Forex Tips and Advice

To a newbie learning Online Forex Trading, it looks very simple in the beginning. Take currency pair EURUSD for instance, if you bullish on Euro, simply place a Buy order. Bearish on EUR, just short it. So easy, you may ask? The truth about Forex Trading is that it is a professional activity that not many traders will succeed.

I will just go through a few very straight forward pointers on how to consistently generate Forex pips.

In the world of Forex currency trading, many newbie traders believe that Forex trading software or system that contains rocket science is more likely able to make money. It may be true, but how many of us will be able to find such a system or methodology? Why not just spend time and money to learn systems or trading methods that are simple but works?

In the Forex currency trading, the fact is simple systems just work best. Simple systems are more robust and easier to trade as you understand the logic and can therefore follow it with confidence when you are in a losing streak.

I personally feel that it is much simpler to trade with the trends rather than the ranging market.

For many successful traders, once they are happy with a system or methodology, they stick with it. Remember, you only make money trading Forex, and not having 100 systems or trading methodologies but trading none of them.

In Forex trading, most traders succeeded primarily due to good money management. So long as your system or trading methodologies has a positive profit factor coupled with proper money management, you will succeed in the long run.

However, for many Forex Trading beginners, after many days and nights of learning and digesting Forex Trading courses, purchasing of various Forex Trading Software and Forex Trading System, you still find yourself with a huge hole in your initial capital.

As times go by, slowly, your dreams of financial freedom and success begin to fade. You will begin to ask yourself, are you a failure? Are you not intelligent enough to become a profitable Forex trader? After all, there are many successful Forex Trading experts out there who are living their Online Money Making dreams….

So the Money Making Online million dollar question – Are you cut out to be a profitable Forex Currency Trading trader? Yes, you can become a profitable Forex Trading Trader! You just need to treat Online Forex Trading like running a Successful Online Money Making Business.

Forex Trading Style

Similar to Stock Trading or any form Investment Trading. You must ask yourself – what is your Online Forex Trading style – news Forex Trading, swing Forex Trading, momentum Forex Trading, pattern Forex Trading and intraday or longer term Forex Trading? It is alright to have a “library” of Forex Trading style or setups, but most Money Making Foreign Currency trader does is to concentrate on a niche or particular Forex Trading style. Learn to do one thing consistently well instead of trying to master too many trading methodologies. You have to pick a style that suits you.

Online Forex Trading Plan

What is your Foreign Currency Trading plan? Before any trade entry, you have to ask yourself it this the right Set Up entry for your Forex Trading style? Where is your exact Forex Currency trade entry point? What are you Forex Trading Stop Loss target? What is your Forex Trading profit target?

Anyone involves in Foreign Currency Trading and not having a well defined stop loss is going to have their entire Online Forex Trading account wipe out before they even realized it. I knew someone did just that recently. A US$10,000 account was wiped out within a week without Stop Loss trading a few currency pairs. You also need to know what your Forex Trading profit target point is. What is the point of having an Online Money Making Forex Trading trade but your Forex Trading Account does not Make Money. For one simple reason, you didn’t take the money from your Forex trade and market reversal against you.

Forex Trading Profit & Loss Plan

Lots of Online Forex Trading beginners don’t realized the important of reward to risk factor for every Forex Trading trade. You will never Make Money Online if you risk $500 but make $100.

Follow your Well-Defined Forex Trading Plan

Once you have written down a well-defined Online Forex Trading, you must have the Discipline to stick to it. All Forex Trading beginners must remember that Discipline and Money Management are the two most import aspects of Forex Trading. Even the greatest Forex Trading System or methodologies will fail if you can’t stick to it.

The reason that you entered Forex currency trading is to make very good money, right? First thing you must do is to have a clear and written Forex currency trading system, preferably a proven one.

It is best if the decision points are defined in purely technical manner by your system, as any judgment calls (discretion) allow for errors that cost money through losses.

