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Tuesday, December 30, 2008

2009 NEW YEAR GREETING

The management of FOREX OH FOREX Blog and ISIS Connects 2U Store wishes all our valued clients, affiliates and guests A VERY HAPPY AND PROSPEROUS NEW YEAR and may this new year all of us will reach out for the new opportunities available. Thank you for you support

Saturday, December 27, 2008

Setting-up Your Trading System

So finally you have GRADUATED from your DEMO School and is now ready to engage in the real battle. Before you start charging forward, let me show how you can set up your very own trading system to ensure you will win each battle:


1.Choose Your Desired Time Frames

Decide what type of trader do you wish to be: a Day Trader or a Swing Trader.This will help you to determine the appropriate time frames.( For further information, you may read the article on this subject in this blog)

2.Find The Indicators That Help To Identify A New Trend

This is to ensure that you are able to exactly identify the emergence of a new trend as early as possible before you enter any trade.There are many indicators that you may choose and one of the most popular one is the MOVING AVERAGE.Note: like the other indicators, MA is not perfect.

3.Find Indicators That Help to Confirm The Trend

MACD, Stochastics or RSI are used by traders to confirm a given trend. You may have used other indicators during your DEMO session so the choice is yours.

4.Don't Forget To Look At Today's Economic Calendar

A professional trader NEVER miss to check the ECONOMIC CALENDAR before he starts his day. Those technical indicators alone WILL NOT help you to close a winning trade unless you enjoy scalping. Please read an article on the ECONOMIC CALENDAR in this blog to help you understanding further.

5. Define Your Risk

A good trader thinks about what he/she may potentially loose BEFORE thinking about how much he/she can win.So always remeber the 2% LIMIT RULE i.e trade only 2% of your equity. If you start with USD 10,000, then 2% is 10,000 x 2%=USD 200. NEVER exceed this percentage or you may end up with a margin call from your broker.

6. Define Entry And Exit

You should wait until a candle completely closes before entering a trade.

Set an exit target and exit when the price hits this target.

Choose Support & Resistance Levels as your price target.


7.Write Down Your System Rules And FOLLOW it strictly
HAPPY TRADING!!!

Forex Economic Calendar

It is important to know the time of High impact data release if you trade affected currency pair.

During actual news release market becomes volatile. The strength of the volatility depends on the "factor of surprise" brought in the news.

"Factor of surprise" can be defined as a level of unexpectedness, where traders compare Forecast data to Actually released data.

Medium impact economic data should also be kept in mind in case the factor of surprise turns to be high. Low impact data most of the time do not shift Forex market significantly.

Column Previous in Forex Calendar — provides data from last release.
Column Forecast indicates numbers that economists are predicting and expecting for the upcoming release today.
Column Actual is updated only after the data is out. At the very second when data becomes available it is instantly

Economic News impact — increased market volatility — usually lasts for 1-3 minutes (highest volatility); next 5-10 minutes market experiences corrective/adaptive volatility, where price settles in summarizing new market shift.

What moves EUR/USD?

1. US Non Farm Payroll — measures new jobs created in States.
2. Interest rates — FOMC rate decisions.
3. US Trade Balance, European Trade Balance — a proportion between exports and imports in US economy.
4. U.S. Current Account
5. US Treasury Inflow Capital (TIC) Data — a measure of how much foreign buying of country's securities takes place.
6. US Gross domestic product (GDP) — a measurement of growth in economy.
7. Federal Open Market Committee (FOMC) Rate Decisions — data about changes in currency rates.
8. US Retail Sales — a measure of strength of consumer expenditure.
9. Consumer price index (CPI) — a measure of inflation in Europe.
Note, that because the US dollar is involved in over 80% of all currency trades, US economic data tends to be the most important in the Forex market.


Forex News Trading

Economic news releases often evoke strong moves in the currency market, creating a lot of short-term trading opportunities for breakout traders. However, not all news reports are tradable. Some of them may not have significant effect on the market while others do. So, before deciding on trading the upcoming news traders may want to find out whether the news is worth trading or not. Traders can find about the significance of the news by looking at the economic calendar's special features, such as, for example, marking all important news in red.

There are two general approaches to trade news:

1 — By "guarding" the breakout channel

Traders simply set Buy and Sell limit orders on both sides of a price channel, so when the news comes out one of the orders will probably be hit. Although this method is very simple, it also carries real risks of potentially hitting two orders: Buy and Sell as the market is shaken by the news report. In such "double-hit" situation traders will face losses on one or sometimes even both trades.

