FOREX TRAINING

What Are Forex Training Programs?

2009-05-28T00:00:00.000-07:00

Forex training programs will teach you how to increase your money making potential. Unfortunately, they focus on mainly one profitable FX market technique.

You should really be looking at other educational that can teach you a broad range of trading skills all the way from the basic level to the advanced trader.

The easiest way to engage profitably with currency markets is to take the short term approach. Learn what concepts you can quickly and apply those lessons to start making money. These forex classes will teach you simple, easy ways to trade. If you pay attention, youll be generating income shortly after you start learning the concepts!

The two best courses are Forex Trading Made EZ and 10 Minute Forex Wealth Builder. Both classes have a very simple approach which doesnt waste your valuable time. Learn, apply, and then youll start making money! A class titled Hector Trader is a trend trading specialization course but that class requires more of your time before you are able to turn a profit. The videos you watch for the class are very complicated and you might have to watch each video several times.

Therefore, learn the techniques outlined in the basic classes. They use very different methods of training and if you follow their teachers, your portfolio will be adequately diverse. With a diverse portfolio, you should experience profitability on a monthly basis.

Then, I would attend a class that would educate me fully about the markets so that I would not appear ignorant while learning some of the things in other classes.

If you complete two courses in particular, Fap Winner and Straight Forex, and use their three techniques for the short term and a long term technique in your investments, you will certainly be very profitable.

It all boils down to hard work. If you are ready to get your hands dirty and be prepared to work, there is absolutely no reason as to why you can’t succeed.

About the Author:

To find out more about trade forex, make sure to check out this website on forex trading machine.

Dollar Trades Higher Overall As Equities Plunge - Forex Trading ...

2009-05-27T23:59:00.001-07:00

Dollar Trades Higher Overall As Equities Plunge Overall: The dollar traded mixed for most of the day on Wednesday, but found strength in late US trading and closed higher against most of the other major currencies. ... Forex Trading Recommendation, Forecast, Trading Signal, Forex Training Course, Education, Tutorial, FX Book, Forex ebooks, Learn to Trade Forex, FX Guide, Currency Rates, Forex Secret, Forex Brokers, Currency Trading System, FX Chart, Free Forex Demo, ...Forex news by unknown

Toms Home Business Blog » Blog Archive » Forex Trading As a Home ...

2009-05-27T23:55:00.000-07:00

56-page ebook Forex Trading To Riches. The author, Daniel Su, is the founder of ForexTradingPower.com where you can get free premium forex trading tips and resources. Share this article with others: These icons link to social ...Forex news by Bricktown Tom

EU Inflation CounterBalances Oil

2008-06-25T00:50:00.001-07:00

Forex analysts reckon the two most powerful forces weighing on the Dollar are commodity prices and European prices, so-to-speak. With regard to commodity prices, it seems plausible that rising commodity prices have contributed to a weaker Dollar, as much as vice versa. Thus, when Saudi Arabia announced recently that it would increase oil production, the Dollar received a nice boost. Conversely, European prices, or inflation, are important for traders to monitor because they represent a proxy for the future of EU monetary policy. Specifically, Eurozone inflation just touched another high, at 3.7%, which analysts point out is now 1.7% higher than the ECB's stated comfort zone. The likely result is an interest hike in the near-term, which would further widen the differential with US interest rates. Unless, of course, the Fed follows suit with a rate hike if its own. Forbes reports:

"High oil and food prices are already clearly denting any hopes for a pick-up of private consumption but only a severe deterioration of economic confidence indicators might prevent the ECB from pulling the rate trigger at the next rate-setting meeting."

Bright Future for Emerging Currencies

2008-06-25T00:49:00.004-07:00

At the recent Reuters Investment Outlook Summit, forex was a popular topic of discussion among the investment strategists in attendance. Specifically, many of the participants were bullish about emerging market currencies. This is somewhat ironic, since these currencies have marked one of the few bright spots for the Dollar, which has benefited from a recent trend towards risk aversion as a result of the credit crisis. In addition, the Fed is certainly finished with its current cycle of lowering rates, and may in fact hike rates as early as this year. However, the experts insist that this will be offset by corresponding rate hikes in emerging markets, which are beginning to come to terms with surging inflation. The currencies of Brazil and Malaysia were singled out because they both benefit from rising commodity prices. In addition, all of the BRIC countries (Brazil, Russia, India, and China) and Mexico, continue to be favored by currency investors. Reuters reports:

A decade of fiscal discipline, political stability and export diversification is also likely to help the Mexican peso in the near term, said...a managing director for foreign exchange products at BMO Capital Markets.

Intervention Drawing Near

2008-06-25T00:49:00.003-07:00

G8 finance ministers met last week to discuss the detrimental effects of rising (commodity) prices on the global economy. Oil prices and commodity prices have in some cases doubled over the last year, contributing to a nasty surge in worldwide inflation rates. While the Dollar was not technically a topic of the discussion at these particular meetings, it was broached tangentially because of the perceived relationship between the weak Dollar and high commodity prices. Accordingly, Central Bank intervention on the Dollar's behalf could theoretically be justified on the basis of both mitigating inflation and facilitating global macroeconomic stability. The "I" word hasn't been mentioned explicitly, but its likelihood increases with every up-tick of inflation and every down-tick of GDP. It is no surprise that in the weeks leading up the actual G8 conference, the Dollar has sustained its strongest rally against the Euro in nearly 3 years. Forbes reports:

Last week Federal Reserve Chairman Ben Bernanke flagged a change in Washington by linking the weaker dollar to inflation and saying he was watching the currency closely with the Treasury. Then U.S. Treasury Secretary Henry Paulson refused last week to rule out direct intervention in currency markets.

4 Types of Forex Trades

2008-06-25T00:49:00.001-07:00

In a recent article for Seeking Alpha, financial journalist Ray Hendon offered an overview on the four principal strategies employed in the forex markets: carry trade, technical trade, fundamental trade, and arbitrage. The carry trade, which involves borrowing in a low-interest rate currency and buying a higher-yielding currency, can be undertaken by either buying ETF(s) or by trading directly using a retail forex account. The ETF route can be further subdivided into two possibilities: to buy a particular currency ETF to take advantage of the spread, or instead to buy one of two ETFs (symbols: ICI & DBV) that use computer models to mimic the carry trade.

Currency traders are probably familiar with the second and third strategies: technical trade and fundamental trade. Hendon refers to the technical trade as "momentum trade" but this is overly simplistic. Traders employing a technical strategy can make use of a range of technical indicators designed to show where a particular currency pair is headed in the short term. On the other end of the time horizon is the fundamental trade, which usually involves a long-term commitment. Fundamental trades make use of differentials between countries/currencies which can involve economic growth, inflation, interest rates, even politics, to try to determine whether a particular currency is undervalued or overvalued.

Finally, there is the arbitrage trade, in which traders attempt to spot minute differences in currency pairs that trade in different markets. There is also the possibility of triangular arbitrage in which the respective exchange rates between 3 currency pairs aren't congruent. However, Hendon concedes that such trades have become the bastion of institutional investors which make use of sophisticated computer models to instantly identify and profit from arbitrage opportunities, which limits the average retail trader to the three strategies listed above.

Euro Aloof to Irish "No"

2008-06-25T00:48:00.000-07:00

Over the weekend, the people of Ireland resoundingly rejected the Lisbon Treaty, throwing up roadblock in the way of the most recent attempt to solidify the bond of the EU. Surprisingly, the Euro shrugged off the news and actually rose on the first day of trading following the release of the results. This marks a sharp departure from 3 years ago, when the rejection of a comparable treaty by the people of France and The Netherlands caused a panic in forex markets as analysts sounded the knell of the EU. The explanation for the diverging reactions is that the European Political Union has been de-coupled from the European Monetary Union. In this way, many Europeans may approve of the ECB and the Euro, while remaining skeptical about the loss of national political power at the hands of the EU. According to one expert, even if the political union were to completely dissolve, it is conceivable that the Euro would continue to exist, perhaps even flourish. The New York Times reports:

Certainly, political stalemate has not tarnished the euro so far. Since the rejection of the constitution by France and the Netherlands in 2005, the currency has risen 23 percent against the dollar, becoming an attractive alternative for bond traders and central bankers.

Euro Outshines Yen

2008-06-25T00:47:00.000-07:00

Most of the stories and analysis featured on the Forex Blog concern the Dollar, or at the very least, how other currencies are performing relative to the Dollar. But there are many important currency pairs that don't involve the Greenback, including the Euro/Yen. Last week, the Euro climbed to its highest level in 2008 against the Yen, thanks to diverging economies and interest rates. Neither economy is particularly strong, but the Bank of Japan is using especially bearish language to describe its faltering economy. It should be noted that despite a prolonged period of economic growth, the Bank of Japan avoided raising interest rates even once. Meanwhile, the European Central Bank is becoming increasingly hawkish in its monetary policy rhetoric. The result has been a sustained (and soon-to-widen) interest rate differential, which has contributed to a dynamic that is unique to these two currencies. Bloomberg News reports:

The yen fell against every major counterpart today after a government report showed Japan's longest postwar expansion may be over.

Rouble: The Next Reserve Currency

2008-06-25T00:41:00.000-07:00

Apparently, Russia has aspirations to turn its currency, the Rouble, into an international reserve currency. Moreover, according to an official with the International Monetary Fund (IMF), this plan is not that far-fetched. Despite soaring inflation and political oppression, Russia's economy is forecast to grow at 8% for the next two years, due primarily to soaring natural resource prices. By its own admission, Russia needs to diversify its economy without inhibiting growth, strengthen its financial system, and conduct monetary policy with price stability in mind. These ambitious steps, combined with continued economic growth, would position the Rouble to be a stable and viable alternative to the Dollar, especially on a regional basis. The Guardian reports:

Russia, with a $1.3 trillion economy at the end of last year, is targeting a place among the world's top five economies by 2020, [President] Medvedev has said. But he acknowledges the rule of law needs to be strengthened and corruption must be rooted out.

Position Sizing Continued

2008-04-10T03:24:00.002-07:00

Last week, I introduced you to position sizing by talking about the marble game I typically play. The game has 20% 10R winners, 70% 1R losers, and 10% 5R losers. It only wins 20% of the time, but the expectancy, because of the 10R winners, is a very healthy 0.8R. I gave you a sample of 30 pulls from the game, shown in the table below. The audience is typically told to decide how much to risk on each pull and we check to see how much equity they have after 30 trades. In fact, the one with the most equity will win a nice prize.

R-Multiples Draw In A Game
-1R	-5R	-1R
-1R	-1R	-1R
-1R	-1R	+10R
-5R	-1R	-1R
-1R	-1R	+10R
+10R	-1R	-1R
-1R	-1R	-1R
-1R	-1R	-5R
-1R	-1R	+10R
+10R	-1R	+10R
+8R	-14R	+30R

In a typical game like this, 1/3 of the audience will go bankrupt (i.e., they won't survive the first five losers or the streak of 12 losses in a row); another 1/3 of the audience will lose money; and the last third will typically have made a huge amount of money – sometimes over a million dollars. And in an audience of say 100 people, except for the 33 or so who are at zero, I'll probably have 67 different equity levels.

So this week, I want to define position sizing; tell you it's purpose, and then tell you a little bit about how to do position sizing. First, what is it? Position sizing is that part of your system that tells you “how much” throughout the course of the trade. And, assuming you have a positive expectancy system, that variable, along with your personal psychology, controls about 90% of the variability of your performance in trading. THAT'S HOW IMPORTANT IT IS. And yet most people totally neglect this variable. Mutual funds, for example, that have to be 95% invested at all times, don't really give it much thought.

What's the purpose of position sizing? I'm currently working on a new book titled, The Definitive Guide to Position Sizing, and the subtitle tells you its purpose. It's how to use position sizing to meet your objectives. Position sizing is that part of your trading system that helps you meet your objectives. Everyone probably has a different objective in trading and there are probably an infinite number of ways you could approach position sizing. It's interesting because even the few people who have written about position sizing get this point wrong. They typically say something like position sizing is designed to help you make as much money as you can without experiencing ruin. But what they are really doing is giving you a general statement about their objectives and thinking that's what position sizing does.

For example, you might have an objective of making as much money as you can, but under no circumstances would you want to drawdown by 20%. Thus, your focus in position sizing will be to not have a 20% drawdown. Someone else might have a goal of making 100% and not having a drawdown of 50%. However, this person would be willing to give up 50% on some years in order to make 100% most years. This person would have a totally different position sizing algorithm.

So let's look at the game. What I recommend for position sizing, until you know your system very well is that you risk about 1% of your equity. That means that on the first trade you risk $1000. Since it is a loser (see Table 1), you'd now risk 1% of the balance or $990, it's also a loser so you'd risk about 1% of what' left or $980. Thus, you'd always be risking about 1% of your equity. The table below shows how that would work out with this particular sample of trades.

Results of Risking 1% in the Game
Equity	1% Risk	R-multiple	New Equity
100,000	1000	-1	99000
99000	990	-1	98010
98010	980.1	-1	97029.9
97029.9	970.299	-5	92178.41
92178.41	921.7841	-1	91256.62
91256.62	912.5662	10	100382.3
100382.3	1003.823	-1	99378.46
99378.46	993.7846	-1	98384.68
98384.68	983.8468	-1	97400.83
97400.83	974.0083	-5	92530.79
92530.79	925.3079	-1	91605.48
91605.48	916.0548	-1	90689.42
90689.42	906.8942	-1	89782.53
89782.53	897.8253	-1	88884.71
88884.71	888.8471	-1	87995.86
87995.86	879.9586	-1	87115.9
87115.9	871.159	-1	86244.74
86244.74	862.4474	-1	85382.29
85382.29	853.8229	-1	84528.47
84528.47	845.2847	-1	83683.19
83683.19	836.8319	-1	82846.35
82846.35	828.4635	-1	82017.89
82017.89	820.1789	10	90219.68
90219.68	902.1968	-1	89317.48
89317.48	893.1748	-1	88424.31
88424.31	884.2431	-1	87540.06
87540.06	875.4006	-5	83163.06
83163.06	831.6306	10	91479.37
91479.37	914.7937	10	100627.3

Notice that because of the drawdowns that came early, you would survive. You have a low equity of about 82,018 after the long losing streak but you are still in the game. And at the end you would come up a little ahead.

You wouldn't win the game because someone who does something incredibly risky, like risking it all on the sixth trade, usually wins the game. But the important point is that you'd survive and your drawdown wouldn't be excessive.

Position sizing is that important and I'd suggest that you take a look at chapter 14 of my book because many people have told me that it turned their trading around, making them winners instead of losers.

Dr. Van K Tharp

Large Round Figures

2008-04-10T03:24:00.001-07:00

Many traders, from the individual speculator to the large fund will focus on the large round figures or round numbers when applying their analysis to the Forex market for a number of reasons. Option traders tend to select these price levels whether their exercising American, European, or Exotic options, as well as the placement of protective stop orders.

For that reason, the 'large round figure' such as 1.3100 or 1.3250 tend to carry a greater weight of importance. However this can be deceitful as the market often times will spill over to trade slightly above or below a price level of importance. For that reason we should naturally expect the ultimate highs and lows to rest at times slightly beyond these areas. For example, we can see the following (15-minute) chart, the EURUSD has recently found major turning points very close but not exactly on the 1.3100, 1.3200, and 1.3250 figures respectively. In fact notice, how each turning point was established within 15-pips of a figure. We should suspect the market as it approaches and fails to break beyond a large round figure, even if we cannot take the exact figure literally.

Intermarket Dynamics- Forex Insight on Gold

2008-04-10T03:23:00.000-07:00

Intermarket Dynamics- Forex Insight on Gold

The price action in Gold has been the focus of deserving attention, yet further insight can be gained from an inter-market perspective.

The usual historical inverse relationship between the USDX, US Dollar Index, and Gold has been out of sync. Both Gold and the dollar have been strengthening. We can see this in the chart below. But this inverse relationship is not likely to last. Is this an omen for a dollar retracement and a Gold sell off?

Another revealing chart shows the relationship between the Yen and Gold. The recent Gold buying has been sourced to be from the TOMOC (The Tokyo Commodity Exchange) as Japanese investors looked to hedge against a very weak Yen. So quite significa

ntly, on the TOMOC exchange, Gold futures went limit down, after 8 days of gain. Is this profit taking or a clue to further Yen strengthening? The fundamentals are beginning to color technical sentiment as a new Tankan Report may reflect business sentiment rising.

A Bloomberg story reports that "The Bank of Japan will say on Dec. 14 that its Tankan confidence index climbed to 23 in the third quarter from 19 in the second, according to the median forecast of 26 economists in a Bloomberg survey." At the same time the Bank of Japan is signaling an end to the zero interest rate policy in Japan which has been a major driver of a weakening Yen.

Let's add to this mix of analysis another factor- China. The Chinese are signaling clearly that they will allow their currency, the Renminbi Yuan, to further strengthen. A stronger Chinese currency means more demand for Japanese goods, and is another positive factor for strengthening Yen.

The inter-market Gold puzzle gets more interesting when you see the Aussie/Yen cross and Gold Patterns. The Aussie has strengthened against the Yen in tandem with the move in Gold.

What can we conclude about the Gold moves from the perspective of currency trading opportunities? The Forex trader need not try to predict where Gold is going, but should be ready for the opportunities to trade the currency pairs in response to what Gold will be doing. An intermarket perspective shows that the Aussie, the Yen, and the AUD/JPY cross provide price extremes that may be about to break. While the majority of Forex traders pay attention to the popular Euro, it may be wise to look east.

Forex Essentials [part 2]

2008-04-10T03:22:00.000-07:00

Introduction to Fundamental Analysis

Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. It is a method of study that attempts to predict price action and market trends by analyzing economic indicators, government policy and societal factors (to name just a few elements) within a business cycle framework. If you think of the financial markets as a big clock, the fundamentals are the gears and springs that move the hands around the face. Anyone walking down the street can look at this clock and tell you what time it is now, but the fundamentalist can tell you how it came to be this time and more importantly, what time (or more precisely, what price) it will be in the future.

There is a tendency to pigeonhole traders into two distinct schools of market analysis - fundamental and technical. Indeed, the first question posed to you after you tell someone that you are a trader is generally "Are you a technician or a fundamentalist?" The reality is that it has become increasingly difficult to be a purist of either persuasion. Fundamentalists need to keep an eye on the various signals derived from the price action on charts, while few technicians can afford to completely ignore impending economic data, critical political decisions or the myriad of societal issues that influence prices.

Bearing in mind that the financial underpinnings of any country, trading bloc or multinational industry takes into account many factors, including social, political and economic influences, staying on top of an extremely fluid fundamental picture can be challenging. At the same time, you'll find that your knowledge and understanding of a dynamic global market will increase immeasurably as you delve further and further into the complexities and subtleties of the fundamentals of the markets.

Fundamental analysis is a very effective way to forecast economic conditions, but not necessarily exact market prices. For example, when analyzing an economist's forecast of the upcoming GDP or employment report, you begin to get a fairly clear picture of the general health of the economy and the forces at work behind it. However, you'll need to come up with a precise method as to how best to translate this information into entry and exit points for a particular trading strategy.

A trader who studies the markets using fundamental analysis will generally create models to formulate a trading strategy. These models typically utilize a host of empirical data and attempt to forecast market behavior and estimate future values or prices by using past values of core economic indicators. This information is then used to derive specific trades that best exploit this information.

Forecasting models are as numerous and varied as the traders and market buffs that create them. Two people can look at the exact same data and come up with two completely different conclusions about how the market will be influenced by it. Therefore is it important that before casting yourself into a particular mold regarding any aspect of market analysis, you study the fundamentals and see how they best fit your trading style and expectations.

Don't succumb to 'paralysis by analysis.' Given the multitude of factors that fall under the heading of "The Fundamentals," there is a distinct danger of information overload. Sometimes traders fall into this trap and are unable to pull the trigger on a trade. This is one of the reasons why many traders turn to technical analysis. To some, technical analysis is seen as a way to transform all of the fundamental factors that influence the markets into one simple tool, prices. However, trading a particular market without knowing a great deal about the exact nature of its underlying elements is like fishing without bait. You might get lucky and snare a few on occasion but it's not the best approach over the long haul.

For forex traders, the fundamentals are everything that makes a country tick. From interest rates and central bank policy to natural disasters, the fundamentals are a dynamic mix of distinct plans, erratic behaviors and unforeseen events. Therefore, it is best to get a handle on the most influential contributors to this diverse mix than it is to formulate a comprehensive list of all "The Fundamentals."

