You can search the Internet, or go to your local library, and find a plethora of information on complicated, hard to understand, currency trading strategies. Though Forex education is important, there are many simple, time-tested Forex trading strategies that can be used immediately and give you profitable results. Profits are, as we all know, the bottom line.
Profiting from Gap Trading
Gap trading is not a new strategy. It's been used in all investment markets for a very long time. To learn this Forex trading technique is relatively easy. Gap trading in an attempt to take advantage of the difference, or "gap," in price between the close of the previous day with the open of the following day. If the open is above the previous day's close, this is commonly referred to as "gapping up.If the open price is below the previous day's close price, this is called "gapping down.If the open is at the same price level, then there was no gap.
Forex Trading and Gaps
Generally, in Forex trading this strategy tends to be ignored; most people feel that as currencies are traded 24 hours a day, there is no true opening or closing prices. That being said, some people maintain that gap trading in Forex trading can be successful 85% of the time. If this is the case, there is money to be made. The question becomes: How can you trade gaps in the Forex market?"
If you ignore the 24-hour time frame associated with Forex trading, and set up an opening and closing time to create an artificial market, you can provide yourself with an open high low close data range. Based on that data range, you would be able to trade gaps. Another Forex trading strategy is basically to ignore trading on Saturday and Sunday, when volume is thin and most of the world is not working. Under this scenario, you establish a closing time on Friday and an opening time on Monday. Based on the gap, you take the appropriate position.
Unlike what you might think, the Forex currency trading strategy for gaps is contrary by nature. That is to say, you do the opposite of what's intuitive. If the price gaps up, you sell. If the price gaps down, you buy.
This forex currency trading strategy works more often than not, and thus, it's a simple process that can generate great profits.
Saturday, December 20, 2008
Easy Steps For Developing A Forex Strategy
There is no successful forex trader out there that hasn't got to where they are without developing their own long term strategy and system for making profits day after day. All businesses work that way, and forex is not an exception. Here are some steps that you need to take to develop a long term strategy.
The time frame of trading: There are a lot of different things you can trade, but what is often overlooked, is how long you hold onto a trade. You could simply be a day trader, or you can hold onto currency for the long term. You need to really sit down and think about what has really worked for you.
Identifying indicators of trends: This is a very nice thing to understand. Being able to see where a currency is going before it is there gives you a tremendous advantage to making a nice profit. I use Forex Killer software to help me identify these trends.
How much are you willing to lose: You need to understand that you're not going to make 100% profitable trades. Some trades will be losers. The key to long term success is maximizing your successes and minimizing your failures. You could make 10 profitable trades and 1 gigantic loss, and you're down in money. You need to assess how much you're willing to lose, so your profitable trades will keep you in the black.
Set an exit after you buy: You need to know when you're going to sell. There's no need to buy and not know when you're going to sell. Setting an exit helps eliminate emotion from a trade. Most people like to ride the wave to see how high the currency can go, but act smart get out at your exit point.
Get yourself forex software: Don't underestimate the power of automated forex software like Forex Killer. This software will analyze all the currency charts and identify profitable trends for you. This is a significant tool help you make profit. Use it.
The time frame of trading: There are a lot of different things you can trade, but what is often overlooked, is how long you hold onto a trade. You could simply be a day trader, or you can hold onto currency for the long term. You need to really sit down and think about what has really worked for you.
Identifying indicators of trends: This is a very nice thing to understand. Being able to see where a currency is going before it is there gives you a tremendous advantage to making a nice profit. I use Forex Killer software to help me identify these trends.
How much are you willing to lose: You need to understand that you're not going to make 100% profitable trades. Some trades will be losers. The key to long term success is maximizing your successes and minimizing your failures. You could make 10 profitable trades and 1 gigantic loss, and you're down in money. You need to assess how much you're willing to lose, so your profitable trades will keep you in the black.
Set an exit after you buy: You need to know when you're going to sell. There's no need to buy and not know when you're going to sell. Setting an exit helps eliminate emotion from a trade. Most people like to ride the wave to see how high the currency can go, but act smart get out at your exit point.
Get yourself forex software: Don't underestimate the power of automated forex software like Forex Killer. This software will analyze all the currency charts and identify profitable trends for you. This is a significant tool help you make profit. Use it.
Choosing The Right Forex Strategy
It is important to choose your Forex trading strategy. Two basic areas of strategy are fundamental analysis and technical analysis. This is the same in the equity market as it is the Forex market. For most Forex traders, the most widely used strategy is technical analysis. The following article is explains how each strategy basically works and how they are used in Forex trading:
Technical Analysis
Since technical analysis is the most common, we’ll start with it. Technical analysts in the Forex market analyze price trends, exactly like in the equity market. There is only one real difference between using it in the equity market and using it in Forex. This difference is that the Forex market is open 24 hours a day, changing the time frame.
On account of this, your technical analysis has to be changed a bit so it can function in the 24 hour Forex market. Generally, the forms of technical analysis used in Forex are:
- The Elliott Waves
- Fibonacci studies
- Parabolic SAR
- Pivot points
To make more accurate predictions, a lot of technical analysts will combine these studies. The most popular combination is Elliott Waves and Fibonacci studies. However, others do choose to create trading systems in an attempt to continually locate related buying and selling conditions.
Fundamental Analysis
Valuing one company is difficulty enough. Imagine valuing an entire country. Because it is often very challenging, fundamental analysis in the Forex market is normally just used to make long-term predictions of trends. Some traders do use it to trade short term, though. There is quite a variety of fundamental indicators of currency value. Some of them are:
- Retail Sales
- Purchasing Managers Index (PMI)
- Non-farm Payrolls
- Consumer Price Index (CPI)
- Durable goods
However, there are more fundamental factors that you have to keep an eye on than just these. A lot of different meetings are available where you can get quotes and commentaries that sometimes affect the markets just as much as the reports. In these meetings, you can discuss inflation, interest rates, and other matters that can have an influence on the Forex market.
Merely taking a look at commentary and reading reports can be very beneficial to Forex fundamental analysts in grasping a better comprehension of the long-term market trends as well as help short-term traders to survive tremendous fluctuations in the market.
Choosing Your Strategy
Choosing a strategy and working on it until it is perfected down to the details is how most successful, experienced traders operate. There are many options for your style and methods. Some traders will concentrate on one certain calculation or study, and others focus on a broader analysis of trends. A combination of technical and fundamental analysis is what most professional Forex traders will advise. But everything is up to your decision and what you think fits your way of trading best.
A great way to develop your individual strategy is to create a demo account and trade “paper money” until you get the hang of it. This way you don’t have to risk your money in an investment until you are absolutely sure that you know what you are doing.
Because the Forex market is the largest in the world and the number of traders keeps increasing, it is crucial that you make sure you know your trading strategy and are ready to execute it.
Technical Analysis
Since technical analysis is the most common, we’ll start with it. Technical analysts in the Forex market analyze price trends, exactly like in the equity market. There is only one real difference between using it in the equity market and using it in Forex. This difference is that the Forex market is open 24 hours a day, changing the time frame.
On account of this, your technical analysis has to be changed a bit so it can function in the 24 hour Forex market. Generally, the forms of technical analysis used in Forex are:
- The Elliott Waves
- Fibonacci studies
- Parabolic SAR
- Pivot points
To make more accurate predictions, a lot of technical analysts will combine these studies. The most popular combination is Elliott Waves and Fibonacci studies. However, others do choose to create trading systems in an attempt to continually locate related buying and selling conditions.
Fundamental Analysis
Valuing one company is difficulty enough. Imagine valuing an entire country. Because it is often very challenging, fundamental analysis in the Forex market is normally just used to make long-term predictions of trends. Some traders do use it to trade short term, though. There is quite a variety of fundamental indicators of currency value. Some of them are:
- Retail Sales
- Purchasing Managers Index (PMI)
- Non-farm Payrolls
- Consumer Price Index (CPI)
- Durable goods
However, there are more fundamental factors that you have to keep an eye on than just these. A lot of different meetings are available where you can get quotes and commentaries that sometimes affect the markets just as much as the reports. In these meetings, you can discuss inflation, interest rates, and other matters that can have an influence on the Forex market.
Merely taking a look at commentary and reading reports can be very beneficial to Forex fundamental analysts in grasping a better comprehension of the long-term market trends as well as help short-term traders to survive tremendous fluctuations in the market.
Choosing Your Strategy
Choosing a strategy and working on it until it is perfected down to the details is how most successful, experienced traders operate. There are many options for your style and methods. Some traders will concentrate on one certain calculation or study, and others focus on a broader analysis of trends. A combination of technical and fundamental analysis is what most professional Forex traders will advise. But everything is up to your decision and what you think fits your way of trading best.
A great way to develop your individual strategy is to create a demo account and trade “paper money” until you get the hang of it. This way you don’t have to risk your money in an investment until you are absolutely sure that you know what you are doing.
Because the Forex market is the largest in the world and the number of traders keeps increasing, it is crucial that you make sure you know your trading strategy and are ready to execute it.
A Forex Strategy That You Must Use
There are numerous strategies available to allow you to trade in the forex exchange. Some of these strategies work well, others not so well. This article details one strategy that works well.
This strategy has to do with following the trends. Professional forex traders say the trend is your friend, until it ends. Here is an extremely short-term trading strategy that follows the trend. This trading strategy usually has profits of about 40 pips per trade.
The foreign currencies often have dynamic price changes immediately after news stories that pertain to those currencies have been released. These news stories report on various economic metrics, such as the CPI, unemployment, etc. There are economic news stories like these released weekly.
How can you capitalize on this news? As I stated above, the forex market often moves significantly after these news stories. This movement can be 30, 40, 50 or even more pips, immediately. This move can be either up or down. So how do you know if you should be long or short on any particular currency for this strategy? A few seconds after the news comes out, determine which way the currency trend is going. If it is trending up, go long that currency. After you establish your position on this currency, set a tight stop-loss of 10 pips below the current price. Soon the currency will likely move 30, 40 or 50 pips. Once it has, close out your position. If conversely, the currency has trended downward more than 5 pips, then short the currency. Follow this strategy and you will be rewarded with controlled risk.
This strategy has to do with following the trends. Professional forex traders say the trend is your friend, until it ends. Here is an extremely short-term trading strategy that follows the trend. This trading strategy usually has profits of about 40 pips per trade.
The foreign currencies often have dynamic price changes immediately after news stories that pertain to those currencies have been released. These news stories report on various economic metrics, such as the CPI, unemployment, etc. There are economic news stories like these released weekly.
How can you capitalize on this news? As I stated above, the forex market often moves significantly after these news stories. This movement can be 30, 40, 50 or even more pips, immediately. This move can be either up or down. So how do you know if you should be long or short on any particular currency for this strategy? A few seconds after the news comes out, determine which way the currency trend is going. If it is trending up, go long that currency. After you establish your position on this currency, set a tight stop-loss of 10 pips below the current price. Soon the currency will likely move 30, 40 or 50 pips. Once it has, close out your position. If conversely, the currency has trended downward more than 5 pips, then short the currency. Follow this strategy and you will be rewarded with controlled risk.
Tuesday, May 20, 2008
Australian Dollar top
Over last few weeks, some of the strongest behaving currencies have experienced measurable corrections against US Dollar. After marking all time highs, Euro pulled back about 700 pips and Swiss Franc bounced almost 1000 pips, Japanese Yen lost 900 pips. Even high yielding New Zealand Dollar slipped from a high of over 0.8200 to just above 0.7600. These currencies have joined British Pound and Canadian Dollar, which reached their respective highs last year.
Looks like all major currencies have undergone some correction, in cross trading with USD. There is one notable exception- Australian Dollar. Contrary to others, AUD not only didn't loss ground, but managed to reached a new multi year high. As of this writing, mid May 2008, AUD-USD is at about 0.9560. While this is not an all time high, it is a highest level seen since early 1980's, or 25 years.
Why is that? Why is AUD acting so strong and is it sustainable? We can always discuss high commodities prices, but most likely reason is interest rate differential. Australian Dollar is probably the last "carry trade" currently under way. Reserve Bank of Australia raised its benchmark Cash Rate Target to 7.25% as recently as in March 2008. No other major central bank has done it this year. They are either cutting rates or staying put. Even Reserve Bank of New Zealand has not changed its rates since July 2007. Almost a year.
It is very unlikely, that Australian Central Bank will stay the course. One should expect a pause or even longer term halt in rates hike. No rate cuts are necessary, just a non action. Combined with projected softer prices of major commodities, that alone should be enough to see AUD retreat against USD and perhaps even all other majors. Especially if Crude Oil undergoes a long overdue price correction.
What is next? Should one go ahead and start shorting AUD? Not exactly. Picking the exact top ( or bottom for that matter) is considered by many a fool's game. We would expect to see some price acceleration just before the top. If recent moves in other currencies were any guide, we might witness 200-300 pips daily move to top off the run. With current quotes of over 0.9500, it's not out of realm of possibility to see a price spike to parity or close to. That is extremely important psychological level. Whatever the ultimate top, it might come as soon as 2-3 weeks from now.
Instead of guessing where the top might happen, it would be more productive to place sell order just under recent low. At this writing that level is around 0.9300. Should the up move continue, 4H chart will provide better entry points, more exact. Daily and weekly charts indicate a probable move to 0.8600-0.8500, taking 6-8 moths to complete. If during this time USD proves that its recent strength is for real, our down target will be farther revised.
Current situation is very interesting and potentially presenting great trading opportunity. Even perennial USD bears, as most people seem to be these days, should recognize, that in decade long moves, there is room to be profitable on both side of the market. This just might be one of these times.
About the Author
Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com.
Looks like all major currencies have undergone some correction, in cross trading with USD. There is one notable exception- Australian Dollar. Contrary to others, AUD not only didn't loss ground, but managed to reached a new multi year high. As of this writing, mid May 2008, AUD-USD is at about 0.9560. While this is not an all time high, it is a highest level seen since early 1980's, or 25 years.
Why is that? Why is AUD acting so strong and is it sustainable? We can always discuss high commodities prices, but most likely reason is interest rate differential. Australian Dollar is probably the last "carry trade" currently under way. Reserve Bank of Australia raised its benchmark Cash Rate Target to 7.25% as recently as in March 2008. No other major central bank has done it this year. They are either cutting rates or staying put. Even Reserve Bank of New Zealand has not changed its rates since July 2007. Almost a year.
It is very unlikely, that Australian Central Bank will stay the course. One should expect a pause or even longer term halt in rates hike. No rate cuts are necessary, just a non action. Combined with projected softer prices of major commodities, that alone should be enough to see AUD retreat against USD and perhaps even all other majors. Especially if Crude Oil undergoes a long overdue price correction.
What is next? Should one go ahead and start shorting AUD? Not exactly. Picking the exact top ( or bottom for that matter) is considered by many a fool's game. We would expect to see some price acceleration just before the top. If recent moves in other currencies were any guide, we might witness 200-300 pips daily move to top off the run. With current quotes of over 0.9500, it's not out of realm of possibility to see a price spike to parity or close to. That is extremely important psychological level. Whatever the ultimate top, it might come as soon as 2-3 weeks from now.
Instead of guessing where the top might happen, it would be more productive to place sell order just under recent low. At this writing that level is around 0.9300. Should the up move continue, 4H chart will provide better entry points, more exact. Daily and weekly charts indicate a probable move to 0.8600-0.8500, taking 6-8 moths to complete. If during this time USD proves that its recent strength is for real, our down target will be farther revised.
Current situation is very interesting and potentially presenting great trading opportunity. Even perennial USD bears, as most people seem to be these days, should recognize, that in decade long moves, there is room to be profitable on both side of the market. This just might be one of these times.
About the Author
Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com.
Friday, May 16, 2008
Forex Investors Watch Out- Here Are 4 Easy Money Making Tips
by John J Callingham
To be a successful Forex trader, you need to be well versed with the basic strategies of controlling the risks involved. The Forex market functions very differently from other financial markets in terms of the speed and volatility of the market concerned. The enormous size of the dedicated online and offline money exchange market is not comparable to anything else in the financial world. In fact, nothing or no one controls the Forex market. It is uncontrollable! However, below are 4 easy money making tips for the dedicated marketer:
* Do your own research. Forex is an individual, factor-less, money market! Its fundamentals are similar to any other speculative business. The increase in the risk factor means you have a higher chance for better profits. It is a known fact that the currency market is not only highly speculative, but also very volatile in nature. The standing of a particular currency changes in a matter of minutes, hours and days. The unpredictable nature of currency attracts and leads the investor to trade and invest. As such, when trading in the Forex market, it is very essential to be well informed and updated with the latest- second-wise updates in the market. It pays to conduct your own research.
