EUR/USD
EUR/USD's sharp fall last week indicates that a short term top is at least formed at 1.3330 on bearish divergence condition in 4 hours MACD. Initial bias remains on the downside this week and break of 1.2731 support will suggest that whole rebound from 1.1875 is completed and will bring deeper decline to 1.2466 support next. On the upside, above 1.2935 will turn intraday bias neutral and bring recovery. But upside should be limited below 1.3330 and bring another fall.
In the bigger picture, while the rebound from 1.1875 was strong, it's limited below 55 weeks EMA (now at 1.3410) and reversed sharply. Break of 1.2731 support will indicate that such rebound is completed and suggest that whole fall from 1.6039 is possibly resuming. Such decline is treated as correction to long term up trend in EUR/USD and would possibly make another low below 1.1639 support before conclusion. On the upside, though, above 1.3330 will turn focus back to 55 weeks EMA and sustained trading above there will pave the wave to further rise to upper trend line resistance (1.6039, 1.5143, now at 1.4699).
In the long term picture, considering the five wave impulsive structure of the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.
Pips Mover's Weekly Pivot Point for this week: 1.2891
Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600
Sunday, August 22, 2010
Saturday, August 21, 2010
Trailing Stop Loss: Boost Your Profits With This Simple Method
Using trailing stops is one of the best techniques that an active trader can do to increase their profits. This trading method will allow you to reap profits will also protecting you from taking losses. This is very important as trades can turn quickly and what once was a winning trade can quickly turn into a loss if it is not managed properly. A trailing stop loss will eliminate this and allow you to leave trades open and let your profits run while simultaneously protecting you from taking a loss.
What is a trailing stop loss?
A trailing stop loss is a technique in which your stop is moved up as your trade moves into profit thereby locking in profits and eliminating the possibility of loss. This is extremely beneficial to traders because once a trade reaches this point the traders knows no matter what they will profit on the trade. The trader can then let the trade run and continue to make profits for them while also being protected from losses. This means unlimited profit potential with no chance of taking a loss. What more can a trader ask for?
How to use a trailing stop loss
If you want to implement trailing stops in your trading then its a simple as selecting it when you open a trade with your software. Most trading software gives you the ability to set stop orders that will automatically trail as your position moves deeper into profit. If you are unsure how to do this then you should consult the manual for your software or contact your broker for assistance. If for some reason your software doesn’t offer this capability built in then you can still manually trail your stop orders.
All you have to do is define the point at which you will move your stop order and also the increments in which you will move it. For example let’s say you are day trading the Eur/Usd in the forex market and your initial stop order is 20 pips away from your entry point, you could choose to move your stop order up another 20 pips for every 20 pips you move into profit. So once your position is 20 pips in profit you would move your stop order to break even and then when you reach 40 pips of profit you would lock in 20 pips of profit and so on and so forth. This is just an example as there are unlimited ways to trail your stops. How you choose to do should be based on your style of trading and risk tolerance.
A trailing stop loss provides traders with a great way to limit and even eliminate their losses while also keeping profit potential unlimited. This is a great method that is sure to help your trading once you find a way to implement it that suits your trading style. As with all new methods you should first test it out in a demo account until you figure out exactly how you want to implement it into your trading plan.
What is a trailing stop loss?
A trailing stop loss is a technique in which your stop is moved up as your trade moves into profit thereby locking in profits and eliminating the possibility of loss. This is extremely beneficial to traders because once a trade reaches this point the traders knows no matter what they will profit on the trade. The trader can then let the trade run and continue to make profits for them while also being protected from losses. This means unlimited profit potential with no chance of taking a loss. What more can a trader ask for?
How to use a trailing stop loss
If you want to implement trailing stops in your trading then its a simple as selecting it when you open a trade with your software. Most trading software gives you the ability to set stop orders that will automatically trail as your position moves deeper into profit. If you are unsure how to do this then you should consult the manual for your software or contact your broker for assistance. If for some reason your software doesn’t offer this capability built in then you can still manually trail your stop orders.
All you have to do is define the point at which you will move your stop order and also the increments in which you will move it. For example let’s say you are day trading the Eur/Usd in the forex market and your initial stop order is 20 pips away from your entry point, you could choose to move your stop order up another 20 pips for every 20 pips you move into profit. So once your position is 20 pips in profit you would move your stop order to break even and then when you reach 40 pips of profit you would lock in 20 pips of profit and so on and so forth. This is just an example as there are unlimited ways to trail your stops. How you choose to do should be based on your style of trading and risk tolerance.