Economic Indicators 101

Economic indicators are snippets of financial and economic data published by various agencies of the government or private sector. These statistics, which are made public on a regularly scheduled basis, help market observers monitor the pulse of the economy. Therefore, they are religiously followed by almost everyone in the financial markets. With so many people poised to react to the same information, economic indicators in general have tremendous potential to generate volume and to move prices in the markets. While on the surface it might seem that an advanced degree in economics would come in handy to analyze and then trade on the glut of information contained in these economic indicators, a few simple guidelines are all that is necessary to track, organize and make trading decisions based on the data.

Know exactly when each economic indicator is due to be released. Keep a calendar on your desk or trading station that contains the date and time when each stat will be made public. You can find these calendars on the N.Y. Federal Reserve Bank Web site using this link http://www.ny.frb.org/, and then by searching for "economic indicators." The same information is also available on many other sources on the Web or from the company you use to execute your trades.

Keeping track of the calendar of economic indicators will also help you make sense out of otherwise unanticipated price action in the market. Consider this scenario: it's Monday morning and the USD has been in a tailspin for three weeks. As such, it's safe to assume that many traders are holding large short USD positions. However, on Friday the employment data for the U.S. is due to be released. It is very likely that with this key piece of economic information soon to be made public, the USD could experience a short-term rally leading up to the data on Friday as traders pare down their short positions. The point here is that economic indicators can effect prices directly (following their release to the public) or indirectly (as traders massage their positions in anticipation of the data.)

Understand what particular aspect of the economy is being revealed in the data. For example, you should know which indicators measure the growth of the economy (GDP) vs. those that measure inflation (PPI, CPI) or employment (non-farm payrolls). After you follow the data for a while, you'll become very familiar with the nuances of each economic indicator and what part of the economy they are measuring.

Not all economic indicators are created equal. Well, they might've been created with equal importance but along the way, some have acquired much greater potential to move the markets than others. Market participants will place higher regard on one stat vs. another depending on the state of the economy.

Know which indicators the markets are keying on. For example, if prices (inflation) are not a crucial issue for a particular country, inflation data will probably not be as keenly anticipated or reacted to by the markets. On the other hand, if economic growth is a vexing problem, changes in employment data or GDP will be eagerly anticipated and could precipitate tremendous volatility following their release.

The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data will hit the wires, it is vitally important that you know what economists and other market pundits are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise of 0.3% in the producer price index (PPI) is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for PPI to fall by 0.1%. As mentioned, you should know that PPI measures prices and that an unexpected rise could be a sign of inflation. But analyzing the longer-term ramifications of this unexpected monthly rise in prices can wait until after you've taken advantage of the trading opportunities presented by the data. Once again, market expectations for all economic releases are published on various sources on the Web and you should post these expectations on your calendar along with the release date of the indicator.

Don't get caught up in the headlines. Part of getting a handle on what the market is forecasting for various economic indicators is knowing the key aspects of each indicator. While your macroeconomics professor might have drilled the significance of the unemployment rate into your head, even junior traders can tell you that the headline figure is for amateurs and that the most closely watched detail in the payroll data is the non-farm payrolls figure. Other economic indicators are similar in that the headline figure is not nearly as closely watched as the finer points of the data. PPI for example, measures changes in producer prices. But the stat most closely watched by the markets is PPI, ex-food and energy. Traders know that the food and energy component of the data is much too volatile and subject to revisions on a month-to-month basis to provide an accurate reading on the changes in producer prices.

Speaking of revisions, don't be too quick to pull that trigger should a particular economic indicator fall outside of market expectations. Contained in each new economic indicator released to the public are revisions to previously released data. For example, if durable goods should rise by 0.5% in the current month, while the market is anticipating them to fall, the unexpected rise could be the result of a downward revision to the prior month. Look at revisions to older data because in this case, the previous month's durable goods figure might've been originally reported as a rise of 0.5% but now, along with the new figures, is being revised lower to say a rise of only 0.1% Therefore, the unexpected rise in the current month is likely the result of a downward revision to the previous month's data.

Don't forget that there are two sides to a trade in the foreign exchange market. So, while you might have a great handle on the complete package of economic indicators published in the United States or Europe, most other countries also publish similar economic data. The important thing to remember here is that not all countries are as efficient as the G7 in releasing this information. Once again, if you are going to trade the currency of a particular country, you need to find out the particulars about their economic indicators. As mentioned above, not all of these indicators carry the same weight in the markets and not all of them are as accurate as others. Do your homework and you won't be caught off guard.

General information regarding major economic indicators

When focusing exclusively on the impact that economic indicators have on price action in a particular market, the foreign exchange markets are the most challenging, and therefore, have greatest potential for profits of any market. Obviously, factors other than economic indicators move prices and as such make other markets more or less potentially profitable. But since a currency is a proxy for the country it represents, the economic health of that country is priced into the currency. One very important way to measure the health of an economy is through economic indicators. The challenge comes in diligently keeping track of the nuts and bolts of each country's particular economic information package. Here are a few general comments about economic indicators and some of the more closely watched data.

Most economic indicators can be divided into leading and lagging indicators.

Leading indicators are economic factors that change before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy.
Lagging Indicators are economic factors that change after the economy has already begun to follow a particular pattern or trend.

Major Indicators

The Gross Domestic Product (GDP) - The sum of all goods and services produced either by domestic or foreign companies. GDP indicates the pace at which a country's economy is growing (or shrinking) and is considered the broadest indicator of economic output and growth.

Industrial Production - It is a chain-weighted measure of the change in the production of the nation's factories, mines and utilities as well as a measure of their industrial capacity and of how many available resources among factories, utilities and mines are being used (commonly known as capacity utilization). The manufacturing sector accounts for one-quarter of the economy. The capacity utilization rate provides an estimate of how much factory capacity is in use.

Purchasing Managers Index (PMI) - The National Association of Purchasing Managers (NAPM), now called the Institute for Supply Management, releases a monthly composite index of national manufacturing conditions, constructed from data on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, and import orders. It is divided into manufacturing and non-manufacturing sub-indices.

Producer Price Index (PPI) - The Producer Price Index (PPI) is a measure of price changes in the manufacturing sector. It measures average changes in selling prices received by domestic producers in the manufacturing, mining, agriculture, and electric utility industries for their output. The PPIs most often used for economic analysis are those for finished goods, intermediate goods, and crude goods.

Consumer Price Index (CPI) - The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. It reports price changes in over 200 categories. The CPI also includes various user fees and taxes directly associated with the prices of specific goods and services.

Durable Goods - Durable Goods Orders measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. A durable good is defined as a good that lasts an extended period of time (over three years) during which its services are extended.

Employment Cost Index (ECI) - Payroll employment is a measure of the number of jobs in more than 500 industries in all states and 255 metropolitan areas. The employment estimates are based on a survey of larger businesses and counts the number of paid employees working part-time or full-time in the nation's business and government establishments.

Retail Sales - The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the timeliest indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer.

Housing Starts - The Housing Starts report measures the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Housing is very interest rate sensitive and is one of the first sectors to react to changes in interest rates. Significant reaction of start/permits to changing interest rates signals interest rates are nearing trough or peak. To analyze, focus on the percentage change in levels from the previous month. Report is released around the middle of the following month.

Forex Essentials [part 1]

2008-04-10T03:19:00.000-07:00

Understanding Margin

Trading currencies on margin lets you increase your buying power. Here's a simplified example: If you have $2,000 cash in a margin account that allows 100:1 leverage, you could purchase up to $200,000 worth of currency-because you only have to post 1% of the purchase price as collateral. Another way of saying this is that you have $200,000 in buying power.

Benefits of Margin

With more buying power, you can increase your total return on investment with less cash outlay. To be sure, trading on margin magnifies your profits AND your losses.

Here's a hypothetical example that demonstrates the upside of trading on margin:

With a US$5,000 balance in your margin account, you decide that the US Dollar (USD) is undervalued against the Swiss Franc (CHF).

To execute this strategy, you must buy Dollars (simultaneously selling Francs), and then wait for the exchange rate to rise.

The current bid/ask price for USD/CHF is 1.6322/1.6327 (meaning you can buy $1 US for 1.6327 Swiss Francs or sell $1 US for 1.6322)

Your available leverage is 100:1 or 1%. You execute the trade, buying a one lot: buying 100,000 US dollars and selling 163,270 Swiss Francs.

At 100:1 leverage, your initial margin deposit for this trade is $1,000. Your account balance is now $4000.

As you expected, USD/CHF rises to 1.6435/40. You can now sell $1 US for 1.6435 Francs or buy $1 US for 1.6440 Francs. Since you're long dollars (and are short francs), you must now sell dollars and buy back the francs to realize any profit.

You close out the position, selling one lot (selling 100,000 US dollar and receiving 164,350 CHF) Since you originally sold (paid) 163,270 CHF, your profit is 1080 CHF.

To calculate your P&L in terms of US dollars, simply divide 1080 by the current USD/CHF rate of 1.6435. Your profit on this trade is $657.13

Summary

Initial Investment:	$1000
Profit:	$657.13
Return on investment:	65.7%

If you had executed this trade without using leverage, your return on investment would be less than 1%.

Managing a Margin Account

Trading on margin can be a profitable investment strategy, but it's important that you take the time to understand the risks.

You should make sure you fully understand how your margin account works. Be sure to read the margin agreement between you and your clearing firm. Talk to your account representative if you have any questions.
The positions in your account could be partially or totally liquidated should the available margin in your account fall below a predetermined threshold.
You may not receive a margin call before your positions are liquidated.

You should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

Calculating Profit and Loss

For ease of use, most online trading platforms automatically calculate the P&L of a traders' open positions. However, it is useful to understand how this calculation is derived.

To illustrate a typical FX trade, consider the following example.

The current bid/ask price for USD/CHF is 1.6322/1.6327, meaning you can buy $1 US for 1.6327 Swiss Francs or sell $1 US for 1.6322.

Suppose you decide that the US Dollar (USD) is undervalued against the Swiss Franc (CHF). To execute this strategy, you would buy Dollars (simultaneously selling Francs), and then wait for the exchange rate to rise.

So you make the trade: purchasing US$100,000 and selling 163,270 Francs. (Remember, at 1% margin, your initial margin deposit would be $1,000.)

As you expected, USD/CHF rises to 1.6435/40. You can now sell $1 US for 1.6435 Francs or buy $1 US for 1.6440 Francs.

Since you're long dollars (and are short francs), you must now sell dollars and buy back the francs to realize any profit.

You sell US$100,000 at the current USD/CHF rate of 1.6435, and receive 164,350 CHF. Since you originally sold (paid) 163,270 CHF, your profit is 1080 CHF.

To calculate your P&L in terms of US dollars, simply divide 1080 by the current USD/CHF rate of 1.6435.

Total profit = US $657.13

Introduction to Technical Analysis

Technical analysis is a method of forecasting price movements by looking at purely market-generated data. Price data from a particular market is most commonly the type of information analyzed by a technician, though most will also keep a close watch on volume and open interest in futures contracts. The bottom line when utilizing any type of analytical method, technical or otherwise, is to stick to the basics, which are methodologies with a proven track record over a long period. After finding a trading system that works for you, the more esoteric fields of study can then be incorporated into your trading toolbox.

Almost every trader uses some form of technical analysis. Even the most reverent follower of market fundamentals is likely to glance at price charts before executing a trade. At their most basic level, these charts help traders determine ideal entry and exit points for a trade. They provide a visual representation of the historical price action of whatever is being studied. As such, traders can look at a chart and know if they are buying at a fair price (based on the price history of a particular market), selling at a cyclical top or perhaps throwing their capital into a choppy, sideways market. These are just a few market conditions that charts identify for a trader. Depending on their level of sophistication, charts can also help much more advanced studies of the markets.

On the surface, it might appear that technicians ignore the fundamentals of the market while surrounding themselves with charts and data tables. However, a technical trader will tell you that all of the fundamentals are already represented in the price. They are not so much concerned that a natural disaster or an awful inflation number caused a recent spike in prices as much as how that price action fits into a pattern or trend. And much more to the point, how that pattern can be used to predict future prices.

Technical analysis assumes that:

All market fundamentals are depicted in the actual market data. So the actual market fundamentals and various factors, such as the differing opinions, hopes, fears, and moods of market participants, need not be studied.
History repeats itself and therefore markets move in fairly predictable, or at least quantifiable, patterns. These patterns, generated by price movement, are called signals. The goal in technical analysis is to uncover the signals given off in a current market by examining past market signals.
Prices move in trends. Technicians typically do not believe that price fluctuations are random and unpredictable. Prices can move in one of three directions, up, down or sideways. Once a trend in any of these directions is established, it usually will continue for some period.

The building blocks of any technical analysis system include price charts, volume charts, and a host of other mathematical representations of market patterns and behaviors. Most often called studies, these mathematical manipulations of various types of market data are used to determine the strength and sustainability of a particular trend. So, rather than simply relying on price charts to forecast future market values, technicians will also use a variety of other technical tools before entering a trade.

As in all other aspects of trading, be very disciplined when using technical analysis. Too often, a trader will fail to sell or buy into a market even after it has reached a price that his or her technical studies identified as an entry or exit point. This is because it is hard to screen out the fundamental realities that led to the price movement in the first place.

As an example, let's assume you are long USD vs. euro and have established your stop/loss 30 pips away from your entry point. However, if some unforeseen factor is responsible for pushing the USD through your stop/loss level you might be inclined to hold this position just a bit longer in the hopes that it turns back into a winner. It is very hard to make the decision to cut your losses and even harder to resist the temptation to book profits too early on a winning trade. This is called leaving money on the table. A common mistake is to ride a loser too long in the hopes it comes back and to cut a winner way too early. If you use technical analysis to establish entry and exit levels, be very disciplined in following through on your original trading plan.

Price charts

Chart patterns

There are a variety of charts that show price action. The most common are bar charts. Each bar will represent one period of time and that period can be anything from one minute to one month to several years. These charts will show distinct price patterns that develop over time.

Candlestick patterns

Like bar charts patterns, candlestick patterns can be used to forecast the market. Because of their colored bodies, candlesticks provide greater visual detail in their chart patterns than bar charts.

Point & figure patterns

Point and figure patterns are essentially the same patterns found in bar charts but Xs and Os are used to market changes in price direction. In addition, point and figure charts make no use of time scales to indicate the particular day associated with certain price action.

Technical Indicators

Here are a few of the more common types of indicators used in technical analysis:

Trend indicators

Trend is a term used to describe the persistence of price movement in one direction over time. Trends move in three directions: up, down and sideways. Trend indicators smooth variable price data to create a composite of market direction. (Example: Moving Averages, Trend lines)

Strength indicators

Market strength describes the intensity of market opinion with reference to a price by examining the market positions taken by various market participants. Volume or open interest are the basic ingredients of this indicator. Their signals are coincident or leading the market. (Example: Volume)

Volatility indicators

Volatility is a general term used to describe the magnitude, or size, of day-to-day price fluctuations independent of their direction. Generally, changes in volatility tend to lead changes in prices. (Example: Bollinger Bands)

Cycle indicators

A cycle is a term to indicate repeating patterns of market movement, specific to recurrent events, such as seasons, elections, etc. Many markets have a tendency to move in cyclical patterns. Cycle indicators determine the timing of a particular market patterns. (Example: Elliott Wave)

Support/resistance indicators

Support and resistance describes the price levels where markets repeatedly rise or fall and then reverse. This phenomenon is attributed to basic supply and demand. (Example: Trend Lines)

Momentum indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Momentum indicators determine the strength or weakness of a trend as it progresses over time. Momentum is highest at the beginning of a trend and lowest at trend turning points. Any divergence of directions in price and momentum is a warning of weakness; if price extremes occur with weak momentum, it signals an end of movement in that direction. If momentum is trending strongly and prices are flat, it signals a potential change in price direction. (Example: Stochastic, MACD, RSI)

Forex 1-2-3 Method

2008-04-10T03:17:00.001-07:00

This particular technique has been around for a long time and I first saw it used in the futures market. Since then I have seen traders using it on just about every market and when applied well, can give amazingly accurate entry levels.

Lets first start with the basic concept. During the course of any trend, either up or down, the market will form little peaks and valleys. see the chart below:

The problem is, how do you know when to enter the market and where do you get out. This is where the 1-2-3 method comes in. First let's look at a typical 1-2-3 set up:

Nice and simple, but it still doesn't tell us if we should take the trade. For this we add an indictor. You could use just about any indictor with this method but my preferred indictor is MACD with the standard settings of 12,26,9. With the indictor added, it now looks like this:

Now here is where it gets interesting. The rules for the trade are as follows:

Uptrend

This works best as a reversal pattern so identify a previous downtrend
Wait for the MACD to signal a buy and for the 1-2-3 set up to be in place.
As the market pulls back to point 3, the MACD should remain in buy mode or just slightly dip into sell.
Place a buy entry order 1 pip above point 2
Place a stop loss order 1 pip below point 3
Measure the distance between point 2 and 3 and project that forward for your exit.
Point 2, should not be lower than point 1

The reverse is true for short trades. As the market progresses you can trail your stop to 1 pip below the most recent low (Valley in an uptrend). You can also use a break in a trend line as an exit.

Some examples:

There are a lot of variations on the 1-2-3 setup but the basic concept is always the same. Try experimenting with it on your favorite time frame.

http://www.actionforex.com

Forex History

2008-04-10T03:16:00.003-07:00

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of US$1.9 trillion — 30 times larger than the combined volume of all U.S. equity markets.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets

Focus on the Loonie

2008-04-10T03:16:00.001-07:00

While most Forex traders concentrate on the big 4 Major, which include theEUR/USD, USD/CHF, GBP/USD, and USD/JPY, the opportunities presented by other currency pairs should not be overlooked. An emerging example is the USD/CAD.

The "loonie" as it is called, is a classic case where a currency pair reflects theunderlying fundamentals of the economy of that currency. In particular, the recentincrease in prices in the crude oil and the general upward trend in commodity prices has contributed to a strengthening of the Canadian economy. In fact, the Canadian currency is known as a commodity currency, which means it is greatly correlated with commodity prices. This also means that a Forex trader needs to be aware of key commodity price action which are driving factors in determining the direction in MANY currency pairs. It is not an accident that the CRB index has had a strong year and year to date has made a new high 33 times! Commodities, as a sector, are on the rise and this helps the Canadian currency. The current fundamental situation is a classic example of how important fundamentals are to a currency direction. Let's take a closer look.

Recent economic data show that Canada is growing as a result of its role as an exporter of resources and, in fact, a net exporter of oil. Recent estimates on the tar sand oil reserve capabilities project an amount of recoverable oil greater than Saudi Arabia. As crude oil prices increase, the ability to tap these reserves in a cost-effective way will increase. It is logical therefore to see Canada as benefiting from this new era in oil prices. Canada's GDP is reflecting these fundamentals as well. The July Canadian GDP report provides a snapshot of the Canadian economy. The Canadian GDP advanced 0.2% in July following a 0.3% increase in June. The growth in the GDP was concentrated in mining, oil and gas. However, the manufacturing, wholesale trade, and utilities industries declined. It is significant that the key province of Alberta, has experienced labor shortages. In effect, Canada has two economies, a growing western economy based on resources and an older manufacturing and service oriented economy that has less potential for growth.

What does this mean for the Forex trader? The Forex trader, as a result of these fundamental conditions, will be able to see an increase in trading opportunities in the USD/CAD pair. Those traders wanting to play the strength of the Canadian economy should look for selling opportunities and signals. Realizing that prices don't just move in straight lines, there will be periods of retracement where the loonie suffers in value as sentiment for the dollar goes up, and when oil prices sell off.

The recent charts tell the story. We see the USD/CAD pair testing 13 year support, and then retracement, as short term sentiment changes. A technical analysis of the price patterns shows a significant downward channel in this pair. The retracements in this weekly chart correlate with key Fibonacci retracement levels.

This kind of pattern provides ample trading opportunity for buyers and sellers. Let's zoom down to the 4 hour chart.

Trade Forex Using News - 5 Most Watched Indicators

2008-04-10T03:14:00.000-07:00

Currencies do not become weaker or stronger randomly. A large portion of a currency's value is based on confidence in the economic strength of the country. Economic strength is judged by certain key indicators that are closely watched in FX trading. When these economic indicators change, the value of a currency will fluctuate. A currency is a proxy for the country it represents and the economic health of that country is priced into the currency.