* Decide on how much you intend to earn and lose. Most people who enter the Forex arena rarely have a set limit of earning. However, it is very important to define how much you could risk as a loss. When you terminate or exit a position in the market, you need to understand the risk management issues that rule your daily transactions. You need to study and analyze unexpected corrections and variations in the foreign exchange rates. You should always balance possible profits with likely loss.
* Always limit the orders. Remember, if you are short, the system will not allow you beyond a limit order below the current market price. Similarly, if you are long, the system will only allow an order above. When you limit your orders, it helps you to discipline your trades and most likely you are going to do better.
* Learn from the experts. You should take time to learn, from the professional traders, if possible, on how to control risk by capping losses. Stop orders, also known as loss orders, enable you to set the exit point. The general rule of thumb states that you should set the stop orders closer to the opening price than the limit orders. The stop and limit placement depends on the risk-adversity you have.
Trading in foreign currencies is potentially profitable if you stick to the rules of the market as you learn as much as possible from the experienced investors. You should venture into the Forex market only after you seriously consider the desired investment, gains and losses that you expect from your trading. So before you decide how and where to invest in, do consider the above 4 steps carefully, and you should be well on your way to becoming a successful Forex trader!
About the Author
John Callingham is an authority on Forex Trading providing valuable advice at http://www.forexsimpletrading.com where you can learn about forex currency trading. Click Here to gain FREE access to his Forex Trading secrets when you sign up for his Forex Trading newsletter.
To be a successful Forex trader, you need to be well versed with the basic strategies of controlling the risks involved. The Forex market functions very differently from other financial markets in terms of the speed and volatility of the market concerned. The enormous size of the dedicated online and offline money exchange market is not comparable to anything else in the financial world. In fact, nothing or no one controls the Forex market. It is uncontrollable! However, below are 4 easy money making tips for the dedicated marketer:
* Do your own research. Forex is an individual, factor-less, money market! Its fundamentals are similar to any other speculative business. The increase in the risk factor means you have a higher chance for better profits. It is a known fact that the currency market is not only highly speculative, but also very volatile in nature. The standing of a particular currency changes in a matter of minutes, hours and days. The unpredictable nature of currency attracts and leads the investor to trade and invest. As such, when trading in the Forex market, it is very essential to be well informed and updated with the latest- second-wise updates in the market. It pays to conduct your own research.
* Decide on how much you intend to earn and lose. Most people who enter the Forex arena rarely have a set limit of earning. However, it is very important to define how much you could risk as a loss. When you terminate or exit a position in the market, you need to understand the risk management issues that rule your daily transactions. You need to study and analyze unexpected corrections and variations in the foreign exchange rates. You should always balance possible profits with likely loss.
* Always limit the orders. Remember, if you are short, the system will not allow you beyond a limit order below the current market price. Similarly, if you are long, the system will only allow an order above. When you limit your orders, it helps you to discipline your trades and most likely you are going to do better.
* Learn from the experts. You should take time to learn, from the professional traders, if possible, on how to control risk by capping losses. Stop orders, also known as loss orders, enable you to set the exit point. The general rule of thumb states that you should set the stop orders closer to the opening price than the limit orders. The stop and limit placement depends on the risk-adversity you have.
Trading in foreign currencies is potentially profitable if you stick to the rules of the market as you learn as much as possible from the experienced investors. You should venture into the Forex market only after you seriously consider the desired investment, gains and losses that you expect from your trading. So before you decide how and where to invest in, do consider the above 4 steps carefully, and you should be well on your way to becoming a successful Forex trader!
About the Author
John Callingham is an authority on Forex Trading providing valuable advice at http://www.forexsimpletrading.com where you can learn about forex currency trading. Click Here to gain FREE access to his Forex Trading secrets when you sign up for his Forex Trading newsletter.
Thursday, May 8, 2008
How To Skyrocket Your Profit With 3 Simple Forex Trading Techniques
By Greg F. Morris
If you are looking for simple ways to increase your Forex trading profit, then you should continue reading this article. In this article, we will cover 3 simple Forex trading techniques - candlestick analysis, support and resistance theory and looking at the historical trend. After reading this article, you should be able to skyrocket your profit by several folds.
The first Forex analysis technique that you need to know is candlestick analysis. The Japanese candlestick is very important in determining the current competition between the buyers and sellers, and which side is gaining the upperhand. A standard Japanese candlestick chart consists of 2 kinds of candlestick - hollow and real body. The upper shadow of the body is the high price and the lower shadow is the low price. By referring to specific Japanese candlestick indicators such as doji, handman, shooting star et cetera, you will be able to understand the current market situation, thus able to make the correct decision to reap short/long term benefit.
Another Forex trading technique that you should learn is applying the support and resistance theory. The theory suggests that once the price passes a resistance level, that particular level will turn into support level. By applying this theory and using the fibonacci sequence (retracment and extension level), you will be able to make the right decision to go long or so short at the best price.
Other than the Forex trading techniques above, it is vital that you look back and check the historical trend of the currency pair. By looking at the historical trend of the currency pair and by using moving average curve, you should be able to predict the long term price. The prediction can be improved by using a Forex prediction software that can help you to analyze the data more accurately.
In conclusion, by combining the first 2 Forex trading techniques to gain short term profit and using the third technique to search for possible long term profit, you should be able to skyrocket your Forex trading profit easily. Remember, it is easy to win in Forex market, but you will need to be smart and have great technical skill.
Currently, I'm provding a free 7 days Forex enrichment course. Inexperienced or experienced Forex traders are welcome to join and share the online Forex currency trading info in my course. People who attend my course will have the opportunity to have their hands on the Forex signal trading system that is currently used by my team. You can reserve your place in my course in my Forex Mentor website to get the our Forex Currency Trading Software
Article Source: http://EzineArticles.com/?expert=Greg_F._Morris
If you are looking for simple ways to increase your Forex trading profit, then you should continue reading this article. In this article, we will cover 3 simple Forex trading techniques - candlestick analysis, support and resistance theory and looking at the historical trend. After reading this article, you should be able to skyrocket your profit by several folds.
The first Forex analysis technique that you need to know is candlestick analysis. The Japanese candlestick is very important in determining the current competition between the buyers and sellers, and which side is gaining the upperhand. A standard Japanese candlestick chart consists of 2 kinds of candlestick - hollow and real body. The upper shadow of the body is the high price and the lower shadow is the low price. By referring to specific Japanese candlestick indicators such as doji, handman, shooting star et cetera, you will be able to understand the current market situation, thus able to make the correct decision to reap short/long term benefit.
Another Forex trading technique that you should learn is applying the support and resistance theory. The theory suggests that once the price passes a resistance level, that particular level will turn into support level. By applying this theory and using the fibonacci sequence (retracment and extension level), you will be able to make the right decision to go long or so short at the best price.
Other than the Forex trading techniques above, it is vital that you look back and check the historical trend of the currency pair. By looking at the historical trend of the currency pair and by using moving average curve, you should be able to predict the long term price. The prediction can be improved by using a Forex prediction software that can help you to analyze the data more accurately.
In conclusion, by combining the first 2 Forex trading techniques to gain short term profit and using the third technique to search for possible long term profit, you should be able to skyrocket your Forex trading profit easily. Remember, it is easy to win in Forex market, but you will need to be smart and have great technical skill.
Currently, I'm provding a free 7 days Forex enrichment course. Inexperienced or experienced Forex traders are welcome to join and share the online Forex currency trading info in my course. People who attend my course will have the opportunity to have their hands on the Forex signal trading system that is currently used by my team. You can reserve your place in my course in my Forex Mentor website to get the our Forex Currency Trading Software
Article Source: http://EzineArticles.com/?expert=Greg_F._Morris
Tuesday, May 6, 2008
You can Exit your Forex Trading Transactions at the Best Price Levels
by David Lloyd
We are going to cover what we regard as the most challenging part of Forex trading: - When to exit a Forex trade. In preceding articles in this series on no stop, hedged Forex trading we covered "Currency trading without stops" and "Currency trading not caring which way the price moves".
How often have you exited a Forex trade positively and then looked on as the price travelled another 100 pips in the same direction? How often have you watched as the price retraced all the way back to your entry or even beyond after you tried to squeeze the last 5 pips out of a good Forex deal? Knowing when to cash in a forex trade, one of the most challenging aspects of Forex trading.
When you enter a Forex trade all the trading signals are aligned and you can tick all entry criteria on your checklist. That is why the entry is the easy part. You are entering on your terms. When the price takes off in its intended direction it enters a mystery zone where you are dependent of the volatility of the move for the Forex transaction to succeed. You very seldom have reference points. Every trader is unsure of when to cash in Forex transactions. The price tends to revisit previous support and resistance levels which makes this even more challenging.
Negative deals make things even worse. You are 30 pips down. Do you close the deal at a loss or do you wait for a small retracement to reduce your loss? Surely the price has gone as far as it can go?
It can't go more negative? Then the transaction goes even more negative. You start thinking: "I've lost so much another 20 pips can't hurt I'll give it more room". And so on. Many Forex traders can identify with this.
The problem is eliminated by grid trading. You would divide the expected trading range for a particular currency for the next say 6 months (say 4000 pips) into grid levels with gaps of say 200 pips. The guesswork of when to cash in your Forex deals has been eliminated. Every time the price touches a grid level you cash in your positive deals. It is as simple as that. When the result of all your deals add up to a profit you would close them all and start again. How simple can trading be? No ifs, buts or maybe's. This is a reason why no Forex charts are required. You trade price levels, with no stops (Because each price level has a buy and sell active) and you don't care about which direction the price moves.
This also answers our question of when to enter a Forex trading transaction. You would use exactly the same price levels that you use to exit profitable deals (as determined above) to enter new deals when using your no stop, hedged, Forex trading grid system strategy. The process of determining the price levels is very important as some trading groups are reporting gains of one thousand percent a year on capital employed using this Forex trading technique.
This is only one example of a way of finding a grid structure. Future article on grid levels will give other examples of ways grid levels can be determined. For more information (which is freely available) on this great trading system why not search the web for "no stop Forex trading".
This article is part of a series of seven articles on the no stop, hedged, Forex trading technique which will be posted in this article directory on an ongoing basis. Make sure that you do not miss any of them.
About the Author
Learn how you can make money from Forex Trading by tapping into David Lloyd's experience by visiting http://www.forextrading-alerts.com/GRIDSystem.html or http://www.forextradersupportservices.com/GRIDSystem.html David and Mary McArthur have written a number of articles on the no stop, hedged, forex trading grid system.
We are going to cover what we regard as the most challenging part of Forex trading: - When to exit a Forex trade. In preceding articles in this series on no stop, hedged Forex trading we covered "Currency trading without stops" and "Currency trading not caring which way the price moves".
How often have you exited a Forex trade positively and then looked on as the price travelled another 100 pips in the same direction? How often have you watched as the price retraced all the way back to your entry or even beyond after you tried to squeeze the last 5 pips out of a good Forex deal? Knowing when to cash in a forex trade, one of the most challenging aspects of Forex trading.
When you enter a Forex trade all the trading signals are aligned and you can tick all entry criteria on your checklist. That is why the entry is the easy part. You are entering on your terms. When the price takes off in its intended direction it enters a mystery zone where you are dependent of the volatility of the move for the Forex transaction to succeed. You very seldom have reference points. Every trader is unsure of when to cash in Forex transactions. The price tends to revisit previous support and resistance levels which makes this even more challenging.
Negative deals make things even worse. You are 30 pips down. Do you close the deal at a loss or do you wait for a small retracement to reduce your loss? Surely the price has gone as far as it can go?
It can't go more negative? Then the transaction goes even more negative. You start thinking: "I've lost so much another 20 pips can't hurt I'll give it more room". And so on. Many Forex traders can identify with this.
The problem is eliminated by grid trading. You would divide the expected trading range for a particular currency for the next say 6 months (say 4000 pips) into grid levels with gaps of say 200 pips. The guesswork of when to cash in your Forex deals has been eliminated. Every time the price touches a grid level you cash in your positive deals. It is as simple as that. When the result of all your deals add up to a profit you would close them all and start again. How simple can trading be? No ifs, buts or maybe's. This is a reason why no Forex charts are required. You trade price levels, with no stops (Because each price level has a buy and sell active) and you don't care about which direction the price moves.
This also answers our question of when to enter a Forex trading transaction. You would use exactly the same price levels that you use to exit profitable deals (as determined above) to enter new deals when using your no stop, hedged, Forex trading grid system strategy. The process of determining the price levels is very important as some trading groups are reporting gains of one thousand percent a year on capital employed using this Forex trading technique.
This is only one example of a way of finding a grid structure. Future article on grid levels will give other examples of ways grid levels can be determined. For more information (which is freely available) on this great trading system why not search the web for "no stop Forex trading".
This article is part of a series of seven articles on the no stop, hedged, Forex trading technique which will be posted in this article directory on an ongoing basis. Make sure that you do not miss any of them.
About the Author
Learn how you can make money from Forex Trading by tapping into David Lloyd's experience by visiting http://www.forextrading-alerts.com/GRIDSystem.html or http://www.forextradersupportservices.com/GRIDSystem.html David and Mary McArthur have written a number of articles on the no stop, hedged, forex trading grid system.
How you can make money trading the Forex trading Grid system
by David Lloyd
We are now coming to the heart of how to make money using the no stop, hedged, forex trading strategy. In the previous articles in this series we discussed trading without stops, not being concerned about which way the price goes and places to cash in on profitable trades. We are now going to explain how it is possible to make money buying and selling at the same time using the grid structure.
One should always be able to cash in at a gain no matter which way the market moves when trading the no stop, hedged grid trading system. The only way this is logically possible is that one would have a buy and a sell transaction active at the same time. This sounds like trading suicide to most traders but let's take a closer look.
Let's assume that a forex trader starts trading with a sell (sell 1) and a buy (buy 1) when the price is at a level of say 1.0100. The price then moves to level 1.0200. The buy transaction will then show a gain of 100 pips. The sell will be negative by 100 pips. At this stage we would close our positive transacion and add 100 pips to our account. The sell transaction now has a loss of 100 pips. The grid system requires one to make sure that the trader can cash in on any movement in the market. To do this one would again enter into a sell (sell 2) and a buy (buy 2) deal at this level (level 1.0200).
Now for convenience let's assume that the price moves back to level 1.0100 (the starting point).
The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is carrying a loss of -100 pips. According to the rule of cashing in positive deals at grid levels you would close the sell (sell 2) at a gain of 100 pips which you can now add to your account. That brings the total cashed in at this point to 200 pips (buy 1 and sell 2). The first sell in now on level 1 and still active.0200 where it was -100 to level 1.0100 where it is now breaking even.
The four Forex trading deals now magically show a gain when added together:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. The gives a total profit of 100 pips. We can own cash in all our deals and celebrate as we have made a profit of 100 pips.
Please make sure that you are comfortable with the above calculations. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept.
This formation is the 100% retracement formation where the price moves up to a grid level and then returns back to the starting grid level and results in a nice gain for the forex trader. There are many other market movements that turn this strange "buy and sell at the same time" activity into gains. The next article will cover the 50% retracement formation which produces the same amount of profit.
There will be much more on the no stop, hedged grid trading system in future articles in this directory. Don't miss them.
About the Author
If you have missed any of the previous articles on no stop, hedged, forex trading using the grid system please contact the authors David Lloyd and Mary McArthur at http://www.forextradersupportservices.com/GRIDSystem.html or for a free course showing you how to double your trading account in 3 trades go to http://www.expert-4x.com We look forward to any feedback, questions or comments on this article.
We are now coming to the heart of how to make money using the no stop, hedged, forex trading strategy. In the previous articles in this series we discussed trading without stops, not being concerned about which way the price goes and places to cash in on profitable trades. We are now going to explain how it is possible to make money buying and selling at the same time using the grid structure.
One should always be able to cash in at a gain no matter which way the market moves when trading the no stop, hedged grid trading system. The only way this is logically possible is that one would have a buy and a sell transaction active at the same time. This sounds like trading suicide to most traders but let's take a closer look.
Let's assume that a forex trader starts trading with a sell (sell 1) and a buy (buy 1) when the price is at a level of say 1.0100. The price then moves to level 1.0200. The buy transaction will then show a gain of 100 pips. The sell will be negative by 100 pips. At this stage we would close our positive transacion and add 100 pips to our account. The sell transaction now has a loss of 100 pips. The grid system requires one to make sure that the trader can cash in on any movement in the market. To do this one would again enter into a sell (sell 2) and a buy (buy 2) deal at this level (level 1.0200).
Now for convenience let's assume that the price moves back to level 1.0100 (the starting point).