A Forex currency trading system is a fully developed process that is repeated over and over again.

In trading, your goal is make consistent profits, so the more consistent you do what you do, the more consistent your results. Consistency is on of the greatest benefits of having a Forex currency trading system, but you must take it one step further to really get the most out of it.

Many traders over the years that have developed and published very profitable Forex currency trading systems. Hundreds of traders have taken those same systems and not even come close to the creator’s success. There are specific reasons for this incongruence.

First of all, the creator back tested and refined the system during its development. That back testing built a level of confidence in the system so that when it came time to put money on the line, they could have the discipline to follow the Forex currency trading system, particularly during drawdown spells.

Secondly, the backtesting allowed the trader to practice with the Forex currency trading system that they had developed, thus improving their competence with it and the efficiency.

Thirdly, many “followers” only concentrate on making money, so they miss the critical metrics that make the bottom line what it is. Every Forex currency trading system has certain performance aspects to it. These aspects that have direct impact on its profitability, and most of all predictability.

The system creators kept their primary focus on the metrics, While the followers that don’t make money with the system may not even know that these metrics exist, let alone what to look for.

Fourthly the creators make money with their Forex currency trading system because they back test and analyze their system’s performance regularly, plus they track specific metrics over time. The goals of consistency and continuous improvement necessitate this practice.

While better than doing nothing at all, some traders will occasionally back test their Forex currency trading system. Most however only look at profit for the period back tested and miss out on the valuable information found in the proper metrics.

Recording and tracking the performance of your Forex currency trading system is absolutely essential to truly maximizing your profits.

For those wishing to truly make the most money possible with their system, tracking your equity balance is important, but regularly analyzing your system’s metrics is what will allow you to really get the most out of it.

When you start to look around, for a viable Forex trading system, you quickly become aware, of so many options out there that you may not be sure where to begin.

In order to pick the right trading system, you will need to establish some basic criteria that you can use to evaluate any possible candidates. Here are some suggestions to help you make your choice.

One of the first things you need to check into is what type of commitment you have to make in order to use the system.

Will you need to commit a minimum amount of resources to the system in order to be able to participate? If so, what is that minimum amount?

Set aside any trading system, which insists that you have to set aside an amount of funds, that you are not comfortable with or are unable to reasonably commit and still maintain your current standard of living.

Next, look into support resources that are available to you as a user of the system.

You want to know that you have access to up to the minute information, as currency exchange rates can and often do change several times a day.

You may also want to look for a comprehensive tutorial that helps you understand the way the system works at each juncture. Another aspect in regard to resources has to do with the ability to communicate with another human being.

Can this be accomplished with emails, direct chats or even by placing a toll free phone call? Pass on any system that seems to leave you hanging out there on your own, even if you consider yourself too savvy to ask for help.

The fact is that you will need assistance at some point and it would be nice to know it is there when that day comes.

You may also want to look closely at what type of claims for success are made for the system in question.

While you do want to get involved with a system that has a proven track record, there is no need to waste your time with any trading system that promises overnight wealth.

While people can and do make impressive livings involved in currency trading, the fact is that they tend to make them over time, not overnight.

Avoid any system that makes what seem to be grandiose claims for success. Focus your attention more on trading systems that will be able to support you for the long term, as you incrementally grow your revenue stream.

Finding a Forex trading system that is reputable, reliable, and will provide you with the support you need can be done.

If you take a little time to evaluate each possibility and make sure the trading system provides everything you need to grow your own success.

It can be helpful to find out what others think of a system before you purchase one.

If you search for Forex forums in search engines, then join a few of these forums, you will soon get an idea of Forex trading systems that have a good reputation, this will help give you confidence before you purchase one.

It should be noted Forex trading involves substantial risk of loss and is not suitable for all investors.

For those that are looking for an exciting way to invest – Forex definitely delivers.  Forex stands for foreign exchange and it is the world’s largest financial market.