Fundamental releases have become increasingly important market movers. When focusing on the impact that economic numbers have on price action in the FX market there are 5 indicators that are watched the most because of their potential to generate volume and to move prices in the market.

Why Does Economic News Impact Short-Term Trading?

The data itself is not as important as whether or not it falls within market expectations. Besides knowing when all the data is released, it is vitally important to know what economists are forecasting for each indicator. For example, knowing the economic consequences of an unexpected monthly rise of 0.3% in the Consumer Price Index, the Actual, is not nearly as vital to your short-term trading decisions as it is to know that this month the market was looking for CPI to fall by 0.1%, the Consensus.

Analyzing the longer-term ramifications of an unexpected monthly rise in prices can wait until after you've taken advantage of the short term trading opportunities presented by the data typically within the first thirty minutes following the release. Market expectations for all economic releases are published on our calendar and you should track these expectations along with the release date of the indicator.

Average Pip Ranges

1.	Non Farm Payrolls - Unemployment Avg. Move: 124 Pips
2.	FOMC Interest Rate Decisions Avg. Move: 74 Pips
3.	Trade Balance Avg. Move: 64 Pips
4.	CPI - Inflation Avg. Move: 44 Pips
5.	Retail sales Avg. Move: 44 Pips
	* 2004 Data from DailyFX Research

1. Non Farm Payrolls – Unemployment

The unemployment rate is a measure of the strength of the labor market. One of the ways analysts gauge the strength of an economy is by the number of jobs created, and the percentage of workers unable to find jobs. Strong job creation is indicative of economic growth, as companies must increase their workforce in order to meet demand.

Release Schedule: First Friday of the month at 8:30am EST

2. FOMC Interest Rate Decisions

The Federal Open Market sets the discount rate, which is the rate at which the Federal Reserve Bank charges member banks for overnight loans. The rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board.

Release Schedule: 8 meetings scheduled per year. Date is known in advance so check the economic calendar

3. Trade Balance

The balance of trade measures the difference between the value of goods and services that a nation exports and the value of goods and services that it imports. A trade surplus results if the value of exported goods exceeds that of imported goods, whereas a trade deficit exists if imported goods exceed exported goods.

Release Schedule: Generally released around the middle of the second month following the reporting period. Check the economic calendar

4. CPI – Consumer Price Index

The CPI is a key gauge of inflation, as it measures the price of a fixed basket of consumer goods. Higher prices are considered negative for an economy, but since central banks often respond to price inflation by raising interest rates, currencies sometimes respond positively to reports of higher inflation.

Release Schedule: Monthly - around the 13th of each month at 8:30am EST

5. Retail Sales

Retail sales is a measure of the total goods sold by a sampling of retail stores. It is used as a gauge of consumer activity and confidence as higher sales figures would indicate increased economic activity.

Release Schedule: Monthly - around the 11th of each month at 8:30am EST

Is it possible to forecast future Forex movements?

2008-04-10T03:13:00.000-07:00

I often hear traders claim that it is impossible to forecast price movement.

I can categorically claim that it is possible, and have considerable success and good accuracy in the process utilizing technical analysis in 100% of my forecasting.

Economists of course laugh at the idea that there can be any other method than applying economic theory.

So how should new, and for that matter experienced traders, formulate their own approach to forecasting future price movements? To be honest it is something personal to each trader. The most important factor they need assess is their own personal skill set. Are they analysts by nature, or are they traders. Each has a completely different mind set and also different abilities in terms of analyzing.

A pure trader is reactive, wants to trade and wants to make quick decisions.
A pure analyst is reflective, ponders decisions but likes to explore different factors that are affecting the market.

Most market participants are a hybrid of the two. Some err on the side of reaction and some err on the side of making sure of their trade, planning the entry and exits.

So how should a new trader decide what he or she should do in terms of analysis?

I am a pure analyst. I include no fundamental factors in my analysis. I am 100% pure technical analysis and I can be no other way since it works well for me. I have been able to forecast approximate targets 6-10 months in the future when the circumstances all work together well. That is how strong technical analysis can be. If an analyst knows what they are doing the advantage that technical analysis has over fundamental analysis is the ability to provide accurate targets, both on retracements and projections. It may also provide good timing.

In that case, do I recommend that all new traders base their trading on technical analysis alone?

Indeed not.

To be able to forecast with technical analysis in this way with a high success ratio requires a deep understanding of price movement, why it does what it does and what happens when it doesn’t move in the way that has been predicted. My method is based around Elliott Wave and a purely personal interpretation of Elliott Wave since I have found the Elliott’s methodology does not really apply to the Forex market, Elliott Wave takes years of practice and use to feel comfortable applying it. I also use time cycles which are also not plain straight forward to apply. If you don’t know what you are doing then you can end up making very bad trades. How long would it take to forecast accurately utilizing 100% technical methodologies? At least 5-10 years depending on the individual’s analytical skills.

So does that imply that new traders should base their trading on fundamental analysis alone?

Indeed not.

I am not a skillful fundamental analyst but I have worked with several and have seen their successes and failures. Certainly they require time to understand the vagaries of the Forex market and how what appear to be understandable and underlying economic factors can apparently fail totally. They can often forecast the underlying direction but what is impossible is to forecast precise levels to enter or exit.

Thus, for the new trader it is important to incorporate both elements into trade decisions. Fundamentals are normally favored because it is easier to conceptualize the concepts. They appear logical while technical analysis does not. It is normally easier for a new trader to become a little more skillful in applying fundamentals in a quicker time than he/she can with technical analysis.

However, the bigger problem for traders is knowing when to enter and where to place stops. The only solution is technical analysis. Since the process of understanding how to use technical analysis will take time it can be useful to subscribe to a technical service. Since probably 80% of traders are not analytical in nature it could be that most traders will find it useful to subscribe to an analytical service permanently and will need to try several services to see which suits their own personal style of trading.

Choosing an analytical service is important. Since there are always several ways a price pattern can develop what a good service must do for you is provide you with guidance to the possible alternatives, the levels that confirm a move and when it breaks down. It is vital to have a firm view of when to enter, why you are entering and when to take profit, or take a loss. Not to have this in your trading strategy will cause you more losses than you need take.

The key to successful and profitable trading is study and that means hard work. It is well know that trading is a stressful profession and that in itself implies that it is not a simple pastime, even for institutional traders who have a wealth of information at hand. However, there is enough information available to private traders these days and for the savvy who do their homework, there are good profits to be made.

Ian Copsey
Global Forex Trading

Making Sense of Forex Broker Stop Loss Policy

2008-04-10T03:12:00.002-07:00

Why do on-line Forex brokers guarantee stops at all? The answer is simple; they make a lot of money from it. Only the on-line Forex brokers handle stop loss orders such that a customer?s stop loss order is executed when the level is reached and not breached. In fact, in Forex banking the etiquette is to not fill a stop until 3 points or so breaches the level.

For example, if you leave a stop loss at 1.2150 with a bank, your stop loss order is unlikely to be filled unless the market trades 1.2147 (meaning deals are actually done at that rate); and then the Bank will likely fill your order at 1.2148 or 1.2149. In the on-line brokers if the market trades at 1.2155 and the broker makes the rate 1.2150-53 you?re stopped out at 1.2150.

What?s particularly disturbing is the low trade may actually be 1.2155, even; it is not at all unusual for the on-line broker to "jack in" a low ball rate and "run" the stops; meaning execute the stop loss orders at 1.2150 (buying from customers at 1.2150) and selling to Banks at current market price 1.2155.

This ability to arbitrarily "jack in" off market rates is the cornerstone of broker profitability and clearly explains why brokers that guarantee stops choose to do so. The fact is if the broker didn?t guarantee stops then nobody would leave stops and the lucrative stop running strategy would not exist.

Another benefit of having an order book of stops is the potential to use the stops to offset a wrong market position or to get a right one. Case in point; on August 6th, 2004, as seconds ticked on toward 8:30am and the release of non-farm payroll EURUSD was marching into the mid 1.2060s; one broker jacked in a 1.2032-1.2035 rate.

This clearly off-market rate caused hundreds of customer long EURUSD positions to be stopped out; in effect all the customer long positions became broker long positions. It is unclear whether the broker knew the non-farm payroll number when the off market rate was jacked in but it was a no lose situation for the broker.

As it turned out the EURUSD price was 200 points higher right after the number; so instead of the customers making 200 points the broker made between 210 and 230 points, depending where they bought the customers EURUSD position (where they stopped out the customer).

The bottom line here is that FOREX brokers that routinely do not simultaneously offset their customer transactions with Banks are in effect strictly market makers and as such have a fiduciary responsibility to treat their customers orders fairly and honestly. Just because a customer signed a client agreement that says the broker rate can be different than the market rate does not mean a broker can make a "flash" price for a nano-second and clean house ? take all the customers positions for themselves, regardless of where the market really is.

When a broker that acts primarily as a market maker jacks in an obviously off market price by 30 points and makes millions of dollars by doing so the regulators ? CFTC ? should at least acknowledge that a situation exists. In this case despite hundreds of complaints I have not heard a single word from the CFTC concerning this matter.

I have called many times and have yet to get a response myself. If the public is indeed protected by these brokers being registered CFMs; well where is the protection when we need it. Where is the CFTC on this matter? The question to be raised if this situation is "swept under the rug" is this; Can anyone with adequate capital become a CFM and do what they want ? provided they have the capital? If so, what kind of "business people" is FOREX inviting?

I personally would like a call from the CFTC so I know that the matter is at least being looked into. There is not a single knowledgeable trader, broker, or informed individual that does not realize that a grave injustice has been done here. If the buck does not stop here, I am afraid on-line FOREX trading is doomed.

Jimmy Young

What Moves Forex Rates?

2008-04-10T03:12:00.001-07:00

In the currency market, traders buy and sell currencies with the hope of making a profit when the value of the currencies changes in their favor, whether from market news or events that take place around the world. Currencies, just like any other commodity that can be bought or sold, are subject to the laws of supply and demand. When more people want a particular currency, the cost of the currency in terms of other currencies will go up. When demand decreases or people do not want to hold a country’s currency, the value will go down. What factors affect supply and demand for a currency?

Economic Growth

Investors want to be sure that they are investing in a solid economy that is achieving steady growth. Currency traders looking to assess the economic growth of a country will look at unemployment, trade, and GDP data.

What Happens If...

BAD	Rise in Unemployment
GOOD	Fall in Unemployment
GOOD	Rise in GDP
BAD	Fall in GDP
GOOD	Rise in Exports
BAD	Fall in Exports

Interest Rates

Money tends to follow interest rates. If interest rates go up, money will flow into the country from all over the world as investors seek to capitalize higher returns. To determine whether interest rates will rise or fall, investors pay attention to economic inflation indicators as well as speeches by influential figures. Generally, the timing of interest rate moves are known in advance. They take place after regularly scheduled meetings by the BOE, FED, ECB, BOJ, and other central banks.

What Happens If...

GOOD	Rise in Interest Rates
BAD	Fall in Interest Rates

Trading With The Trend And Consolidation Patterns

2008-04-10T03:11:00.000-07:00

The FX-market will develop distinctive trends from time to time, as a result of the underlying fundamental factors which make up each currency within the pair traded. Often times these trends occur as one currency offers a significant higher interest rate, which continues to draw investment capital out of another other currency with significantly lower rates. In the midst of these long term trends, the market may establish a number of consolidation patterns. During these range bound market conditions, it is important to keep in mind, the direction of the prevailing trend, as the market has the tendency to break out of these ranges, in the same direction as the overall trend. We can see the following (daily) chart, the NZDJPY recently broke above an ascending triangle pattern, to continue it's long term trend; to the upside. Therefore, when a clear trend (to the upside) exists, and the market establishes a range bound condition, traders may choose to 'go long' just above support with protective stops placed below support. Short term traders may choose to take profits inside this range, as long term traders may hold on to their position with the anticipation the market will eventually breakout to higher highs. In a down trending market, traders may opt to sell short just below resistance with the same long term outlook in mind. Best of luck in all your trades!!!

Adam Rosen, FX PowerCourse Instructor
FxCM.com

Canadian Dollar: End of Month Trading Anomaly

2008-04-10T03:10:00.002-07:00

Did you know that the Canadian dollar has a very unique trading characteristic at the end of every month? According to our statistical analysis, we found that over the past 10 years, USD/CAD tends to fall in the last week of the month with a 95 percent confidence level. A more granular look at the data reveals that this drop is predominately concentrated around the 24th and 25th day of every month. Interested in knowing why this happens?

Settlement of Oil Futures

The trading anomaly in USD/CAD stems from the fact that Canada is one of the world's largest oil producers. Their oil reserves are also second to only Saudi Arabia. Canada is also the top exporter of oil and other petroleum products to the United States, making the US dollar-Canadian dollar exchange rate especially correlated to energy prices and related money flows.

Therefore it is not surprising that the movement of the Canadian dollar is especially sensitive to end-of-month oil contract settlement. It is fairly easy to determine when firms are required to settle outstanding oil contracts and potentially convert US dollars for loonies on a monthly basis. More specifically, it is well-known that oil futures settle in the final week of every month.

Looking at the table below, we see that a 10-year sample of data shows the biggest appreciation in the Canadian dollar against the US dollar happening in the final week of every month. In other words, on average, USDCAD falls 6 points per day in the final week - a result statistically below 0,at a 95% confidence level. Six points is hardly worth getting overly excited about since it is difficult to take advantage of such a small price move on a vague, weekly basis. However when we take a much more granular look of the USDCAD's behavior around specific days of the month, the moves become more substantial.

The chart below shows that the Canadian dollar tends to appreciate the most on the 24th and 25th day of every month, with continued gains into the early days of the month that follows. This dynamic is exactly consistent with settlement on oil futures contracts, as the “notice day” - the first day on which the purchaser may be called upon to take delivery - is typically between the 22nd and the 24th calendar day.

Taking a look at the NYMEX crude oil schedule through 2007, we see an interesting connection between the USDCAD and delivery dates.

Namely, it seems as though the Canadian dollar moves the most following the Notice Day, while the First Delivery Day likewise causes some strong moves in following month. Given that the Notice Day occurs today, August 23rd, it is especially interesting to note that the Canadian dollar has appreciated strongly against yesterday's close.

The chart below shows USDCAD movements through Notice Days from December 2006 to present.

The statistical relationship showed signs of waning through the early months of the year, but it has clearly picked up from June through August. Given such a relationship, it seems clear that the USDCAD stands to continue declines through the short-term - leaving Loonie appreciation probable in upcoming days of trade.

dailyfx.com

Pyramiding: A Risky Strategy

2008-04-10T03:10:00.001-07:00

Pyramiding is adding to positions as price moves in the desired trend direction. Pyramiding is a highly aggressive trading strategy suitable only for full-time professional traders who know how to control risks and have the discipline to execute a tested plan consistently. Pyramiding should be executed only according a predetermined and tested method which includes an effective stop loss.

Although pyramiding increases profits if the trend continues as hoped, pyramiding also increases losses if the trend reverses, so risk control is key. Reward/risk tradeoffs quickly turn against the pyramid trader when the price trend reverses. Because adding to positions changes the total cost of the entire position on a per-unit basis toward the last price, a quick reversal to the original entry price can result in a significant loss. And if the price changes direction quickly and steeply, such as on a gap or fast market, it can be impossible or difficult to limit risk according to plan.

The signal to add to positions may be triggered at predetermined price points that confirm the trend direction. Such price points might be based on volatility bands, moving averages, a variety of trendlines, logical chart points, penetration of resistance levels, and so on.

The standard pyramid, which is also known as the scaled-down pyramid or upright pyramid, starts with a large initial position and is followed by predetermined additions that decrease systematically in size as price moves in the indicated trend direction. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 50 more shares, then 25 more at the next level, then 13 more, for a total of 188 shares.

The inverted pyramid, which is also known as the equal amounts pyramid, adds to an initial position in equal share-size increments. For example, if the initial entry was for 100 shares, then as price moves to the next predetermined level add 100 more, then if the price continues 100 more, then 100 more, for a total of 400. Here, however, the average cost per share is much higher, such that a smaller price reversal eliminates all profit. The inverted pyramid offers greater potential reward at the cost of much greater risk, as compared to the standard, scaled-down pyramid.

The reflecting pyramid systematically adds to a position up to a predetermined price level, then it reduces the position systematically as the trend continues, so the reflecting pyramid is not a pure trend following method. If the price does have a major move in the indicated trend direction, the reflecting pyramid would result in less profit than both the standard and inverted pyramids.

The maximum-leverage pyramid keeps on adding maximum size up to the limits of accumulated profits and margin requirements. This is the most aggressive strategy possible, and it offers the maximum potential reward, the maximum potential risk, and the worst reward/risk ratios. This pyramid must be combined with tight exit rules, or else it is a formula for near-certain ruin.

Robert W. Colby
TradingEducation.com

Microsoft bids $44.6bn for Yahoo

2008-04-10T03:09:00.001-07:00

(its not aboat forex)

Yahoo's latest results didn't shine - and now Microsoft is bidding for it again, in an attempt to transform itself finally into an online entity

Microsoft has bid $44.6bn (£23bn) for Yahoo, the second-biggest online property behind only Google. The $31-per-share cash-and-stock bid, made after markets closed, is a 61% premium to Yahoo's closing stock price.

The stock graph comparison for the past year with Google tells its own story: Yahoo stock down 40%, Google's pretty much steady despite all the turbulence in the markets and disappointing results last night from the dominant search engine.

If Microsoft succeeds in the bid (which will almost certainly be referred to competition regulators, since it would give Microsoft a huge share of many online markets), it could propel it into pole position online and ready it for the world that its new software architect, Ray Ozzie, anticipates: one where Microsoft has to deliver services to a population online, not statically on desktops running Windows.

Microsoft was reported (in the NY Post) to have approached Yahoo last spring, but that was quickly denied; Yahoo said it wasn't interested.

Since then Terry Semel has left, co-founder Jerry Yang has taken over, and Yahoo has continued (for the 8th quarter in a row) to disappoint Wall Street with its results while promising that better times lay ahead; Yang suggested that would be in 2009. Meanwhile, it laid plans to cut 1,000 staff.

Trading in the Retail Off-Exchange Foreign Currency Market - What Investors Need to Know

2008-04-10T03:08:00.000-07:00

National Futures Association is a congressionally authorized self-regulatory organization of the United States futures industry. Its mission is to provide innovative regulatory programs and services that protect investors and ensure market integrity.

NFA has prepared this booklet as part of its continuing public education efforts to provide information to potential investors. The booklet presents an overview of the retail off-exchange foreign currency market and provides other important information that investors need to know before they invest in the off-exchange foreign currency market.

INTRODUCTION

Companies and individuals may speculate in foreign currency exchange rates (commonly referred to as ?forex?), and a number of firms are presently offering off-exchange foreign currencyfutures and options contracts to the public. If you are a retail investor considering participating in this market, you need to fully understand the market and some of its unique features. NFA has prepared this booklet to educate you about off-exchange foreign currency trading.

Like many other investments, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all investors. In fact, you could lose all of your initial investment and may be liable for additional losses. Therefore, you need to understand the risks associated with this product so you may make an informed investment decision.

You should also understand the language of the forex markets before trading in those markets. The glossary in the back of this booklet defines some of the most commonly used terms.

This booklet does not suggest that you should or should not participate in the retail off-exchange foreign currency market. You should make that decision after consulting with your financial advisor and considering your own financial situation and objectives. In that regard, you may find this booklet helpful as one component of the due diligence process that investors are encouraged to undertake before making any investment decisions about the off-exchange foreign currency market.

Finally, the discussion in this booklet assumes you are funding your forex account with US dollars. The principles in this booklet apply to all currencies, however.

What are foreign currency exchange rates?

Foreign currency exchange rates are what it costs to exchange one country?s currency for another country?s currency. For example, if you go to England on vacation, you will have to pay for your hotel,
meals, admissions fees, souvenirs and other expenses in British pounds. Since your money is all in US dollars, you will have to use (sell) some of your dollars to buy British pounds.

Assume you go to your bank before you leave and buy $1,000 worth of British pounds. If you get 565.83 British pounds (?565.83) for your $1,000, each dollar is worth .56583 British pounds. This is the exchange rate for converting dollars to pounds.

If ?565.83 isn?t enough cash for your trip, you will have to exchange more US dollars for pounds while in England. Assume you buy another $1,000 worth of British pounds from a bank in England and get only ?557.02 for your $1,000. The exchange rate for converting dollars to pounds has dropped from .56583 to
.55702. This means that US dollars are worth less compared to the British pound than they were before you left on vacation.

