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Forex

The Philosophy Of Winning In Trading the Forex Market -The

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The Philosophy Of Winning In Trading the Forex Market -The Sure Way To Become A Successful Trader

Everyone who enters into the forex market to trade always starts off with good intentions. They will invariably aim to win. They are there to make gigantic profits in the market. After all, it is a keen interest in trading that has led to their involvement in trading the forex market.

In all my years of trading, I have yet to meet a complete newbie who is in the forex market to trade without spending at least some time to learn how to trade. At worst, the newbie to forex trading has at least learned the technical terms to trading, and has at least entered his trading account to look at the trading platform and the trading interface provided by his broker.

In the quest to become a better trader, most forex traders I know would have learnt the use of many tools, usually technical tools. To them, the tools are their weapons of war. Many use technical trading systems to help them get a more accurate analysis of price movements, and to study price trends. Some use simple trend trading methods such as trendlines, others use price patterns of congestion and outbreaks, some use the more sophisticated Elliot wave counting and WD Gann squaring of price and time, and some even neural networks forecasting and astronomy. Yet, with the help of many trading tools, a big majority of traders are still unprofitable.

Herein lies the problem with many traders.

In forex trading, like in all forms of market trading, the amount of tools you use, whether singly or in synergy, will not guarantee your success. Having a battery of technical indicators to provide you a technical reading will not ensure your success in trading.At best, these technical indicators will help you understand the market trend more, or might even serve to confuse you especially if they generate conflicting signals.

Forex trading, is just like fighting a battle, and the following principle holds true:

“It’s not the sword that wins the battle.

It’s the Warrior whos wielding it.

It’s the warrior who’s wielding the sword that will determine the outcome of the battle. In other words, if you are a forex trader, it is your trading discipline, and the proper use of the trading tool or method that will ensure your success.It is you, the trading warrior, who wields the trading tool correctly that can ensure the battle is won.

Therefore to become a successful trader, you will need to master your self – to follow a set trading method and to execute the trades based on a trading plan, where you will follow stringently to the best trading setups and exit at pre-determined stop losses. Without trading discipline, you will not be able to master your trades, and you will find profits hard to come by.

It is only when you master yourself to conduct discipline trading and also master your trades by following a proven trading methodology with a timely and suitable entry and exit strategy that you can become a profitable trader.

October 21, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

The Forex Market and Its Success Potential

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The Forex market (or Foreign Exchange market) has become one of the most lucrative forms of stock trading in history. Until recently, this market was limited to government banks and lending institutions. Today, any investor can take advantage of this profitable market easily.

The Forex market is a sector of the stock market where someone can buy and sell foreign currency by phone, online or other methods 24 hours a day. It is now one of the most profitable and largest markets in the world, with over 2 trillion worth of currency being traded daily!

In this unique market, currency is bought and sold based on the fluctuation of exchange rates. You’re actually buying one type of currency with another type of currency and profiting from the difference if you buy and sell at the right time.

For instance, someone who buys Euro pounds with U.S. pounds will profit if U.S. pounds are worth even more at the time of selling (exchanging Euros back into U.S. pounds). It works similar to other stock market ventures except the broker makes money from the difference in the buysell amounts for the two countries.

There are three factors that can affect the value of currency and the exchange rate between two countries. Interest rates can change on a daily basis depending on the country’s currency value. These interest rates affect the lending rates used to buy foreign currency when borrowing to do so.

The unemployment rate also affects a nation’s currency value. The economy is usually very weak at times of high unemployment, thus causing the value of the currency to decrease. A third factor is when major political events take place in a country such as elections, national disasters, wars, etc.

These three factors alone can cause the exchange rates among countries to fluctuate tremendously, and they are worth watching if you’re planning to invest in the Forex market.

The Forex market offers plenty of earning potential once you understand how it works. One reason this market is so lucrative is because you are able to trade any time of the day. It’s not limited by corporate schedules or anything else.

Another reason you can profit is because brokers will lend you the money to get started – up to 100 times of your cash on hand! So, you’ll have tremendous trading power right from the start.

The Forex market is a great business opportunity where you don’t have to buy and sell a product, advertise your business or spend endless hours trying to implement new business strategies. You just invest and keep a sharp eye on foreign happenings!

Disclaimer: There is risk involved when you invest in the Forex market as there is with any other stock transaction.

October 14, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

Technical Analysis – Reading FOREX Charts

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Price charts can be simple line graphs, bar graphs or even candlestick graphs. These are graphs that show prices during specified time frames. These time frames can be anywhere from minutes to years or any time interval in between.
Line charts are the easiest to read, they will show you the broad overview of price movement. They only show the closing price for the specified interval, they make it very easy to pick out patterns and trends but do not provide the fine detail of a bar or candlestick chart.

With a bar chart the length of a line displays the price spread during that time interval. The larger the bar is the greater the price difference between the high and low price during the interval. It is easy to tell at a glance if the price rose or fell because the left tab shows the opening price and the right tab the closing price. Then the bar will give you the price variation. When printed bar charts can be difficult to read but most software charts have a zoom function so you can easily read even closely spaced bars.

Originally developed in Japan for analyzing candlestick contracts candlestick charts are very useful for analyzing FOREX prices. Candlestick charts are very similar to bar charts they both show the high, the low, open and close price for the indicated time. However the color coding makes it much easier to read a candlestick chart, normally a green candlestick indicates a rising price and a red one indicates a falling price.

The actual candlestick shape in reference to the candlesticks around it will tell you a lot about the price movement and will greatly aid your analysis. Depending on the price spread various patterns will be formed by the candlesticks. Many of the shapes have some rather exotic names, but once you learn the patterns they are easy to pick out and analyze.

Price charts are not usually used by themselves to get the full affect you need to supplement them with some technical indicators. Technical indicators are normally grouped into some pretty broad categories. Some of the more common ones used to monitor and track the market movement are: trend indicators, strength indicators, volatility indicators, and cycle indicators.

Here is a list of some of the more commonly used indicators as well as a brief description.

Average Directional Movement Index (ADX) This index will help indicate if the market is moving in a trend in either direction and how strong the trend is. If a trend has readings in excess of 25 then this is considered a stronger trend.

Moving Average ConvergenceDivergence (MACD) This shows the relationship between the moving averages which allows you to determine the momentum of the market. Any time that the signal line is crossed by the MACD it is considered to be a strong market.

Stochastic Oscillator This compares the closing price to the price range over a specific time frame to determine the strength or weakness of the market. If a currency has a stochastic of greater than 80 it is considered overbought. However if the stochastic is under 20 then the currency is considered undersold.

Relative Strength Indicator (RSI) This is a scale from 1 to 100 to compare the high and low prices over time. If the RSI rises above 70 it is considered overbought where as anything below 30 is considered oversold.

Moving Average This is created by comparing the average price for a time period to the average price of other time periods.

October 7, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,