A trailing stop loss provides traders with a great way to limit and even eliminate their losses while also keeping profit potential unlimited. This is a great method that is sure to help your trading once you find a way to implement it that suits your trading style. As with all new methods you should first test it out in a demo account until you figure out exactly how you want to implement it into your trading plan.
Day Trading Secrets: These Powerful Insider Tips Will Take You To The Next Level
If you are looking for day trading secrets then you have come to the right place. In this article I am going to give you some great information that is is sure to help you in your quest to become a better trader. Well without further ado here are my top 4 day trading secrets:
Dont trade after 12pm est.
The NYSE opens at 9:30 am eastern time and the bulk of action occurs within the first 2 hours of any session. Therefore if you want the best opportunity for profit then you need to be trading during this time. After the first couple of hours of trading market volatility and liquidity drop off considerably as most experienced traders exit the market. Not only does this mean less opportunity for profit but it also leaves the market more vulnerable to short term manipulation which can leave inexperienced traders with heavy losses. If you trade a market other than the U.S stock market then the same principle applies, only trade during the first 2 hours of the session.
The market always retraces.
Whenever there is a large move in the market you can bet your bottom dollar that the market will eventually retrace a portion of the move. This occurs becasue the people that have been in the move since the beginning start taking profit and also becasue of other traders that don’t think the move is sustainable begin to fade it. Both of these forces come together to push price back in the opposite direction of the move. So what does this mean for you day trading? It means that if you ever find yourself on the sidelines when a move occurs don’t fret over the missed opportunity for profit, instead just wait for the first sign that the move has run out of steam and then position yourself to trade the retracement
Only suckers trade the news.
There is no faster way to lose your money than trying to trade the news, and this is becasue of two reasons.For starters, you can’t predict the news so you have no way reliably positioning yourself before the news is released, and trust me listening to the analysts predictions on CNBC is no better than flipping a coin. Lastly, even if you were to guess correctly as to what the news will be there is no way you would then be able to predict how the market would react to it. Just becasue news is good doesn’t mean the market will go up and just becasue its bad doesn’t mean the market will go down. Oftentimes the market will react to surprising ways and many times it wont react at all and becasue of this it is a fools ambition to try to basing his trading around news releases. I’m sure you can get lucky and correctly predict what the news will be and how the market will react to it, but is that something that you can do day in and day out for any meaningful amount of time?
Always take profit.
While this may seem like common sense you would be surprised at how many new traders get this crucial point wrong. When you are in a trade and its in profit those are just paper profits, and what I mean by paper profits is that they are not real becasue you have not taken profit and therefore that money has not been deposited into your trading account. If the market for were to for whatever reason reverse direction all of your profits would be gone and you may even end up taking a loss. This is why its imperative that when you are in a trade and you have some good profits you need to bank them instead of holding on in the hope that the market will continue to move your way. This is probably the most important of all day trading secrets because at any time market conditions can change and what once was profit can quickly turn into a loss if you’re not careful.
So that’s it those are in my opinion the most important day trading secrets that new traders need to know. They are not all there is to know however as there are plenty of other little tidbits and pieces of information that will only come to you with time an experience. I’m still learning new things everyday myself in fact, the point of this article wasn’t to give you some magic day trading secrets that would turn you into a millionaire overnight, I’m afraid they don’t exist. I’m just trying to give you the information you need to become the best trader you can be. If I have helped you or you want to take issue with anything I have said then leave a comment in the box below.
By Jason Madison
Dont trade after 12pm est.
The NYSE opens at 9:30 am eastern time and the bulk of action occurs within the first 2 hours of any session. Therefore if you want the best opportunity for profit then you need to be trading during this time. After the first couple of hours of trading market volatility and liquidity drop off considerably as most experienced traders exit the market. Not only does this mean less opportunity for profit but it also leaves the market more vulnerable to short term manipulation which can leave inexperienced traders with heavy losses. If you trade a market other than the U.S stock market then the same principle applies, only trade during the first 2 hours of the session.
The market always retraces.
Whenever there is a large move in the market you can bet your bottom dollar that the market will eventually retrace a portion of the move. This occurs becasue the people that have been in the move since the beginning start taking profit and also becasue of other traders that don’t think the move is sustainable begin to fade it. Both of these forces come together to push price back in the opposite direction of the move. So what does this mean for you day trading? It means that if you ever find yourself on the sidelines when a move occurs don’t fret over the missed opportunity for profit, instead just wait for the first sign that the move has run out of steam and then position yourself to trade the retracement
Only suckers trade the news.