Assume that you have ?100 left when you return home. You go to your bank and use the pounds to buy US dollars. If the bank gives you $179.31, each British pound is worth 1.7931 dollars. This is the exchange rate for converting pounds to dollars.

Theoretically, you can convert the exchange rate for buying a currency to the exchange rate for selling a currency, and vice versa, by dividing 1 by the known rate. For example, if the exchange rate for buying British pounds with US dollars is .56011, the exchange rate for buying US dollars with British pounds is 1.78536 (1 ? .56011= 1.78536). Similarly, if the exchange rate for buying US dollarswith British pounds is 1.78536, the exchange rate for buying British pounds with US dollars is .56011 (1? 1.78536 = .56011). This is how newspapers often report currency exchange rates.

As a practical matter, however, you will not be able to buy and sell the currency at the same price, and you will not receive the price quoted in the newspaper. This is because banks and other market participants make money by selling the currency to customers for more than they paid to buy it and by buying the currency from customers for less than they will receive when they sell it. The difference is called a spread and is discussed later in this booklet.

......

Down full document here.

Source: National Futures Associations

forex reference

2008-04-10T03:05:00.000-07:00

1/ Introduction to Forex

1st Forex Trading Academy - Introduction to Forex
Forex - Online Manual for Successful Trading
Forex - Time Zone Chart
Introduction to Forex Trading with TradeStation
Mark McRae - Introduction to Forex
Realtime Forex Online Tutorial
Study Book for Successful Foreign Exchange Dealing
The Forex Market Phenomena
Trading for a Living in the Forex Market

_______________________
2/ Forex Trading Course

#1 Forex Trading Course
10 Rules - How to Make More Money in Forex Trading
Avoiding Mistakes in Forex trading
Forex - Market Quotations, Spread & Volatility
Forex - Study Book for Successful Forex Dealing
Forex Manual - 10 keys to successful trading
Forex Trading - Avoiding Mistakes
FX Power Trading Course
Sure-Fire Forex Trading

_______________________
3/ Forex Trading System

80 Trading Strategies for Forex
Amazing Forex System
Bortucene & Macy - The Day Trade Forex System
Currency Strategy - A Practitioner's Guide To Currency Investing, Hedging & Forecasting
Day Trade Forex System - The ULTIMATE Step-By-Step Guide to Online Currency Trading
Day Trading the Forex Market
Forex - Trade Book
Forex 1-2-3 Method
Forex Report - Predicting Price Action
Forex Sailing
Forex Scalping
Forex Surfing
Forex Systems Research - Practical Fibonacci Methods For Forex Trading 2005
Forex Trading - Power Trading Course (2003)
Forex Trading Strategy
Make the Trend Your Friend in Forex
One More Zero - How to Trade the Forex like a Pro in One Hour

Automated Forex Day Trading

2008-04-10T03:04:00.000-07:00

Perks of Automated Forex Day Trading

Are you interested in automated forex day trading? There are many things that you should know about automated forex trading, and this is a great place to learn about it. The idea of automated forex day trading is recently getting more and more popular. Futures exchange was the first to adopt this system and later on, the FX market followed suit and employed automated forex day trading.- EfficiencyThis system is very efficient and successful because of its capability to carry out a deal or a trade - real time. This means that there are no lags and fewer complications when trading and these results to more income generated. Achieving this level of efficiency is very hard to do by manual means especially if the decision to trade or not to trade can only be done in a time window of a few seconds. There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. These factors are eliminated by an automated system.- VersatilityAn automated system allows you to trade in diverse fields. It makes it possible for you to trade in varying markets as well as an array of time zones. Many trading models can be used by the trader since the system will be the one managing each trading model. Short term data can be analyzed by the system and this provides you with an advantage since you can use the data analyzed for making decisions based on what is currently happening in the market. Analyzing where the market will go in the next 15 or so minutes is impossible without using an automated forex trading system.- Improved liquidityLiquidity is greatly improved by the use of automated trading systems. This can be deduced by observing the behavior of the futures exchange market after employing an automated forex trading system.- SetbackTraders are foreseeing that a problem may arise when the time comes that all traders will adopt the automated system. The volume of orders may be so great that the existing bandwidth as well as current equipment used may not be able to accommodate this influx of information in real time. Existing systems might be able to carry the load and crash which will result to chaos in the market. As of now, safety controls have been created and set in place to prevent this scenario from happening.- Risk ManagementAnother big issue that concerns forex traders is risk management. Even automated forex trading systems require a risk management tool to ensure that there are no errors while trading. Risk management tools requires that before opening a position, checks should be conducted to ensure that no excessive correlation is present in already existing positions. To be 100% sure that the check is accurate and free of error, the whole system must first be synchronized. But as the technology used in forex trading progresses and evolves, these will no longer be issues to be concerned about.There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. These factors are eliminated by an automated system.These are some of the things that you should know about automated forex day trading. The information provided here will give you a better grasp and knowledge about this topic. Hopefully this will be helpful when you are deciding to try this kind of business

How To Increase Forex Profits 100% in 10 Minutes

2008-04-10T03:03:00.000-07:00

This simple exercise will increase Forex profits 100% and works for 99% of all short-term FX traders - stop trading so much - widen out your stops - widen out your profit targets - and only trade in the direction of the trend indicated by 4 hour chart.

1) Stop trading so much

Sure there are no commissions but the spreads are HUGE and believe it or not (well you'll believe it after you do the simple exercise below) the spreads are reducing your profits 100%!

2) Widen out your stops

Initial stop loss should be a minimum of 23 points; I use between 23 and 35 point stop losses for short-term trading.

3) Widen out your profit targets

Unless you think a trade can make you 100 points or more don't do it.

4) Only trade in the direction of the 4 hour chart

The real money is made in the direction of the trend

Simple exercise

1) Download all your trades for the year into an excel spreadsheet (if you don't know how to do this ask your broker for help).

2) Determine the dollar value of the spread for each trade.

3) Sum up the total dollar value of all spreads for all trades and add this number it to your current account balance; this is your spread adjusted account balance.

4) Take your spread adjusted current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.

5) Take your actual current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.

6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.

7) That number should be 100% or more

8) Take the necessary steps as outlined above (1 to 4) and improve your results 100%

Jimmy Young - EURUSDTrader

Trade Using News: Helpful Hints

2008-04-10T03:02:00.002-07:00

RefcoFX has compiled a list of the most common questions regarding trading on news. Here is what our trading specialists had to say...

Why are economic events important to currency traders?

A currency is a proxy for the country it represents, therefore the economic health of that country is priced into the currency. Economic indicators measure the health of an economy. The challenge is keeping track of each particular country's economic health.

Know when indicators are due to be released. It is important to keep an eye on the future and knowing which news releases the market deems most important.

Why are some indicators more important than others?

Current market conditions will influence which news the market deems most important. Know which economic indicators are capturing most of the market's attention. When the US is incurring large trade deficits, the market will focus on Trade Balance data. Its news release can catalyze large volume and price movements. Moreover, during an US economic boom with high employment, the market will not focus on unemployment.

Economic conditions can change. Large US Trade Deficits can weaken the US Dollar over time. When the US Dollar is weak the market will shift its focus to inflation. Market watchers will shift focus to CPI and FOMC Interest Rate Decisions in the news.

What is the significance of "actual versus consensus"?

The data itself is not as important as whether or not it falls within market expectations. Know when the data is released in addition to what market forecasters are expecting for each indicator.

Once you know the market expectation for the economic indicator, pay attention if the consensus number is met. A drastic difference between the consensus and actual results can cause price movement.

The consequences of an unexpected monthly rise of 0.3% in the Consumer Price Index, the Actual, is not nearly as important to your short-term trading decisions as it is to know that this month the market was looking for CPI to fall by 0.1%, the Consensus.

Wait until after you've taken advantage of the short term trading opportunities presented by the data, typically within the first thirty minutes following the release, to analyze the longer-term ramifications of an unexpected monthly rise in consumer prices.

Remember that market expectations for all economic releases are published on our economic calendar.

Why should technical traders pay attention to news releases?

Technical analysis will not work when fundamental factors or economic data becomes the main focus of the market as participants become sensitive to any developments. With speculation mounting on the possible outcomes, fundamental news releases like US non-farm payrolls have created situations in the market that do not adhere to technical analysis as volume and volatility spikes. Although the aftermath more than not will once again adhere, the mass speculation that ensues makes sure that traders are scrapping for the best price available in filling their positions rather than applying your everyday moving average or price oscillator.

Trade currency without risking capital - with a FREE practice account with RefcoFX

The Foreign Exchange Market Fact Sheet

2008-04-10T03:02:00.001-07:00

The foreign exchange market enables companies, fund managers and banks to buy and sell foreign currencies, if necessary in large amounts. The motivations behind this demand for foreign currency include capital flows arising from trade in goods and services, cross-border investment and loans and speculation on the future level of exchange rates. The sums involved are very large: estimated global turnover in all currencies in April 1998 was $1,490 billion, an increase of 26 percent over the past three years. Deals are typically for amounts between $3 million and $10 million, though much larger transactions are often done.

Foreign exchange trading may be for spot or forward delivery. Generally, spot transactions are undertaken for an actual exchange of currencies (delivery or settlement) two business days later (the value date). Forward transactions involve a delivery date further into the future, possibly as far as a year or more ahead. By buying or selling in the forward market a bank can, on its own behalf or that of a customer, protect the value of anticipated flows of foreign currency, in terms of its domestic currency, from exchange rate volatility.

Unlike some financial markets, the foreign exchange market has no single location - foreign exchange is not dealt across a trading floor. Instead, trading is via telephone and computer links between dealers in different centres and, indeed, different continents. London is the world?s largest foreign exchange centre: average daily turnover is $637 billion. This is approximately the same as the combined level of trading in the United States, Japan and Singapore.

London?s leading position arises partly from the large volume of international financial business generated here - insurance, bonds, shipping, equities, commodities and banking. London also benefits from its geographical location which enables firms located here to trade not only with each other and with firms based in Europe throughout the day, but also with the US and the Far East, whereas their time difference makes it difficult for firms in those two centres to trade with each other. When banks in London begin trading at 8 am they can deal with banks in Tokyo, Hong Kong or Singapore whose trading day is just ending. From about 1 pm onwards, London banks can trade with banks in New York; before they close at 4 pm their counterparties may be in Los Angeles or San Francisco. This is important because the foreign exchange market trades 24 hours a day: 66 percent of trades involving a firm in London are transacted with a counterparty located abroad.

Down full document here.

Source: Bank of England

Fibonacci Forex Trading

2008-04-10T03:00:00.002-07:00

How to make money in Foreign Currencies using Fibonacci Retracements and Fibonacci Profit Targets.

How to Handle a Losing Streak

2008-04-10T03:00:00.001-07:00

A trader emailed me a while back, asking for some advice on a good money manager for him. He said he was a "lousy trader" and tired of losing money.

I doubt there is one non-rookie trader reading this story who has not experienced at least a small run of poor performance in trading futures. I've said before that most successful veteran traders have more losing trades than winning trades in any given year. The key is maximizing profits on the winning trades and minimizing losses on the losers.

I will also argue that at one point or another in most traders' experiences, they, too, have felt like "lousy traders." I certainly have. (Those who say they have never had a run of poor trading performance or felt "lousy" about a trade or trades are likely either lying or completely out of touch with futures trading reality.)

So what's a trader to do when losses start to pile up and winners become scarce. Here are a few tips that I've picked up over the years from some of the very best traders in the business:

Don't overtrade. If you are trading several markets and not having any success, cut back to trading one or two markets. You can follow fewer trades more closely and document your success or failures more easily. Plus, your trading account won't be drawn down so quickly.

Keep a detailed trading diary. If you keep a good trading diary, you can go back and see if there is a common thread among your losers--and your winners, and possibly make the proper adjustments.

If you are not trading that many markets and still racking up losers, take a break from trading for a while. Gather your thoughts. You may want to "paper trade" for a while to get your confidence back. Then, if you are still losing on paper, you will want to look for other trading methods.

If you are losing money trading, DO NOT (I REPEAT) DO NOT try to make a big home-run-type trade that will get you back to even or the plus side in a hurry. In fact, do just the opposite. Make smaller trades that risk less capital, until your performance starts to turn around and you can resume your normal asset allowances for trades. Successful traders survive the rough waters by hunkering down and being conservative.

Exhibit patience and discipline. I've preached about this before. Are you following a trading plan that you devised before you put on the trade? If not, you should be. You are not shooting from the hip (no exit strategy in place) once a trade gets initiated, are you? If so, that could be part of your problem. On the patience issue, are you impatient? I've talked to successful position traders who may only trade a few times a year, because they wait for what they feel is that "perfect set-up" to occur. If you are a position trader (as opposed to a day trader), you don't have to be "in the market" all the time. Wait for the good trades to develop and don't chase markets.

Be confident. Have faith in your trading methods. And if you don't have faith in your methodology, why don't you? If your methods are really not successful, find something else. Read some of the many books out there by the successful traders, and how they have traded successfully. But be cautious of the person who wants to sell you some so-called successful trading method for big bucks. (See the next item on hard work.)

Work harder. Don't expect to produce winning trades if you are not working very hard at trading. Do you know well the fundamentals of the markets you are trading? Even if you know technicals well, you should have at least a good understanding of a market's fundamentals. Here's an example: Let's say the charts and technical indicators look bullish for corn and it's the day before a major USDA report. Smart traders likely won't initiate a trading position in corn the day before a big government report is out.

In case you're wondering what I told the reader who emailed me and told me was a "lousy" trader, here's what I said: Don't give up just yet. The fact that he admitted he needed some help (before he lost all of his trading assets) is a positive first step. I then told him I would write this feature because there were likely many traders who feel the same way, at times, that he feels, and that there are steps to take on the road to recovery and eventual successful trading.

Jim Wyckoff
TradingEducation.com

Forex Education - Forex Discipline the Key to Winning Is Hard To Achieve

2008-04-10T02:59:00.001-07:00

The first point you need to understand as part of you forex education is your success will not just depend on your method but your discipline to execute it. Most traders can't and lose and this is because they don't understand that discipline can only be acquired, if you take on traits that are not acceptable in normal society.

Discipline in forex trading means - you have to accept that you are going to need to act in a way that would normally be seen as acceptable in everyday life. People find this hard to do and some explanation will make this clearer.

1. Be a Loner

Man is a pack animal and since stone age times we have sought safety in groups - they make us feel safe, wanted and accepted. In forex trading however if you run with the pack you are going to lose, as 95% of traders do and thats a fact.

When man gets in a group he runs with the herd and the herd is always wrong in forex trading, as you are infleunced by the emotions of the crowd.

You need to be a loner and not listen to others - don't share your opinions with others and don't let others influence you. You're on your own - but that's the best place to be in forex trading and could make you a fortune.

2. Break & Make the Rules

You will hear lots of common wisdoms spouted in forex trading and do you know what?

Most of them are wrong.

This again goes with the fact the majority of traders lose.

In life were used to order:

We stop at red lights, don't drop litter, don't drink and drive etc or we know what the consequences will be - our lives are ordered for us.

Forex trading is different we get to make the rules and they will decide our financial destiny, as there are none to start with.

The forex market is chaos, an all powerful force, moving as when it wants and only it can be right and only the trader can be wrong.

You need to create a set of rules to work with it and earn your living.

You're a bit like the captain of a ship - the ocean is all powerful but you can make a living from it.

You can navigate it correctly and make a living or you can drown the choice is yours.

Most traders cannot take responsibility, cannot make their own rules and follow the herd, news wires gurus, or sure fire trading systems and lose.

3. The Work Ethic Doesn't Apply

In most jobs the more hours you put in the more you get out in terms of reward - not so in forex trading, you only get rewarded for being right and that's it.

You can spend 20 minutes a day or 5 hours - but that will not influence how much money you make.

Many traders work hard but they don't work smart they learn lots of information and lose - others work short periods work smart and win.

4. Most Traders Can't Accept Big Gains

This may sound odd but it's true.

Traders hit a trend and then rather than follow it want to snatch the profit.

Why?

Because they think it's too easy, they haven't put enough effort in and it really won't run on - but it does and they snatch it early, before it gets away.

In many instances they can't believe they can make a huge profit for so little effort or they simply don't have inner confidence in their ability and these traders let huge profits get away all the time.

Spotting big trends is easy, holding them requires huge mental discipline.

So if you learn one thing from your forex education, learn that it is not hard to learn a method but it is hard to learn the discipline to execute a method.

Discipline is hard because it sets us against the market on our own and makes us responsible.

Running with the pack, listening to the news or a guru won't help - you're on your own and most traders simply cant accept this fact.

Of course if you accept the above, take responsibility for your actions and understand yourself, you can earn huge rewards.

source

Start Thinking In Terms of Risk-Reward

2008-04-10T02:58:00.000-07:00

One of the cardinal rules of good trading is to always have an exit point before you ever enter into a trade. This is your worse case risk for the trade. It's the point at which you would say, "something's wrong with this trade and I need to get out to preserve my capital."

Most sophisticated traders will have some sort of exit criteria that they like. However, if you are a novice and you just don't know, then I'd recommend 75% of your entry price if you are an equity trader. That is, if you buy a stock a $40, then get out if the stock drops to $30 or below. If you are a futures trader, then calculate the average true range over the last ten days and multiple that result by three. If the contract drops to that level, then you must get out of the position.

Your initial stop defines your initial risk. In the example of our $40 stock, your initial risk is $10 per share and I call this risk 1R (where R stands for risk). And if you know your initial risk, then you can express all of your results in terms of your initial risk.

So let's say that your initial risk is $10 per share. If you make a profit of $40 per share, then you have a gain of 4R. If you have a loss of $15 per share, then you have a 1.5R loss. And losses bigger than 1R will occur when you have a sudden big move against you.

Let's look at a few more. What if the stock goes up to $140, what's your profit in terms of R? Your profit is $100 and your initial risk is $10, so you've made a 10R profit.

It's quite interesting because portfolio managers like to talk about 10 baggers. By a 10-bagger, then mean a stock that they bought at $10 per share that goes up to $100 – in other words a stock that goes up in value 10 times. However, I think a 10R gain in much more useful to think about and much easier to attain.

When our 1R loss was $10 per share, then the stock had to go up by $100 to get a 10R gain. But to fit the portfolio manager's definition of a 10 bagger it would have had to go up 10 times the price you bought it for, going from $40 per share to $400. But what would that $460 gain be in terms of R-multiples when your initial risk was $10? That's right, it would be a 36R gain.

What I'd like you to do before next week is to look at all of your closed trades last year and express them as R-multiples. In other words, what was your initial risk? What was your total gain and loss? What's the ratio of each profit/loss to the initial risk? And if you didn't set your initial risk for your trades last year, then use your average loss as a rough estimate of your initial risk.

Let's look at how 10 trades might be expressed as ratios of the initial risk. Here we have three losses $567, $1333, and $454. The average loss is $785.67, so we'll assume that this was the initial risk. Hopefully, you'll know the initial risk, so you won't have to use the average loss. I call the ratios that we calculate, the R-multiples for the trading system. This information is shown in the table below.

Position	Profit or Loss	R-multiple
1	$678	0.86R
2	$3456	4.40R
3	($567)	- 0.72R
4	$342	0.44R
5	$1234	1.57R
6	$888	1.13R
7	($1333)	-1.70R
8	($454)	-0.58R

When you have a complete R-multiple distribution for your trading system, there are a lot of things you can do with it. But we'll save that for next week's topic.

Van K. Tharp, Ph.D.
TradingEducation.com

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2008-04-10T02:57:00.002-07:00

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Be Careful, Someone Wants Your Money

2008-04-10T02:57:00.001-07:00

The United States Commodity Futures Trading Commission ('CFTC') warns consumers to take special care to protect themselves from the many types of commodities fraud being perpetrated in today's financial markets. The CFTC is the federal agency that regulates commodity futures and options markets in the United States. We have seen a great increase in the number of scams that falsely promise high profits with low risks. Many of these scams are targeted at ethnic communities in their language, from New York to South Florida and from the Southwest to California, among other areas.