Forex is quite different from investing in the NYSE or NASDAQ because Forex takes place at dozens of locations all over the world.  In fact, most traders are day traders that trade from home.  While this form of investing can be risky, it can be extremely profitable.  Forex trading occurs 24 hours per day (except on weekends).  One of the things that make Forex unique is that you aren’t buying a currency or selling a currency, you are actually trading one currency for another.

While Forex seems very easy at first, it can be extremely complicated and risky.  There are tons of tools online that can help you climb the steep learning curve and for those that do, it is possible to make a very, very good living.

Forex is an interesting investment for some because of the amount of leverage one can have.  Some Forex trading brokerages allow their member accounts to leverage the amount of currencies they purchase by 10, 25, 50 times or more.  This means with an initial investment of $1K, you can theoretically control over 50K of currencies in some situations.  While this can lead to large profits, it can also lead to financial ruin if you make the wrong decision on a trade.  One of the ways that many investors learn to trade Forex without risk is to use the systems simulation platform.  Many Forex brokerages have a simulation platform that is identical to the normal platform and uses current, real world data.  This way, if you are just starting out and make a mistake on the simulation, it won’t cost you a dime.

Forex can be extremely fast paced.  While many investors are those that are day traders looking to make a quick buck each day, others trade for the long term, looking for long term trends that are much less riskier and can return much more than a day trade.  Whatever your strategy, Forex can be an excellent way to invest.  It should be noted that almost anyone can trade from their computer and with a limited amount of investment, however before you trade, get to know the system you trade on and the dynamics of the foreign currency market.

In the FOREX market, you can use two distinct types of trading systems. The first type is the mechanical trading system. The mechanical trading system is relatively easy to use because an automated process makes all trade decisions for you. This trading system is based on technical and systematic analysis. Traders call it mechanical trading because they use computers to get trading signals.

At the other side of the spectrum, the discretionary trading system uses gut instincts. It is based on an investor’s experience, knowledge, and intuition. Some investors choose to use mechanical systems to understand current market conditions, and then analyze the details on their own before trading.

Mechanical Trading System
Of course, most FOREX traders use the mechanical trading system, simply because it automates the process and you can set it up with little effort. It is the easiest way to become a FOREX trader because it requires less training and education than discretionary trading. Mechanical trading systems are widely available online and some software is available in stores.

Mechanical trading systems take the human element out of FOREX trading. Through such a system, you have no opportunity to make trading decisions based on greed, gut feel, or bad judgment. Because a wise investor always invests with his head and not with his heart, mechanical trading can help those investors who often base his or her decisions on emotions.

In recent years, the internet has made FOREX trading much easier by providing online trading platforms. The brokerage firm you use will provide one for you. Some brokers have also developed mechanical trading systems that their clients can use to trade. You can buy this separately, or have one provided for you. Your broker may also provide valuable tools like economic calendars, detailed analyses, and current currency charts. If your broker does not provide these to you, you can buy them on your own or find a different brokerage firm to work with.

Discretionary Trading Systems
Even when you opt to use the FOREX mechanical trading system, you should still understand the basics of the FOREX market to become an informed investor. There are various courses and books on becoming a FOREX trader and you should take full advantage of them.

Those with limited knowledge in this area can gain just from testing a broker’s trading software. The trading software can easily teach you terms, how to read charts, and some basic trading theories. Used with a book or online course, you can quickly grasp the principles behind FOREX. An informed trader can therefore use both discretionary and mechanical trading systems to achieve maximum profits.

If you’re interested in entering the FOREX market, carefully consider your choices. It may be best to start off by using mechanical trading systems before deciding of your own. In this way, you can minimize losses and lessen the risk of betting over your head. Once you are familiar and learned, you can start setting up the discretionary system of trading. Stay educated; it will pay off!

There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? These are the answers we will try to answer on this article.

We will first analyze the pros and cons about each system approach.