There is no faster way to lose your money than trying to trade the news, and this is becasue of two reasons.For starters, you can’t predict the news so you have no way reliably positioning yourself before the news is released, and trust me listening to the analysts predictions on CNBC is no better than flipping a coin. Lastly, even if you were to guess correctly as to what the news will be there is no way you would then be able to predict how the market would react to it. Just becasue news is good doesn’t mean the market will go up and just becasue its bad doesn’t mean the market will go down. Oftentimes the market will react to surprising ways and many times it wont react at all and becasue of this it is a fools ambition to try to basing his trading around news releases. I’m sure you can get lucky and correctly predict what the news will be and how the market will react to it, but is that something that you can do day in and day out for any meaningful amount of time?
Always take profit.
While this may seem like common sense you would be surprised at how many new traders get this crucial point wrong. When you are in a trade and its in profit those are just paper profits, and what I mean by paper profits is that they are not real becasue you have not taken profit and therefore that money has not been deposited into your trading account. If the market for were to for whatever reason reverse direction all of your profits would be gone and you may even end up taking a loss. This is why its imperative that when you are in a trade and you have some good profits you need to bank them instead of holding on in the hope that the market will continue to move your way. This is probably the most important of all day trading secrets because at any time market conditions can change and what once was profit can quickly turn into a loss if you’re not careful.
So that’s it those are in my opinion the most important day trading secrets that new traders need to know. They are not all there is to know however as there are plenty of other little tidbits and pieces of information that will only come to you with time an experience. I’m still learning new things everyday myself in fact, the point of this article wasn’t to give you some magic day trading secrets that would turn you into a millionaire overnight, I’m afraid they don’t exist. I’m just trying to give you the information you need to become the best trader you can be. If I have helped you or you want to take issue with anything I have said then leave a comment in the box below.
By Jason Madison
Friday, August 20, 2010
Advantage Of Metatrader 4 Online Trading Platform
MetaTrader 4 is an online trading platform designed for financial institutions dealing with Forex, CFD, and Futures markets.
The platform includes all necessary components for brokerage services via internet including the back office and dealing desk.
Currently, over 100 brokerage companies and banks worldwide have chosen our solution to meet their high standards of business performance.
The MetaTrader 4 Platform has a user-friendly front-end trading interface. It provides technical analysis, charting and Expert Advisors to help you develop your own trading strategies.
Advantages
MetaTrader 4 is a solution for broker companies, banks, financial companies, and dealing centers. The main advantages of the system are:
Coverage of financial markets
The trading platform MetaTrader 4 covers all brokerage and trading activities at Forex, Futures and CFD markets.
Multi-currency basis
The system is designed on a multi-currency basis. It means that any currency can serve as a general currency used in the operation of the whole complex in any country and with any national currency.
Economy and productivity
Implemented data transfer and processing protocols are notable for their economy. It makes it possible to support several thousands of traders through a single server with the following configuration: Pentium 4 2 GHz, 512 DDR RAM, 80 GB HDD. New protocols reduce both the demands on datalink and their operational cost.
Reliability
In the case of damage to the historical data, the complex has backup and restoration systems. Also, the implemented synchronization allows to restore damaged historical databases within several minutes with the help of another MetaTrader 4 server.
Safety
To provide safety, all the information exchanged between parts of the complex is cripted by 128-bit keys. Such solution guarantees safekeeping of information transferred and leaves no chance for a third person to use it. A built-in DDoS-attacks guard system raises the stability of operation of the server and the system as a whole.
A new scheme of system working operation was created especially for DDoS-attacks resistance. With its help, you can hide the real IP-address of the server behind a number of access points (Data Centers). Data Centers also have a built-in DoS-attacks protection system; they can recognize and block such attacks. During distributed attacks at the system, only Data Centers are attacked; MetaTrader 4 Server continues its operation in regular mode. Thus, Data Centers increase the system's stability to DoS and DDoS attacks.
The implemented mechanisms of rights sharing make it possible to organize the security system with more effectiveness and to reduce the probability of ill-intentioned actions of company staff.
Multilingual support
MetaTrader 4 supports different languages, and a MultiLanguage Pack program is included into distributive packages. It provides translation of all program interfaces into any language. With the help of MultiLanguage Pack you can easily create any language and integrate it into the program. This feature of the system will bring MetaTrader 4 nearer to end-users in any country of the world.
Application Program Interfaces
MetaTrader 4 Server API makes it possible to customize the work of platform to meet your requirements. API can solve a wide range of problems:
»creating additional analyzers for finding a trend of monthly increase of traders;
»creating applications of integration into other systems;
»extending the functionality of the server;
»implementing its own system work control mechanisms;
»and do much more.
Integration with web-services
To provide traders with services of higher quality, the system supports the integration with web services (www, wap). This feature allows realtime publishing of quotations and charts on your site, dynamic tables containing contest results and much more.