The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is carrying a loss of -100 pips. According to the rule of cashing in positive deals at grid levels you would close the sell (sell 2) at a gain of 100 pips which you can now add to your account. That brings the total cashed in at this point to 200 pips (buy 1 and sell 2). The first sell in now on level 1 and still active.0200 where it was -100 to level 1.0100 where it is now breaking even.
The four Forex trading deals now magically show a gain when added together:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. The gives a total profit of 100 pips. We can own cash in all our deals and celebrate as we have made a profit of 100 pips.
Please make sure that you are comfortable with the above calculations. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept.
This formation is the 100% retracement formation where the price moves up to a grid level and then returns back to the starting grid level and results in a nice gain for the forex trader. There are many other market movements that turn this strange "buy and sell at the same time" activity into gains. The next article will cover the 50% retracement formation which produces the same amount of profit.
There will be much more on the no stop, hedged grid trading system in future articles in this directory. Don't miss them.
About the Author
If you have missed any of the previous articles on no stop, hedged, forex trading using the grid system please contact the authors David Lloyd and Mary McArthur at http://www.forextradersupportservices.com/GRIDSystem.html or for a free course showing you how to double your trading account in 3 trades go to http://www.expert-4x.com We look forward to any feedback, questions or comments on this article.
Sunday, May 4, 2008
Succeed with No Stop Forex Trading
by Mary McArthur
Hedged, No Stop, Forex Grid system trading ("the No Stop system") is one of the most misunderstood techniques in forex trading. I am going to describe the No Stop system as best I can in the limited space available. There is a series of 7 other articles describing the elements below in greater detail.
There are many hedged systems around and the No Stop system below is one that is being traded profitably. The No Stop system is an investment technique which creates favourable dollar cost averaging on all transactions entered into. For this reason the technique is too much of a paradigm shift for most conventional traders who like charts, support and resistance and indicators.
It is strictly speaking, it is not a trading technique. It has however become very popular as a trading technique because of the short term gains that can be made. The No Stop system trades without stops. No stop loss orders are used at all except for when a group of transactions have a positive result and we want to liquidate the entire group of transactions at a net gain. Because the No Stop system cashes in its transactions regularly it becomes a trend following No Stop system too. There is no need for charts when using this No Stop system as we use predetermined price levels to cash in transactions positively (The No Stop system loves price spikes).
Transactions can or should be slow at a rate of about 3 to 4 a week. As price levels are determined well in advance orders can be placed well in advance so the No Stop system takes very little supervision. The technique is highly systematic and can easy be converted into an automatic trading system or expert advisor very easily.
The No Stop system is always in a sell and a buy at the same time and therefore can cash in on any move the market makes. Being in a sell and a buy at the same time also created a hedge. Predetermined cash in levels create a grid of price levels there positive transactions will be cashed in continuously until the group of transactions are profitable.
In simple terms you will enter the market at a particular level with an active bay and a sell. You would have predetermined levels at which you would cash in positive transactions. For instance one could decide to cash in on every 100pip (grid gap) move made in the market. When the price moves 100 pips you would cash in your positive transaction and then enter into another buy and sell transaction at that point. This process will continue until the total for the group of transaction is positive and then you would liquidate. You would then start again - as simple as that. No need for charts. Patience is the biggest virtue required.
Money is made when the price revisits some of the cash in levels over and over and over again (which it does).
In the above example should the price return to the starting level (after moving 100 pips) the group of 4 transactions in total will be positive and you would then cash in the unwanted transactions, bank your profits and start again. The big danger of this No Stop system is strong trends with no or very few retracements. You will lose money in trends. There are however specific techniques to manage and contain these losses.
The biggest one is to start with a big grid gap. What is a trend on a 5 minute chart could be a small spike on a daily or weekly chart. Grid gaps of between 150 pips and 300 pips have been found to work well.
One could also vary the grid sizes relative to the trend to reduce the number of unhedged transaction. For example have grid gaps of 100, 200, 300 etc.
The other way is to vary the number of lots used when entering into the buy and sell transactions at a particular cash in point to ensure balanced hedging. Trends tend to scare people away from this technique but if one views this as an investment technique and not a trading technique the trends could have a reduced impact on the annual return on investment. The market only trends 20% of the time any way. Talking about return on investment some current trading groups are showing returns of between 200% p.a. and 1000% p.a. on current investment levels. There are many trading records are available to back this up. The longer you trade this No Stop system the lower your risk and the better your return. That said, you can lose more than just your boots (your whole trading account) if you treat this No Stop system with disrespect.
Success factors for this No Stop system are: - Selecting appropriate grid sizes, currency pairs, lot sizes, cash in times and an investment mentality. All very easy, if you have done it for a few years.
This No Stop system is not for everybody however, and is not the best Forex system since sliced bread, but is does very nicely for some traders, thank you very much. It is important to know about this system as using its principles could help your conventional trading. For freely available information on this No Stop system search the net for "no stop forex trading"
About the Author
Mary McArthur is a Trader associated with www.expert-4x.com She works with http://www.forextradersupportservices.com providing educational input. She is considered an expert of the hedged grid system.
Hedged, No Stop, Forex Grid system trading ("the No Stop system") is one of the most misunderstood techniques in forex trading. I am going to describe the No Stop system as best I can in the limited space available. There is a series of 7 other articles describing the elements below in greater detail.
There are many hedged systems around and the No Stop system below is one that is being traded profitably. The No Stop system is an investment technique which creates favourable dollar cost averaging on all transactions entered into. For this reason the technique is too much of a paradigm shift for most conventional traders who like charts, support and resistance and indicators.
It is strictly speaking, it is not a trading technique. It has however become very popular as a trading technique because of the short term gains that can be made. The No Stop system trades without stops. No stop loss orders are used at all except for when a group of transactions have a positive result and we want to liquidate the entire group of transactions at a net gain. Because the No Stop system cashes in its transactions regularly it becomes a trend following No Stop system too. There is no need for charts when using this No Stop system as we use predetermined price levels to cash in transactions positively (The No Stop system loves price spikes).
Transactions can or should be slow at a rate of about 3 to 4 a week. As price levels are determined well in advance orders can be placed well in advance so the No Stop system takes very little supervision. The technique is highly systematic and can easy be converted into an automatic trading system or expert advisor very easily.
The No Stop system is always in a sell and a buy at the same time and therefore can cash in on any move the market makes. Being in a sell and a buy at the same time also created a hedge. Predetermined cash in levels create a grid of price levels there positive transactions will be cashed in continuously until the group of transactions are profitable.
In simple terms you will enter the market at a particular level with an active bay and a sell. You would have predetermined levels at which you would cash in positive transactions. For instance one could decide to cash in on every 100pip (grid gap) move made in the market. When the price moves 100 pips you would cash in your positive transaction and then enter into another buy and sell transaction at that point. This process will continue until the total for the group of transaction is positive and then you would liquidate. You would then start again - as simple as that. No need for charts. Patience is the biggest virtue required.
Money is made when the price revisits some of the cash in levels over and over and over again (which it does).
In the above example should the price return to the starting level (after moving 100 pips) the group of 4 transactions in total will be positive and you would then cash in the unwanted transactions, bank your profits and start again. The big danger of this No Stop system is strong trends with no or very few retracements. You will lose money in trends. There are however specific techniques to manage and contain these losses.
The biggest one is to start with a big grid gap. What is a trend on a 5 minute chart could be a small spike on a daily or weekly chart. Grid gaps of between 150 pips and 300 pips have been found to work well.
One could also vary the grid sizes relative to the trend to reduce the number of unhedged transaction. For example have grid gaps of 100, 200, 300 etc.
The other way is to vary the number of lots used when entering into the buy and sell transactions at a particular cash in point to ensure balanced hedging. Trends tend to scare people away from this technique but if one views this as an investment technique and not a trading technique the trends could have a reduced impact on the annual return on investment. The market only trends 20% of the time any way. Talking about return on investment some current trading groups are showing returns of between 200% p.a. and 1000% p.a. on current investment levels. There are many trading records are available to back this up. The longer you trade this No Stop system the lower your risk and the better your return. That said, you can lose more than just your boots (your whole trading account) if you treat this No Stop system with disrespect.
Success factors for this No Stop system are: - Selecting appropriate grid sizes, currency pairs, lot sizes, cash in times and an investment mentality. All very easy, if you have done it for a few years.
This No Stop system is not for everybody however, and is not the best Forex system since sliced bread, but is does very nicely for some traders, thank you very much. It is important to know about this system as using its principles could help your conventional trading. For freely available information on this No Stop system search the net for "no stop forex trading"
About the Author
Mary McArthur is a Trader associated with www.expert-4x.com She works with http://www.forextradersupportservices.com providing educational input. She is considered an expert of the hedged grid system.
Saturday, May 3, 2008
Forex Hedging Strategy - Protection Against Losses
Author: Harold Hsu
Many Forex retail traders think that hedging is a good way to minimize losses. When holding on to a losing position, they often take up some form of hedging strategy to protect themselves against further capital depletion.In this article I will discuss what a hedging strategy is, and why it’s a bad idea for retail traders to consider any type of hedging strategy at all… hedging is not for retail traders!
What Is Hedging?Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.
Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.
Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.Why Hedging is A Bad Idea for Retail TradersThis method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!
Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be somewhat muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.
Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-hedging-strategy-protection-against-losses-385840.html
About the Author:
Visit http://forexsystemprofits.com for more tips and techniques on profitable Forex trading. Get your free 26-page Forex trading guide while you’re at it.
Many Forex retail traders think that hedging is a good way to minimize losses. When holding on to a losing position, they often take up some form of hedging strategy to protect themselves against further capital depletion.In this article I will discuss what a hedging strategy is, and why it’s a bad idea for retail traders to consider any type of hedging strategy at all… hedging is not for retail traders!
What Is Hedging?Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.
Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.
Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.Why Hedging is A Bad Idea for Retail TradersThis method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!
Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be somewhat muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.
Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-hedging-strategy-protection-against-losses-385840.html
About the Author:
Visit http://forexsystemprofits.com for more tips and techniques on profitable Forex trading. Get your free 26-page Forex trading guide while you’re at it.
Sistema Forex - Margin Trading In The Forex
By Chen Petersen
Now you might be wondering how it is possible to earn big money trading the Forex? The answer is Margin trading. In other words you trade with borrowed money.
Forex is always traded in Lots, so in actual fact you cannot purchase just 100 Euros, (or in fact 100 units of any currency). A standard Lot is $100,000, some brokers offer Mini-Lots of $10,000, and a few brokers also offer Micro-Lots of $1,000. The good news is you don't need anything like $100,000 to open a Forex account or to trade the Forex.
The Forex market uses a system called Margin trading, where you pay the broker a security margin, usually between 0.25 and 5 percent. The security margin gives you control over a very much larger unit (or lot) of currency. For example, to trade a standard lot $100,000, your broker will probably require a margin (deposit) of 1 percent = $1,000. (In actual fact you will need more than $1,000 in your account, in case the market moves against you.
Suppose you sell $100,000 and buy Euros at 10:00 AM. The Euros will cost $1.4725 each. So you will receive (rounded) 67912 EUR. Your 67912 EUR will have a value of 67912 x 1.4720 = $99,967 (Note: You have lost $33 instantly because of the bid/ask spread.) Now, suppose you sell your Euros at 5 PM and close the trade. You sell your 67912 EUR and buy U.S. dollars. You receive $1.4770 for each Euro = 67912 x 1.4770 = $100,306. So you make an overall profit of $306 on the days trading.
Margin trading is an example of leverage (sometimes called gearing), where you are using a relatively small amount of money to control (or lever) a very much larger amount of money. This enables you to profit (or lose) from very small changes in Forex quotes.
If you trade with $1,000, you will need more than $1,000 in your account. In the example above, if you only had $1,000 in your account to start, you would have a negative amount (-$33) in your account immediately after your trade was opened.
Now, suppose you started with $2,000 in your account:
You sell U.S.$100,000 and buy Euros at 10:00 AM. Your used margin is now $1,033, so the usable margin in your account is $2,000 - $1,033 = $967. Imagine the trade moves against you, so that at 12:14 PM the Forex quote: EUR/USD = 1.4578/1.4583. Your 67912 EUR are now worth 67912 x 1.4578 = $99,002, and the usable margin in your account = $2,000 - $1,998 = $2. This would result in a margin call, and your trade would be closed to prevent your account going negative, so you would lose $1,998.
If however, you had $3,000 in your account, your trade could have continued:
If the trade had continued moving against you so that at 1:00 PM the Forex quote: EUR/USD = 1.4570/1.4575. Your 67912 EUR are now worth 67912 x 1.4570 = $98,948. Your used margin is now $2,052 but you still have $3,000 - $2,052 = $948 in your account, so you can continue trading. If the Euro then recovers, so that at 5:00 PM the Forex quote: EUR/USD = 1.4770/1.4775, you sell your 67912 EUR at $1.4770 each and make an overall profit of $306.
Always aim to have at least twice your margin in your account at all times (even when a trade moves against you). However, it is safer still if you never trade with more than 10 percent of your account at any time.
Margin Percent = 100/LeverageLeverage = 100/Margin Percent
Chen Petersen is a helping people become familiar with Forex and learn how to avoid the pitfalls and profit from Forex trading. Check out his site Forex Info for more free Tips on how to trade Forex and profit from currency trading.
Click Here to check out Forex Info.
Article Source: http://EzineArticles.com/?expert=Chen_Petersen
Now you might be wondering how it is possible to earn big money trading the Forex? The answer is Margin trading. In other words you trade with borrowed money.
Forex is always traded in Lots, so in actual fact you cannot purchase just 100 Euros, (or in fact 100 units of any currency). A standard Lot is $100,000, some brokers offer Mini-Lots of $10,000, and a few brokers also offer Micro-Lots of $1,000. The good news is you don't need anything like $100,000 to open a Forex account or to trade the Forex.
The Forex market uses a system called Margin trading, where you pay the broker a security margin, usually between 0.25 and 5 percent. The security margin gives you control over a very much larger unit (or lot) of currency. For example, to trade a standard lot $100,000, your broker will probably require a margin (deposit) of 1 percent = $1,000. (In actual fact you will need more than $1,000 in your account, in case the market moves against you.
Suppose you sell $100,000 and buy Euros at 10:00 AM. The Euros will cost $1.4725 each. So you will receive (rounded) 67912 EUR. Your 67912 EUR will have a value of 67912 x 1.4720 = $99,967 (Note: You have lost $33 instantly because of the bid/ask spread.) Now, suppose you sell your Euros at 5 PM and close the trade. You sell your 67912 EUR and buy U.S. dollars. You receive $1.4770 for each Euro = 67912 x 1.4770 = $100,306. So you make an overall profit of $306 on the days trading.
Margin trading is an example of leverage (sometimes called gearing), where you are using a relatively small amount of money to control (or lever) a very much larger amount of money. This enables you to profit (or lose) from very small changes in Forex quotes.
If you trade with $1,000, you will need more than $1,000 in your account. In the example above, if you only had $1,000 in your account to start, you would have a negative amount (-$33) in your account immediately after your trade was opened.
Now, suppose you started with $2,000 in your account:
You sell U.S.$100,000 and buy Euros at 10:00 AM. Your used margin is now $1,033, so the usable margin in your account is $2,000 - $1,033 = $967. Imagine the trade moves against you, so that at 12:14 PM the Forex quote: EUR/USD = 1.4578/1.4583. Your 67912 EUR are now worth 67912 x 1.4578 = $99,002, and the usable margin in your account = $2,000 - $1,998 = $2. This would result in a margin call, and your trade would be closed to prevent your account going negative, so you would lose $1,998.
If however, you had $3,000 in your account, your trade could have continued:
If the trade had continued moving against you so that at 1:00 PM the Forex quote: EUR/USD = 1.4570/1.4575. Your 67912 EUR are now worth 67912 x 1.4570 = $98,948. Your used margin is now $2,052 but you still have $3,000 - $2,052 = $948 in your account, so you can continue trading. If the Euro then recovers, so that at 5:00 PM the Forex quote: EUR/USD = 1.4770/1.4775, you sell your 67912 EUR at $1.4770 each and make an overall profit of $306.
Always aim to have at least twice your margin in your account at all times (even when a trade moves against you). However, it is safer still if you never trade with more than 10 percent of your account at any time.
Margin Percent = 100/LeverageLeverage = 100/Margin Percent
Chen Petersen is a helping people become familiar with Forex and learn how to avoid the pitfalls and profit from Forex trading. Check out his site Forex Info for more free Tips on how to trade Forex and profit from currency trading.
Click Here to check out Forex Info.
