by kelly price
Forex scalping and day trading is more popular than ever and is the choice of most new forex traders but is it the right one and how do you enjoy forex scalping success - lets find out.
1. Short Term Volatility is Random
Millions of forex traders trade trillions of dollars in currency each day and to say that you can measure what this diverse number of traders will do in a few hours, or a day is laughable you cant.
2. Support and Resistance Levels are Meaningless
To trade any market you need to have valid levels of support or resistance to key off however with all volatility being random in short term trading, prices can and do go anywhere and support and resistance cannot be used - as the data simply isn't valid.
3. No Trading system Will Work
It doesn't matter how good or well thought out the trading system is - if volatility is random and support and resistance not valid it wont work!
In any financial market to win you need to trade the odds and if you cant, you are going to lose longer term. It's a bit like being in a casino - if you can count the cards in a game such as blackjack you win but in a game of pure chance like roulette, play long enough with the odds against you and your going to lose and it's the same in forex scalping.
You cant get the odds on your side and you cant win - PERIOD
4. Forex Scalping Systems Don't have Track Records
Yes they do many traders will say - I have seen them. Sure they have and written all over the track record will be "hypothetical" or "simulated" This means it wasn't traded in the market but done on paper knowing the closing prices!
How hard is that?
You could do it and so can I and even my 10 year old daughter could - but the markets don't work backwards its harder - You have to trade going forwards!
5. Why is it So Popular?
Because it makes a good story and vendors know this.
Most of them have never traded in their lives - but the story of small regular profits and low risk is an easy one to sell, to naive or greedy investors who are looking for an easy way to get rich in forex.
Of course there is no easy way to get rich in forex and you wouldn't expect there to be, with the rewards on offer.
THE GOOD NEWS!
The good news is you can make money in forex trading if you avoid forex scalping and concentrate on trading the odds. This means valid data where you can get the odds in your favour with your forex trading system and trade them for profit.
You can swing trade, looking for trends of a few days to a few weeks, or trend follow looking for trends that last weeks, months or even years. In both forex methods you can trade the odds - the key to a successful forex trading strategy.
Forex scalping is not the only myth in currency trading - but it's a popular one and you need to ignore it and concentrate on getting the right forex education to win.
So leave forex scalping and day trading to the dreamers and greedy traders, who think forex trading is simply a walk in the park and concentrate on building your own forex trading strategy based around trading the odds.
Learn the odds, learn how to trade them and there is nothing to stop you enjoying currency trading success.
About the Author
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Saturday, December 1, 2007
Tuesday, November 27, 2007
Forex Fundamentals: Knowledge You Can Profit From
by Gerald Mason
An in-depth knowledge of macroeconomics or international trade isn't necessary to trade the Forex. But knowing how these forces affect currency pairs can only make you a more savvy trader. Here are a few highlights.
When a country raises its interest rates, often their stock market will go down as investors move their funds to greener financial pastures. This tends to weaken the internal economy of the country, but strengthens it in relation to other countries. Which effect will have the most impact on that nation's currency pairs is often discussed well in advance by the "talking heads," and each Forex trader has to decide for herself who to believe!
Crude oil
Canada is an oil-producing nation. Exporting crude oil raises their GNP and improves the balance of trade, strengthening their economy.
As the price of crude oil goes up, the USD/CAD goes down. (That's because the Canadian dollar, the cross currency, has appreciated against the base currency, the U.S. dollar.) At this point, the Canadian dollar is almost at parity with the U.S. dollar, a situation not seen since the 1950s.
As an interesting exercise, try laying the chart of the USD/CAD over the chart of crude oil prices for the same time period. The two charts are almost a flipped image of each other.
Japan, on the other hand, is an oil-consuming nation, strongly industrial but with no real energy reserves of their own. Importing crude oil at increasingly higher rates to power their economy raises the cost of production and slows or reverses their economic growth.