Flexibility of the system
The platform possesses a wide range of customizable functions. You can set all parameters, from trade session time to detailed properties of financial instruments of each user groups.
The platform includes all necessary components for brokerage services via internet including the back office and dealing desk.
Currently, over 100 brokerage companies and banks worldwide have chosen our solution to meet their high standards of business performance.
The MetaTrader 4 Platform has a user-friendly front-end trading interface. It provides technical analysis, charting and Expert Advisors to help you develop your own trading strategies.
Advantages
MetaTrader 4 is a solution for broker companies, banks, financial companies, and dealing centers. The main advantages of the system are:
Coverage of financial markets
The trading platform MetaTrader 4 covers all brokerage and trading activities at Forex, Futures and CFD markets.
Multi-currency basis
The system is designed on a multi-currency basis. It means that any currency can serve as a general currency used in the operation of the whole complex in any country and with any national currency.
Economy and productivity
Implemented data transfer and processing protocols are notable for their economy. It makes it possible to support several thousands of traders through a single server with the following configuration: Pentium 4 2 GHz, 512 DDR RAM, 80 GB HDD. New protocols reduce both the demands on datalink and their operational cost.
Reliability
In the case of damage to the historical data, the complex has backup and restoration systems. Also, the implemented synchronization allows to restore damaged historical databases within several minutes with the help of another MetaTrader 4 server.
Safety
To provide safety, all the information exchanged between parts of the complex is cripted by 128-bit keys. Such solution guarantees safekeeping of information transferred and leaves no chance for a third person to use it. A built-in DDoS-attacks guard system raises the stability of operation of the server and the system as a whole.
A new scheme of system working operation was created especially for DDoS-attacks resistance. With its help, you can hide the real IP-address of the server behind a number of access points (Data Centers). Data Centers also have a built-in DoS-attacks protection system; they can recognize and block such attacks. During distributed attacks at the system, only Data Centers are attacked; MetaTrader 4 Server continues its operation in regular mode. Thus, Data Centers increase the system's stability to DoS and DDoS attacks.
The implemented mechanisms of rights sharing make it possible to organize the security system with more effectiveness and to reduce the probability of ill-intentioned actions of company staff.
Multilingual support
MetaTrader 4 supports different languages, and a MultiLanguage Pack program is included into distributive packages. It provides translation of all program interfaces into any language. With the help of MultiLanguage Pack you can easily create any language and integrate it into the program. This feature of the system will bring MetaTrader 4 nearer to end-users in any country of the world.
Application Program Interfaces
MetaTrader 4 Server API makes it possible to customize the work of platform to meet your requirements. API can solve a wide range of problems:
»creating additional analyzers for finding a trend of monthly increase of traders;
»creating applications of integration into other systems;
»extending the functionality of the server;
»implementing its own system work control mechanisms;
»and do much more.
Integration with web-services
To provide traders with services of higher quality, the system supports the integration with web services (www, wap). This feature allows realtime publishing of quotations and charts on your site, dynamic tables containing contest results and much more.
Flexibility of the system
The platform possesses a wide range of customizable functions. You can set all parameters, from trade session time to detailed properties of financial instruments of each user groups.
Thursday, August 19, 2010
Fundamental Forex Trading… The Forgotten Art
Traders in the forex market use two types of analysis in their trading, fundamental forex analysis and technical analysis. Technical analysis seems to be the method of choice for most traders especially since it can be used to trade effectively on smaller time frames, but traders shouldn’t underestimate the value that fundamental analysis could bring to their trading. As in the stock market, forex fundamental analysis involves looking at the intrinsic value of a investment, but countries are not like companies in that they do not have balance sheets and income statements. So, in order to determine the value of a countries currency traders have to look at the economic conditions in the country that have an affect on the valuation of its currency. In this post we are going to take a look at some of these fundamental analysis factors.
The Economic Indicators
Economic indicators are reports that are released by the government or a private organization and they form the core of fundamental forex trading. These reports are similar to the financial statements that publicly traded companies are required to file with the SEC. These reports are released at a scheduled time and since they are the only formal way to measure the strength or lack thereof of national economies if there deviate from the norm then they can cause huge swings in the value of a currency. What follows is a list of the major economic indicators used in fundamental forex analysis.
Gross Domestic Product
GDP is designed to give a broad view of the strength of a economy and represents the total market value of all goods and services produced in a country during a given year. A positive GDP means that the economy as a whole has grown in size, which is good for the currency while a negative GDP means that the economy has contracted which may signal further economic issues.
Retail-Sales
The retail-sales report is a measurement of the total receipts of all retail stores in a given country. This measurement is gathered through a diverse sampling of a nations retail establishments. This report is important because it tells traders whether or not consumers are out spending money in the economy. High retail sales indicate a active economy which bodes well for the strength of the economy as a whole and also it’s currency.