Mechanical systems

Advantages
This kind of system can be automated and backtested efficiently.
It has very rigid rules. Either, there is a trade or there isn’t.
Mechanical traders are less susceptible to emotions than discretionary traders.

Disadvantages
Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data.
The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same.
A system that worked successfully the past year doesn’t necessary mean it will work this year.

Discretionary systems

Advantages
Discretionary systems are easily adaptable to new market conditions.
Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.

Disadvantages
They cannot be backtested or automated, since there is always a thought decision to be made.
It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won’t play an important role in your system. You only take the trades that your system signals.

If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.

On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.

Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.

I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.

Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:

1.    You need to make sure the Forex trading system you are using totally fits your personality.  Otherwise you will find yourself outguessing your system.
2.    You also need to have some rules and most importantly have the discipline to follow them.
3.    Take your time to build the perfect system for you. It’s not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
4.    Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.)

Forex trading signals that most traders want are selected through shopping for a chart containing useful forex trading indicators. These indicators would work best if a wiser approach is used by the traders to create a trading system that is unique from others.

Forex trading signals provides clearly explained technical indicators to the traders. These signals pertains to price actions which set off either the market entry or market exit, or set off adjustments in any intra-trade types.

A precise mathematical formula being applied to the prices refers to technical indicators. It also displays the intervals of time within the selected periods of prices. So, the charts contain information about technical indicators as well as the prices in the different intervals of time. The data in these charts are always updated depending on its type. Take for instance, a one-minute chart is being updated every after one minute while a sixty-minute chart is updated every after one hour.

If you have understood these intervals and its effects on the technical indicators, then you can start finding the forex trading signals appropriate for you before entering the market.

Potential traders are always looking for easy and clear technical signals. It indicates the right time when a particular trader should enter the market. Remember that forex trading signals are based on a specified chart interval. It is helpful for traders to always observe the chart before entering the market. They can also have an option to use these signals basing from one or more intervals of time to build any entry signal.

If ever you have identified the trade through entry signals, then concentrate next on your exit plans. As a trader, you always have the options of limit exits, exit signals, trailing stops, or fixed stops on the trade.

The trader can also use the forex trading signals when entering a trade to attempt in capturing a reversal. Take for example, if a short swing of a currency pair occurs, you will then capture it earlier as possible because you can accumulate better profit when the swing turns long. This is called the turning points which are excellent signals for market entry and market exits of shorter trades.

Normally, limit exits are preferred by most traders. They are frequently trading using higher percentage, however for only lower pips. Another alternative view that is possible is to use the signals for managing market exits. The signals should be conservative but the exit signals should capture real moves rather than exit limits.

It will be the trader’s personal decision on what type of signals he is going to use. The trader should be committed on whatever decision he has made. The technical indicators should be studied well to learn everything about it. It will help you select the best signals which will work best to your advantage.

These signals can be merged. It can also be implemented along with some parameters for improving its performance and reducing the danger of wrong moves. Take note, forex trading signals are characterized as unique market aspects. Using different signal varieties will provide a good system of balances and checks. It enables the traders to anticipate the market movements and conditions before making their trading decision.

Keep in mind that trading forex is difficult especially if it is done only as part-time. It could be easier if you are using your computer twenty four hours each day. Many independent companies and forex brokers have created trading systems which provide forex signals to its users to know when to sell and buy. The trade executions could be very simple. You can just make a phone call or press a button.

Remember, forex trading signals are operating using a mathematical formula. The signals are sent out through phone or email if the parameters are met. If the signals are received, the user will then decide whether to obtain the signals or not.

There are a great number of available service providers on forex trading signals. However, make sure that you carefully read their reviews. In fact, most service provider’s signals works, the problem lies on the failure of following the system. Even if you haven’t decided when it is the right time to sell and buy, you can be sometimes emotional which will later on distract your business’ right direction. The traders should follow the systems to succeed.