The public should be wary of any firm that offers to sell commodities or commodity futures or options. They might be selling precious metals, such as silver or gold, or on foreign currency, such as Euros, Yen or Deutschmarks. They might be selling futures or options on precious metals or foreign currency, or on other commodities such as crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans, or cattle. The firm might be offering to manage your money for you to trade in commodity futures or options, or to pool your money with other customers. If a firm offers any of these investments, and promises high profits and low risks, or claims that they have made profits for all of their customers, you should not believe them without proof. The commodities and futures markets are very risky, and you can lose your entire investment very quickly. Anyone who claims otherwise might be breaking the law.

Foreign currency trading scams often attract customers through advertisements in local newspapers, radio promotions or attractive Internet sites. These advertisements may tout high-return, low-risk investment opportunities in foreign currency trading, or even highly-paid currency-trading employment opportunities. The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks, or that employment as a currency trader will make you wealthy quickly. Precious metals scams often work the same way.

Commodity pool operators often solicit investments from friends, neighbors, co-workers and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, the investment schemes turn out to be fraudulent, and investors lose their entire investment, in many cases as a result of outright theft. Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate 'Ponzi' schemes in which little or none of the money sent in by investors is ever invested as promised ' in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony 'profits" to earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors. Be wary of such payouts if you do not fully understand the source of any purported profits.

Introducing Brokers often use advertisements on radio and television, as well as infomercials ' program-length television commercials ' to promote commodity futures and options. These advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events create an opportunity to make big money by trading in commodity futures and options. The advertisements and infomercials promise quick riches ' such as turning $5,000 into $20,000 in just a few months ' with predetermined risk. The CFTC has brought actions against wrongdoers who lured customers by claims that one could earn large profits with little risk based on predictable seasonal demands, published reports, or well-known current events.

Warning Signs of Fraud

1. Stay Away From Opportunities That Sound Too Good to Be True

Get-rich-quick schemes, including those involving foreign currency trading, tend to be frauds.

Always remember that there is no such thing as a "free lunch." Be especially cautious if you have acquired a large sum of cash recently and are looking for a safe investment vehicle. In particular, retirees with access to their retirement funds may be attractive targets for fraudulent operators. Getting your money back once it is gone can be difficult or impossible.

2. Avoid Any Company that Predicts or Guarantees Large Profits

Be extremely wary of companies that guarantee profits, or that tout extremely high performance. In many cases, those claims are false.

Be sure you get all the information about the company and its track record and verify the data. If you can, before you invest with any company, check the company's materials with someone whose financial advice you trust

3. Stay Away From Companies That Promise Little or No Financial Risk

Be suspicious of companies that downplay risks or state that written risk disclosure statements are routine formalities imposed by the government.

If in doubt, don't invest. If you can't get solid information about the company and the investment, you may not want to risk your money

4. Question Firms That Claim To Trade in the "Interbank Market"

Be wary of firms that claim that you can or should trade foreign currency in the "interbank market," or that they will do so on your behalf. Firms that trade currencies in the interbank market, however, are most likely to be banks, investment banks and large corporations, since the term "interbank market" refers simply to a loose network of currency transactions negotiated between financial institutions and other large companies.

5. Be Wary of High-Pressure Efforts to Convince You to Send or Transfer Cash Immediately to the Firm, via Overnight Shipping Companies, the Internet, by Mail, or Otherwise

6. Be Skeptical about Unsolicited Phone Calls about Investments, Especially Those from Out-of-State Salespersons or Companies with Which You Are Unfamiliar

source

Forex Money Management

2008-04-10T02:56:00.001-07:00

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.

It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.

There are different money management strategies. They all aim at preserving your balance from high risk exposure.

First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.

If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$

It's important to understand what's meant by core equity since your money management will depend on this equity.

We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Money management strategy

Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3%

1% risk of a 100,000$ account = 1,000$

You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.

If you are a short term trader and you place your stop loss 50 pips below/above your entry point .
50 pips = 1,000$
1 pips = 20$

The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 10,000$ = 10% of your balance.

If you are a long term trader and you place your stop loss 200 pips below/above your entry point.
200 pips = 1,000$
1 pip = 5$

The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 2,500$ = 2.5% of your balance.

This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions.

Diversification

Trading one currnecy pair will generate few entry signals. It would be better to diversify your trades between several currencies. If you have 100,000$ balance and you have open position with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you should calculate 1% risk of your core equity not of your starting balance!. Itmeans that the second trade risk should never be more than 900$. If you want to enter a 3rd position and your core equity is 80,000$ then the risk per 3rd trade should not exceed 800$

It's important that you diversify your prders between currencies that have low correlation.

For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then your risk is 6% since the trades will tend to end in same direction.

If you want to trade both EUR/USD and GBP/USD and your standard position size from your money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$ GBP/USD. In this way,you will be risking 0.5% on each position.

The Martingale and anti-martingale strategy

It's very important to understand these 2 strategies.

-Martingale rule = increasing your risk when losing !

This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc

This strategy assumes that after 4 or 5 losing trades,your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example,if a trader started with a abalance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase ths size of his position 4 times to recover his loss. If he lose,his balance will be 2,000$!! He will never recover from 2,000$ to his startiing balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.

-Anti-martingale rule = increase your risk when winning& decrease your risk when losing

It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$

Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$

High return strategy

This strategy is for traders looking for higher return and still preserving their starting balance.

According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern:

1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)

In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit.

source

The Why Wall Street Doesn't Know About Position Sizing

2008-04-10T02:55:00.001-07:00

In the last two tips I've talked about the importance of position sizing. You've learned that:

The most important questions you can ask yourself (other than questions about your personal psychology) is what are my objectives and how can I use the "how much" variable to meet my objectives.
That position sizing accounts for most of the variability of performance between individuals
That many professionals call the "how much" variable asset allocation.

This week I'm going to be a little controversial because I'm going to put forth some rather bold statements.

First, it is possible with small amounts of money and a reasonable trading system to make outstanding rates of return (50-100% or more) through position sizing.

Second, if you have too much money, then you probably cannot achieve these sorts of goals because your activity moves markets.

Third, professionals either don't know this, or don't want to know this, because they have other rules to justify their performance.

Today there are still more mutual funds trading the market than there are stocks on the major exchanges. And the portfolio mangers who trade those mutual funds stress relative performance rather than absolute returns. Thus, they compare themselves to some index such as the S&P 500 and believe they have done well by outperforming that index.

Most mutual funds have to be at least 90% invested so that concepts like stops and position sizing don't mean much to them. Instead, their idea is to buy the major index that they are trying to outperform and by doing manipulations on their assets, try to outperform the market. Most of them cannot do it because of the fees they charge their clients.

However, most mutual funds want you to believe that what's important to success is picking the right stock. You are slammed with that concept on a regular basis by the financial media.

Asset allocation is also thought to be important. I've already shown you that asset allocation, when defined as how much (i.e. position sizing) accounted for 90% of the variability of performance on 82 pension fund managers over a 10 year period. But asset allocation doesn't sound like how much, does it? Instead, it sounds like "how do you select the best asset classes?" And that's what most professionals talk about.

I just looked at a significant book on the topic of asset allocation. The back of the book contained a quote from Jim Cramer (of CNBC fame) saying that this book was a very readable discussion of the most important topic of investment success. But was it? I don't think so because:

The book did not define asset allocation
The book had no mention of "how much" or "position sizing"
Instead the book was a discussion of the potential risk and reward of various asset classes and the variable that might influence those classes in the future.

And I submit to you, based upon my findings that it is through position sizing that you meet your objectives and that position sizing accounts for 90% (or more) of performance variability, selecting the right assets has nothing to do with good performance. And Wall Street doesn't understand this.

In fact, here is a challenge. Give me the names of 10 of the so-called geniuses of Wall Street. My guess is that less than half of them understand the real importance of position sizing. Their success is due to other factors, and they are at risk of losing a lot of money in the future. But that's another story.

Dr. Van K Tharp
TradingEducation.com

On The Sidelines

2008-04-10T02:54:00.001-07:00

Newport fighter to compete for title

Newport's Daniel Stewart is set to compete for the Full Contact Fighting Federation Heavyweight Championship Saturday, Jan. 26, against Daniel Krug at Rumble at the Roseland XXXIII in Portland.

Stewart defeated Derrick Russell on Dec. 15 by knockout in 21 seconds to win the Super Heavyweight Championship. Stewart relinquished that belt to fight for the Heavyweight Championship.

Tickets can be purchased at ticketswest.com or by phone at 800-992-TIXX. For more information and the complete fight card visit thefcff.com.

Crab feed planned in Newport

The Newport High School softball team will sponsor a crab feed in the high school's multipurpose room from 4:30 p.m. to 7 p.m. Friday, Feb. 1.

The menu will include one-half crab, donated by local crabbers and processors, a cup of Mo's famous clam chowder, coleslaw, Franz French Bread, dessert and coffee or a choice of Pepsi products.

The cost of the meal will be $7 per person or $22 for a family (immediate family).

Tickets may be purchased from any Newport High softball player, or at the door.

The crab feed is being held in conjunction with the Newport vs. Philomath girls' basketball games. This allows basketball fans to have dinner and then take in an evening of high school basketball.

For further information, contact Newport High School softball coach Mark Schiewe at 265-7382.

Swim team to hold can/bottle drive

The Newport High School swim team is holding a can and bottle drive from 11:30 a.m. to 3:30 p.m. on Sunday, Jan. 27. Drop off bottles and cans at a collection site at the entrance to Newport High School's west campus. The money raised will help pay expenses for the district swimming championships in Astoria on Feb. 8 and 9.

Cheer clinic

Taft High School cheerleaders will teach a youth cheer clinic from 9 a.m. to noon on Saturday, Feb. 2.

This clinic is for children in grades kindergarten through 8th grade. Check-in time is 8:30 a.m. to 9 a.m. The cost is $15 per participant.

Cheerleaders will teach chants, jumps, and a short dance. Participants will receive a free ticket to the Taft High School varsity basketball game, where they will have the opportunity to perform at half time at 7 p.m. on Tuesday, Feb. 5.

Pre-registration is not required. For further information, call Tonia Roberts at Taft High, 996-2115.

Fly fishers set meeting

The Central Coast Fly Fishers normally meet on the second Thursday of each month, however, to avoid conflicting with Valentine's Day, the group's February meeting has been moved to 6 p.m. to 8 p.m. Thursday, Feb. 7, upstairs at the Bayshore Club House in Waldport.

The group will watch fly tying, hold a short business meeting, swap fish stories (the good, the bad and the ugly), share fly fishing ideas, and set up for fly tying for the beginner. All those who have never tied a fly but would like to give it a try are invited to come and participate.

For additional information, contact President Alan Canfield, 563-6976.t

The Single MOST IMPORTANT Aspect of Futures Trading

2008-04-10T02:53:00.002-07:00

Okay, traders: Do you know what is the most important aspect of successful futures trading? Is it identifying the trading opportunity? Is it proper entry into the market? Is it the trading "tools" you are using? Is it an exit strategy that is the most important aspect of trading? The answer is: None of the above (although an exit strategy is close).

The most important factor in successful futures trading is money management. One still has to be savvy at chart forecasting and-or fundamental analysis, but it's the money-management factor that will make or break a futures trader. The huge leverage involved with trading futures absolutely requires pinpoint money managing.

Over the years, I have listened to the best traders in the business talk about what makes them succeed in this challenging arena, and nearly every one emphasizes the importance of sound money management. A few years ago I attended a TAG (Technical Analysis Group) trader's conference in Las Vegas. One of the featured speakers stressed that becoming a successful futures trader should be more an act of survival in the early going than scoring winning trades.

Surviving in the futures market absolutely requires practicing sound money management. Even a rookie trader who starts out with a hot hand will eventually find that at least some trades are not going to go his way. And if he has not employed good money- management principles on those losing trades, he will likely have squandered his trading profits and his entire trading account.

Conversely, the novice trader who uses good, conservative money management techniques will be able to withstand some losses and be able to trade another day. The ability to take a loss and trade another day is the key to survival--and ultimate success-- in the futures trading arena.

Here's an important point to consider, regarding money management and successful futures trading: Most successful futures traders will tell you that during the span of a year they have more losing trades than winning trades. Then why are they successful? It is because of good money management. Successful traders set tight stops to get out of losing positions quickly; and they let the winners ride out the trend. On the balance sheet, a few bigger winning trades will more than offset the more numerous smaller losers. Good money management allows for that to happen.

Good money management" is a relative principle. A good money- management practice for one trader might not be a good money- management practice for another. Here's a real-life example: I had a fellow email me a while back, saying he was up $3,000 in a sugar trade, and that his total trading account was $4,000. Although I don't provide specific trading advice to individuals, I told the trader that if I had only a $4,000 trading account and had racked up 3 grand in profits on one trade, I would seriously think about ringing the cash register on that trade and building up my account so that I could withstand those drawdowns and losers that will eventually occur.

On the other hand, if a trader with a $30,000 account had a $3,000 winning sugar trade, he may want to let the winner ride a little longer, as pocketing the profit would not nearly double his trading account, as it would the smaller-capitalized trader.

In other words, don't be a greedy trader. There's an old trading adage that says there is room for bulls and bears in the marketplace, but pigs get slaughtered.

Let me emphasize here there is nothing wrong with starting out with, or keeping, a smaller-capitalized futures trading account. But I strongly suggest that those smaller accounts use the very strictest of money management.

There are dozens of good futures and stock trading books available, and most spend at least an entire chapter on money management.

Here are just a few very general money-management guidelines:

For smaller-capitalized traders, don't commit more than one-third of your trading capital to one trade. For medium- and larger-capitalized traders, you should not commit more than 10% of your capital to one trade. The guideline here is, the larger your trading account, the smaller your commitment should be to one trade. In fact, some trading veterans suggest larger trading accounts should not commit more than 3-5% of their capital to one trade. Smaller-capitalized traders, by necessity, have to commit a larger percentage of their capital to one trade. However, these small-cap traders may want to trade options (buying them, not selling them), as risk is limited to the price paid for the option. Or, smaller-capitalized traders may want to trade on the Mid-American Exchange, a division of the Chicago Board of Trade that has smaller futures contract sizes.
Use tight protective stops in all your trades. Cut your losses short and let the winners ride the trend.
Never, never, never add to a losing position.
Your risk-reward ratio in a futures trade should be at least three to one. In other words, if your risk of loss is $1,000, your profit potential should be at least $3,000.

I can't stress enough that survival in the futures trading arena (especially for beginners) should be your top priority.

Jim Wyckoff
TradingEducation.com

Main Players In Forex

2008-04-10T02:53:00.001-07:00

Central Banks And Governments

Policies that are implemented by governments and central banks can play a major roll in the FX market. Central banks can play an important part in controlling the country's money supply to insure financial stability. .....

Banks

A large part of FX turnover is from banks. Large banks can literally trade billions of dollars daily. This can take the form of a service to their customers or they themselves speculate on the FX market.

Hedge Funds

As we know the FX market can be extremely liquid which is why it can be desirable to trade. Hedge Funds have increasingly allocated portions of their portfolios to speculate on the FX market. Another advantage Hedge Funds can utilize is a much higher degree of leverage than would typically be found in the equity markets.

Corporate Businesses

The FX market mainstay is that of international trade. Many companies have to import or exports goods to different countries all around the world. Payment for these goods and services may be made and received in different currencies. Many billions of dollars are exchanges daily to facilitate trade. The timing of those transactions can dramatically affect a company's balance sheet.

The Man In The Street

Although you may not think it, the man in the street also plays a part in toady's FX world. Every time he goes on holiday overseas he normally need to purchase that country's currency and again change it back into his own currency once he returns. Unwittingly he is in fact trading currencies.

He may also purchase goods and services whilst overseas and his credit card company has to convert those sales back into his base currency in order to charge him.

Speculators And Investors

We shall differentiate speculator from investors here with the definition that an investor has a much longer time horizon in which he expects his investment to yield a profit. Regardless of the difference both speculators and investors will approach the FX market to exploit the movement in currency pairs.

They both will have their reason for believing a particular currency will perform better or worse as the case may be and will buy or sell accordingly. They may decide that the Euro will appreciate against the US Dollar and take what is called a long position in Euro. If the Euro does in fact gain ground against the US Dollar they will have made a profit.

source

Accounts In Forex

2008-04-10T02:45:00.000-07:00

Although the movement today is towards all transaction eventually finishing in a profit and loss in US Dollars it is important to realize that your profit or loss may not actually be in US Dollars.

From my observation the trend is more pronounced in the US as you would expect. Most US based traders assume they will see their balance at the end of each day in US Dollars. I have even spoken with some traders who are oblivious to the fact the their profit might have actually been in Japanese Yen.

Let me explain a little more. You sell (go short) USD/JPY and as such are short USD and Long (bought) JPY. You enter the trade at 116.10 and exit 116.90. You in fact made 80,000 Japanese Yen (1 lot traded) not US Dollars.

If you traded all four major currencies against the US Dollar you would in fact have made or lose in EUR, GPY, JPY and CHF. This might give you a ledger balance at the end of the day or month with four different currencies.

This is common in London. They will stay in that currency until you instruct the broker to exchange the currencies into your own base currency.

This actually happened to me. After dealing with mainly US based brokers it had never occurred to me that my statement would be in anything other than US Dollars.

This can work for you or against you depending on the rate of exchange when you change back into your home currency. Once I knew the convention I simply instructed the broker to change my profit or loss into US Dollars when I closed my position. It is worth checking how your broker approaches this and simply ask them how they handle it. A small point, but worth noting.

Nowadays most countries have regulated forex, but it is still worth checking that the broker who you are dealing with is regulated in the country that it operates, insured or bonded and has some kind of track recorded.

I cannot advise you on which broker you should use as there are just to many variables to each person, but as a rule of thumb, nearly all countries have some kind of regulatory authority who will be able to advise you. Most of the regulatory authorities will have a list of brokers that fall within their jurisdiction and will give you that list. They probably wont tell whom to use but at least if the list came from them you can have some confidence in those companies.

Once you have a list, give a few of them a call, see who you feel comfortable with, ask for them to send you their polices and procedures. If you live near where your broker is based, go spend the day with him. I have been to many brokerages just to check them out. It will give you a chance to see their operation and meet their team.

This brings up another interesting point. When you open an account with a broker you will have to fill in some forms basically stating your acceptance of their polices. This can range from a 1 page document to something resembling a book. Take the time to read through these documents and make a list of things you don't understand or want explained.

Most reputable companies will be happy to spend some time with you on this. Your involvement with your broker is largely up to you. As a forex trader you will probably spend long hours staring at the screen without talking to anyone. You may be the sort of person who likes this or you may be the sort of person who likes to chat with the dealer in the trading room. You will normally get a call once a week or once a month from someone in the brokerage asking if everything is OK.

source

Rollovers In Forex

2008-04-10T02:43:00.000-07:00

Even though the mighty US dominates many markets, most of Spot Forex is still traded through London in Great Britain. So for our next description we shall use London time. Most deals in Forex are done as Spot deals. Spot deals are nearly always due for settlement two business days later. This is referred to as the value date or delivery date. On that date the counter parties theoretically take delivery of the currency they have sold or bought.

In Spot FX the majority of the time the end of the business day is 21:59 (London time). Any positions still open at this time are automatically rolled over to the next business day, which again finishes at 21:59.

This is necessary to avoid the actual delivery of the currency. As Spot FX is predominantly speculative most of the time the trades never wish to actually take delivery of the currency. They will instruct the brokerage to always rollover their position.

Many of the brokers nowadays do this automatically and it will be in their polices and procedures. The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

Just to go over this again, your broker will automatically rollover your position unless you instruct him that you actually want delivery of the currency. Another point noting is that most leveraged accounts are unable to actual deliver of the currency as there is insufficient capital there to cover the transaction.

Remember that if you are trading on margin, you have in effect got a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you rollover your position. This normally only happens if you have rolled over the position and not if you open and close the position within the same business day.

To calculate the broker's interest he will normally close your position at the end of the business day and again reopen a new position almost simultaneously. You open a 1 lot ($100,000) EUR/USD position on Monday 15th at 11:00 at an exchange rate of 0.9950.

During the day the rate fluctuates and at 22:00 the rate is 0.9975. The broker closes your position and reopens a new position with a different value date. The new position was opened at 0.9976 - a 1 pip difference. The 1 pip deference reflects the difference in interest rates between the US Dollar and the Euro.

In our example your are long Euro and short US Dollar. As the US Dollar in the example has a higher interest rate than the Euro you pay the premium of 1 pip.

Now the good news. If you had the reverse position and you were short Euros and long US Dollars you would gain the interest differential of 1 pip. If the first named currency has an overnight interest rate lower than the second currency then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential.