Industrial Production
This report measures the overall change in the production of factories, mines, and utilities within a nation. It also reports how closely these factories are to operating at full capacity. If the factories of a nation are operating at or near full capacity and there is also an increase in overall production then that is a sign for future economic strength.
Consumer Price Index
The CPI measures the change in the price of consumer goods. This measurement is done across 200 categories of consumer goods. When compared to exports it can be an indicator of whether or not the country is making or losing money on its products and services.
Using These Indicators
These forex fundamental analysis factors are meant to be used as a guide to the strength of an economy and by extension the potential its currency has for appreciation. These reports are a good place to start if you are trying to get a grip on fundamental forex trading. However, there are a number of other factors that play also play a role in the valuation of a currency so don’t go opening trades any trades simple because a nations GDP has risen. This post is meant to give you a quick overview of fundamental analysis in the forex market and to give you another lens through which to view your trades.
The Economic Indicators
Economic indicators are reports that are released by the government or a private organization and they form the core of fundamental forex trading. These reports are similar to the financial statements that publicly traded companies are required to file with the SEC. These reports are released at a scheduled time and since they are the only formal way to measure the strength or lack thereof of national economies if there deviate from the norm then they can cause huge swings in the value of a currency. What follows is a list of the major economic indicators used in fundamental forex analysis.
Gross Domestic Product
GDP is designed to give a broad view of the strength of a economy and represents the total market value of all goods and services produced in a country during a given year. A positive GDP means that the economy as a whole has grown in size, which is good for the currency while a negative GDP means that the economy has contracted which may signal further economic issues.
Retail-Sales
The retail-sales report is a measurement of the total receipts of all retail stores in a given country. This measurement is gathered through a diverse sampling of a nations retail establishments. This report is important because it tells traders whether or not consumers are out spending money in the economy. High retail sales indicate a active economy which bodes well for the strength of the economy as a whole and also it’s currency.
Industrial Production
This report measures the overall change in the production of factories, mines, and utilities within a nation. It also reports how closely these factories are to operating at full capacity. If the factories of a nation are operating at or near full capacity and there is also an increase in overall production then that is a sign for future economic strength.
Consumer Price Index
The CPI measures the change in the price of consumer goods. This measurement is done across 200 categories of consumer goods. When compared to exports it can be an indicator of whether or not the country is making or losing money on its products and services.
Using These Indicators
These forex fundamental analysis factors are meant to be used as a guide to the strength of an economy and by extension the potential its currency has for appreciation. These reports are a good place to start if you are trying to get a grip on fundamental forex trading. However, there are a number of other factors that play also play a role in the valuation of a currency so don’t go opening trades any trades simple because a nations GDP has risen. This post is meant to give you a quick overview of fundamental analysis in the forex market and to give you another lens through which to view your trades.
Tuesday, August 17, 2010
Fundamental Forex Trading: All About GDP
If you are interested in fundamental forex trading then there is one economic indicator that definitely needs to be on your watch list and that is the gross domestic product or GDP for short. The GDP reflects the value of all goods and services produced by the economy during the time frame measured; taking into account consumer spending, purchases made by the government, inventories of private companies, construction costs, and the foreign trade balance. This thorough analysis of the economic activity within a country makes the GDP an important part of forex fundamental analysis.
Unlike other indicators used in fundamental forex trading the GDP is released on a quarterly basis which makes it less prone to fluctuations as the data is gathered over a larger period of time. It is also very comprehensive as it incorporates the information from many other economic indicators and combines them with the result being the GDP. So in a sense the GDP is an indicator of economic indicators as it brings all of the data from the other major economic indicators together to provide a clear picture of the state of a country’s economy.
How To Use The GDP In Fundamental Forex Trading
For your trading you are going to want to look at the rate of growth of the GDP. It is generally believed that a annual GDP growth rate of 2.5-3.5% is best for the economy of a country. Any lower and it may indicate future trouble for the country in terms of economic growth and may even foreshadow economic contraction. If the GDP is higher than 2.5-3.5% then it may signal inflationary pressures that may hurt country’s economy and value of its currency in the long run. So, as far as fundamental forex trading is concerned if the growth rate of a country’s GDP is in the optimal range of 2.5-3.5% then there is a strong likelihood that the value of its currency will increase. Too high above or below this range may signal problems that may lead to a future decline in value of the currency.
GDP is a a great tool for any fundamental forex trader. It takes a huge amount of information and compiles it into a simple number. This makes it both easy to understand and powerful, however it is not a magic bullet. You can’t just look at the GDP, make a trade, and then having everything work out. GDP is a tool to be used in conjunction with other tools to make an informed decision.