The change in the USD/JPY has not been as dramatic as that in the USD/CAD, and the correlation between the charts not as impressive, but that's because the cost of crude oil has affected the USD half of the equation as well as the JPY side.
Precious metals
During troubled political or economic times, investors tend to move their capital from speculative investments to something more conservative and solid. Precious metals, particularly gold, tend to go up in value at these times. When the situation returns to normal, gold tends to decline as investors seek higher returns from their money.
The Swiss franc, like gold, is considered a safe harbor for capital. As the U.S. dollar has depreciated (mainly due to the government deficit, a large trade deficit, and low interest rates when much of the rest of the world is raising theirs), investors have moved much of their capital to these harbors. Therefore, as the price of gold rises, so does the franc in relation to the dollar.
Like the Canadian dollar discussed above, the USD/CHF (Swissie) has declined because of the pressure of the cross currency against the base. Again, lay a chart of the USD/CHF over one for gold with the same time interval, and see how one reflects the other like trees in a lake.
Australia is a major gold and copper producer. Copper is not only a precious metal, it's also a substantial element in the housing market (copper plumbing, wiring, etc.). As demand for copper rises on both fronts, the Australian dollar climbs against the U.S. dollar. This is also a reflection of high Australian interest rates versus the low ones in the United States.
About the Author
Download Free Forex Software Free Forex Software For You To Use: Download Free Forex Software
An in-depth knowledge of macroeconomics or international trade isn't necessary to trade the Forex. But knowing how these forces affect currency pairs can only make you a more savvy trader. Here are a few highlights.
When a country raises its interest rates, often their stock market will go down as investors move their funds to greener financial pastures. This tends to weaken the internal economy of the country, but strengthens it in relation to other countries. Which effect will have the most impact on that nation's currency pairs is often discussed well in advance by the "talking heads," and each Forex trader has to decide for herself who to believe!
Crude oil
Canada is an oil-producing nation. Exporting crude oil raises their GNP and improves the balance of trade, strengthening their economy.
As the price of crude oil goes up, the USD/CAD goes down. (That's because the Canadian dollar, the cross currency, has appreciated against the base currency, the U.S. dollar.) At this point, the Canadian dollar is almost at parity with the U.S. dollar, a situation not seen since the 1950s.
As an interesting exercise, try laying the chart of the USD/CAD over the chart of crude oil prices for the same time period. The two charts are almost a flipped image of each other.
Japan, on the other hand, is an oil-consuming nation, strongly industrial but with no real energy reserves of their own. Importing crude oil at increasingly higher rates to power their economy raises the cost of production and slows or reverses their economic growth.
The change in the USD/JPY has not been as dramatic as that in the USD/CAD, and the correlation between the charts not as impressive, but that's because the cost of crude oil has affected the USD half of the equation as well as the JPY side.
Precious metals
During troubled political or economic times, investors tend to move their capital from speculative investments to something more conservative and solid. Precious metals, particularly gold, tend to go up in value at these times. When the situation returns to normal, gold tends to decline as investors seek higher returns from their money.
The Swiss franc, like gold, is considered a safe harbor for capital. As the U.S. dollar has depreciated (mainly due to the government deficit, a large trade deficit, and low interest rates when much of the rest of the world is raising theirs), investors have moved much of their capital to these harbors. Therefore, as the price of gold rises, so does the franc in relation to the dollar.
Like the Canadian dollar discussed above, the USD/CHF (Swissie) has declined because of the pressure of the cross currency against the base. Again, lay a chart of the USD/CHF over one for gold with the same time interval, and see how one reflects the other like trees in a lake.
Australia is a major gold and copper producer. Copper is not only a precious metal, it's also a substantial element in the housing market (copper plumbing, wiring, etc.). As demand for copper rises on both fronts, the Australian dollar climbs against the U.S. dollar. This is also a reflection of high Australian interest rates versus the low ones in the United States.
About the Author
Download Free Forex Software Free Forex Software For You To Use: Download Free Forex Software
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