To simplify the above. If you are long (bought) a particular currency and that currency has a higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.

I would like to emphasis here that although we are going a little in-depth to explain how all this works, your broker will calculate all this for you. The purpose of this book is just to give you an overview of how the forex market works.

source

Leverage in Forex

2008-04-10T02:42:00.000-07:00

Leverage financed with credit, such as that purchased on a margin account is very common in Forex. A margined account is a leverageable account in which Forex can be purchased for a combination of cash or collateral depending what your brokers will accept.

The loan (leverage) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position.

Margin rules may be regulated in some countries, but margin requirements and interest vary among broker/dealers so always check with the company you are dealing with to ensure you understand their policy.

Up until this point you are probably wondering how a small investor can trade such large amounts of money (positions). The amount of leverage you use will depend on your broker and what you feel comfortable with. There was a time when it was difficult to find companies prepared to offer margined accounts but nowadays you can get leverage from a high as 1% with some brokers. This means you could control $100,000 with only $1,000.

Typically the broker will have a minimum account size also known as account margin or initial margin e.g. $10,000. Once you have deposited your money you will then be able to trade. The broker will also stipulate how much they require per position (lot) traded.

In the example above for every $1,000 you have you can take a lot of $100,000 so if you have $5,000 they may allow you to trade up to $500,00 of forex.

The minimum security (Margin) for each lot will very from broker to broker. In the example above the broker required a one percent margin. This means that for every $100,000 traded the broker wanted $1,000 as security on the position.

Margin call is also something that you will have to be aware of. If for any reason the broker thinks that your position is in danger e.g. you have a position of $100,000 with a margin of one percent ($1,000) and your losses are approaching your margin ($1,000). He will call you and either ask you to deposit more money, or close your position to limit your risk and his risk.

If you are going to trade on a margin account it is imperative that you talk with your broker first to find out what their polices are on this type of accounts.

Variation Margin is also very important. Variation margin is the amount of profit or loss your account is showing on open positions.

Let's say you have just deposited $10,000 with your broker. You take 5 lots of USD/JPY, which is $500,000. To secure this the broker needs $5,000 (1%).

The trade goes bad and your losses equal $5001, your broker may do a margin call. The reason he may do a margin call is that even though you still have $4,999 in your account the broker needs that as security and allowing you to use it could endanger yourself and him.

Another way to look at it is this, if you have an account of $10,000 and you have a 1 lot ($100,000) position. That's $1,000 assuming a (1% margin) is no longer available for you to trade. The money still belongs to you but for the time you are margined the broker needs that as security.

Another point of note is that some brokers may require a higher margin during the weekends. This may take the form of 1% margin during the week and if you intend to hold the position over the weekend it may rise to 2% or higher. Also in the example we have used a 1% margin. This is by no means standard. I have seen as high as 0.5% and many between 3%-5% margin. It all depends on your broker.

There have been many discussions on the topic of margin and some argue that too much margin is dangerous. This is a point for the individual concerned. The important thing to remember as with all trading is that you thoroughly understand your broker's policies on the subject and you are comfortable with and understand your risk.

Source

An Introduction to an Exciting Market - FOREX

2008-04-10T02:41:00.000-07:00

The largest traded "market" in the world is not the U.S., Japanese or European stock markets. It's the foreign exchange market. It's also called FOREX for short, or called the cash currency or spot currency market. Speculators can and do trade this huge market, in which over 1 trillion dollars (and other currencies) can change hands every day.

The purpose of this feature is to introduce you to the FOREX market. I will just scratch the surface here, and I suggest you read some books on FOREX trading if you want to learn more about the world's largest traded market.

Here's an example to help you better understand the FOREX market. If you have ever traveled to another country and needed to exchange your own currency for another country's currency, then you know why foreign exchange is a necessity. (Americans are spoiled when they travel to other countries because many retail merchants will accept U.S. dollars for payment.)

The "exchange rate" for your currency is usually posted at the institution at which you exchange your currency for another currency--for example, a bank branch at an airport. Exchange rates fluctuate on a daily basis. Factors that impact an individual country's currency exchange rate are the health of its economy, political events, natural disasters and events around the world that could impact that particular country's economic or political well-being.

FOREX trading is done in "currency pairs." In other words, when you trade spot currencies you are trading in pairs. It has to be that way. Think about it: When you go to the airport to change out American dollars for Euros (the new European Union single currency), you are actually making a transaction in the "Euro-Dollar" currency pair. The first currency listed in every pair is known as the "base currency." The exchange rate refers to the amount of the second currency that can be exchanged for one unit of the base currency.

Here are some major currency pairs that are traded by hedgers and speculators worldwide: Euro-Dollar, Dollar-Swiss Franc, Dollar-Canada Dollar, Dollar-Japanese Yen, Dollar-Australian Dollar and British Pound-Dollar. Notice that the U.S. dollar is the "base" currency for most major currency pairs.

There are currency futures and options that trade at the Chicago Mercantile Exchange. You can trade the British pound, Swiss Franc, Australian Dollar, Canadian Dollar, as well as others. But again, even though the CME currencies are not labeled as "pairs," that is in fact what the futures are based upon. For example, Japanese yen futures prices are based upon the Dollar-Yen currency pair.

One big advantage to trading in the FOREX market is that it is a very liquid market (remember, it's the largest traded market in the world). The FOREX market trades from about 6:00 p.m. Central U.S. time on Sunday night, straight through until about 2:00 p.m. Central U.S. time on Friday afternoon.

There are some nuances in FOREX trading that futures traders do not encounter. One is the fact that since FOREX trading occurs continuously for 24 hours per day, five days per week, there is a daily settlement period designated. FOREX traders must theoretically "settle up" or square their positions at the end of every day. There is usually a small fee charted for this daily settlement process.

The margin for trading the FOREX market is usually around 1%, meaning that a $10,000 account can trade about $1 million worth of currencies. Most FOREX brokers do require at least a $10,000 margin deposit to open a FOREX trading account.

U.S. traders wanting to explore more about trading the world foreign exchange market should be aware that in the Commodity Futures Modernization Act of 2000 (CFMA), the Commodity Exchange Act was amended to make clear that it is unlawful to offer FOREX products to retail customers unless the entity offering the service is a regulated financial entity as spelled out in the CFMA. For more details regarding FOREX trading and the U.S. laws regulating it, check out the following Commodity Futures Trading Commission (CFTC) website address:

www.cftc.gov/opa/enf98/opaforexa15.htm

Jim Wyckoff
TradingEducation.com

What is Psychology?

2008-04-10T02:40:00.000-07:00

Psychology is the study of the mind and behavior. The discipline of psychology embraces all aspects of the human experience — from the functions of the brain to the environments in which humans and other animals develop; from child development to aging. Psychology is a science based on a large body of social science and behavioral science research and which is expanding its boundaries to overlap with neuroscience and health science. Psychologists study two critical relationships: one between brain function and behavior, and one between the environment and behavior. As scientists, psychologists follow scientific methods, using careful observation experimentation and analysis to learn more about the world in which we live and its inhabitents.

Trading with a Strategy

2008-04-10T02:38:00.000-07:00

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint. ACM does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers. As market professionals, we can however point the novice in the right direction and indicate what are correct trading tactics and considerations and what is total nonsense.

Anyone who says you can consistently make money in foreign exchange markets is being untruthful. Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.

Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side:

Trade with money you can afford to lose:

Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

Identify the state of the market:

What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.

Determine what time frame you're trading on:

Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term. This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

Time your trade:

You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.

If in doubt, stay out:

If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade logical transaction sizes:

Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.

Gauge market sentiment:

Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

Market expectation:

Market expection relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.

Use what other traders use:

In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

ACM-Refco

Bollinger Bands and Breaks

2008-04-10T02:37:00.001-07:00

The (FX) market follows a steady cycle of oscillating between a range bound and trending environment, on a long and short term basis. During range bound markets, the buying and selling forces remain more or less equal, and therefore compress the market into a sideways trading pattern such as the triangle consolidation pattern shown below. Once the market reaches a critical point, either the buyers or sellers overtake the opposing side, and force the market into a new trend; to the upside or downside. However detecting these breakouts can be quite tricky as the market has the tendency to trade to slightly new high or low prices, only to return inside its previous trading range. Therefore we must employ a filter that will hopefully help us avoid these false breakouts, and preserve our trading capital for only those 'true' breaks in the range. With that said, we can see as the market eventually broke out of it's trading range, the break was marked by the first candlestick to close below the lower Bollinger Band as well as below it's current support level. Once this occurred the market quickly began a new trend to the downside. For this reason, we should always consider the market's activity more relevant when studying the 'closing' prices, and not simply the highs and lows.

Adam Rosen, FX PowerCourse Instructor
FXCM

Stop Loss?? I Don't Want To Use It

2008-04-10T02:35:00.000-07:00

Last week I was reviewing a website which has a trading signal program for those investors who prefer to not being involved in confusing market analysis and I respect them because such services normally will bring them more time to do other important things in their daily life. But the interesting thing was the most of signalers did not actually place a stop loss point on their recommendations. Is that so because they know they are right all the time? Or that's because they did not lose half of their trading account in an unexpected slump of 200 hundred points and a single trade.

However, the answer is most of them have something between -1000 to -5000 pips of open trades on their signal board and they actually trapped in desperately while they could cut the losing trades and ran another one instead. Also I should mention that there are some other types of system trading that called "Hedge Fund" and I don't actually want to argue if they are right or wrong. I am definitely talking to day traders who get into challenge with big bear every day.

Sometimes, I don't understand why a trader could be convinced of not having a Stop Loss while we see almost every month an unexpected uncounted impulse (I would call it Best of the Test for whom with less of the rest) in the market.

There is no specific rule as to where you should place the stop loss, so consider the below mentioned tips as the general rules and ask your mentor to fit reliable Stop loss rules just for you and your trading system(If you have one?).

Many loser traders do place the same stop loss for all the trades they execute without even trying to measure market environment.
Don't be scared of placing a stop loss while it is for your gain and you must know what your profit objective is.
Stop Loss should not be too close to the current price while most of the stop loss enemies have ruined their trading accounts already just by using very close ones.
Stop Loss should not be too far from the point you get into trade while it's better to not placing any Stop Loss rather taking an unreachable, fictional protector.
Try to not to risk more than the points of your profit goal. Pro traders recommend to only take those trades which have at least 2 points of potential profit per 1 pip of potential lose, but I would say it is completely depends on the money management system that you use, as different money management systems has different recommendations for Risk & Reward.
Sometimes a trading system does not work if you risk less than recommended %7 to %10 of your total account balance. It means you trade oversize or you just entered the market when everyone else getting out of the market. In this case this is not your fault as it has a clear message for you "don't trade this way anymore and ask an expert to solve the problem".
If you are convinced enough that you can make up 1 million dollar out of your 10000 dollars account by not using stop losses as you may think you are the one who knows the price will be back on its way to you instead of hitting new highs, well, simply you are wrong.
Remember, there are no sky limits for the price of any of currencies in FOREX market.
If you don't like to place a pre defined Stop Loss on your trades, please ask someone to show you how to follow a wining trade by using "Trailing Stop".
Be sure it is better to have one or two losing trades with 100 points of lose, instead of being desperate with sinking into -1000 pips of dizziness.

How to Define the Best Stop Loss point?

Try these tools to define the most accurate stop loss points easily:

Use 10 pips over/below the first Parabolic SAR spot(dot) appeared over/below the price candles for Short/Long Trades.
Note#1: Remember you just can use 10 pips above the parabolic SAR dots as an Stop Loss point when you have a Short trade and Vice Versa.
Note#2: You realized that the Stop Loss obtained from SAR is too far from the point which you want to enter the market. OK, this means you are about to enter the market very late so better to not do it.
Use 10 pips over/below the day before yesterday's HIGH and LOW and in the case of the market has moved a lot far, use 10 pips over/below the yesterday HIGH and LOW as a Stop Loss point for your Short/Long trades.
Use two Moving Averages of 55 EMA and 144 MA. You may place your stop loss just 10 pips below/above one of those two MAs depending on how do you set up the profit/loss game for your Long/Short trades.
Note#: If you trade on the range market break out be aware of this kind of Stop Loss setting, and it is quite safer to use another way.
Place the Stop Loss 10 pips over/below Bollinger Bands Upper/Lower band for Short/Long trades.
If you use Elliot Waves theory to analyze the market:
# Place the Stop Loss just 10 pips below the lowest point of the Second (2) wave in bullish trend when you LONG on Wave 3.
# places the Stop Loss 10 pips below the lowest point of the 4th Wave when you go for LONG on 5th Wave.
# Place the Stop Loss right above/below the top/low of the previous wave when you go for SHORT/LONG based on A-B-C correctional waves.

Notes:

Aforementioned suggestions are based on 4Hours chart.
Those ways of defining Stop Loss points has worked for me, but It does not necessarily works for you, so ask your mentor or an expert friend to do evaluate the probability of fitting those suggestions to your trading strategy.
10 pips are because sometimes price hit the important support or resistance levels by more than a touch.
Please don't forget, the Stop Loss issue is not actually a game. It is not even an option for you; it is a "MUST" and will save you when you can do nothing, so refresh your mind in this case.

source

who is forex broker?

2008-04-10T02:29:00.000-07:00

A Forex broker is best described as an individual or a company that buys and sells orders according the investor 's decisions. Forex broker in turn earns money by charging a commission or a fee for their services. They are experts in dealing with foreign exchange, just like a real estate broker who deals in real estate and properties.

In other words, a broker is an advisor who advises you about the foreign exchange market. Many brokers specialize in certain areas whilst others operate as full service broker.

What does a Forex Broker do?

The broker helps open a FOREX account, which is as simple as filling out a form and providing the necessary ID. The form will include a margin covenant that states that the Forex broker can interfere with any trade it deems to be too risky.

This is to protect the interests of the broker in most trades; after all, all trades are done using the broker 's money. Once your account has been established, you can most defiantly fund it and begin trading.

Most of the brokers has separate styles of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts can have a minimum deposit of $, 1000 to $2,500 depending on the splendid broker.

The amount of leverage in using borrowed money varies with accounts. High leverage gives you more money to trade for a given investment.

However, beginner traders are advised get accustomed to FOREX by doing paper trades for a period of time. Paper trades are practice transactions that actually don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most of the Forex brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Each and every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.

Each Forex broker has his own set of software tools to aid in making transactions, but there are a few tools that are common to all the brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analysis are some of the features you would expect to see on most online web sites.

Almost every single broker operates on the excellent Internet. To access their online services you would need to have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system, that for an instance can be Windows XP.

Once your account is set up, you can easily access it from any computer. You will need to just enter your account name and password. If for some reason and its most important to understand if you are not able obtain access to a computer, most Forex brokers will allow you to make trades over the phone.

Trades are commission free, meaning that you can easily make many trades in one day without worrying about incurring high brokerage fees. The broker makes his money on the excellent 's pread' that is the difference between bids and ask prices.

A full service Forex broker negotiates the selling and purchasing of foreign currency all over the world. Negotiation is a key factor in your job role, along with an extensive back knowledge of the forex system. As everybody knows that, knowledge is considered to be the ultimate power, learning as much about Forex and the Forex system is crucial to the full service Forex broker, in the role of assisting and advising their customers.

The Forex market is a relatively used market especially to the first time users individual and smaller investors. For many years it was only large corporations and skilled professionals who took full advantage of buying foreign currency. For this very reason, many clients approach the broker as hesitant investors with limited or minimal knowledge of its operations and expanding opportunities.

Therefore it is vital for clients to be educated aspect element within the system and its operations or employ the assistance of a professional and experienced broker who can work wonders for them.

So what should you look for when selecting a Forex broker?

For a broker, experience and reputation are two good starting places for the selection process. Do as much research as possible and ask in online forums for anyone with first hand knowledge of the company.

Due to the global nature of the Forex broker there is a diverse range of financial regulatory environments depending on where the company is based.

One of the uppermost unregulated country is the United States of America, so the aspect element within the absence of independent verification of a company 's continuing finance, the broker should have the stability of doing the homework thoroughly, is imperative.

The basic aspect element within the end is if it can save you an immense amount of dollars and distress, when selecting a Forex broker be apprehensive

http://forexinvestmentprogram.blogspot.com

FXCM Announcement | Introducing Metatrader

2008-04-02T22:45:00.000-07:00

I just stumbled on this and I find this VERY interesting.

This could be enough for me to move some funds back to FXCM to give it a try.

I do like FXCM as a broker, my biggest beef with them wast that they did not have a trading platform that I agreed with.

Metatrader is not the best either, but I do believe it is the best free platform there is. Most traders use Metatrader, and because of that I do all of my analysis and teaching using metatratder. I will also be doing some tutorials in the free learning platform section of my site as well as advanced tutorials of how you use metatrader in the paid subscribtion area of my site.

The best means of trading the forex is by an independent data feed that is paid for from a high quality source. This is essential when trading with hundreds of thousands of dollars. For most people the Metatrade and the free platforms are just fine.

Here is the announcement:

MetaTrader
Trading Software

FXCM plans to introduce the MetaTrader online trading platform in the beginning of 2008. Because many traders have expressed an interest in this trading platform, we would like to keep them informed of our progress. Please complete the form below if you would like us to send you information about the upcoming release of MetaTrader.

Like I said very interesting.

more videos to come very soon,

FX Trading Videos | 422 PIPS PROFIT | Trading Is Not Always Roses

2008-04-02T22:43:00.000-07:00

FX VIDEOS 422 PIPS PROFIT TRADING IS NOT ALWAYS ROSES

Forex Training Forex Trading

In this Forex Trading blog post where I show another Free Forex Video we look at some live trades showing you some real proof that with the right education and the right method anyone can master the Fore Market. We will show that MISSION PHOENIX has got 422 pips of profit, and this method is so easy anyone can do it. However it is critical that one must know how the markets behave to ensure protection.

I can not stress enough that a trader needs forex education in order to succeed in currency trading. Why is it is so critical? We will see in these next videos MISSION talking about closing trades that are very successful trades all because of a specific candle formation or because of specific things that are happening in the currency pair, and on the charts.
─ How does MISSION PHOENIX know these things?
─ How does MISSION PHOENIX know that the current price movements are over?
─ How does MISSION PHOENIX know to either close the trade all together or should to move stop losses to lock in profits?

MISSION PHOENIX knows these things because:
─ Of extensive knowledge of how the markets behave,

I don’t have a crystal ball
I have just learned how to listen to the foreign language of financial charts, It is a great symphony that once you learn how to really “hear” the music you can really enjoy living to it.

─ Only using those things that work

I found the secret to forex trading. What it all boils down to is that all people make trading too hard.
This is EXCELLENT because anyone can now learn how to trade currencies in the 4x markets in a very short time
Only 5% of all traders know this secret, and they aren’t telling. I’m actually going to make a lot of people mad by sharing this.
o I’m going to make even more people mad because the brokers out there and everyone else don’t want you to master the market because they want to keep taking your money.

─ having years of trading experience.

Now I know you may not have years of trading experience and that you want to get up to speed and start trading like a pro as soon as tomorrow.
Anyone may tell you that this is impossible - Well YOU CAN!
How you are going to do that is by finding a mentor and a teacher that can teach you all of the things that they know and not hold anything back (or at least hold back only those things that do not work).
What this does is takes off the years of learning the markets (the way I had to do it), and supercharges your learning curve so that you don’t have to make the same mistakes that many have.
This drops years off of your trading dues. Your dues that you have to pay to the all powerful trading gods that unleash fury on new traders

Just a little investment in the beginning can save you tens of thousands of dollars gaining you trading knowledge. So with some patience and some time investment and the appropriate education you can have that account balance soaring in no time.

All of this training was not around when I started and now that I have been trading successfully I see that the training out there is not sufficient enough, that is not up to my standards of what people should be learning.

Why are my standards higher? Well friends and family are wanting to start doing what I do and I can not find anyone out there who I trust to send them too. So I’ve taken this into my own hands. So I’m developing the means to give them my training, an elite training that will help them. There is only one of me though and I hope that my posts are coming fast enough for you guys. Along with my philanthropy, blogging, developing my training courses, and trading for myself, that leaves little time.

I am also committed to helping others and that drives a lot of fulfillment in my life so I volunteer a lot of my time to making a difference in other people’s lives as well. Since that is very important to me and a core value of mine that I do not want to sacrifice I also have to find time for that as well.