Article Source: http://EzineArticles.com/?expert=Chen_Petersen
Friday, April 25, 2008
Amazing Forex Strategy Without Technical Indicators
By Krisman Situmorang
Amazing Forex Strategy is one of the most important tools for all traders but most of the writers or traders said that only few traders can make money from trading. Is that true? How can you lose money while there are so many tools which can help you beat the trading!.
If you are still new to the trading there is still chance for you to make a lot of money after reading this article. I’ll try to explain here the strategy you as long as you follow the rule. I will explain How to win Forex Without Technical Indicators.
Technical Analysis is the biggest aspect that influences the trader’s mind and decision when start trading. Thousands of indicators even strategies and tricks can be easily found in many forex forums but only few make money? Right. Why do you fail using technical indicators? The answer is because technical indicators can not beat NEWS or Fundamental Analysis.
Fundamental news may cause all your technical indicators or strategy not work, this is what so many traders forget when begin trading. They use technical indicators by not considering fundamental analysis.
Herewith we will try to take a look at fundamental / news affects to your trading. So if you feel that you always lose your money, try just to follow this simple method Every week there are some NEWS that will affect the price that you must know. They are:
1. NON FARM PAYROLL
2. TRADE BALANCE
3. INTEREST RATE STATEMENTS
4. DURABLE GOOD
5. PRODUCER PRICE INDEX
6. PPI excl. FOOD AND ENERGY
7. CONSUMER PRICE INDEX
8. CPI excl. FOOD AND ENERGY
9. TRICHET, BERNANKE, & FUKUI SPEAKS
10. UNEMPLOYMENT RATE
1.NON FARM PAYROLL Remarks : # Pip : 100 – 200 pips # Country : USA # Currencies : all USD pair
2. TRADE BALANCE Remarks : # Pip : 70 – 120 pips # Country : USA # Currencies : all USD pair
3. INTEREST RATE STATEMENTS Remarks : # Pip : >100 pips# Country : ALL # Currencies : all pair
4. DURABLE GOOD Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
5. PRODUCER PRICE INDEX Remarks : # Pip : 50 - 60 pips # Country : ALL # Currencies : all pair
6.PPI excl. FOOD AND ENERGY Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
7.CONSUMER PRICE INDEX Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
8.CPI excl. FOOD AND ENERGY Remarks # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
9.TRICHET, BERNANKE, & FUKUI SPEAKS Remarks # Pip : 30 - 100 pips # Country : E-12, USA, & JPN # Currencies : EURO, USD, & JPY
10.UNEMPLOYMENT RATE Remarks # Pip : 30 - 50 pips # Country : ALL # Currencies : all pair
All the above news can be seen in this following site, It is clearly explained what news to be released in the week and we have to bookmark this page to make us easier to look at the News everyday. There are many sites now providing traders with News that we have to bookmark.
How can we start trading the news?
TIPS 1 : NON FARM PAYROLL (NFP) The Great in Forex Trading
Check your calendar news this month, you don’t have to take care of what news to be released. Just remember that Every Friday of each month the above news will be released at 12.30 GMT.
The effect of this news is really big (100 -200 pis) only in a few minutes. So lets try to put the TRAP against the price direction.
Strategy
- Before the news released, do not trade, but just be prepared to trade on Brit / USD.
- 30 minutes before the news, open your - Metatrader (Your chart station) with 30 minutes chart. - Look at current price. - BUY STOP at 20 pips above current price, (example current price is 1.9050, so you put BUY STOP at 1.9070)
- At the same time SELL STOP at 20 pips below current price, (example current price is 1.9050, so you put SELL STOP at 1.9030)
- Cancel one of them it the price starts touching the charts.
- Set Take profit 100 pips - Set trailing stop 15.
Trading on this news once a month will make you profit at least 100 pips without technical analysis. What you want to see is the schedule for that news on every month of the first Friday.
For the other news you can do the same thing, and I am sure that every week you will make good profit without technical analysis that usually make traders confused and finally loose the trade.
Happy trading.
Krisman Situmoranghttp://forex-winning.blogspot.com
Article Source: http://EzineArticles.com/?expert=Krisman_Situmorang
Amazing Forex Strategy is one of the most important tools for all traders but most of the writers or traders said that only few traders can make money from trading. Is that true? How can you lose money while there are so many tools which can help you beat the trading!.
If you are still new to the trading there is still chance for you to make a lot of money after reading this article. I’ll try to explain here the strategy you as long as you follow the rule. I will explain How to win Forex Without Technical Indicators.
Technical Analysis is the biggest aspect that influences the trader’s mind and decision when start trading. Thousands of indicators even strategies and tricks can be easily found in many forex forums but only few make money? Right. Why do you fail using technical indicators? The answer is because technical indicators can not beat NEWS or Fundamental Analysis.
Fundamental news may cause all your technical indicators or strategy not work, this is what so many traders forget when begin trading. They use technical indicators by not considering fundamental analysis.
Herewith we will try to take a look at fundamental / news affects to your trading. So if you feel that you always lose your money, try just to follow this simple method Every week there are some NEWS that will affect the price that you must know. They are:
1. NON FARM PAYROLL
2. TRADE BALANCE
3. INTEREST RATE STATEMENTS
4. DURABLE GOOD
5. PRODUCER PRICE INDEX
6. PPI excl. FOOD AND ENERGY
7. CONSUMER PRICE INDEX
8. CPI excl. FOOD AND ENERGY
9. TRICHET, BERNANKE, & FUKUI SPEAKS
10. UNEMPLOYMENT RATE
1.NON FARM PAYROLL Remarks : # Pip : 100 – 200 pips # Country : USA # Currencies : all USD pair
2. TRADE BALANCE Remarks : # Pip : 70 – 120 pips # Country : USA # Currencies : all USD pair
3. INTEREST RATE STATEMENTS Remarks : # Pip : >100 pips# Country : ALL # Currencies : all pair
4. DURABLE GOOD Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
5. PRODUCER PRICE INDEX Remarks : # Pip : 50 - 60 pips # Country : ALL # Currencies : all pair
6.PPI excl. FOOD AND ENERGY Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
7.CONSUMER PRICE INDEX Remarks : # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
8.CPI excl. FOOD AND ENERGY Remarks # Pip : 50 - 100 pips # Country : ALL # Currencies : all pair
9.TRICHET, BERNANKE, & FUKUI SPEAKS Remarks # Pip : 30 - 100 pips # Country : E-12, USA, & JPN # Currencies : EURO, USD, & JPY
10.UNEMPLOYMENT RATE Remarks # Pip : 30 - 50 pips # Country : ALL # Currencies : all pair
All the above news can be seen in this following site, It is clearly explained what news to be released in the week and we have to bookmark this page to make us easier to look at the News everyday. There are many sites now providing traders with News that we have to bookmark.
How can we start trading the news?
TIPS 1 : NON FARM PAYROLL (NFP) The Great in Forex Trading
Check your calendar news this month, you don’t have to take care of what news to be released. Just remember that Every Friday of each month the above news will be released at 12.30 GMT.
The effect of this news is really big (100 -200 pis) only in a few minutes. So lets try to put the TRAP against the price direction.
Strategy
- Before the news released, do not trade, but just be prepared to trade on Brit / USD.
- 30 minutes before the news, open your - Metatrader (Your chart station) with 30 minutes chart. - Look at current price. - BUY STOP at 20 pips above current price, (example current price is 1.9050, so you put BUY STOP at 1.9070)
- At the same time SELL STOP at 20 pips below current price, (example current price is 1.9050, so you put SELL STOP at 1.9030)
- Cancel one of them it the price starts touching the charts.
- Set Take profit 100 pips - Set trailing stop 15.
Trading on this news once a month will make you profit at least 100 pips without technical analysis. What you want to see is the schedule for that news on every month of the first Friday.
For the other news you can do the same thing, and I am sure that every week you will make good profit without technical analysis that usually make traders confused and finally loose the trade.
Happy trading.
Krisman Situmoranghttp://forex-winning.blogspot.com
Article Source: http://EzineArticles.com/?expert=Krisman_Situmorang
Trading Gaps in the Forex: Not Trendy, But Very Profitable!
Author: Jason Fielder
Common sense isn't common, more young kids know who's on the "Surreal Life" than know where Mexico is located, and if it's not new, it's not "trendy" or "hip." While this general foolishness seems to have nothing to do with Forex trading, why is it that long effective trading strategies are ignored because they're "simple" or "old?"
Why spend hours a day on an advanced, new fangled, supposedly cutting edge (read: complicated and confusing) trading system when the old "boring" version is profitable? Isn't profit the point? Isn't it better to be old, boring, and profitable than new, flashy, and questionable? Isn't profit the bottom line here?
Gap trading is nothing new. It's been used in the stock market and in commodities trading for decades, and takes advantage of the difference, or "gap" between the closing price of the day before with the opening price of the next day, but this strategy is ignored in the Forex. Why is that? Well, gaps rely on a market close, and when the Forex market never closes, it's really hard to get a gap or take advantage of it.
In fact, during an entire trading week, there is only one time when using gap trading strategies in the Forex market is even possible! Sunday night at the open is the only time that gap trading Forex is possible. Boring?
For most of us, yeah. Pointless? Oh heck no. While different trading systems are looking for that .5% or that 1% above the 50% mark, some signs and indicators suggest that the Forex gap method is correct over 85% of the time. No, that's not a typo, and that's not hype. Once a week may be boring, but those numbers make it worth the wait and should have you drooling at the possibilities.
So how do you trade the gaps on the Forex market? First, understand that there are 3, and ONLY 3, things that the price can do between Friday's close and Sunday's open. They can:
1. Open above Friday's close, which is called "gapping up"
2. Open below Friday's close, which is called "gapping down"
3. Open at the exact same price, meaning there was no gap
There can be large gaps, often referred to as "full gaps" in price, or small gaps, known as "partial gaps." As far as strategy, there's no difference between the two. Good gap trading strategy works for all types of gaps. The one thing to watch out for is gap size.
I don't recommend trading a gap unless there is a 15 pip difference, and this strategy is best used with the major currency pairs. Knowing this, the rule to trading gaps may seem the opposite of what you would expect, but if you want to be right 85% of the time, here's the rule you want to follow:
Whatever direction the gap is going, you want to trade the opposite direction. So if a pair gaps up, sell short, if it gaps down, buy more. This strategy works a stunning amount of the time, and can be the edge in the Forex market that you've been looking for.
Article Source: http://www.articlesbase.com/currency-trading-articles/trading-gaps-in-the-forex-not-trendy-but-very-profitable-369881.html
About the Author:
And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/ From Jason Fielder: Founder, ForexImpact.com
Common sense isn't common, more young kids know who's on the "Surreal Life" than know where Mexico is located, and if it's not new, it's not "trendy" or "hip." While this general foolishness seems to have nothing to do with Forex trading, why is it that long effective trading strategies are ignored because they're "simple" or "old?"
Why spend hours a day on an advanced, new fangled, supposedly cutting edge (read: complicated and confusing) trading system when the old "boring" version is profitable? Isn't profit the point? Isn't it better to be old, boring, and profitable than new, flashy, and questionable? Isn't profit the bottom line here?
Gap trading is nothing new. It's been used in the stock market and in commodities trading for decades, and takes advantage of the difference, or "gap" between the closing price of the day before with the opening price of the next day, but this strategy is ignored in the Forex. Why is that? Well, gaps rely on a market close, and when the Forex market never closes, it's really hard to get a gap or take advantage of it.
In fact, during an entire trading week, there is only one time when using gap trading strategies in the Forex market is even possible! Sunday night at the open is the only time that gap trading Forex is possible. Boring?
For most of us, yeah. Pointless? Oh heck no. While different trading systems are looking for that .5% or that 1% above the 50% mark, some signs and indicators suggest that the Forex gap method is correct over 85% of the time. No, that's not a typo, and that's not hype. Once a week may be boring, but those numbers make it worth the wait and should have you drooling at the possibilities.
So how do you trade the gaps on the Forex market? First, understand that there are 3, and ONLY 3, things that the price can do between Friday's close and Sunday's open. They can:
1. Open above Friday's close, which is called "gapping up"
2. Open below Friday's close, which is called "gapping down"
3. Open at the exact same price, meaning there was no gap
There can be large gaps, often referred to as "full gaps" in price, or small gaps, known as "partial gaps." As far as strategy, there's no difference between the two. Good gap trading strategy works for all types of gaps. The one thing to watch out for is gap size.
I don't recommend trading a gap unless there is a 15 pip difference, and this strategy is best used with the major currency pairs. Knowing this, the rule to trading gaps may seem the opposite of what you would expect, but if you want to be right 85% of the time, here's the rule you want to follow:
Whatever direction the gap is going, you want to trade the opposite direction. So if a pair gaps up, sell short, if it gaps down, buy more. This strategy works a stunning amount of the time, and can be the edge in the Forex market that you've been looking for.
Article Source: http://www.articlesbase.com/currency-trading-articles/trading-gaps-in-the-forex-not-trendy-but-very-profitable-369881.html
About the Author:
And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/ From Jason Fielder: Founder, ForexImpact.com
Thursday, April 24, 2008
Non-Farm Payroll Reports as a Major Forex Indicator
Author: Jason Fielder
The Unemployment Report, also referred to as the Non-Farm Payroll (NFP) Reports, is a major indicator of a country's economic health, and one of the most anticipated economic reports for investors in all markets, including the Forex.
The Unemployment Report may be released at different times for different countries, so make sure to know when this information comes out for whatever nations your currency pair is from. In the United States the Non-Farm Payroll Report is released on the first Friday of every month by the U.S Bureau of Labor Statistics, and often times will affect at least the short term action in the Forex market in regards to the U.S. Dollar.
This report, in the United States, includes roughly 80% of the paid workers in the country and excludes government, farm, and non-profit employees. This report is used as one of the biggest measuring sticks for a country's overall economic health, which logically will affect its currency strength and thus affect the Forex market.
That part is true of any country's non-farm payroll report, is that it is one of the biggest indicators of a nation's overall economic health and will almost always have an impact on investment and trading markets.The Unemployment/Non-Farm Payroll Report is one of the major five economic reports for each country that traders jump on, the other four being interest rates, consumer price index, trade balance, and retail sales.
Even among all these, the unemployment report often gets the strongest attention, and is considered one of the most accurate economic indicators of a country's overall economic health, which makes sense. The more people who are working, the more currency you have being made and spent in a nation's economy.
You'll want to know when the reports are released. For example, if you are trading the US Dollar and Euro, then you'll need to know that the United States and European Union release different economic indicators on different days, meaning the unemployment report for the United States may come on a different day than the reports from the European Union.
If you want to get the maximum information for this currency pair, then you'll want to know the information for both.The same idea applies to the Japanese Yen, or any currency you're trading. You want to know when all the reports become available so you can stay on top of the current financial news and end up a Forex winner!
Article Source: http://www.articlesbase.com/currency-trading-articles/nonfarm-payroll-reports-as-a-major-forex-indicator-371647.html
About the Author:
And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/ From Jason Fielder: Founder, ForexImpact.com
The Unemployment Report, also referred to as the Non-Farm Payroll (NFP) Reports, is a major indicator of a country's economic health, and one of the most anticipated economic reports for investors in all markets, including the Forex.
The Unemployment Report may be released at different times for different countries, so make sure to know when this information comes out for whatever nations your currency pair is from. In the United States the Non-Farm Payroll Report is released on the first Friday of every month by the U.S Bureau of Labor Statistics, and often times will affect at least the short term action in the Forex market in regards to the U.S. Dollar.
This report, in the United States, includes roughly 80% of the paid workers in the country and excludes government, farm, and non-profit employees. This report is used as one of the biggest measuring sticks for a country's overall economic health, which logically will affect its currency strength and thus affect the Forex market.
That part is true of any country's non-farm payroll report, is that it is one of the biggest indicators of a nation's overall economic health and will almost always have an impact on investment and trading markets.The Unemployment/Non-Farm Payroll Report is one of the major five economic reports for each country that traders jump on, the other four being interest rates, consumer price index, trade balance, and retail sales.
Even among all these, the unemployment report often gets the strongest attention, and is considered one of the most accurate economic indicators of a country's overall economic health, which makes sense. The more people who are working, the more currency you have being made and spent in a nation's economy.
You'll want to know when the reports are released. For example, if you are trading the US Dollar and Euro, then you'll need to know that the United States and European Union release different economic indicators on different days, meaning the unemployment report for the United States may come on a different day than the reports from the European Union.
If you want to get the maximum information for this currency pair, then you'll want to know the information for both.The same idea applies to the Japanese Yen, or any currency you're trading. You want to know when all the reports become available so you can stay on top of the current financial news and end up a Forex winner!
