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.
Tuesday, May 20, 2008
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
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