So back to trading. In this video I will talk about take profit orders for the first time. I don’t use them that often because I used to and found that they limited my profit potential. Here is what happens:

─ You get in at the start of a good trend and you put in a take profit order for 250 pips profit and it’s hit!

─ WHOOO HOOO, great job 250% profit

─ Then as you feel really good about yourself you go on trading

Here is where many people meet their fx trading challenges
Many people pick the wrong times to get in on other pairs and suffer minor losses but now they still have 75 pips of that 250 left
Then they go to check out that old chart to only find that if they would have stayed in they would have >700 pips profit.
Ugh! Right!? If you would have only stayed in then you wouldn’t have had those small losses and on and on and on.

─ This is the real life of trading!!!! No one will tell you this and they will hide it in their systems that they tell you about

─ They also will not tell you that it’s never perfect, I was being very generous with the above example. Usually traders loose all of their profits plus some when they move on and try to trade other things.

Those systems out there give you the signals and they look good on paper but look at the time frame that they are on and ask yourself some questions about what trading style that is.

─ Are you at your charts for those periods of time?

─ By the time you would have gotten to your charts could you have entered a position in enough time to make a profitable trade?

─ What about the exit signal

Are you checking your charts are that time?
By the time you would have gotten to your charts would it still be a profit?

─ How about the trading style?

Do you have to sit at your charts looking for these trading opportunities for hours upon hours?
Does your wife, family, or friends complain that you work all day and then you sit at your charts all night?

─ Those systems look all great on paper, but in real life they stink

─ Really evaluate them and try to apply real life to the trades, you will find that most of the time you will lose and lose big when they are claiming great profits

So Lets Set The Record Straight

You will watch:
─ MISSION PHOENIX get into trades late
─ MISSION PHOENIX get out of trades late
─ MISSION PHOENIX be very imperfect
─ MISSION PHOENIX make mistakes on a daily basis
─ MISSION PHOENIX win big in the forex currency trading market.

How can I win so big with such a lazy proven system?
─ Because I’m a “little” lazy and I HATE to loose.
─ I sought out my method and my education and tailored it specifically for me

Guess what; I have found that there are a whole bunch of people out there just like me.

This works for anyone and when I started talking with some of my trader friends I found that I was making just as much as them or blowing them out of the water.

In this video we are going to see some more trades that I’m in, 5 of them if I remember correctly. MISSION PHOENIX will also show you that as traders we sometime see some losses during the trade. Does that mean that we close the trade for a loss? No it doesn’t! Not unless there is something telling you that you should close the trade (how do you know if something is telling you, because you use your education and know that the market is telling you that there is nothing wrong and to not close what is going to be a winning position, or it could tell you the opposite and alert you to get out).

In these trades We have 500+ pips profit and we will see that We have an open trade with 99+ pips loss for a total 422 pips profit in trades in 1.5 days!

Now we might stay in these trades for days or weeks? Depends, we will see, but my hunch says “NO” (Really It’s Not a Hunch, I Don’t Have Hunches, there is something telling me that these trends are close to over) and we will look at that in the video as well. I am preconditioned on these trades to jump ship at any sign of things not working out.

Why? Well we will talk about trading mentality versus the specific situation at hand and how we know things could reverse on us for a substantial correction at any time.

This is very important in trading and the key to much success and failure. Just this post alone is worth so much, and you will never get this teaching in a seminar, I’ve taken most of them and the stuff they don’t want you to know, what I’m sharing right here in this blog is what makes and keeps profits, and there is even more that I want to share with you.

We will see how emotionless I am during these trades and with profits and losses:
─ How I am able to do this?
─ What protection mechanism am I using?
─ What is it that has been kept a secret from you?

This is really cool stuff guys. Let me know what you think, feel free to leave comments on the blog below. I read all comments.

Let me know what issues you have in keeping those profits that they do not teach you how to protect, and we’ll see about getting that worked out for you.

I hope you enjoy the video; it is long at 29:12 in length.

Live trades - 380 pips Profit!!! - Free Forex Training Video

2008-04-02T22:42:00.000-07:00

Live trades - 380 pips Profit!!! - Free Forex Training Video

Forex Training Forex Trading

This is another video showing the analysis of the CAD/JPY and the GBP/JPY and real trades. Here I am managing my trades. I just took a look at what the charts were doing and decided to make a video of it because things were starting to reverse on me and when these signals start happening there is no telling how far it will retrace.

It is very easy to trade when the currencies are trending, I only trade during trending periods because it is so easy to make so much profit. I have found that, when people start to try to trade during corrective time frames that even though the general direction was correct and the trade entry was correct, the currency does not behave in the appropriate manner and makes the trader go through very wide ranging swings. This in turn is very hard on the trader's emotions and the trader closes out the trade for a loss or stop losses are misplaced and hit.

Enjoy the video we are doing quite well this month. I ended up closing out these trades immediately after the video for 380 pips profit.

It is very important that traders invest in their eduction. What that investment is does not have to cost a lot of money. However what a trader MUST invest in that does cost something substantial is time. Time is absolutely one of the most important aspects to trading. Don't get me wrong I only want you spending about 15 min maximum looking at charts and trading at a time, but it takes time, it takes months of 15 min sittings looking at charts. This then becomes experience and it is only experience that make you a good trader.

No can we shorten the time that it takes to become a good trader? Well for that it would require somehow sitting with an experienced trader and seeing the analysis done in the same manner that you were trained.

I have not been able to find out there in this world a place where you can receive this type of education that specifically teaches how to trade with a longer term trading and a shorter term investing approach that also mentors it's students over any desired time frame, for a reasonable monetary cost to the students. There are a few programs out there, but the style of trading they teach you require that you sit in front of your computer for hours on end and trading on charts that are much more noisy and make you incur more losses. They also cost a fortune.

Because of this injustice to the consumer and because this is special knowledge that all the free forex learning sites out there will not give you mission phoenix is developing course ware at this very moment that starts at the beginning and take you to professional level. Mission Phoenix is also going to be mentoring you and you get to decide on what level, weekly, or daily. Mission Phoenix wants you to not spend an fortune on your investment education and therefor is developing a lifetime membership of mentorship and coaching that is far less than the cost of many seminars and internet coaching packages out there.

So stay tuned for good things to come!

Live abundantly and then share that abundance!

The Trials of a New Forex Trader - Another Case for True Forex Training

2008-04-02T22:41:00.000-07:00

The Trials of a New Forex Trader - Another Case for True Forex Training

For this post I wanted to share a good post from a beginner out there in the market. Sometimes I take for granted my method, my education, and my results. It's hard fore me to remember the days of so much uncertainty and all of this seams so simple now. It is very important that you get to sit beside a professional from time to time. To actually do this costs extreme amounts of money, however there are a few professional traders out there that deliver this type of service through the internet via videos. It is vital that mentorship be a part of training. It takes time to start seeing the same things that the profession starts seeing. You can be trained but then people forget, they have to see how the whole thing is put together, time and time again.

Like I said there are mentorship programs out there that are pretty good. I have only found one of them that I sort of like, and I barely found that one. Remember these guys are making tons of money and could careless whether other people out there get it or not. You must find someone who is more interested in teaching and helping others as a driver. There are very few individuals out there that feel this way and that do this. That is why I am here, I'm driven to help my friends and family, and in doing so the means in which I am getting this done lends itself to everyone out there in the world.

So I found this blog post by Colin McGinley. The following is quoted and taken directly from him, and I am not the author of any of the following. Colin did a great job capturing what it is like as a new trader without knowledge and education and utilizing a method that gets you consistent results and prevents you from trading during the times that most people loose all of their gains.

Written by Colin McGinley
My first post of the new year is going to be of the slightly grisly kind. I am going to break down some of the figures that come from my trading results during December 2007.

If you read my blog last month you’ll know that I completely lost control of my trading situation and basically imploded my trading account.

Hopefully I’ll be able to focus on more positive, forward looking topics soon but I have posted a monthly review of my performance each and every month on this blog and I think it is important that I do so as usual. It sort of marks the end of one stage of my trading career and the start of another. After such a traumatic event nothing can ever be the same again.

I closed out 25 entries during December. Only eight of these entries were closed out in positive territory. Fully 14 of those entries were fatefully closed out when I threw in the towel on my positions on December 19.

My account return for the month was -79.09%. To get the true impact of my disastrous December this is what my account equity for the whole of last year looks like on a graph:

The simplified, short hand version is that I was overleveraged and did not handle my losses well at all.

There were many minor errors and mistakes in the prior weeks that culminated in this undesirable result. My trading had become ragged. I needed a break from trading to recharge my batteries but didn’t do so. I didn’t avail myself of the opportunity to extradite myself from the situation when I had the chance. I was pushing myself too hard. I was becoming impatient. I didn’t follow my gut. I didn’t step back and see the bigger picture often enough.

Obviously I want to try and make sure that I don’t make the same mistakes again going forward.

It’s pretty easy to quantify the ways in which this experience has not been pleasant at all. Losing money is never nice. Losing lots of money is even worse. Having to tell your spouse exactly how much money you’ve just lost is something I don’t ever want to have to do again. Especially when future use of that money was linked to potentially moving house or your child’s education.

You doubt if you have what it takes to be a successful trader. Your confidence takes a severe blow.

On the other hand there a few positives that can be taken from the situation. In a way I have the opportunity to completely reboot my trading approach. I can step back and examine my whole trading plan. I can pick over two years worth of trading results to try and determine what things worked well for me and what were my weaknesses.

I am currently putting in place tweaks to my trading plan, mainly on the money management side. The plan for the immediate future is to lock in these changes and to slowly start building back up my confidence by getting back into the market.

I just really love this post, and Colin I'm working hard to get you on the right track. As many of you have mentioned to me I haven't posted anything in a little while. I have been working frantically along with trying to trade on developing a course for you guys. I know my profits are unlike anyone else out there and you want to know how I do it. It very simple, yes it is, and I want to teach. So I've been hard at work developing the course for all of you. It is going to be quite thorough and well I think awesome. I can't wait to start hearing the success stories. So stay posted and we are going to start making some great profits.

Free Forex Trading Analysis - Continued GBP/JPY Analysis

2008-04-02T22:40:00.000-07:00

Free Forex Trading Analysis - Continued GBP/JPY Analysis

The forex markets are really fun and it's now finally great that the currencies are starting to move after a considerable time of consolidation. Our Great British Pound (GBP) vs. Japanese Yen (JPY) has turned out to be a very profitable trading currency.

Forex Training Forex Trading

Where we left off we were looking at a little Elliot Wave Analysis, We used some Fibonacci analysis as well to look at current price movement. I was also biased towards taking a long position, however notice how I did not allow my bias take over and place a bad trade. In the analysis we say cases for both positions. Long or Short (going up or going down). The deciding factor was how the currency behaved at a critical support resistance zone. When the currency broke that zone, then retested the zone and continued down that was a good low risk entry position downward.

Again we are going to take another look at this currency and see if it is now time to get it. As will most analysis in the currency market the decision is to wait. We spend most time waiting as a currency trader and that takes some patience. However, we are just looking at 1 currency, I am looking at all currencies when I am doing my analysis , and there is typically one currency that is always trending.

It is important to understand that we do not "go to the market," meaning that we go looking for entry points. Entry points should scream out at you, and then when you have the confidence and the patience to then tell that market that is screaming at you "ok, so you're telling me to get in, I'll tell you what, you continue your move and if you retest the new broken support zone and then continue in the same direction that I will believe you and then I will get in." This is called the "market coming to us." We then tell the market to give me proof, it does and we then see we have entered at the beginning of a trend.

So back to waiting. Here is another video showing that same GBP/JPY currency pair, and again we are waiting to see what happens and at this point our job is to do nothing but observe.

Video length is 9:12

Free Forex Training Video - Possible Trade Entry Video GBP/JPY

2008-04-02T22:39:00.000-07:00

Free Forex Training Video - Possible Trade Entry Video GBP/JPY

Entering and exiting a trade is everything when trading. It's all about timing. Here is a great example of the forex market behaving as it always does. When I first looked at this chart the emotions kick in and it looks like a great opportunity. But then when my experienced eye kicks in I see that the move is almost over and I should not join the crowd. Instead my technical analysis tells me that it is time to wait.

I and you too should be doing a lot of waiting in the forex market. If you are waiting then you are trading. If you are always trying to make something happen, then you are a member of the heard.

There are always entry and exit signals that have specific technical analysis basis, those entry and exit points are the tools that make very successful traders.

I also mention in this video the difference between trading systems and trading methods. A trading system in a hard core set of rules that governs entry and exits, whereas a trading method is what an experience trader uses. A trading method is a method of trading based on special knowledge and experience, it understands that each situation is different and allows the user to make more accurate assumptions that a trading system can. A trading method is a living and breathing method whereas a trading system is not. A trading method is much better suited for the living, breathing markets.

I hope you enjoy the video looking at technical analysis of the GBP/JPY. Please contact me and give me your feedback, or comments.

This is a 25 min Video. Wanted to let you know before you dove into watching it.

*UPDATE* - since this video was created you can see that the support resistance zone was broken and the currency pair is headed down. I will continue to stay out of this pair on the short term until something more substantial starts to happen. I am anticipating something relatively soon, but it may be after the new years before anything really starts happening.

Forex Training Forex Trading

Live abundantly and then share that abundance.

It's time to make the world a better place.

Forex Trading Systems | Forex Software - What's the difference?

2008-04-02T22:37:00.000-07:00

Free Forex Training 102 - Forex Trading Systems Forex Software - what's the difference?What core things do successful Forex Traders know?

Forex Training Forex Trading

I found a good press release today that has some good comments that I wanted to share with you. I have bolded some of the key points that are important in forex trading.

Below is a direct quote from the press release:

"There has been significant bad press specifically on forex trading software, and there are certainly some scams online to be aware of, however there are most definitely bonafide options as well. Using forex trading software and systems eliminates the risk involved in currency trading, as Andreas Kirchberger of Forex Killer states "proven software which does the thinking for you and therefore eliminates the human error factor".

There are essentially 3 main factors of successful forex trading software and systems. Firstly selecting your term of trading is crucial to your currency trading success. There are essentially 3 time frames: long term, medium term and short term. The long term trader will hold on to their currency for months. The short term trader, sometimes known as a scalper, is seeking quick fire trades and immediate profits. The medium term trade is the lowest risk option, and require the least amount of capital to realize profits.

Justin Kuepper, a contributor to Investopedia.com, suggests favouring a medium term trade will "help you save money and ultimately become a profitable retail forex trader".Secondly, analysis of technical statistics is required. The currency marketplace is essentially a continuous supply of data which needs to be interpreted and correctly exploited for profit. One needs to be able to understand market fluctuations and be aware of key indicators of a market swing.

This is the attraction of forex trading software, as it will interpret this data and help you make educated decisions on future trades more frequently.Finally, timing of your trades is crucial to your success. John Chen of Profitable Trend Forex System attributes timing in terms of joining a trend as a key ingredient in currency trading success. There are essentially two main orders or decisions one needs to incorporate in one's forex trading system, theses are 'stop loss' and 'take profit'. 'Stop loss' is an order to cease trading when the currency reaches a certain point. 'Take profit' is a more conservative approach to a market upswing, which will result in profit, but not risk a massive collapse." This article comes from 24-7pressrelease.com and is referencing the forextradingsoftwarereview.com website. I did not write the article I am just citing it and want to document where it comes from.

This is a really good article/press release that has some really good points about what profitable forex traders do. Here is my summation and added comments to this article.

Forex has gotten some bad press lately - The forex market is a wonderful market, lets get that straight first. However, there are scams and questionable brokers around every courner. With the right education you can identify these with ease and have a great forex experience.
It is not illustrated well and I will clarify this more in my following Forex Trading Software vs. Forex Tading Systems post - There is a big difference between forex trading software and forex trading systems. One step farther is that there is a big difference in following a forex system blindly or actually knnowing everything about that system and the trading methodology. This only comes from quality Forex Training, this type of forex training is rarely free. If the demand is great enough and you would really like to learn more about forex training, I have an idea that could give you the forex training for less than your monthly starbucks cost. But I won't waste my time if no one is interested so please contact me.
Your term of trading - or your trading style (scalper vs. swing trader vs. investor) makes a big difference in your time investment, your stress levels, and your forex career. What I share with you is going to the medium term style as is what you can do easily without quiting your current job, it takes very little time per day to do, and you can produce expert level gains and results with this term.
The medium term forex stylecombines the best of the highest reward with the lowest risk (scalpers have the lowest risk, however they also have the lowest profits per trade. They make up with this by the number of trades they make - sometimes a hundred+ per day, we don't have this kind of time to invest and we can do the same with a few minutes per day).
Technical analysis of statistics is required (in our language technical analysis is required). That sounds really hard, but if you see that this line "/" is sloping up and this line "\" is sloping down, then you can do technical analysis.
Successful traders uses analysis to determine when to enter and exit trades
Some people use Forex Trading Software to give them signals. I personaly do not trust software, and I know for a fact that it does not always work!!! I will explain this in my following Forex Trading Software vs. Forex Tading Systems post. Trading software tells you when to buy and sell. Easy right,,,,that's what I want!!!! Well it's not that easy. These systems work well during trending markets. So you can make huge gains during a trend, and when you get to a correction you end up loosing it all if not more. OUCH!!! Yes I have been there.
People use Forex Trading Systems to trade by looking at the technical analysis indicators and getting buy and sell signals from those indicators. When looking at the charts you can also take into account other little things, like cases. "Well in this case you would do xxxxxxx, and in that case you would do yyyyyyy" This is something that Forex Trading Software does not do a good job it. It is not human and cannot make those type of descisions.
#8 leads me to this point and that is that taking the last bolded item of the article. Taking the signals (timing) in context or in conjuction with the overall trend of the market is very key to a Forex trader's success. Always go in the direction of the trend and trade with common sense, something a computer does not have. This may all be greek to you but with the right forex training this becomes very elementary and easy.

I have developed over 40 automatic trading advisors, I am an engineer by education and know a thing or two about computer programming. It has taken me a very long time to develop a trading advisor that works. I'm in the long phase of testing it. It is the closest thing to being intelligent enough to know to only trade during tending markets and to not trade during corrective periods.

Trading advisor & automatic trading programs (they execute the trades for you while you are out on the beach) are very hard to come by, the ones that are profitable and work are worth millions of dollars and will only be sold for that. It is much easier for you (unless you have a couple of million dollars to purchase one of these) to gain your forex training and start trading on the medium term time frame.

Forex Training - will never fail you (only your emotions will)

Forex Systems without education - Will produce profits, and will produce losses, you are at the mercy of how much either of those are by cercumstance and luck.

Forex Software - Same as the forex system but can get you into bigger trouble due to the fact that you could be in a corrective period and the software could give you numerous false signals resulting in numberous consecutive loosing trades.

Get you forex education is by for the best means of creating a successful forex career. You won't need anything else except a computer and an internet connection.

If you are interested in me creating a good educational source please contact me. You guys/gals have been great so far and I just wanted to thank you for coming to my blog, you inspire me.

Live abundantly and then share that wealth with those who need it.

Free Forex Training Video - Protecting Profits in the GBP/AUD Part 4

2008-04-02T22:36:00.000-07:00

Free Forex Training Video - Protecting Profits in the GBP/AUD Part 4

Hey Everyone,

Some interesting things happened on this trade. Well I say interesting when really this is kind of normal for the forex market.

I'm so accustomed to the forex market that when you guys come to me for help that I typically respond with what are you talking about, it always happens likes this. This has been actually been an interest of mine over this past month. I have a retirement account that I am still managing and it has just been funny lately, when really it is the same old thing. I've just been growing accustomed to the forex markets. Friends, I always tell people that they need to trade at a minimum of 3 months in a forex demo account before live trading.

Please hear me on this one!!! Look at the gains that I am getting on these trades...it is realistic to double your account every couple of months. REALLY LISTEN TO ME NOW!!! If you could double (that is 100% rate of return on your entire account balance) in 6 months (and we can do it every 3 or 4). Is it worth it to take a little break and "LEARN" the markets, get a feel for the markets, get all messed up like me because you are accustomed to the forex market. This is what you want...I cannot stress enough how lucrative this market is. Now outside of brokers, we have to be better than them. Only 5% of the traders out there can have the success that we are seeing here. Stand by be and you will be in that 5%.