2 — By actually analyzing the data

Traders can predict most probable outcome of the news by looking at such economic calendar fields as: "Forecast" and "Previous". Figures in those fields can give an idea about the current situation...

Then, traders would watch the news report and pay attention to the actual numbers released. If the numbers come as a surprise — means they are not close to what was expected / forecasted, then traders would consider opening trading position regarding to the situation. If the data carries positive surprise — they would open Long position, negative — Short. This news trading requires more attention from traders, but is also more effective as it carries lesser risks. position regarding to the situation. If the data carries positive surprise — they would open Long position, negative — Short.

This news trading requires more attention from traders, but is also more effective as it carries lesser risks.


When are economic news released?

USD - United States - 8:30 am — 10:00 am EST

GBP - United Kingdom - 2:00 am — 4:30 am EST

EUR - Germany - 2:00 am — 6:00 am EST

EUR - Italy - 3:30 am — 5:00 am EST

EUR - France - 2:30 am — 4:00 am EST

CHF - Switzerland - 1:30 am — 5:30 am EST

AUD - Australia - 5:30 pm — 7:30 pm EST

CAD - Canada - 7:00 am — 8:30 am EST

JPY - Japan - 6:30 pm — 11:30 pm EST


What you should know about trading the news in Forex

1. Even if you do not trade news it is important to know about the date and time the news are due, to be able to prepare to possible short-term extreme market conditions. Some traders, actually, prefer not to trade at all during economic news releases.

2. The fewer the price moves before news releases (when it may seem like everybody has abandoned trading), the greater is a potential for the market to burst out after the news report.

3. Breakouts following the economic news reports exist for very short period of time — from several minutes to several seconds — it is a first reaction of the world to the news.

4. Generally, if the news did not carry any "surprises" — unexpected data — there will often be no significant reaction in the Forex market.

Reproduced from Forex Fundamental Analysis

Friday, December 26, 2008

DAY TRADER Vs SWING TRADER

Day traders typically buy and sell currencies throughout the day, in the hope that the currency price will fluctuate during the day, thus providing them opportunities to make quick profits. A day trader can hold an open position anywhere from a few seconds to a few hours, but will close out his position before he goes to sleep. Therefore, the day trader does not hold any overnight positions.
On the other hand, swing traders have a a slightly longer time horizon than day traders for holding an open position. Just like day traders do, swing traders also try to speculate the short-term fluctuations of a currency price. Swing traders, however, tend to hold open positions for more than one day, but could also hold them for a few hours to several days, if that is necessary in order to capture a larger movement. I will highlight some differences between day trading and swing trading Forex below:

1. Choice Of Time Frames -

Day Trading is carried out on lower time frames such as 5 min chart, 15 min chart or 30 min chart etc, the amount of pips that can be made per trade are typically not as high since the day trades last only for few min to few hours. However, the swing trades on the other hand are carried out on bigger time frames (1 hr chart, 4 hr forex chart , 8 hr chart etc.) ad they sometimes last for as much as few days. As a day trader your primary concern is to catch intraday swings. Your trades start and finish the same day. Your world is the day you are trading in. You don't care what will happen in the market tomorrow or the day after tomorrow. Your objective when trading is focusing on the appropriate time frame chart. My opinion is that day trading should be done on a 1, 5 or 10 minute bar chart. Remember, you are looking to capture several fast and short moves during the day and hence you must focus on the charts that best illustrate events as they happen in a short period of time. However, the fact that you are day trading on a 1,5 or 10 minute bar chart does not mean you cant use a larger time frame chart for the purpose of analysis. This however, is very subjective and depends very much on the traders' strategies and methods of trading. As an example, many day traders would look at one hour bar charts in order to have a view of how the market has been behaving in the last week. Is it moving sideways (and so maybe I should only place trades between support and resistance areas)? Is it trending (and so maybe I should only be looking at placing trades in the direction of the higher time frame trend)? Are there any major support and/or resistance levels I should be aware of (areas where I should refrain from placing trades since it is uncertain how the market will react when reaching them)? Did the market brake out of a congestion area? Again, it is very subjective. Some day traders believe that with proper larger time frame analysis they can select better their day trades. My personal opinion is that the more you analyze the more conflicts you will have and the more uncertainties will appear (especially if you are new to trading). I like making things simple and I found it very useful when trading (proof of this is that all of the trading systems I use are 100% mechanical). Don't get me wrong, this is not to say that larger time frames should not be used at all for analysis purposes. But, try to keep it simple and if you see that looking at larger time frame charts interferes with your correct decision process when placing day trades then simply stop.
However a swing trade lasts between 4 hrs to 1 or 2 days depending on the timeframe. If you are a swing trader holding a position for more than one day, 5 and 15-minute charts will generate too many short-term signals. The most reasonable time frames to follow are the daily charts, the 240-minute charts (which break down to a 4-hour time frame), and the 60-minute charts. As far as using pivot points, it is important for swing traders to pay attention to the daily pivots as well as to the weekly and monthly numbers to help give a potential entry or exit target price but also to help be aware of any confluence of support or resistance for those various time periods.