Article Source: http://www.articlesbase.com/currency-trading-articles/nonfarm-payroll-reports-as-a-major-forex-indicator-371647.html
About the Author:
And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/ From Jason Fielder: Founder, ForexImpact.com
Wednesday, April 23, 2008
Trading Forex With Pivot Points
By: E.J Sieberhagen
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days move and trades are entered when the market hits a support or resistance line of the pivot point providing your OB/OS indicator is in agreement. All the support and resist lines are put in place 1st thing in the morning. then you wait for the market to hit those entry Points.
Contrary to what some might believe, trading Forex with Pivot Points are probably the most popular method used in trading the financial markets today. Long before the invention of computers this was the method used by the traders in the pits to determine hidden support and resistance levels.
The Pivot Point is still used by experienced floor traders and technical analysts alike. The major advantage now is that we now have computers and can calculate our points well in advance. Many charting packages can calculate them for you automatically, thus enhancing the use of Pivot Points.
Whilst there is a lot more to Pivot Point Trading in Forex Trading than we will be mentioned in this article, the purpose of this exercise is to introduce you to the concept of trading Forex with Pivot Points.
Remember the market can only go up, down, or sideways. It is like an elastic band that has been stretched, sooner or later it will rebound to an equilibrium point where the market is in balance, and then stretch the opposite way only to rebound and reach another balance point. Then some fundamental announcement or happening will drive the market in a new direction and so on day after day. Pivot Points can aid us in determining how far that elastic can stretch before it rebounds.
Whilst there are many time frames that can be used for calculating Pivots, for the purpose of this exercise lets concentrate on the daily time frame (i.e.: 24hr) Pivot Points are calculated using the previous days, Open, High, Low, and Close figures. There are many Pivot Point calculators available on the web so you don’t have to waste your time doing the calculations manually. Also bear in mind the longer the time frame you are using the longer you must be prepared to stay in the market or wait for the next entry point.
Pivot points unlike many other indicators are an objective tool. Because they are mathematically calculated, there can only be one answer for a specific time period.
Many subjective indicators like Fibonacci retracements, (and I am a great fib fan) Elliot waves etc. can have different people trading in different directions at the same time due to individual interpretation..
The PP’s can help you to predict the next day’s highs and lows in advance. PP’s can give you anything from 4 to 8 support and resistance levels. However you still have to be able to identify the trend to be a successful PP trader. Pivot Points also work best in a trending market.
Entry and exit points
Pivot Points can give you exact entry and exit points, rather than enter markets that are in the middle of a run, or about to turn the other way. Here is where we use other indicators to assist on the entry or exit. If the market stalls at a Pivot Point level, and you have an overbought or oversold indicator that will be a good time to get in or out. Or if a Fibonacci level coincides with a Pivot Point level it can make a strong case to enter or exit a trade. If the market is bullish and your favourite indicator is not near overbought, when it hits the first resistance level then you probably have a good case to stay in the market and make your profit target the next Pivot Point resistance line. The breakout above the 1st resistance level can then become your new stop or stop reverse.
Obviously the reverse is true of the support level as well. By combining the Pivot Points with your favourite indicator you can develop your own trading system that no one else uses.
Trading for the day will probably remain between the 1st support (S1) and resistance (R1) levels as the floor traders make their markets. Once one of these levels is penetrated other traders will be attracted to the market, and should the second level be breached, the longer term traders are attracted to the market.
Knowledge of where the floor traders are expecting support or resistance can be a distinct advantage especially when there is no outside influence in the market. Provided no significant market news has occurred between yesterdays close and today’s opening, the local floor traders and market makers tend to move the market between the Pivot Point (P) and the first support line (S1) and resistance (R1) If one of these levels is breached then expect the market to test the next levels (S2) and ( S3) or (R2) and (R3)
Whilst there are many other aspects to Pivot Point trading why not try this simple method first and see if you can develop your own strategy by using your existing trading technique’s in conjunction with the Pivot Points.
About the Author
For more online Forex trading information please visit Free Forex Trading Information Online - a popular online Forex trading website that provides trading advice and information to beginner traders. Visit our Forex Trading Beginnner for the latest Forex news.
Permanent Link: http://www.isnare.com/?aid=46861&ca=Finances
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days move and trades are entered when the market hits a support or resistance line of the pivot point providing your OB/OS indicator is in agreement. All the support and resist lines are put in place 1st thing in the morning. then you wait for the market to hit those entry Points.
Contrary to what some might believe, trading Forex with Pivot Points are probably the most popular method used in trading the financial markets today. Long before the invention of computers this was the method used by the traders in the pits to determine hidden support and resistance levels.
The Pivot Point is still used by experienced floor traders and technical analysts alike. The major advantage now is that we now have computers and can calculate our points well in advance. Many charting packages can calculate them for you automatically, thus enhancing the use of Pivot Points.
Whilst there is a lot more to Pivot Point Trading in Forex Trading than we will be mentioned in this article, the purpose of this exercise is to introduce you to the concept of trading Forex with Pivot Points.
Remember the market can only go up, down, or sideways. It is like an elastic band that has been stretched, sooner or later it will rebound to an equilibrium point where the market is in balance, and then stretch the opposite way only to rebound and reach another balance point. Then some fundamental announcement or happening will drive the market in a new direction and so on day after day. Pivot Points can aid us in determining how far that elastic can stretch before it rebounds.
Whilst there are many time frames that can be used for calculating Pivots, for the purpose of this exercise lets concentrate on the daily time frame (i.e.: 24hr) Pivot Points are calculated using the previous days, Open, High, Low, and Close figures. There are many Pivot Point calculators available on the web so you don’t have to waste your time doing the calculations manually. Also bear in mind the longer the time frame you are using the longer you must be prepared to stay in the market or wait for the next entry point.
Pivot points unlike many other indicators are an objective tool. Because they are mathematically calculated, there can only be one answer for a specific time period.
Many subjective indicators like Fibonacci retracements, (and I am a great fib fan) Elliot waves etc. can have different people trading in different directions at the same time due to individual interpretation..
The PP’s can help you to predict the next day’s highs and lows in advance. PP’s can give you anything from 4 to 8 support and resistance levels. However you still have to be able to identify the trend to be a successful PP trader. Pivot Points also work best in a trending market.
Entry and exit points
Pivot Points can give you exact entry and exit points, rather than enter markets that are in the middle of a run, or about to turn the other way. Here is where we use other indicators to assist on the entry or exit. If the market stalls at a Pivot Point level, and you have an overbought or oversold indicator that will be a good time to get in or out. Or if a Fibonacci level coincides with a Pivot Point level it can make a strong case to enter or exit a trade. If the market is bullish and your favourite indicator is not near overbought, when it hits the first resistance level then you probably have a good case to stay in the market and make your profit target the next Pivot Point resistance line. The breakout above the 1st resistance level can then become your new stop or stop reverse.
Obviously the reverse is true of the support level as well. By combining the Pivot Points with your favourite indicator you can develop your own trading system that no one else uses.
Trading for the day will probably remain between the 1st support (S1) and resistance (R1) levels as the floor traders make their markets. Once one of these levels is penetrated other traders will be attracted to the market, and should the second level be breached, the longer term traders are attracted to the market.
Knowledge of where the floor traders are expecting support or resistance can be a distinct advantage especially when there is no outside influence in the market. Provided no significant market news has occurred between yesterdays close and today’s opening, the local floor traders and market makers tend to move the market between the Pivot Point (P) and the first support line (S1) and resistance (R1) If one of these levels is breached then expect the market to test the next levels (S2) and ( S3) or (R2) and (R3)
Whilst there are many other aspects to Pivot Point trading why not try this simple method first and see if you can develop your own strategy by using your existing trading technique’s in conjunction with the Pivot Points.
About the Author
For more online Forex trading information please visit Free Forex Trading Information Online - a popular online Forex trading website that provides trading advice and information to beginner traders. Visit our Forex Trading Beginnner for the latest Forex news.
Permanent Link: http://www.isnare.com/?aid=46861&ca=Finances
Forex Trading Tip - Learn 80 - 20 Rule and Instantly Enhance Your Profit Potential
by kelly Price
The 80 / 20 rule will help you make money in forex trading and if you are new to forex trading or trading already and not making enough money this forex trading tip is for you...
The 80 / 20 rule is simple.
It simply states that:
80% of your success comes from 20% of your efforts.
Let's take a simple example of a sales organization.
It's well known that 80% of the income normally comes from 20% of the clients.
In trading terms therefore: 80% of your profits come from 20% of your trades and the rest (80%) give you just 20% of your profits.
If you think about the 80 / 20 rule, you can apply it to many areas of life and try applying it to your forex trading and you will see it makes sense.
So what should you do?
Cut your trading frequency!
It's a well known fact that most forex traders try to hard, they think they need to trade a lot or always be in the market to win.
What happens?
They take low odds trades and lose. Keep these two points in mind:
- Unlike most activities you don't get paid for effort in forex trading you get paid for being right with your trading signal and that's it.
- The amount of trades is NOT In any way related to your profit potential.
To give you an example - I know traders who trade less than once a month yet make 100% + annualized gains!
The fact is most short term volatility in forex trading is random. This means you can't get the odds on your side and you won't win. Ever wonder why you never see a winning day trader or forex scalper?
Well, the reason is they trade to much and trade low odds or trades and this means an erosion and eventual wipeout of equity.
If you trade longer term, your chances of success with your forex trading system will be more because you are focusing on high odds trades.
If you really want to win, use the 80 / 20 rule and get the odds in your favor.
Try trading long term high odds trades and trade valid breakouts to new highs and lows (most major moves start from them), be selective and follow the market action and lock into these big breaks and follow the big trends that develop.
The 80 / 20 rule is logical in life and in the forex market and if you understand it, you can make big gains.
Many people like trading frequently - but their just playing a game and not interested in making money, it's a thrill seeking exercise - personally I would rather go Scuba Diving!
If you believe forex trading is all about making money and NOTHING else, then you will see how you can use the 80 / 20 rule to your advantage.
Think about the above and using it in your forex trading strategy and you maybe glad you did!
About the Author
NEW! 2 X ESSSENTIAL FOREX PDFS PDF
For free 2 x trading Pdf's, with 50 of essential info and anexclusive Currency Trading Course visit our website at: http://www.learncurrencytradingonline.com
The 80 / 20 rule will help you make money in forex trading and if you are new to forex trading or trading already and not making enough money this forex trading tip is for you...
The 80 / 20 rule is simple.
It simply states that:
80% of your success comes from 20% of your efforts.
Let's take a simple example of a sales organization.
It's well known that 80% of the income normally comes from 20% of the clients.
In trading terms therefore: 80% of your profits come from 20% of your trades and the rest (80%) give you just 20% of your profits.
If you think about the 80 / 20 rule, you can apply it to many areas of life and try applying it to your forex trading and you will see it makes sense.
So what should you do?
Cut your trading frequency!
It's a well known fact that most forex traders try to hard, they think they need to trade a lot or always be in the market to win.
What happens?
They take low odds trades and lose. Keep these two points in mind:
- Unlike most activities you don't get paid for effort in forex trading you get paid for being right with your trading signal and that's it.
- The amount of trades is NOT In any way related to your profit potential.
To give you an example - I know traders who trade less than once a month yet make 100% + annualized gains!
The fact is most short term volatility in forex trading is random. This means you can't get the odds on your side and you won't win. Ever wonder why you never see a winning day trader or forex scalper?
Well, the reason is they trade to much and trade low odds or trades and this means an erosion and eventual wipeout of equity.
If you trade longer term, your chances of success with your forex trading system will be more because you are focusing on high odds trades.
If you really want to win, use the 80 / 20 rule and get the odds in your favor.
Try trading long term high odds trades and trade valid breakouts to new highs and lows (most major moves start from them), be selective and follow the market action and lock into these big breaks and follow the big trends that develop.
The 80 / 20 rule is logical in life and in the forex market and if you understand it, you can make big gains.
Many people like trading frequently - but their just playing a game and not interested in making money, it's a thrill seeking exercise - personally I would rather go Scuba Diving!
If you believe forex trading is all about making money and NOTHING else, then you will see how you can use the 80 / 20 rule to your advantage.
Think about the above and using it in your forex trading strategy and you maybe glad you did!
About the Author
NEW! 2 X ESSSENTIAL FOREX PDFS PDF
For free 2 x trading Pdf's, with 50 of essential info and anexclusive Currency Trading Course visit our website at: http://www.learncurrencytradingonline.com
Tuesday, April 22, 2008
Forex Trends - How to Follow Them for Bigger Profits
Author: Monica Hendrix
When you look back at a forex chart forex trends that last for weeks or months are easy to see but there much harder to hold in real time trading.
There are huge profits to be made if you can milk the longer term trends but you must be aware of two main problems you will encounter.
Volatility within the Main Trend When your are forex trend following you get constant pullbacks in price and you have to decide whether they are a trend change or a pullback and this is not so easy when money is on the line. The dilemma you face is: Where should you put your stop so that you can stay with the trend but get at least a good chunk of profit should the trend turn. For this you should have an understanding of standard deviation of price - if you don't know what it is - make it an essential part of your forex education.
Our view is to use trend line support and moving averages pullbacks to the 18 - 25 day moving average are normal and pullbacks to the 40 day moving average indicate a trend that might turn. Once the trend is in motion, use the 40 day and trend line support as your stop. Of course when the trend turns you give back a bit of profit but that's ok - if you caught 50% of every major trend, you would be very rich.
Don't ever try and predict when a trend might end or impose your view on the market let the market action tell you when you are wrong. You Have to Accept Short Term Dips to Make Long Term Gains!Many traders get excited when they get a profit and the bigger it becomes, the more excited they get - Every dip in open equity causes them emotional turmoil and they simply want to get the profit in the bank, before it gets away.
They end up snatching their profit and banking a marginal one - what happens next? The trend continues and makes $5 10 or 15,000 and their not in yet, that's where they thought the price was going anyway!They just didn't have the discipline to stay with them. The fact is you must be disciplined and be prepared to take open equity dips - sometimes of thousands at a time, once a big trend is in motion.
This requires confidence and discipline in your forex trading strategy, an understanding of volatility and a mindset to put up with it, to seek a longer term gain. Take a look at a forex charts and you won't just see trends at present that yield a few hundred pips in motion, you will see ones that could give you thousands or tens of thousands and you can get these trends with the right attitude.
If you have the discipline and the mindset to succeed you can make a lot of money from long term trends - you don't have to be perfect and you and you don't have to be clever, just have the patience to stay with the trend, until the chart tells you that your wrong.
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-trends-how-to-follow-them-for-bigger-profits-392718.html
About the Author:
NEW! 2 X FREE ESSENTIAL TRADER PDFS & MUCH MORE!For free 2 x trading Pdf's with 90 of pages of essential info on Forex Trend Following Systems visit our website at: http://www.learncurrencytradingonline.com
When you look back at a forex chart forex trends that last for weeks or months are easy to see but there much harder to hold in real time trading.
There are huge profits to be made if you can milk the longer term trends but you must be aware of two main problems you will encounter.
Volatility within the Main Trend When your are forex trend following you get constant pullbacks in price and you have to decide whether they are a trend change or a pullback and this is not so easy when money is on the line. The dilemma you face is: Where should you put your stop so that you can stay with the trend but get at least a good chunk of profit should the trend turn. For this you should have an understanding of standard deviation of price - if you don't know what it is - make it an essential part of your forex education.
Our view is to use trend line support and moving averages pullbacks to the 18 - 25 day moving average are normal and pullbacks to the 40 day moving average indicate a trend that might turn. Once the trend is in motion, use the 40 day and trend line support as your stop. Of course when the trend turns you give back a bit of profit but that's ok - if you caught 50% of every major trend, you would be very rich.
Don't ever try and predict when a trend might end or impose your view on the market let the market action tell you when you are wrong. You Have to Accept Short Term Dips to Make Long Term Gains!Many traders get excited when they get a profit and the bigger it becomes, the more excited they get - Every dip in open equity causes them emotional turmoil and they simply want to get the profit in the bank, before it gets away.
They end up snatching their profit and banking a marginal one - what happens next? The trend continues and makes $5 10 or 15,000 and their not in yet, that's where they thought the price was going anyway!They just didn't have the discipline to stay with them. The fact is you must be disciplined and be prepared to take open equity dips - sometimes of thousands at a time, once a big trend is in motion.
This requires confidence and discipline in your forex trading strategy, an understanding of volatility and a mindset to put up with it, to seek a longer term gain. Take a look at a forex charts and you won't just see trends at present that yield a few hundred pips in motion, you will see ones that could give you thousands or tens of thousands and you can get these trends with the right attitude.