Unlike other indicators used in fundamental forex trading the GDP is released on a quarterly basis which makes it less prone to fluctuations as the data is gathered over a larger period of time. It is also very comprehensive as it incorporates the information from many other economic indicators and combines them with the result being the GDP. So in a sense the GDP is an indicator of economic indicators as it brings all of the data from the other major economic indicators together to provide a clear picture of the state of a country’s economy.
How To Use The GDP In Fundamental Forex Trading
For your trading you are going to want to look at the rate of growth of the GDP. It is generally believed that a annual GDP growth rate of 2.5-3.5% is best for the economy of a country. Any lower and it may indicate future trouble for the country in terms of economic growth and may even foreshadow economic contraction. If the GDP is higher than 2.5-3.5% then it may signal inflationary pressures that may hurt country’s economy and value of its currency in the long run. So, as far as fundamental forex trading is concerned if the growth rate of a country’s GDP is in the optimal range of 2.5-3.5% then there is a strong likelihood that the value of its currency will increase. Too high above or below this range may signal problems that may lead to a future decline in value of the currency.
GDP is a a great tool for any fundamental forex trader. It takes a huge amount of information and compiles it into a simple number. This makes it both easy to understand and powerful, however it is not a magic bullet. You can’t just look at the GDP, make a trade, and then having everything work out. GDP is a tool to be used in conjunction with other tools to make an informed decision.
Tuesday, July 20, 2010
Dear Lord, We, The Forex Traders Do Make Mistakes...Guide Us Please!
1.Day Trading and Scalping
Compared to all other types of trading, scalping is by far the hardest to master. Many amateur traders make the mistake of thinking that by trading in the very short term, they increase the probability of profiting from a trade. It's intuitive to think that small, quick trades are easier to profit from, isn't it?
In the Forex market however, the reverse is true.This is because of the volatile nature of the Forex market; market prices can fluctuate rather violently without any good reason at all. Although you risk smaller amounts of your capital when scalping, you're actually dramatically increasing the probability that your stop losses will be hit.
Although I've personally met people who are proficient scalpers, it might do you well to know that they are highly trained and experienced traders. I've never met a beginner trader who was successful at scalping. If you want to try your hand at Forex trading, do try to trade on larger time frames such as using hourly or daily charts instead. Avoid trading using minute charts at all costs!
2.Trading Breaking News
This is one of the most appealing schools of thought among the Forex trading community. Who wouldn't like to benefit from a quick 100 pip gain in less than 10 minutes?
The allure of quick, one time profits is what drives many traders to try their hand at news trading. Personally however, I would strongly discourage most inexperienced traders to news trade.
The reason is simple: the institutional traders (i.e. the big players) have all the advanced technology and knowledge in the world to beat you at this game. Their news feeds are faster, and they have their own in-house economists and currency strategists.
What do retail traders have? A top-notch desktop computer with a high-speed internet connection at best? Even their broker platforms won't be able to keep up with the volatility that occurs during news announcements. And not to mention the larger spreads that retail traders pay compared to the institutional traders.
To be a rich retail trader, you'll have to work on your strengths and avoid your vulnerabilities. News trading is definitely not for the average retail trader, so please pick your battles wisely.
3.Trading Expert Opinion
All the forex news you see looks so convincing and today, we have TV channels and lots of resources on the net but there only opinions. They won't help you win. If they did, more traders would win than they did 50 years ago and this is simply not the case - the ratio remains the same. Sure, the news sounds convincing but chances are its wrong, as it reflects the views of the majority who lose.
The traders who do this need to learn the following - markets move to perception of the news not the news itself and how far it is already discounted. Markets always crash when the news is most bullish and rally when its most bearish and trying to trade on the back of it is a waste of time.
4.Trading a Forex Robot with a Simulated Track Record
You can buy these online and they tell you that you can get rich for a few hundred bucks, you won't be surprised to learn - you can't. Most of these robots have great track records, the problem is there simulated over past data and won't help you make money - there not worth the paper there written on, we can all be rich if we know what happened and could trade it!
A Forex robot software is a software that can help you to calculate and analyze the market trend. Some common functions that can be found in the software will be predicting the possible short term trend, automatically generate buy and sell signal by analyzing the Japanese candlestick indicators etc.
However, due to the convenience of the Forex software, many people have done several mistakes that can cost them thousands of dollars. One of the great mistakes is they tend to have too much faith in the software and decided not to put a stop-loss limit, and they often trade with very little deposit left. Once the prices go against them, and the brokers call for a margin call, it will be a total disaster for them.