2. Risk Needed Per trade -

Since the Day trading is done on lower time frame and lower profits can be made, the amount of pips risked per day trade is also very less as compared to Swing Trade. In day trade, the risk is in tune of 15 to 30 pips depending on the time frame being used to place the trade. Swing trade on the other hand requires risk ranging from40 pips to as high as 80pips.

3. Application of Technical Analysis -

Both Forex Day Trading and Swing Trading are typically carried out using Technical Analysis. However it is said that the higher the time frame, the more accurate the technical analysis becomes. Due to this, technical analysis is more accurate in Swing Trading than in Day Trading. There are day traders who trade solely based on intraday technical signals, and disregard fundamental aspects completely, and there are those who take the larger picture into consideration when deciding their intraday trades. This contrasts to swing traders who adopt a combined approach of longer-term analysis of technical and fundamentals when trying to determine good entry opportunities.
Swing traders, whose aim is to capture a larger move rather than small tick movements, are thus more concerned with the overall fundamentals of the currencies that they are focusing on. For those day traders who ignore fundamentals, and trade only according to their tick-by-tick system, their myopic trading eyesight may adversely affect their overall trading performance, and this is due to the fact that it is primarily fundamentals that move the markets.
They could be entering in the market at a time when important news are being released, or when most traders are sitting by the sideline and nervously waiting for data releases, and such bad timing would most likely stop their positions out.
So, no matter which style you are trading, whether day or swing trading, it is definitely more beneficial if you take note of fundamentals in general.
For both form of trading there are some specialized technical indicators. For e.g. Use of Daily Pivot Points is used in Day trading to identify Support and Resistance levels.( I will supply you with these datas on the daily basis. Just check my blog site daily)

4. Overall Costs -

Since a day trader places many more trades than a swing trader would, he incurs higher fixed costs in the form of spreads for every trade he places. He must make sure that the currency pair that he trades has a very tight spread so as to increase his chances of profit for each trade. The quality of fills is extremely important to a day trader because he can't afford to suffer any slippage.
A swing trader, on the other hand, will incur less transaction costs due to the low frequency of trades, but may be subjected to rollover fees if he sells a currency with a higher interest rate against one with a lower interest rate, and holds that position overnight. However, the rollover fees are very little compared to the spreads and the potential profits.

Summary

When choosing a particular trading style, it should be seen which form of trading are you more comfortable with and how much are you ready to risk in each trade.
The above points can help you choose a form of forex trading.
But choosing a form of style to trade forex is just one part of the game, the next and important point is to find a reliable Forex trading system that can make money consistently. And if you can come across a course that not only teaches you such a reliable system, but also explains you the important money management principles, that is fantastic.

Tuesday, December 23, 2008

Forex Day Trading Secrets for Success

Forex day trading secrets for success are all over the internet as vendors sell systems but when buying them you need to be aware of this secret which will save you a lot of money and put you on the road to success...

Day trading simply doesn't work and you should try another short term method of trading that does.

So Why doesn't day trading work?

Simple - it's a proven fact that in today's world of instant communications, all short term volatility is of a random nature therefore, you can't use support and resistance in these short time frames as there not relevant, so the odds are against you and you will lose.

In days gone by, the floor trader had an advantage has he had the information first but with the rise of online trading this no longer applies.

The Proof!

Take any of the day trading systems online that claims to make profits, then, look at the small print on the track record and you will see the following words:

"Back test", "simulated" and "hypothetical" and this means in simple English - made up, with all the closing data known in advance and of course that's easy.

The vendors who sell these systems want you to trust a made up track record - but don't trade it themselves!

Doesn't inspire confidence does it?

Short Term Strategies for Profit

If you want to trade short term try swing trading.