If you have the discipline and the mindset to succeed you can make a lot of money from long term trends - you don't have to be perfect and you and you don't have to be clever, just have the patience to stay with the trend, until the chart tells you that your wrong.
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-trends-how-to-follow-them-for-bigger-profits-392718.html
About the Author:
NEW! 2 X FREE ESSENTIAL TRADER PDFS & MUCH MORE!For free 2 x trading Pdf's with 90 of pages of essential info on Forex Trend Following Systems visit our website at: http://www.learncurrencytradingonline.com
FOREX: Exiting positions at a right time
Author: Andrey Moraru
The presented article covers one of the most important (in author's opinion) aspects of trading in general and FOREX trading in particular ? managing of orders and positions. This includes choosing entry points, making decisions about exit points, stop-loss and take-profit of the trader. I hope this article will help new traders, who just began to work with FOREX, and also to experienced traders who trade regularly and regularly make or loose their money to the market.
When I started to trade FOREX and made my first big losses and profits I began to notice when very important thing about the whole trading process. While the right time to enter a position was rarely a problem for myself (nearly 80% of all my open positions had gone into the "green" profit zone), the problem was hidden in the determining the right exit point for that position.
Not only was it important to cut my risk on the potential losses with stop-loss orders, but to limit my greediness and take profit when I can take it and make it as high as I can. There are many known guidelines and ways to enter a right position at a right time ? like major economic news releases, global world events, technical indicators combinations, etc. But while the entering into a position is optional and trade can decide to miss as many good/bad entry point moments as they wish, this is untrue if we talk about exiting a position.
Margin trading makes it impossible to wait too long with an open position. More than that, every open position in a certain way limits trader's ability to trade.Choosing the good exit points for positions could be an easy task if only the FOREX market wasn't so chaotic and volatile. In my opinion (backed by my trading experience) exit orders for every position should be toggled constantly with time and as the new market data (technical and fundamental) appear.
Let's say, you took a short position on EUR/USD at 1.2563, at the time you are taking this position the support/resistance level is 1.2500/1.2620. You set your stop-loss order to 1.2625 and your take-profit order to 1.2505. So now, this position can be considered as an intraday or 2-3 days term position. This means that you must close it before it's "term" is over, or it will become a very unpredictable position (because market will differ greatly from what it was at the time you have entered this position).
After the position is taken and initial exit orders are set, you need to follow the market events and technical indicators to adjust your exit orders. The most important rule is to tighten the loss/profit limit as time goes by. Usually if I take a middle term position (2-4 days) I try to lower the stop and target order by 10-25 pips every day. I also monitor global events, trying to lower my stop-losses when very important news can hurt my position.
If the profit is already quite high, I try to move my stop-loss the entry point, making a sure-win position. The main idea here is to find an equilibrium point between greed and caution. But as your position gets older the profit should be more limited and losses cut. Also, trader should always remember that if the market began to act unexpectedly, they need to be even more cautious with exit order, even if the position is still showing profits.
Every trader has their own trading strategy and habits. I hope this article will make its readers think about such an important aspect of trading as the exit orders and this will only improve their trading results.
To learn more about FOREX market visit my website - http://www.earnforex.com and my blog - http://earnforex.blogspot.com
This article is free for republishingSource: http://www.a1articles.com/article_78217_19.html
The presented article covers one of the most important (in author's opinion) aspects of trading in general and FOREX trading in particular ? managing of orders and positions. This includes choosing entry points, making decisions about exit points, stop-loss and take-profit of the trader. I hope this article will help new traders, who just began to work with FOREX, and also to experienced traders who trade regularly and regularly make or loose their money to the market.
When I started to trade FOREX and made my first big losses and profits I began to notice when very important thing about the whole trading process. While the right time to enter a position was rarely a problem for myself (nearly 80% of all my open positions had gone into the "green" profit zone), the problem was hidden in the determining the right exit point for that position.
Not only was it important to cut my risk on the potential losses with stop-loss orders, but to limit my greediness and take profit when I can take it and make it as high as I can. There are many known guidelines and ways to enter a right position at a right time ? like major economic news releases, global world events, technical indicators combinations, etc. But while the entering into a position is optional and trade can decide to miss as many good/bad entry point moments as they wish, this is untrue if we talk about exiting a position.
Margin trading makes it impossible to wait too long with an open position. More than that, every open position in a certain way limits trader's ability to trade.Choosing the good exit points for positions could be an easy task if only the FOREX market wasn't so chaotic and volatile. In my opinion (backed by my trading experience) exit orders for every position should be toggled constantly with time and as the new market data (technical and fundamental) appear.
Let's say, you took a short position on EUR/USD at 1.2563, at the time you are taking this position the support/resistance level is 1.2500/1.2620. You set your stop-loss order to 1.2625 and your take-profit order to 1.2505. So now, this position can be considered as an intraday or 2-3 days term position. This means that you must close it before it's "term" is over, or it will become a very unpredictable position (because market will differ greatly from what it was at the time you have entered this position).
After the position is taken and initial exit orders are set, you need to follow the market events and technical indicators to adjust your exit orders. The most important rule is to tighten the loss/profit limit as time goes by. Usually if I take a middle term position (2-4 days) I try to lower the stop and target order by 10-25 pips every day. I also monitor global events, trying to lower my stop-losses when very important news can hurt my position.
If the profit is already quite high, I try to move my stop-loss the entry point, making a sure-win position. The main idea here is to find an equilibrium point between greed and caution. But as your position gets older the profit should be more limited and losses cut. Also, trader should always remember that if the market began to act unexpectedly, they need to be even more cautious with exit order, even if the position is still showing profits.
Every trader has their own trading strategy and habits. I hope this article will make its readers think about such an important aspect of trading as the exit orders and this will only improve their trading results.
To learn more about FOREX market visit my website - http://www.earnforex.com and my blog - http://earnforex.blogspot.com
This article is free for republishingSource: http://www.a1articles.com/article_78217_19.html
Monday, April 21, 2008
Forex Trading - It is Possible to Make Money With Only 50% Wins
Author: Craig Torey
To be realistic, most people will have a win loss ratio no better than 50%. The reason so many people lose money in Forex trading is that with a 50% win rate, they lose much more money than when they win. It is possible to make money in Forex trading by picking winning trades with no better statistical advantage than flipping a coin.
How can someone make money when you only get half the trades right? That means 5 out of every 10 trades are losers. Well, if your money management is set up with the right profit loss ratio, it is possible. Let's use 30 pips as a profit target on every trade and 20 pips as a stop loss on every trade. We will use 10 trades to make it easier using percentages. Winning 5 trades at 30 pips per trade, nets 150 pips profit.
Losing 5 trades at 20 pips per trade is 100 pips loss. The net profit for ten trades is 50 pips gain. With one contract, this is $500.00 or one mini-contract, this is $50.00 per ten trades. Let's say you get better at your trading and win 60% trades. Winning 6 trades at 30 pips per trade, nets 180 pips profit. Losing 4 trades at 20 pips per trade is 80 pips loss. The net profit for ten trades is 100 pips.
With one contract, this is $1,000.00 or one mini-contract, this is $100.00 profit per ten trades. A more rare win percentage is 70%. But working out the math, 7 winning trades at 30 pips, nets 210 pips profit. Losing 3 trades at 20 pips per trade is 60 pips loss. The net profit for ten trades is 150 pips. With one contract, this is $1,500.00 or one mini-contract, this is $150.00 profit per ten trades.
This shows that even with only 50 % wins, money can be made. Using a 3:2 profit loss ratio is profitable for making money in Forex trading. This could mean using a 60 point target with a 40 point stop loss as well.
Using a smaller ratio like a 30 point target and 30 point stop loss, a 1:1 ratio will only give a profit with a win rate greater than 50%. You may find that your trading strategy can only get a 20 point target so you may need to do the 1:1 ratio.
Using the 3:2 ratio, with a 20 point target, you will have less than 20 as a stop loss and this is too small of a stop loss for Forex trading. There are so many market forces that can swing more than 20 pips and hit your stop loss.
Practically speaking, you need to work with the currency pairs with the smallest spreads when using a 20 point stop. Now, knowing the right target loss ratio, the right trading strategy needs to be incorporated to make this work. Finding the right strategy is vital to this ratio.
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-trading-it-is-possible-to-make-money-with-only-50-wins-369607.html
About the Author:
For information on Stock Trading Strategies we reviewed, visit our website at OpinionandReview.com
To be realistic, most people will have a win loss ratio no better than 50%. The reason so many people lose money in Forex trading is that with a 50% win rate, they lose much more money than when they win. It is possible to make money in Forex trading by picking winning trades with no better statistical advantage than flipping a coin.
How can someone make money when you only get half the trades right? That means 5 out of every 10 trades are losers. Well, if your money management is set up with the right profit loss ratio, it is possible. Let's use 30 pips as a profit target on every trade and 20 pips as a stop loss on every trade. We will use 10 trades to make it easier using percentages. Winning 5 trades at 30 pips per trade, nets 150 pips profit.
Losing 5 trades at 20 pips per trade is 100 pips loss. The net profit for ten trades is 50 pips gain. With one contract, this is $500.00 or one mini-contract, this is $50.00 per ten trades. Let's say you get better at your trading and win 60% trades. Winning 6 trades at 30 pips per trade, nets 180 pips profit. Losing 4 trades at 20 pips per trade is 80 pips loss. The net profit for ten trades is 100 pips.
With one contract, this is $1,000.00 or one mini-contract, this is $100.00 profit per ten trades. A more rare win percentage is 70%. But working out the math, 7 winning trades at 30 pips, nets 210 pips profit. Losing 3 trades at 20 pips per trade is 60 pips loss. The net profit for ten trades is 150 pips. With one contract, this is $1,500.00 or one mini-contract, this is $150.00 profit per ten trades.
This shows that even with only 50 % wins, money can be made. Using a 3:2 profit loss ratio is profitable for making money in Forex trading. This could mean using a 60 point target with a 40 point stop loss as well.
Using a smaller ratio like a 30 point target and 30 point stop loss, a 1:1 ratio will only give a profit with a win rate greater than 50%. You may find that your trading strategy can only get a 20 point target so you may need to do the 1:1 ratio.
Using the 3:2 ratio, with a 20 point target, you will have less than 20 as a stop loss and this is too small of a stop loss for Forex trading. There are so many market forces that can swing more than 20 pips and hit your stop loss.
Practically speaking, you need to work with the currency pairs with the smallest spreads when using a 20 point stop. Now, knowing the right target loss ratio, the right trading strategy needs to be incorporated to make this work. Finding the right strategy is vital to this ratio.
Article Source: http://www.articlesbase.com/currency-trading-articles/forex-trading-it-is-possible-to-make-money-with-only-50-wins-369607.html
About the Author:
For information on Stock Trading Strategies we reviewed, visit our website at OpinionandReview.com
Forex Trading Strategies and Forex Market Volatility
Part of developing a profitable Forex trading strategy involves being able to determine market volatility. The Forex market is open 24 hours per day and you will find it impossible to keep track of all market activities, all the time. You will need to understand the timing of various markets, particularly those in which you are trading and those that influence your trades, so that you are in a position to make the best possible decisions during your trading hours.
Different markets are affected by differing market conditions. All currency pairs are subject to market volatility, but most currencies tend to become more or less volatile during certain times of the day. As a trader, you will need to have some knowledge of the currency trading system, currency pairings in different times zones and the conditions that affect their volatility.
The London market is the largest and most volatile Forex market in the world since some of the largest dealing desks of large banks are located there and transactions that take place usually involve large sums of money. The London market share is about 30% of all markets. The market hours are from 2 am to 12 pm EST, which is also the time for which most transactions are completed.
The benchmark established for volatility is 80 pips and more than half of the London market currency pairings are likely to reach in excess of 80 pips. It would not be uncommon for the daily range of GBP/CHF and GBP/JPY currency pairs to average more than 140 pips.
The ability of these currency pairs to generate huge profits in a short amount of time appeals to traders willing to take risks in the currency trading system.Since most large market participants complete their circle of currency conversions during the London market hours, daily trade activities peak during this time, causing high volatility. Near the end of the London trading session most large investors will convert their European assets to US dollar assets in anticipation of the opening of the US market.
This conversion is responsible for the increased volatility in GBP/CHF and GBP/JPY currency pairs. The New York trading session is the benchmark for US trading and it represents the second largest FOREX market. Trading hours are from 8 am and 5 pm EST. The majority of transactions occur in the US market from 8 am to noon EST.
During this timeframe, the European market is still in session, which creates a market of high liquidity. Trading during this period of overlap accounts for about 70% of the currency pair trading in the European session and about 80% of currency pair trading in the US session.Other currency pairs that appeal to high-risk traders during the London market hours include the USD/CHF, GBP/USD, USD/CAD and EUR/USD currency pairs.
It is not uncommon for these pairs to reach a daily range of about 100 pips. This level of volatility creates opportunities for entry into the market. In contrast, is not uncommon for the AUD/JPY, EUR/CHF, AUD/USD and NZD/USD currency pairs to reach a daily range of about 50 pips. This level of volatility is more appealing to traders who attempt to avoid risks. The level of volatility indicates that these pairs may be less likely to create a loss.
The London market also overlaps with the Asian market. The Tokyo trading session is the benchmark for the Asian market. Trading hours are from 7 pm and 4 am EST. Large investors take positions in the Tokyo market in anticipation of the opening of the London session. The GBP/CHF and GBP/JPY currency pairs are also highly volatile during this timeframe of overlap.
Trading during the period of overlap, which is between 2 am and 4 am, is the lowest of any trading session. Traders use these slow trading hours to position themselves for the opening of the European or US market.
Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and a Free Forex Training blog for keeping online Forex trading records.
Different markets are affected by differing market conditions. All currency pairs are subject to market volatility, but most currencies tend to become more or less volatile during certain times of the day. As a trader, you will need to have some knowledge of the currency trading system, currency pairings in different times zones and the conditions that affect their volatility.
The London market is the largest and most volatile Forex market in the world since some of the largest dealing desks of large banks are located there and transactions that take place usually involve large sums of money. The London market share is about 30% of all markets. The market hours are from 2 am to 12 pm EST, which is also the time for which most transactions are completed.
The benchmark established for volatility is 80 pips and more than half of the London market currency pairings are likely to reach in excess of 80 pips. It would not be uncommon for the daily range of GBP/CHF and GBP/JPY currency pairs to average more than 140 pips.
The ability of these currency pairs to generate huge profits in a short amount of time appeals to traders willing to take risks in the currency trading system.Since most large market participants complete their circle of currency conversions during the London market hours, daily trade activities peak during this time, causing high volatility. Near the end of the London trading session most large investors will convert their European assets to US dollar assets in anticipation of the opening of the US market.
This conversion is responsible for the increased volatility in GBP/CHF and GBP/JPY currency pairs. The New York trading session is the benchmark for US trading and it represents the second largest FOREX market. Trading hours are from 8 am and 5 pm EST. The majority of transactions occur in the US market from 8 am to noon EST.
During this timeframe, the European market is still in session, which creates a market of high liquidity. Trading during this period of overlap accounts for about 70% of the currency pair trading in the European session and about 80% of currency pair trading in the US session.Other currency pairs that appeal to high-risk traders during the London market hours include the USD/CHF, GBP/USD, USD/CAD and EUR/USD currency pairs.
It is not uncommon for these pairs to reach a daily range of about 100 pips. This level of volatility creates opportunities for entry into the market. In contrast, is not uncommon for the AUD/JPY, EUR/CHF, AUD/USD and NZD/USD currency pairs to reach a daily range of about 50 pips. This level of volatility is more appealing to traders who attempt to avoid risks. The level of volatility indicates that these pairs may be less likely to create a loss.
The London market also overlaps with the Asian market. The Tokyo trading session is the benchmark for the Asian market. Trading hours are from 7 pm and 4 am EST. Large investors take positions in the Tokyo market in anticipation of the opening of the London session. The GBP/CHF and GBP/JPY currency pairs are also highly volatile during this timeframe of overlap.
Trading during the period of overlap, which is between 2 am and 4 am, is the lowest of any trading session. Traders use these slow trading hours to position themselves for the opening of the European or US market.
Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and a Free Forex Training blog for keeping online Forex trading records.
Forex Trading-How To Make 10 Pips A Day
By Nathan Pennington
Ten pips per day, if I could only do 10 pips each day... I'd be a millionaire in 18 months!
Have you ever run calculations like that? I know I have. That's the allure of just 10 pips a day. It's just 10, right? I mean, how hard could that be? Really hard.
First the bad news, if you try to just make 10 pips in a day, you will fail. You can't be that consistent in trading over any significant space of time.