These days everyone is talking about Forex trading and the great opportunity this activity represents for people willing to brake free from the corporate world and start working from home or any where else without losing their current lifestyle and even improving it.

Forex trading has changed dramatically in the last 10 years thanks to the technological advancements of the internet era. With real-time streaming technology and faster and more efficient computer systems, almost anything, from roses to FX trading, is available at the click of a button.

Some of the great reasons why Forex trading is a great way of entering the capital markets is that your trades are all commission-free and it has a low transaction cost. All the best forex brokers have these characteristics and even Mini FX traders (i.e., traders starting with accounts having a capital as low as $250), who are just starting in this field, can buy and sell currencies online always commission-free.

But one thing is to start Forex trading and other very different is becoming a profitable Forex trader. In order to become a profitable trader the new trader will immediately discover the imperative need of having an accurate knowledge of the markets and a good understanding of the forex technical indicators. Concepts as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.

But having a good knowledge of these concepts is not everything you need. Fear is one of the worst enemies of the Forex trader. In order to become a profitable trader it is essential that the person involved in trading understands that he must leave fear aside and stick to the trading plan he has constructed and arranged before, always understanding that losing trades happen to everyone and they are always part of a profitable trading career. A forex trader must learn how to profitable use his stops without heavily compromising the capital in his trading account, i.e., he must play safe but realizing that a calculated risk must be undertaken in order to maximize profits.

In short knowledge is the key to a successful trading career but it also must go along the proper psychological preparation of the trader in order to be able to tame the markets and become a profitable trader.

– Your capital is at risk
Many people who have decided to enter the forex trading should educate themselves first. It is very important to know even the basics of forex trading to gain success, but this is no guarantee, not by a long shot, you need to know more than the basics to even have a fighting chance of succeeding. There are different ways to learn forex trading. You can join online services, enroll in a forex trading school, become an apprentice of a forex trader, or do it alone. However, doing it alone involves a lot of risks especially for beginners.

For novice traders, it is much better to choose the safer ways of learning forex trading. You are going to benefit from experienced instructors who are already trading forex in real times. In this manner, you are being acquainted with the real market conditions. You are given the chance to see the actual processes and decisions which you can later on adopt. Nevertheless, it is your own strategy that will win you up.

There are six simple steps that novice traders can follow to achieve success in the forex markets.

1.    Right attitude. The traders who are successful in trading forex takes on the attitude of doing what it takes to achieve success. This stresses that success lies on the person who are trading forex itself. It does not matter if you read forex trading tip sheets or listen to forex trading guru. It will become invalid if you don’t possess the right attitude for success.

You can conduct experiments on your own for two weeks together with other novice traders. They are often called as turtles. Learning forex trading is avoiding the trap of believing that you can actually gain success by following someone else. Just get the right knowledge and develop a strategy of your own.

2.    Right method. It should involve long term trends. Keep in mind that the trend on big currencies lasts for months or even for years. It is your responsibility to lock yourself into these trends to make huge profits. It is best suggested to use the breakout methods to catch long-term trends. This method is already proven by leading trading systems. Good software is also recommended for use. It allows the trader to test the trading method that was chosen and later on trade it on real times.

You need to know proper charting and mapping. There is already available software that will aid you regarding market moves. It will allow you to calculate the best times for selling or buying when you are able to read forex market charts.

3.    Right discipline. The traders should discipline themselves by strictly following on their developed methods even when losing period’s strikes. It could teach them new techniques on how to survive the forex markets even when downfalls strike.

4.    Right knowledge. The traders can quickly learn the breakout method, however, they should also overcome psychological pitfalls involved in forex trading. It is recommended to read motivational books that mainly focus on this matter.

5.    Take the risks. The common mistake done by most forex traders is trying to restrict the risks. In the end they may suffer great losses because they are being blocked out in the forex market. The trader’s direction is right however the trade does not have enough room for downsides. Always remember that in forex trading risks lays the rewards. There is a difference between rushing in taking risks which are already calculated. It only allows you to wait for the right opportunity.