Another mistake that people tend to make is they left the Forex robot software alone to do all the tradings automatically without monitoring them, thinking that money will continue to roll in. This is very wrong the Forex softwares can only trade according to the trend. It is vulnarable to the sudden fluctuation due to news. The traders should monitor the chart and the news closely so to avoid any losses due to sudden fluctuation.
5.Trying to Predict Forex Prices In Advance
Prediction is another word for hoping or guessing and that won't get you far in forex trading. You can't predict forex prices in advance so don't try. Act on the reality of price change and trade the truth.
Many gurus sell scientific systems that claim they have found the formula for market movement and all you need do is follow them. If however markets did move to a scientific theory, we would all know the price in advance and there would be no market. Prices move because markets are uncertain not certain!
6.Failure To Use Stop Loss Correctly
Stops are necessary to avoid bad losses, however poorly placed stops can be just as bad. Before placing a trade the trader should consider the risk to reward ratio for the trade. The stop needs to be set with the traders money management in mind and should not be too close or too far away from the price. Traders should also consider moving their stop as the trade goes in their favor to lock in profits and reduce potential losses.
7.Over Leveraging a Small Account
You can get up to 400:1 leverage with many forex brokers and most traders think the more they leverage they use the better - but they get stopped out quickly and their accounts are soon wiped out.
When traders use a high level of leverage the returns can be astounding, but when the trade doesn’t work out the result can be catastrophic. Traders should always calculate the value of the risk they are taking for each trade and ensure that this is appropriate for their account balance. Experienced traders rarely risk more than 2-3% of their account balance on any one trade.
8.Relying Too Much On Technical Indicators
Technical indicators are great tools that assist traders to make decisions. However making decisions for trades based solely on what the technical indicators are telling us can result in large losses. By considering fundamental information together with technical information you will have a much better chance at being successful.
9.Failure To Control Your Emotion And Discipline
Forex trading is a highly volatile market. Emotions tend to run high and low, and either of those extremes can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you THINK you’re seeing at the moment. The trick to making money in the currency exchange market is to avoid making emotional decisions and follow a carefully thought out strategy that takes the current market and history into account. Letting your emotions rule your decisions can hurt your trading in several different ways. It’s the reason that most experienced traders tell beginner or novice traders that they need to develop a trading system, and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you’ll maximize your profits.
A trading system based on Technical analysis of historical market trends is one of the most potent tools that you can utilize if you’re just getting started in Forex trading – and many traders with years of experience continue to use their system to keep the profits rolling in. In fact, many will tell you that when their ‘gut instinct’ and their system collide, the system is almost always right.
Analysis of trends in the market will show you that the market moves in trends within overall patterns that are predictable. No trend moves smoothly in an up or down line – there are inevitable periods of time when values suddenly spiral up or down based on some outside factor. These are the times when emotion can hurt your portfolio. When a currency that you’re holding takes a sudden dip south, it’s tempting to succumb to panic trading, cut your losses and run even if your system tells you to hold on. On the other hand, it’s easy to catch the rising excitement as a trade starts increasing in value and scramble to buy more of the same. These are exactly the times to rely most heavily on your trading system. It will tell you exactly when to trade for maximum profit.
Compared to all other types of trading, scalping is by far the hardest to master. Many amateur traders make the mistake of thinking that by trading in the very short term, they increase the probability of profiting from a trade. It's intuitive to think that small, quick trades are easier to profit from, isn't it?
In the Forex market however, the reverse is true.This is because of the volatile nature of the Forex market; market prices can fluctuate rather violently without any good reason at all. Although you risk smaller amounts of your capital when scalping, you're actually dramatically increasing the probability that your stop losses will be hit.
Although I've personally met people who are proficient scalpers, it might do you well to know that they are highly trained and experienced traders. I've never met a beginner trader who was successful at scalping. If you want to try your hand at Forex trading, do try to trade on larger time frames such as using hourly or daily charts instead. Avoid trading using minute charts at all costs!
2.Trading Breaking News
This is one of the most appealing schools of thought among the Forex trading community. Who wouldn't like to benefit from a quick 100 pip gain in less than 10 minutes?
The allure of quick, one time profits is what drives many traders to try their hand at news trading. Personally however, I would strongly discourage most inexperienced traders to news trade.
The reason is simple: the institutional traders (i.e. the big players) have all the advanced technology and knowledge in the world to beat you at this game. Their news feeds are faster, and they have their own in-house economists and currency strategists.
What do retail traders have? A top-notch desktop computer with a high-speed internet connection at best? Even their broker platforms won't be able to keep up with the volatility that occurs during news announcements. And not to mention the larger spreads that retail traders pay compared to the institutional traders.