Now the good news, you can make an average of 10 pips a day. Notice however, that I said average 10 pips per day.
Let's back up a bit. 10 pips per day become 50 pips in a week. 50 pips in a week become 200 pips in a month. Now that's something you can work with.
Focus on 200 pips per month. Take fewer trades. Trade off of the daily charts. Use much larger profit targets and stop losses. Trade less lots. It will still equal the same outcome as the unreal expectations above, but this time you're actually setting yourself up for success.
Doing all this still won't guarantee that you'll be able to hit the target. You'll probably still have a losing month here and there. That happens. The thing is you'll be able to survive it.
In the 10 pips a day mindset, you're trading with very high leverage. One or two errors and you could be wiped out. In fact that is what happens almost every time.
Give yourself a change. After all, really making money is more fun.
Do you want to learn more about how I trade? I have just completed my brand new guide, "Forex Trading - What Finally Worked For Me".
Download it free here: Forex Trading
Nathan Pennington is a forex trader and the author of Winning Forex Trading -THE Definitive Guide
Article Source: http://EzineArticles.com/?expert=Nathan_Pennington
Ten pips per day, if I could only do 10 pips each day... I'd be a millionaire in 18 months!
Have you ever run calculations like that? I know I have. That's the allure of just 10 pips a day. It's just 10, right? I mean, how hard could that be? Really hard.
First the bad news, if you try to just make 10 pips in a day, you will fail. You can't be that consistent in trading over any significant space of time.
Now the good news, you can make an average of 10 pips a day. Notice however, that I said average 10 pips per day.
Let's back up a bit. 10 pips per day become 50 pips in a week. 50 pips in a week become 200 pips in a month. Now that's something you can work with.
Focus on 200 pips per month. Take fewer trades. Trade off of the daily charts. Use much larger profit targets and stop losses. Trade less lots. It will still equal the same outcome as the unreal expectations above, but this time you're actually setting yourself up for success.
Doing all this still won't guarantee that you'll be able to hit the target. You'll probably still have a losing month here and there. That happens. The thing is you'll be able to survive it.
In the 10 pips a day mindset, you're trading with very high leverage. One or two errors and you could be wiped out. In fact that is what happens almost every time.
Give yourself a change. After all, really making money is more fun.
Do you want to learn more about how I trade? I have just completed my brand new guide, "Forex Trading - What Finally Worked For Me".
Download it free here: Forex Trading
Nathan Pennington is a forex trader and the author of Winning Forex Trading -THE Definitive Guide
Article Source: http://EzineArticles.com/?expert=Nathan_Pennington
Forex Day Trading Versus Position Trading - The Pros and Cons
Trading can be fun and exciting when you daytrade and very boring when you position trade.
Our motto: get in, get out and go play!WHY We Want To Day Trade Versus Position Trade
1) We want to spend only a few short hours each day trading, sometimes just a few minutes!
2) We don't want to hold any overnight positions!
3) We don't want to hedge!
4) We want the fun of the quicker action and quicker profits!
5) We want more profits with less risk!
So keep these goals in mind as you learn our trading techniques!Be patient in your learning process and keep in your awareness that if you learn this trading system successfully, you will have a cash cow system FOR LIFE that is safe, independent, portable and highly profitable. It will give you the freedom to quit your J.O.B. (Just Over Broke) and travel the world and earn a great living, with just a portable laptop and your debit card!The currency pairs are made to swing, so trade with ease and without fear.
Quickly close out a losing position...don't dream/hope that it will turn back into profit! It often doesn't!Don't be radically bullish or bearish, swing trade within the trading range of the day, go with the short term trend.If you can develop the mental and emotional disciplines to trade according to these guidelines, you'll do very well and become very successful!I
deas About Trading in the Different Time FramesEach person needs to experiment with the different time frames and moving averages to find out what he/she is most suited for, time-wise and personality-wise. This takes time and lots of practice and patience in your demo account.If you have a J.O.B., then what we teach is perfect for you if you can trade during the busiest hours, between 3 am to 11 am EST.
Even 1 hour of trading in the 1-5-10 or 15 minute chart will make you enough money for the day. You can do multiple scalping trades in the 1 and 5 minute chart, or one trade in the 10 or 15 minute chart, and then go to work. If you get lucky and hit a breakout or breakdown, no matter what time frame you are in, you can make as much as 30 -100 pips in a few minutes!
YOU ONLY NEED 20 PIPS A DAY TO BE RICH!Some people love scalp trading, which are quick trades in the 1 and 5 minute charts for small but quick profits; and some love day trading, mostly done in the 10 and 15 and 30 minute charts, which simply means you close out all positions before the end of the trading day.If you do one or more trades in one day that rides the price up and down and you close each position out, that is called day trade swing trading. And some prefer swing trading over the course of several days or weeks, which I call position trading, mostly done in the 1 or 2 or 4 hour charts.
We personally scalp and short term day trade, which is really just one-day swing trading. If you use a 1 or 5 minute chart with a 20 pip initial stop loss with a 10-15 pip trailing stop after breakeven, and/or a 10-50 pip limit, you will do very well without big risk or staring at your computer screen until you fall asleep or go blind! Our motto: get in, get out and go play!The beauty of this method is that you don't have to have your PC on all the time or be glued to it or worry about overnight positions.
The trade-off is that the longer plays make more money, although, they do carry more inherent risk. So again, staying with your trade in the beginning until you've moved your stop to a breakeven, is your first goal, and this is true for every time frame you decide to trade in.Keep a trading journalFinally, it is a good practice to keep a simple trading journal. This way you can keep track of your trades and progress and be able to analyze, improve and hone your trading skills.
Simply include the time you entered and exited the trade, the currency pair, the chart time frame (this is important), and the strategy (breakout, trend or top or bottom). Also include write down what happened and what you could have done differently for future reference.Not every trade can be a winner but in order for you to be a consistent winner, you need to do two things: keep your losses small and manage your margin conservatively.We recommend that you trade no more than 5-10% of your account size in each trade. 5% is safer. It's easier to make up the losses, when they happen, and they will happen!!!
And ALWAYS use stops! Learn to manage your money wisely...invest small amounts each time and keep your losses small and when you're in profit, let your profits run with a trailing stop.What "Rich Dad, Poor Dad" says about trading:"It's not gambling if you know what you're doing. It is gambling if you're just throwing money into a trade and praying. The idea in trading is to use your technical knowledge, wisdom and love of the game to cut the odds down, to lower the risk.
Of course there is always risk. It is financial intelligence that improves the odds."Robert T. Kiyosaki"Knowing how to take a loss for the trader is as significant for him or her as learning to overcome the fear of death was for the samurai warrior."Robert KoppelWhat's the best way to stay positive no matter what? Celebrate your losses! Get up and dance, do a little jig, blow a horn, yell yippie, another loss!
Remember, you love the game and winning and losing are both part of the game!
Article Source: http://www.dk-article.com Web Directory: http://www.dk-seek.com
Erol Bortucene and Cynthia Macy are co-authors of The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading: The Day Trade Forex Trading Systems
Our motto: get in, get out and go play!WHY We Want To Day Trade Versus Position Trade
1) We want to spend only a few short hours each day trading, sometimes just a few minutes!
2) We don't want to hold any overnight positions!
3) We don't want to hedge!
4) We want the fun of the quicker action and quicker profits!
5) We want more profits with less risk!
So keep these goals in mind as you learn our trading techniques!Be patient in your learning process and keep in your awareness that if you learn this trading system successfully, you will have a cash cow system FOR LIFE that is safe, independent, portable and highly profitable. It will give you the freedom to quit your J.O.B. (Just Over Broke) and travel the world and earn a great living, with just a portable laptop and your debit card!The currency pairs are made to swing, so trade with ease and without fear.
Quickly close out a losing position...don't dream/hope that it will turn back into profit! It often doesn't!Don't be radically bullish or bearish, swing trade within the trading range of the day, go with the short term trend.If you can develop the mental and emotional disciplines to trade according to these guidelines, you'll do very well and become very successful!I
deas About Trading in the Different Time FramesEach person needs to experiment with the different time frames and moving averages to find out what he/she is most suited for, time-wise and personality-wise. This takes time and lots of practice and patience in your demo account.If you have a J.O.B., then what we teach is perfect for you if you can trade during the busiest hours, between 3 am to 11 am EST.
Even 1 hour of trading in the 1-5-10 or 15 minute chart will make you enough money for the day. You can do multiple scalping trades in the 1 and 5 minute chart, or one trade in the 10 or 15 minute chart, and then go to work. If you get lucky and hit a breakout or breakdown, no matter what time frame you are in, you can make as much as 30 -100 pips in a few minutes!
YOU ONLY NEED 20 PIPS A DAY TO BE RICH!Some people love scalp trading, which are quick trades in the 1 and 5 minute charts for small but quick profits; and some love day trading, mostly done in the 10 and 15 and 30 minute charts, which simply means you close out all positions before the end of the trading day.If you do one or more trades in one day that rides the price up and down and you close each position out, that is called day trade swing trading. And some prefer swing trading over the course of several days or weeks, which I call position trading, mostly done in the 1 or 2 or 4 hour charts.
We personally scalp and short term day trade, which is really just one-day swing trading. If you use a 1 or 5 minute chart with a 20 pip initial stop loss with a 10-15 pip trailing stop after breakeven, and/or a 10-50 pip limit, you will do very well without big risk or staring at your computer screen until you fall asleep or go blind! Our motto: get in, get out and go play!The beauty of this method is that you don't have to have your PC on all the time or be glued to it or worry about overnight positions.
The trade-off is that the longer plays make more money, although, they do carry more inherent risk. So again, staying with your trade in the beginning until you've moved your stop to a breakeven, is your first goal, and this is true for every time frame you decide to trade in.Keep a trading journalFinally, it is a good practice to keep a simple trading journal. This way you can keep track of your trades and progress and be able to analyze, improve and hone your trading skills.
Simply include the time you entered and exited the trade, the currency pair, the chart time frame (this is important), and the strategy (breakout, trend or top or bottom). Also include write down what happened and what you could have done differently for future reference.Not every trade can be a winner but in order for you to be a consistent winner, you need to do two things: keep your losses small and manage your margin conservatively.We recommend that you trade no more than 5-10% of your account size in each trade. 5% is safer. It's easier to make up the losses, when they happen, and they will happen!!!
And ALWAYS use stops! Learn to manage your money wisely...invest small amounts each time and keep your losses small and when you're in profit, let your profits run with a trailing stop.What "Rich Dad, Poor Dad" says about trading:"It's not gambling if you know what you're doing. It is gambling if you're just throwing money into a trade and praying. The idea in trading is to use your technical knowledge, wisdom and love of the game to cut the odds down, to lower the risk.
Of course there is always risk. It is financial intelligence that improves the odds."Robert T. Kiyosaki"Knowing how to take a loss for the trader is as significant for him or her as learning to overcome the fear of death was for the samurai warrior."Robert KoppelWhat's the best way to stay positive no matter what? Celebrate your losses! Get up and dance, do a little jig, blow a horn, yell yippie, another loss!
Remember, you love the game and winning and losing are both part of the game!
Article Source: http://www.dk-article.com Web Directory: http://www.dk-seek.com
Erol Bortucene and Cynthia Macy are co-authors of The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading: The Day Trade Forex Trading Systems
Saturday, April 19, 2008
How Many Kinds Of Main Strategies Are There In Forex Trading?
By Victor Mars and Oaco M
There may be dozens of strategies in Forex trading. Let's just talk about the roots.
Nature Of Market:
Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.
Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.
Fundamental Trading:
In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.
If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.
Hedge:
In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.
In FOREX, there are two kinds of similar "hedging" strategies:
1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.
For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.
Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.
This kind of "Yo-Yo Hedge" can work at any currencies pair.
2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.
Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.
There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.
Let's take the EUR/USD and the CHF/USD pairs.
These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.
And, this return does not include the buy low/sell high profits.
But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.
Arbitrage:
Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:
1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, then profit opportunity comes.
In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.
More pairs:
AUD/CAD CAD/JPY AUD/JPY AUD/CAD GBP/CAD GBP/AUD AUD/CAD USD/CAD AUD/USD AUD/CHF CHF/JPY AUD/JPY AUD/CHF GBP/CHF GBP/AUD AUD/CHF USD/CHF AUD/USD AUD/JPY EUR/JPY EUR/AUD AUD/JPY GBP/JPY GBP/AUD AUD/JPY USD/JPY AUD/USD AUD/USD GBP/USD GBP/AUD AUD/USD USD/CAD AUD/CAD AUD/USD USD/CHF AUD/CHF AUD/USD USD/JPY AUD/JPY CAD/JPY EUR/JPY EUR/CAD CAD/JPY GBP/JPY GBP/CAD CAD/JPY USD/JPY USD/CAD CHF/JPY EUR/JPY EUR/CHF CHF/JPY GBP/JPY GBP/CHF EUR/AUD AUD/CHF EUR/CHF EUR/AUD AUD/JPY EUR/JPY EUR/AUD AUD/USD EUR/USD EUR/AUD GBP/AUD EUR/GBP EUR/CAD AUD/CAD EUR/AUD EUR/CAD GBP/CAD EUR/CAD EUR/CAD USD/CAD EUR/USD EUR/CHF AUD/CHF EUR/AUD EUR/CHF GBP/CHF EUR/GBP EUR/CHF USD/CHF EUR/USD EUR/GBP GBP/AUD EUR/AUD EUR/GBP GBP/CAD EUR/CAD EUR/GBP GBP/CHF EUR/CHF EUR/GBP GBP/JPY EUR/JPY EUR/GBP GBP/USD EUR/USD EUR/JPY GBP/JPY EUR/GBP EUR/JPY USD/JPY EUR/USD EUR/USD GBP/USD EUR/GBP EUR/USD USD/JPY EUR/JPY GBP/JPY USD/JPY GBP/USD
2, Hedging Arbitrage:
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.
One broker which pays or charges roll over interest at end of day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea about this type of Hedge Arbitrage is to open a position of currency (Fore example, the highest SWAP GBP/JPY) at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency with the broker that does not charge interest for carrying the trade. This way you will gain the interest or SWAP that is credited to your account, risk-free.
3, Netting Arbitrage:
The main idea behind the strategy is, using differences between cross rates (such as EUR/USD, GBP/USD, and EUR/GBP) at different markets.
For example, suppose you had opened the following positions:buy 1 lot EUR/USD at 1.4867;sell 1 lot EUR/GBP at 0.7600;and sell 0.76 lot GBP/USD at 1.9586.
The netting/clearing gives the following results:Long EUR from the first pair and short EUR from the second pair gives zero exposure in EUR.Long position in GBP from the second pair and short position from the third pair gives zero exposure in GBP.Short position from the first pair ($148,670.00) in USD and long position from the third pair ($195,860.00*0.76) in USD gives you $183.60 profit without open positions and exposures. Simple? Not really for small traders, may be for those "big brothers" only. Because it is really hard to play spread, slippage, stop loss hunting or so on games against brokers.
Carry Trading:
Carry trading is a well known trading strategy which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. Then this investor can make profit from the difference of these two interest rates.
JPY is currently considered to be the most popular currency to use as the low interest yielding currency in the carry trade, because its interest rate is the lowest of the world almost at 0. And GBP is currently considered to be the high yielding currency. So are NZD and AUD.
When we buy these currencies pairs: GBP/JPY, AUD/JPY, GBP/CHF, USD/JPY, or EUR/CHF; Or sell: EUR/AUD, EUR/GBP, AUD/NZD; Both actions can yield positive SWAP roll over interest. If combining with some kinds of hedge trading, we can make as high as 100% profit annually and keep the risk low.
The big risk in a carry trading is the uncertainty of exchange rates. Also, these transactions are generally done with a high leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
Martingale:
Originally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double his/her order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment. In the example below, you bought 1 lot EUR/USD at 1.4650. Unfortunately, the rate drops. You play it in martingale way, "double down", buy two lots, you need the EUR/USD to rally from 1.4630 to 1.4640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.4625 instead of 1.4640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.4550, you only need the currencies pair to rally to 1.4569 to break even on your entire holdings. Once the rate goes up one more pip, you will win a lot.
EUR/USD Lots Average or Breakeven Price 1.4650 1 1.4650 1.4630 2 1.4640 1.4610 4 1.4625 1.4590 8 1.4605 1.4570 16 1.4588 1.4550 32 1.4569
The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.
