DEMO' ACCOUNTS, NEWS, CHARTS AND ANALYSIS: Most Online
Forex firms offer free 'Demo' accounts to practice trading, along with breaking
Forex news and charting services. These are very valuable resources for traders
who would like to hone their trading skills with 'virtual' money before opening a
live trading account.
6. 'MINI' TRADING: One might think that getting started as a currency trader
would cost a lot of money. The fact is, it doesn't. Online Forex Firms now offer
'mini' trading accounts with a minimum account deposit of only $200-$500 with
no commission trading. This makes Forex much more accessible to the average
individual, without large, start-up capital.