To be a rich retail trader, you'll have to work on your strengths and avoid your vulnerabilities. News trading is definitely not for the average retail trader, so please pick your battles wisely.
3.Trading Expert Opinion
All the forex news you see looks so convincing and today, we have TV channels and lots of resources on the net but there only opinions. They won't help you win. If they did, more traders would win than they did 50 years ago and this is simply not the case - the ratio remains the same. Sure, the news sounds convincing but chances are its wrong, as it reflects the views of the majority who lose.
The traders who do this need to learn the following - markets move to perception of the news not the news itself and how far it is already discounted. Markets always crash when the news is most bullish and rally when its most bearish and trying to trade on the back of it is a waste of time.
4.Trading a Forex Robot with a Simulated Track Record
You can buy these online and they tell you that you can get rich for a few hundred bucks, you won't be surprised to learn - you can't. Most of these robots have great track records, the problem is there simulated over past data and won't help you make money - there not worth the paper there written on, we can all be rich if we know what happened and could trade it!
A Forex robot software is a software that can help you to calculate and analyze the market trend. Some common functions that can be found in the software will be predicting the possible short term trend, automatically generate buy and sell signal by analyzing the Japanese candlestick indicators etc.
However, due to the convenience of the Forex software, many people have done several mistakes that can cost them thousands of dollars. One of the great mistakes is they tend to have too much faith in the software and decided not to put a stop-loss limit, and they often trade with very little deposit left. Once the prices go against them, and the brokers call for a margin call, it will be a total disaster for them.
Another mistake that people tend to make is they left the Forex robot software alone to do all the tradings automatically without monitoring them, thinking that money will continue to roll in. This is very wrong the Forex softwares can only trade according to the trend. It is vulnarable to the sudden fluctuation due to news. The traders should monitor the chart and the news closely so to avoid any losses due to sudden fluctuation.
5.Trying to Predict Forex Prices In Advance
Prediction is another word for hoping or guessing and that won't get you far in forex trading. You can't predict forex prices in advance so don't try. Act on the reality of price change and trade the truth.
Many gurus sell scientific systems that claim they have found the formula for market movement and all you need do is follow them. If however markets did move to a scientific theory, we would all know the price in advance and there would be no market. Prices move because markets are uncertain not certain!
6.Failure To Use Stop Loss Correctly
Stops are necessary to avoid bad losses, however poorly placed stops can be just as bad. Before placing a trade the trader should consider the risk to reward ratio for the trade. The stop needs to be set with the traders money management in mind and should not be too close or too far away from the price. Traders should also consider moving their stop as the trade goes in their favor to lock in profits and reduce potential losses.
7.Over Leveraging a Small Account
You can get up to 400:1 leverage with many forex brokers and most traders think the more they leverage they use the better - but they get stopped out quickly and their accounts are soon wiped out.
When traders use a high level of leverage the returns can be astounding, but when the trade doesn’t work out the result can be catastrophic. Traders should always calculate the value of the risk they are taking for each trade and ensure that this is appropriate for their account balance. Experienced traders rarely risk more than 2-3% of their account balance on any one trade.
8.Relying Too Much On Technical Indicators
Technical indicators are great tools that assist traders to make decisions. However making decisions for trades based solely on what the technical indicators are telling us can result in large losses. By considering fundamental information together with technical information you will have a much better chance at being successful.
9.Failure To Control Your Emotion And Discipline
Forex trading is a highly volatile market. Emotions tend to run high and low, and either of those extremes can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you THINK you’re seeing at the moment. The trick to making money in the currency exchange market is to avoid making emotional decisions and follow a carefully thought out strategy that takes the current market and history into account. Letting your emotions rule your decisions can hurt your trading in several different ways. It’s the reason that most experienced traders tell beginner or novice traders that they need to develop a trading system, and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you’ll maximize your profits.
A trading system based on Technical analysis of historical market trends is one of the most potent tools that you can utilize if you’re just getting started in Forex trading – and many traders with years of experience continue to use their system to keep the profits rolling in. In fact, many will tell you that when their ‘gut instinct’ and their system collide, the system is almost always right.
Analysis of trends in the market will show you that the market moves in trends within overall patterns that are predictable. No trend moves smoothly in an up or down line – there are inevitable periods of time when values suddenly spiral up or down based on some outside factor. These are the times when emotion can hurt your portfolio. When a currency that you’re holding takes a sudden dip south, it’s tempting to succumb to panic trading, cut your losses and run even if your system tells you to hold on. On the other hand, it’s easy to catch the rising excitement as a trade starts increasing in value and scramble to buy more of the same. These are exactly the times to rely most heavily on your trading system. It will tell you exactly when to trade for maximum profit.
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