6.    Trading in isolation. The trader should learn this to keep focused. Remember that if you are open to the views and opinions of others, it may discourage you if you find it very different. It does not necessarily mean you follow the opinion agreed upon by many traders, because most often, many traders acquire losses.

Forex market is considered the largest market in the world. It is operational twenty four hours a day, five days a week. Its processes are been carried out in real times without boundaries. The trader’s success also depends on the right decision making.  Learning forex trading have no barriers and entry points so you need to have better understanding before plunging into business.  Although some people suggest that learning forex while trading is the best, but it is always your decision to choose the best way to learn that will suit your needs.

– Your capital is at risk
Why Forex trading?

This is probably one of the questions that you need a reasonable answer. There are hundreds of investments out there that you can prefer, but why go trading foreign currencies instead?

Forex investment is unique in various aspects.

Its trading volume is relatively huge compared to other market.

It has extreme liquidity or the capability of either buying or selling the currency without causing significant movement in the market price.

It has the largest number and variety of traders.

It is one of the markets that have long trading hours (24 hours each day, except during weekends.

Trading locations are almost everywhere, not just in the United States or major cities of Europe.
There are different factors that affect foreign exchange rate.

Another whooping fact that will make you excited to go on Forex trading: it has an average turnover in traditional foreign exchange market of around $1.88 trillion daily, according to the Triennial Central Bank Survey of the BIS (Bank for International Settlements). Here are the daily averages of turnover on the Forex market for the last 17 years:

$500 billion (April 1989)
$750 billion (April 1992)
$1.18 trillion (April 1995)
$1.48 trillion (April 1998)
$1.16 trillion (April 2001)
$1.88 trillion (April 2004)

From the figures alone, you will notice that the average trend of Forex turnover is increasing. It is estimated to reach as high as 2 to 3 trillion dollars within the next 8 to 10 years, if the number of traders around the world will continue to increase. As a matter of fact, everyone have the chance of getting a substantial slice of the Forex market wealth pie, especially that the Forex trading marketing is now on its automation process.

The concept of automation becomes the new trend to the foreign exchange trading market. The Interbank spot Forex market has also considered switching to the automated method as well.

There are several benefits that a Forex trader can derive from automated Forex trading. Here are some of such benefits and figure out why Forex trading as well as other investments (futures and commodities) prefer the automated process.

Through automated process, transactions can now be done in real time. Although manual systems have existed for quite some time now, it is difficult to achieve such benefit that the automated Forex system can offer to its traders. All of the trades can happen within a few milliseconds and can be a big plus for automated transactions against the manual system. In fact, there are problems that are addressed using automated Forex trading especially if the trader is losing a few times in a row that prevents him from making new trades. Such problem could be addressed using the automatic trading system.

With automated Forex trading, you will have a greater diversification. It means that you can trade in various markets in different time zones at a time. You can execute trades with traders from Singapore or London even it is already 12 midnight in the United States. This benefit allows you a multiple exchange model option. You can use varying trading models to evaluate short-term data. This means that you will be able to predict the trend for a shorter period of time, let us say from fifteen minutes to half an hour.

As previously mentioned, the Forex market is unique because of its extreme liquidity. This liquidity is increased when the market goes automated.

Risk management problems are solved through automated Forex trading. International checks, which are commonly used in making purchases on Forex market, are synchronized through automated technology. Since the transaction in an automated process is now on real time, there is a slim chance that the payments will be delayed, reducing the risk of non-payment by either parties. Although there are problems noted with the use of the automated system, it can be fixed through consistently-updated technologies.

With automated Forex trading market, the prediction of $2-3 trillion average daily turnover within the nest 8 to 10 years can be changed within the next 4 to 5 years. Given the quick yet efficient trades on varying time zones, automated Forex trading will now be among the existing lucrative business around the world.