This method takes advantage of overbought and oversold scenarios which last a few days to a week or so. In these periods you can get the odds on your side and you win because support and resistance is valid.

So if you want to win the secret of Forex day trading the vendors of systems don't tell you is - it doesn't work and focus on Forex swing trading, a short term strategy where you can get the odds on your side and can enjoy forex trading success.

Swing trading, is easy to understand and learn and you could soon be making big profits, in around 30 minutes a day or less.

By : Sonia Kristina

A full list of retail Forex broker companies that offer on-line Forex trading services:

Forex Broker Name Min. Account Size MT4 Browser - Based Platform Registered with any regulator Easy Online Account Opening
FXOpen $1 + - + +
Ava FX $100 - - - +
LiteForex $0.01 + - + +
InstaForex $10 + - - +
eToro $50 - - - +
Finexo $100 - + + +
MasterForex $1 + - + +
Marketiva $1 - - + +
FXcast $10 + - - +
Easy-Forex $200 - + + +
Forex WebTrader $25 - + - +
FastBrokers $500 + - + +
Forex Capital Trading $100 - + + +
ForexYard $100 - + - +
Alpari $200 + - + +
FXCM $300 - - + +
GFT Forex $250 - - + +
OANDA $1 - + + +
Saxo Bank $2,000 - - + -
Interbank FX $250 + - + -
Forex.com $250 + + + -
Realtime Forex $3,000 - - + +
ACM $2,000 - + + -
Deutsche Bank FOREX $5,000 - - + -
FX Solutions $250 - - + -
CMS Forex $200 - - + +
Interactive Brokers $5,000 - + + +
X-Trade Brokers $2,000 + - + -
MB Trading $400 - - + -
Tadawul FX $1,000 + - + -
Forex.CH $2,000 - - + -
Finotec $200 - - - +
Hotspot FX $7,500 + - + -
EFX Group $400 - - + +
ECN broker $200 - - + +
PFG Forex $1,000 - - + +
Dukascopy $50,000 - - + -
High Street Networking $100 - + - -
Real Trade $20 + - - +
Forex Club $10 - - + +
Crown Forex $300 + - + -
MIG Investments $5,000 + - + -
RCG fxtrader $5,000 - - + -
Questrade FX $250 - + + -
IKON GM – Royal Division $2,500 + - + -
ODL Securities $2,000 + - + +
MGFOREX $200 - + + +
MF Global $10,000 - - + -
IG Markets $200 - + + +
IFX Markets $500 + - + +
Pip Forex $200 - - + +
CMC Markets $2,000 - - + -
IFC Markets $1 - - + +
Neuimex $400 + - + +
MFN $500 - - - +
Invest2Forex $1,000 + - + -
iFOREX $100 - + - +
FIBOGroup $300 + - - +
FXDD $500 + - - +
Synthesis Bank $10,000 - - + +
iTradeFX $300 - - + +
ActivTrades 250 + + + +
ABN AMRO marketindex £1 - + + +
GCI Financial $2,000 + - - +
Forex Trading Edge $1,000 + + + +
Xforex $50 - + - +
CitiFX $10,000 - - + -
VarengoldBankFX $1,000 + - + -
FxPro $100 + - + +
GFS Forex & Futures $500 - - + +
DeltaStock $100 - + + -
Forex-Metal $1 + - + +
TradeView Forex $2,500 + - + -
One Financial $1,000 - + + -
Exto Capital $5,000 - + + -
NobleTrading $250 - + + +
NordMarkets $1,000 - - + -
GDI Markets $10,000 - - + -
FXCM Micro $25 - - + +
FXD24 $250 + - - +
Fit Markets $500 - + + -
Ingot Brokers $100 + - + -
ForexGen $250 + - - +
Latitude FX $1,000 + + + +
Prime4x $100 + - - +
FXTSwiss $2,000 + - - +
InvestTechFX $100 + - + +
Apex FX Trading $2,000 + - - +
GOMarkets $100 + - + +
ATC Brokers $3,500 + - + -
Windsor Brokers $100 + - + -
HY Markets $50 - + + +
Arab Financial Brokers $2,000 + - + +
WH SelfInvest 2500 - + + -
Sucden £5,000 - - + -
FOREX UKRAINE $100 + - - +
FX|Clearing $10 + - - +
Admiral Markets $10 + - - +
EMPFX $300 - - - +
Advised Trading $10,000 + - - -