Anti-Martingale:
The anti-martingale strategy is the opposite of the better known martingale approach. This approach instead increases order lots after wins, while reducing them after a loss. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
Grid:
Basically the trader sets a series of entry limit orders X pips from the current price, for example 15 pips. Some experienced traders like to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or Golden Section Numbers to make this grid. Once price hits the level the limit order is executed. Then every 15 pips there is another order at limit price executed. And so on. In a yo-yo market, while the price moves up or down, there always be some limit orders executed. Once the order is taken profit, and the price moves to its original level again, a new limit order shall be executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It is simple and easy, but hard to deal with when and how to close all orders, especially the Stop Loss. Some experts say we do not need stop loss, but will you take the chance to hold your all positions till "Margin Call?"
Day trading:
This refers to the practice of buying and selling currencies pairs such that all positions will usually be closed within the same Forex the trading day. The day trading idea comes from stock market. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Under the rules of NYSE and NASD, customers who are deemed "pattern day traders" must have at least $25,000 in their accounts and can only trade in margin accounts.
But in Forex market, every one can be a day trader to do day trading. Actually, more than day trading, they can do "scalping".
Scalping:
Scalping is a trading style where small price gaps created by the bid-ask spreads are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get a few points (1~3 pips only, no greed, no long term) off the market every time. This strategy is based on a fact: approximately 70 to 80% of the time, the market is in a consolidation pattern. What this means is that for the majority of time the market is not making significant moves. For example, after the USA market is closed and before the Europe market is open, the Forex market tends to range in a consolidation channel for hours at a time before making another significant move in one direction. This kind of market behavior pattern is ideal for Forex scalping. Every time you enter the market, wait 10 or 20 minutes, once you have several pips gain then cash it and go.
Scalping has some features:
1, Lower exposure, lower risks. Scalpers are only exposed in a relatively short period.
2, Smaller moves, easier to obtain. The normal wave of the market will give you several pips easily.
3, Large volume, adding profits up. Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for small-capital traders.
But be careful, not every broker welcomes this kind of scalping strategy. If you scalp it too quick and thin, let's say you just hit 1 pip every 2 or 3 minutes then run, and repeat it again and again within a day, every day, you must feel high, eh? But the broker may be not happy and bans you. You will be kicked out because of your successful scalping!
Break-Out:
Using the Bollinger Bands indicator on a chart, we will find every Forex currencies pair is waving in a "band", or a channel. By finding major support and resistance levels with technical analysis, a Break-Out strategy trader will buy this pair at the lower level of support (bottom of the band/channel) and sell them near resistance (top of the band/channel). Till now there is not a Break-Out yet.
Once the price breaks the upper range line with larger-than-average volume, or the opposite: the price breaks the lower range line with larger-than-average volume, the chance is coming. The idea of this strategy is that when a currencies pair breaks out of the channel, it usually experiences a large price movement in the direction of the breakout. So buy it at the price breaks the upper range line and continue to hold it until the rate has risen a distance comparable to the height of the range. If it goes down instead, stop losses as it penetrates the upper range line. Or, sell it at the price breaks the lower range line, and continue to hold it until the rate has fallen a distance comparable to the height of the range. If it goes up instead, stop losses as it penetrates the lower range line.
Pivot:
Besides Support and Resistance levels, many foreign exchange traders like to use another indicator to analyze and predict currency pairs' price changes, it is so-called: the Pivot Point. To calculate and analyze pivot is a subset of technical analysis, with this bench mark, traders can locate the rotation point of the trend, and this is very helpful for deciding when and where to buy or sell.
Classical Pivot Point, Support and Resistance Formulas are as follows:
Look at any one chart, the pivot is an average of the previous bar's high, low, and closing prices. In the following formula, "H" represents the previous bar's high, "L" represents the previous bar's low, and "C" represents the previous bar's closing price.
Current Bar's Pivot Point (P)=Previous Bar's (H+L+C)/3 First level of support and resistance can be calculated as follows: First Resistance Level (R1)=(2*P)-L First Support Level (S1)=(2*P)-H Likewise, the second level of support and resistance: Second Resistance Level (R2)=P+(R1-S1) Second Support Level (S2)=P-(R1-S1)
Since many currency pairs tend to fluctuate between Support and Resistance levels, and these levels are calculated based on Pivot points, so when a trend or breakout trader knows where the pivot point is, it will enable him/her to find out key levels that need to be broken for a move to qualify as a breakout.
News Trading:
The system is developed based on economic news events from around the world. Nearly half of those announcements have moved the market significantly. Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the news is released, especially for the big one, both sides of buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the Stop Loss, just let it be. The winner's gain minus the loser's loss, it is your news trading profit. For example, Non-Farm Payrolls/Employment Report - The NFP is the most influential news release of every month. It's announced on the first Friday of the month at 8:30am EST for the prior month. We can put a buy order and a sell order at market prices for GBP/USD, at 8:29 am EST. Don't forget, set 30 pips Stop Loss level for them. Wait 2 minutes only, the news is announced, it is a big one! Then the sell order jumps over 100 pips, and the buy order drops like a brick. The brick hits the Stop Loss and the pain is over. Totally, your gain could be 100-30=70 pips. Quick and easy, cool enough?
Trend Following:
It is so simple, just follow the trend. Buy it is the most difficult strategy because no one can tell you 100% for sure what is the right TREND. Go to look at a weekly chat of USD/CAD, if you had shorted this pair in September 2001 and held it till September 2007, you know what the trend means.
The most famous trend analysis tool seems the Wave Principle. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. Elliott isolated five such patterns, or "waves," that recur in market price data.
Another trend analysis guru should be W. D. Gann. In 1908, Gann discovered what he called the "market time factor", which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Back to the chat of USD/CAD, now, please tell me, how to follow the trend? Will USD/CAD continue the trend which is going south further to 0.6000, or, another trend going north reversely back to 1.6000?
If you would like to find out more about Forex trading, come and visit us at http://www.vdux.com
If you want to download our Raingull Automated Trading Software EA, please come to http://www.raingull.com
Article Source: http://EzineArticles.com/?expert=Victor_Mars
There may be dozens of strategies in Forex trading. Let's just talk about the roots.
Nature Of Market:
Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.
Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.
Fundamental Trading:
In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.
If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.
Hedge:
In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.
In FOREX, there are two kinds of similar "hedging" strategies:
1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.
For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.
Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.
This kind of "Yo-Yo Hedge" can work at any currencies pair.
2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.
Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.
There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.
Let's take the EUR/USD and the CHF/USD pairs.
These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.
And, this return does not include the buy low/sell high profits.
But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.
Arbitrage:
Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:
1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, then profit opportunity comes.
In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.
More pairs:
AUD/CAD CAD/JPY AUD/JPY AUD/CAD GBP/CAD GBP/AUD AUD/CAD USD/CAD AUD/USD AUD/CHF CHF/JPY AUD/JPY AUD/CHF GBP/CHF GBP/AUD AUD/CHF USD/CHF AUD/USD AUD/JPY EUR/JPY EUR/AUD AUD/JPY GBP/JPY GBP/AUD AUD/JPY USD/JPY AUD/USD AUD/USD GBP/USD GBP/AUD AUD/USD USD/CAD AUD/CAD AUD/USD USD/CHF AUD/CHF AUD/USD USD/JPY AUD/JPY CAD/JPY EUR/JPY EUR/CAD CAD/JPY GBP/JPY GBP/CAD CAD/JPY USD/JPY USD/CAD CHF/JPY EUR/JPY EUR/CHF CHF/JPY GBP/JPY GBP/CHF EUR/AUD AUD/CHF EUR/CHF EUR/AUD AUD/JPY EUR/JPY EUR/AUD AUD/USD EUR/USD EUR/AUD GBP/AUD EUR/GBP EUR/CAD AUD/CAD EUR/AUD EUR/CAD GBP/CAD EUR/CAD EUR/CAD USD/CAD EUR/USD EUR/CHF AUD/CHF EUR/AUD EUR/CHF GBP/CHF EUR/GBP EUR/CHF USD/CHF EUR/USD EUR/GBP GBP/AUD EUR/AUD EUR/GBP GBP/CAD EUR/CAD EUR/GBP GBP/CHF EUR/CHF EUR/GBP GBP/JPY EUR/JPY EUR/GBP GBP/USD EUR/USD EUR/JPY GBP/JPY EUR/GBP EUR/JPY USD/JPY EUR/USD EUR/USD GBP/USD EUR/GBP EUR/USD USD/JPY EUR/JPY GBP/JPY USD/JPY GBP/USD
2, Hedging Arbitrage:
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.
One broker which pays or charges roll over interest at end of day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea about this type of Hedge Arbitrage is to open a position of currency (Fore example, the highest SWAP GBP/JPY) at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency with the broker that does not charge interest for carrying the trade. This way you will gain the interest or SWAP that is credited to your account, risk-free.
3, Netting Arbitrage:
The main idea behind the strategy is, using differences between cross rates (such as EUR/USD, GBP/USD, and EUR/GBP) at different markets.
For example, suppose you had opened the following positions:buy 1 lot EUR/USD at 1.4867;sell 1 lot EUR/GBP at 0.7600;and sell 0.76 lot GBP/USD at 1.9586.
The netting/clearing gives the following results:Long EUR from the first pair and short EUR from the second pair gives zero exposure in EUR.Long position in GBP from the second pair and short position from the third pair gives zero exposure in GBP.Short position from the first pair ($148,670.00) in USD and long position from the third pair ($195,860.00*0.76) in USD gives you $183.60 profit without open positions and exposures. Simple? Not really for small traders, may be for those "big brothers" only. Because it is really hard to play spread, slippage, stop loss hunting or so on games against brokers.
Carry Trading:
Carry trading is a well known trading strategy which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. Then this investor can make profit from the difference of these two interest rates.
JPY is currently considered to be the most popular currency to use as the low interest yielding currency in the carry trade, because its interest rate is the lowest of the world almost at 0. And GBP is currently considered to be the high yielding currency. So are NZD and AUD.
When we buy these currencies pairs: GBP/JPY, AUD/JPY, GBP/CHF, USD/JPY, or EUR/CHF; Or sell: EUR/AUD, EUR/GBP, AUD/NZD; Both actions can yield positive SWAP roll over interest. If combining with some kinds of hedge trading, we can make as high as 100% profit annually and keep the risk low.
The big risk in a carry trading is the uncertainty of exchange rates. Also, these transactions are generally done with a high leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
Martingale:
Originally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double his/her order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment. In the example below, you bought 1 lot EUR/USD at 1.4650. Unfortunately, the rate drops. You play it in martingale way, "double down", buy two lots, you need the EUR/USD to rally from 1.4630 to 1.4640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.4625 instead of 1.4640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.4550, you only need the currencies pair to rally to 1.4569 to break even on your entire holdings. Once the rate goes up one more pip, you will win a lot.
EUR/USD Lots Average or Breakeven Price 1.4650 1 1.4650 1.4630 2 1.4640 1.4610 4 1.4625 1.4590 8 1.4605 1.4570 16 1.4588 1.4550 32 1.4569
The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.
Anti-Martingale:
The anti-martingale strategy is the opposite of the better known martingale approach. This approach instead increases order lots after wins, while reducing them after a loss. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
Grid:
Basically the trader sets a series of entry limit orders X pips from the current price, for example 15 pips. Some experienced traders like to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or Golden Section Numbers to make this grid. Once price hits the level the limit order is executed. Then every 15 pips there is another order at limit price executed. And so on. In a yo-yo market, while the price moves up or down, there always be some limit orders executed. Once the order is taken profit, and the price moves to its original level again, a new limit order shall be executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It is simple and easy, but hard to deal with when and how to close all orders, especially the Stop Loss. Some experts say we do not need stop loss, but will you take the chance to hold your all positions till "Margin Call?"
Day trading:
This refers to the practice of buying and selling currencies pairs such that all positions will usually be closed within the same Forex the trading day. The day trading idea comes from stock market. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Under the rules of NYSE and NASD, customers who are deemed "pattern day traders" must have at least $25,000 in their accounts and can only trade in margin accounts.
But in Forex market, every one can be a day trader to do day trading. Actually, more than day trading, they can do "scalping".
Scalping:
Scalping is a trading style where small price gaps created by the bid-ask spreads are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get a few points (1~3 pips only, no greed, no long term) off the market every time. This strategy is based on a fact: approximately 70 to 80% of the time, the market is in a consolidation pattern. What this means is that for the majority of time the market is not making significant moves. For example, after the USA market is closed and before the Europe market is open, the Forex market tends to range in a consolidation channel for hours at a time before making another significant move in one direction. This kind of market behavior pattern is ideal for Forex scalping. Every time you enter the market, wait 10 or 20 minutes, once you have several pips gain then cash it and go.
Scalping has some features:
1, Lower exposure, lower risks. Scalpers are only exposed in a relatively short period.
2, Smaller moves, easier to obtain. The normal wave of the market will give you several pips easily.
3, Large volume, adding profits up. Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for small-capital traders.
But be careful, not every broker welcomes this kind of scalping strategy. If you scalp it too quick and thin, let's say you just hit 1 pip every 2 or 3 minutes then run, and repeat it again and again within a day, every day, you must feel high, eh? But the broker may be not happy and bans you. You will be kicked out because of your successful scalping!
Break-Out:
Using the Bollinger Bands indicator on a chart, we will find every Forex currencies pair is waving in a "band", or a channel. By finding major support and resistance levels with technical analysis, a Break-Out strategy trader will buy this pair at the lower level of support (bottom of the band/channel) and sell them near resistance (top of the band/channel). Till now there is not a Break-Out yet.
Once the price breaks the upper range line with larger-than-average volume, or the opposite: the price breaks the lower range line with larger-than-average volume, the chance is coming. The idea of this strategy is that when a currencies pair breaks out of the channel, it usually experiences a large price movement in the direction of the breakout. So buy it at the price breaks the upper range line and continue to hold it until the rate has risen a distance comparable to the height of the range. If it goes down instead, stop losses as it penetrates the upper range line. Or, sell it at the price breaks the lower range line, and continue to hold it until the rate has fallen a distance comparable to the height of the range. If it goes up instead, stop losses as it penetrates the lower range line.
Pivot:
Besides Support and Resistance levels, many foreign exchange traders like to use another indicator to analyze and predict currency pairs' price changes, it is so-called: the Pivot Point. To calculate and analyze pivot is a subset of technical analysis, with this bench mark, traders can locate the rotation point of the trend, and this is very helpful for deciding when and where to buy or sell.
Classical Pivot Point, Support and Resistance Formulas are as follows:
Look at any one chart, the pivot is an average of the previous bar's high, low, and closing prices. In the following formula, "H" represents the previous bar's high, "L" represents the previous bar's low, and "C" represents the previous bar's closing price.
Current Bar's Pivot Point (P)=Previous Bar's (H+L+C)/3 First level of support and resistance can be calculated as follows: First Resistance Level (R1)=(2*P)-L First Support Level (S1)=(2*P)-H Likewise, the second level of support and resistance: Second Resistance Level (R2)=P+(R1-S1) Second Support Level (S2)=P-(R1-S1)
Since many currency pairs tend to fluctuate between Support and Resistance levels, and these levels are calculated based on Pivot points, so when a trend or breakout trader knows where the pivot point is, it will enable him/her to find out key levels that need to be broken for a move to qualify as a breakout.
News Trading:
The system is developed based on economic news events from around the world. Nearly half of those announcements have moved the market significantly. Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the news is released, especially for the big one, both sides of buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the Stop Loss, just let it be. The winner's gain minus the loser's loss, it is your news trading profit. For example, Non-Farm Payrolls/Employment Report - The NFP is the most influential news release of every month. It's announced on the first Friday of the month at 8:30am EST for the prior month. We can put a buy order and a sell order at market prices for GBP/USD, at 8:29 am EST. Don't forget, set 30 pips Stop Loss level for them. Wait 2 minutes only, the news is announced, it is a big one! Then the sell order jumps over 100 pips, and the buy order drops like a brick. The brick hits the Stop Loss and the pain is over. Totally, your gain could be 100-30=70 pips. Quick and easy, cool enough?
Trend Following:
It is so simple, just follow the trend. Buy it is the most difficult strategy because no one can tell you 100% for sure what is the right TREND. Go to look at a weekly chat of USD/CAD, if you had shorted this pair in September 2001 and held it till September 2007, you know what the trend means.
The most famous trend analysis tool seems the Wave Principle. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. Elliott isolated five such patterns, or "waves," that recur in market price data.
Another trend analysis guru should be W. D. Gann. In 1908, Gann discovered what he called the "market time factor", which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Back to the chat of USD/CAD, now, please tell me, how to follow the trend? Will USD/CAD continue the trend which is going south further to 0.6000, or, another trend going north reversely back to 1.6000?
If you would like to find out more about Forex trading, come and visit us at http://www.vdux.com
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Article Source: http://EzineArticles.com/?expert=Victor_Mars
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