So how to we double our accounts? lets say I risk 3% of my account balance on every trade. I have $10,000, so I riske 3%...that is risking $300. Got it? if not contact me, I want you to make money...so please ask me, I WILL answer any question you have. So we trade with $300. Lets say that I can average 100 pips per trade (I believe I am averaging about 135), So that means that I am make $300 on my 1st trade. I then have $10300 and I riske 3% = $309 (so we stick with our .3 lots or $300 risk) (1 lot trades in the forex market = $1,000 of currency, this would be trading with .3 lots = $300) So now we make $318 with our 100 pips profit. So now our account balance is $10,627. What is 3% of $10600? It is $318. So we are sticking with our $300 risk or .3 lots.

BORING...right!!!! So If I'm making a little over $300 per trade on average (forget the compounding interest), how long does it take to double my account balance. 34 trades is how long. Well I get this many pips every other day or 2 or 3 days. So that is why I say you can double your account balance every 3 or 4 months. I make BIG PIPS, period! That how I trade, my mediocre trades are 100 pips, I get 200 - 700 pips all of the time! I have even had a few 900 - 1000 pip trades. Trading in this manner is also the easiest on you, it's the funnest. I mean how many people can turn $100 to $1000 in one to 4 months time?

HONESTLY....its REALLY boring though! This is not fast money....Could you? Well yes, I'm tempted all the time....(Mission....you make 100 pips profit all the time, why not risk 50, 70, 80% and make some big bucks).....well, it never works out that way. WHY? Emotions! Its a lot easier to see a -100 pip move on $300 (it's only $300 and I made that yesterday), and so I am confident in the indicators and the trends and everything else (yes, I make mistakes too when I enter the market but the overall trend takes care of everything). Then the trade works out...it always does, and I can manage the trade better that way. But when I see that I'm -$7000 on an account, no one can take that kind of loss in a day, or hours, or even minutes in this market. So you close the trade for a HUGE loss!

So if you are looking for excitement (pants flaming and leisure suites in Manhattan), then you've come to the wrong place.

All we do here is make money, in a very boring way. Sorry for the disappointment....but I at least hope that you like the video!!!

In this industry we ALWAYS use stop losses!!!! PERIOD! Now I have traded without them, but this was a big mistake. Don't loose $15K on one trade like I did because of no stop loss. Yes, I have lost, so listen to me when I harp! Lucky I make $17,400 a few hours before on 4 trades. It still REALLY hurt though. I couldn't trade for a week after that.

Forex Training Forex Trading

2008-04-02T22:35:00.001-07:00

Have fun guys!!!

Enjoy

Live live abundantly.
-Mission

Example of a Trendline Trade

2008-04-02T22:34:00.001-07:00

Here’s an example of a trendline trade where profit consisted of 57 pips per lot per hour or $142.50 per hour over 4 hours. Construct various trendlines and look at the divergence between MACD and price.

This forex training video is available at this link:
http://www.forexmentor.com/video/example-trendline-trade-patricia.html

Forex Training Video - End of Run Determination

2008-04-02T22:33:00.001-07:00

There’s a story here worth repeating - what railroad tracks should look like at the end of a downtrend. Railroad tracks consist of price collapses, closes low, opens low and then closes high. Then price reverses.

This forex training video is available at this link:
http://www.forexmentor.com/video/end-of-run-determination.html

Forex Training Video - Different Time Frames

2008-04-02T22:32:00.000-07:00

It’s important to reference the 15 minute chart to an hourly chart. Wait for MACD on the hourly chart to turn before making decisions based on the 15 minute chart. Making a decision on divergence prevents you from taking an erroneous signal.

This forex training video is available at this link:
http://www.forexmentor.com/video/different-time-frames.html

Forex Training Video - COT Australian Dollar

2008-04-02T22:25:00.000-07:00

Looking at a COT chart for the Australian dollar and price action. The divergence between hedge funds and dumb money say’s it’s game over.

This forex training video is available at this link:
http://www.forexmentor.com/video/cot-02.html

Euro Could Replace Dollar

2008-03-28T23:00:00.001-07:00

Two American economists recently conducted a computer simulation to determine how the role of the US Dollar as the world's reserve currency will evolve over the next decade. Their hypothesis- that the Dollar's preeminence would be maintained- was contradicted by the simulation leading them to conclude that the Euro will overtake the Dollar within the next 10-15 years. This may be hard for many analysts to stomach, since the Dollar's share in global currency reserves is 66%, compared to the Euro's 25%. In addition, the Dollar has held its title for nearly 150 years, and it's difficult to fathom its being replaced.

However, two factors have emerged within the last 10 years, lending support to the argument. First, the US twin deficits have exploded; the current account deficit approximates $800 Billion and the national debt is estimated at $9.4 Trillion. Second, prior to the inception of the Euro, there didn't exist a credible alternative to the Dollar. The Deutsch Mark and Japanese Yen initially seemed like potential candidates, but the German currency was folded into the Euro, and the Japanese economy has soured and taken over by deflation. Then there are peripheral factors, like US monetary policy, which is facilitating inflation and eroding the Dollar. There are also signs that a neo-imperialist foreign policy has overstretched the US, and foreign Central Banks are becoming nervous. The Financial Times reports:

Many developing countries will find it harder to maintain their dollar pegs. They may be reluctant to drop them now but there will come a point when the rise in inflationary pressures becomes unbearable.

Return of the Carry Trade?

2008-03-28T22:59:00.001-07:00

After the Fed cut its benchmark lending rate by 75 basis points last week, the Dollar immediately rallied 2.5% against the Japanese Yen, marking its highest daily rise in nine years. Some analysts are at a loss to explain this phenomenon, since a narrower interest rate differential should have produced the opposite effect. Perhaps, the answer can be found in the carry trade, whereby investors sell Yen in favor of higher-yielding currencies. Support for the carry trade typically moves inversely with volatility. For example, when risk aversion rises due to economic uncertainty, investors typically unwind their carry trade positions. With the Fed rate cut last week, however, risk aversion actually fell, and the S&P 500 Index surged. By no coincidence, the Yen fell. Reuters reports:

As U.S. stocks rallied, with investors willing to take on more risk, the dollar recouped some of Monday's sharp losses versus the low-yielding yen.

Japan (Also) Mulls Intervention

2008-03-28T22:58:00.000-07:00

Yesterday, the Forex Blog reported that the risk of intervention in forex markets is growing, in order to prop up an ailing Dollar. The focus of the post was on the Euro, which is hovering below the record high of $1.60 reached last week. With this post, we wish to extend coverage of the potential intervention to include Japan. In some respects, Japan is actually a more likely candidate for intervention, since it has a history of actively depressing its currency. Most recently, in 2004, it accumulated $350 Billion in Dollar-denominated assets in a large scale effort to keep the Yen from rising out of control.

Japan's consumers are notoriously tightfisted, and consequently, its economy is dependent on the export sector to drive growth. Unfortunately, the more expensive Yen is making this sector less competitive. In addition, Japan's new Prime Minister has yet to lay out an economic plan, and the stock market is foundering. A number of creative solutions are being mulled, including one to buy American mortgage-backed securities, in order to head off the international opposition to intervention. The New York Times reports:

That might win Washington’s approval by helping to ease the credit squeeze in the United States, but given such securities’ role in precipitating the crisis of the last several months, it might well set off cries of dismay here.

The Rising Threat of Intervention

2008-03-28T22:56:00.000-07:00

Last week, the Euro retreated from the record high of $1.60 that it achieved earlier in the week. Policymakers are still concerned, however, and are perhaps using this lull to come up with a plan of action should the Dollar resume its slide. In fact, the consensus among analysts is that coordinated intervention is likely if the Euro crosses a certain threshold- perhaps $1.65. In order to be successful, the intervention would need to involve the Federal Reserve Bank and the European Central Bank principally, as well as the peripheral participation of the Central Banks of Switzerland, Japan and England. The situation is complicated by the monetary policy of the ECB, the tightness of which is causing the interest rate differential with the US to widen dramatically. Already, volatility levels in forex markets are slowly climbing, suggesting that investors are bracing themselves for a big move. The Guardian UK reports:

ECB Executive Board member Lorenzo Bini Smaghi said in a speech on Tuesday markets sometimes overshot, with possible negative implications for the world economy. Since his speech, the dollar has strengthened by almost 2 cents against the euro.

Brazil to Alter Forex Rules

2008-03-28T22:55:00.000-07:00

In a thinly disguised effort to stem the appreciation of its currency, Brazil has announced sweeping changes to its rules governing forex. Rather than revert to outright intervention in the forex markets, however, Brazil will permit businesses to hold more foreign currency as part of their reserves. In this way, the Central Bank won't have to purchase Dollar-denominated assets directly. Instead, it is hoping that the natural attraction of US and other Western capital markets will be enough to drive private Brazilian companies to increase their holdings abroad. It is intended that this will act against the upward pressure on the Real, which rose 20% against the Dollar in 2007, and 5% already in 2008, and now threatens to drag down the economy. Dow Jones reports:

The strong real has made some Brazilian manufactured exports such as textiles and footwear less competitive. Meanwhile, it also has introduced a boom in imports resulting in a narrowing of the country's trade surplus.

USD: 0 for 3

2008-03-28T22:54:00.000-07:00

In a recent commentary piece, the Market Oracle used the analogy of baseball to outline why this will be an "off year" for the Dollar, listing three reasons to support its claim. Consumer spending was listed first because it represents the largest component of US GDP. Since much consumption is financed through borrowing and since the credit crunch has forced banks to rein in lending, the Oracle reasoned that consumer spending will be especially hard hit. Next, there is the worsening employment picture. As its moniker implies, the "jobless recovery" that has characterized the US economy over the last few years did not add many jobs, and due to the economic downturn, jobs are now being shed. Finally, the Market Oracle has identified the Federal Reserve as a primary contributor to the decline of the Dollar. While the Fed is trying to shore up the economy, it is simultaneously enabling inflation. Thus, even if the battle is won and recession is averted, the Fed may still find that it has lost the war- on prices.

Fed Rate Cut has Small Effect

2008-03-28T22:52:00.000-07:00

On Tuesday, the Federal Reserve Bank lowered its benchmark federal funds rate by 75 basis points, its sharpest cut in decades. The markets initially reacted positively to the move, which was intended to shore up sagging confidence in the economy and financial markets. But the next day, most of the gains had been lost, as investors feared both that the recession has already begun and that the Fed is giving up on fighting inflation to battle the lost cause of the economy. In fact, as many analysts feel a recession is a foregone conclusion, the focus may soon turn to inflation, especially given exploding commodity prices and the sagging dollar. The New York Times reports:

"I'm disappointed," said an economist at Citigroup. "It's not as if we're trying to gauge policy priorities on a sunny day. I'd like to know how you're going to get inflation in an environment with suffocating financial restraint and pervasive slowing in demand."

links

2008-03-24T09:02:00.000-07:00

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currency converter

2008-03-20T04:58:00.000-07:00

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Why the Fed is such a Lousy Wizard of Oz

2008-03-14T00:42:00.000-07:00

Another interesting articles from my friends over at Elliottwave.

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Why the Fed is Such a Lousy Wizard of Oz
By Susan C. Walker, Elliott Wave InternationalSeptember 7, 2007

Central bankers who "follow the yellow brick road" end up in Jackson Hole, Wyoming, every Labor Day weekend for their annual symposium sponsored by – who else? – the Kansas City Fed. (Who can forget Judy Garland saying to her little dog, "Toto, I've got a feeling we're not in Kansas anymore," in the 1939 movie, The Wizard of Oz?)

The Jackson Hole Resort serves as the Federal Reserve's equivalent of the Emerald City, as Fed governors and presidents meet with central bankers and economists from around the world to discuss economic issues. This year, the symposium focused on housing and monetary policy. Usually, the Fed chairman kicks off the symposium and, this year, the new chairman, Ben S. Bernanke, did the honors. He closed his speech with these words:

"The interaction of housing, housing finance, and economic activity has for years been of central importance for understanding the behavior of the economy, and it will continue to be central to our thinking as we try to anticipate economic and financial developments."

Then came the other speeches. And it seems that some of the guests in Emerald City were waiting for their chance to pull back the curtain and prove that the Wonderful Wizard of Oz isn't such a wizard after all. Bloomberg reported that "Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat, arguing they should use regulation and interest rates to prevent asset-price bubbles."

Apparently, one academic paper presented at Jackson Hole graded the Fed an 'F' for the way it has handled the repercussions from the rise and fall of the housing market.

Truth be told, these folks are a little late to the table as critics of the Fed. We're glad they're joining us, but here's what they still haven't learned: It isn't because the Federal Reserve messes up by allowing credit, asset and stock bubbles to form that it's not a wizard. The Federal Reserve isn't a wizard for one particular reason that it doesn't want anybody to know – and that is that the Fed doesn't lead the financial markets, it follows them.

People everywhere want to believe in the Fed's wizardry. But all this talk about how the Fed will be able to help the U.S. economy and hold up the markets by cutting rates now is as much hooey as the Wizard of Oz promising Dorothy, the Scarecrow, the Tin Man and the Cowardly Lion that he could give them what they wanted: a return to Kansas, a brain, a heart, and courage. Because when the Fed does do something, it always comes after the markets have already made their moves.

If you don't believe it, you should look at one chart from the most recent Elliott Wave Financial Forecast. It compares the movements in the Fed Funds rate with the movements of the 3-month U.S. Treasury Bill Yield. What does it reveal? That the Fed has followed the T-Bill yield up and down every step of the way since 2000. And the interesting question becomes this: Since the T-bill yield has dropped nearly two points since February, how soon will the Fed cut its rate to follow the market's lead this time?

[Editor's note: You can see this chart and read the Special Section it appears in by accessing the free report, The Unwonderful Wizardry of the Fed.]

We've got our own brains, heart and courage here at Elliott Wave International, and we've used them to explain over and over again that putting faith in the Fed to turn around the markets and the economy is blind faith indeed.

"This blind faith in the Fed's power to hold up the economy and stocks epitomizes the following definition of magic offered by Teller of the illusionist and comedy team of Penn and Teller: a 'theatrical linking of a cause with an effect that has no basis in physical reality, but that – in our hearts – ought to be.'" [September 2007, The Elliott Wave Financial Forecast]

Because, you see, what makes the markets move has less to do with what the unwizardly Fed does and more with changes in the mass psychology of all the people investing in those markets. The Elliott Wave Principle describes how bullish and bearish trends in the financial markets reflect changes in social mood, from positive to negative and back again. To extend the metaphor: The Fed can't affect social mood anymore than the Wonderful Wizard of Oz could change the direction of the wind that brought his hot air balloon to the Land of Oz in the first place.

As our EWI analysts write, "With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point. The market, not the Fed, sets rates." Being able to understand this information puts you one step closer to clicking your ruby red shoes together and whispering those magic words: "There's no place like home." Once you land back in Kansas, your eyes will open, and you will see that an unwarranted faith in the Fed was just a bad dream.

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.

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Happy Trading!!

Regret Will Kill Your Forex Account

2008-03-14T00:41:00.002-07:00

OK, so you just pulled the trigger on a trade and every bone in your body told you not to. You violated the rules dictated in your trade plan and you watched a small profit immediately turn into a major loss.

Sound familiar? What do you do?

You get over it, that’s what you do! Regret over a bad trade will eat your account from the inside out. Regret is a more powerful emotion than most traders recognize. It is like the unwanted guest that keeps living off of your bank account until there is no more left. It takes most traders into a tailspin that they will never recover. It can lead to dangerous psychological results such as failure to pull the trigger over even worse, paralysis by analysis.

“Yeah, but…” (I will save the disempowerment of this statement for another day)

It’s not easy putting those emotions aside when your money is on the line. That’s why they called it trading, folks. In Forex someone is on the other side of the trade controlling their emotions and eventually controlling your account balance. If you want to find consistency you must never let regret live in your trading experience.

Here’s what I do to combat this debilitating emotion … I get over it! How do I do this? I simply perform a post mortem of my bad trades (I still have them every now and then) and keep a detailed journal. Over time I began to recognize my personal triggers and simply tweaked my trade plan to be a more proactive currency trader and avoid the situations that led to the bad trade in the first place, in my instance over-trading or being tired.

What trader do I model my approach after? The answer may surprise you!

The answer is Tiger Woods.

I play golf, so you could imagine I am a huge fan of Tiger Woods. There are a lot of similarities between golf and trading. Both venues offer a look at who we are as a person, raw and uncensored. Both live in the world of risk and reward.

I admire Tiger Woods skill as a golfer, but even more so his mental toughness. Next time you watch Tiger Wood hit a bad shot follow his reaction. His immediate reaction is to get upset, really upset. Then count 5 seconds. His expressions and demeanor will have returned to one of focus and concentration.

And the funny thing is that is doesn’t matter what kind of prize money is online. He takes the same approach to every golf shot, in every tournament.

Let’s translate that to trading. Do you give yourself 5 seconds to get over a bad trade? Do you take the same approach to every trade?

Stop living in the world of regret and only think about the possibilities of wining trades and you will find your experiences trading the Forex market one filled with achievement and success.

Happy Trading!!

Suddenly, It's a Bleak Midwinter for Housing and Lending

2008-03-14T00:41:00.001-07:00

If you're wondering how the housing market collapse in the US will impact your favorite Central Banker (and interest rates), here's an interesting article to help support your fundamental Forex analysis:

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Suddenly, It's a Bleak Midwinter for Housing and Lending

By Susan C. Walker, Elliott Wave International

January 7, 2008

In the bleak midwinter, Frosty wind made moan,Earth stood hard as iron, Water like a stone…(From "A Christmas Carol" by Christina Rossetti)
Shawn Colvin sings a beautiful song based on this poem by Christina Rossetti, reminding us of the bleakness of midwinter. That is exactly where the housing market seems to be now – facing its very own bleak midwinter of falling prices, rising mortgage rates and growing inventories.

The latest report of the S&P/Case-Shiller home price index shows that the price of houses fell 6.7% in October, year over year. That is the largest year-to-year decline drop since April 1991.

Think of it – if you had bought a home for $300,000 in October 2006, it is now worth about $280,000. And suppose you just got a new job and need to move? You are going to have trouble selling it at that price, too, thanks to so many foreclosed homes on the market. One realtor in Phoenix explained to a Wall Street Journal reporter that local residents are now competing with foreclosed homes selling for $50,000 to $100,000 less than other houses on the market. "The sellers now are having to reduce their prices by 20% to 30% to compete," she says. (Wall Street Journal, "Pace of Decline in Home Prices Sets a Record," 12/27/07)

At a meeting of the New York Society of Security Analysts on January 7, U.S. Treasury Secretary Hank Paulson said this about the U.S. economy: "We will likely have further indications of slower growth in the weeks and months ahead.''

Paulson and central bankers at the U.S. Federal Reserve recognize that they, too, face their own bleak financial midwinter. It's not just the mayhem brought on by the subprime mortgage debacle, the implosion of the housing market and the ensuing credit crunch; nor is it that the U.S. economy lurches toward a recession and hard times.

No, it is something bigger than that. Public opinion or social mood, as we call it here at Elliott Wave International, has shifted from positive to negative. When that happens, financial heroes find themselves falling from their pedestals onto frozen earth hard as iron.

Exhibit A - The headline of a recent article on Bloomberg: "Paulson Gets Diminishing Return with Bush, Like Powell, O'Neill" and the lead: "Henry Paulson escaped the Nixon White House with his reputation enhanced. He won't be so lucky this time around."

Exhibit B - The lead from a recent column by David Ignatius in the Washington Post:
"When airport rescue crews are worried that a damaged plane may have a crash landing, they sometimes spread the runway with foam to reduce the probability of fire on impact. That's what the Federal Reserve and other central banks are doing in pumping liquidity into severely damaged financial markets. Make no mistake: The central bankers' announcement Wednesday of a new coordinated effort to pump cash into the global financial system is a sign of their nervousness…."
Nervousness is in the air now. Investors are anxious about the markets; everyone is worried about the housing market.

Our Elliott Wave Financial Forecast December issue explains how housing starts (and stops) are intimately tied to recessions: "One key indicator of success in pre-dating economic downturns is housing starts, which are approaching the 1-million-a-month level that has preceded all recessions of the last 40 years."

And the Fed is nervous, too. So much so that it announced a credit giveaway with four other major central banks (the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank) in mid-December to try to bolster the financial system and the banks that keep it humming. The Fed reports that banks have been stepping up to its auction window each week to purchase $20 billion. Unfortunately for the banks, most of this "liquidity" isn't that liquid. It has to be paid back within 30 days, with interest of about 4.65%.

Editor's note: Elliott Wave International has agreed to make available to our readers a 2-1/2-page excerpt from Bob Prechter's Elliott Wave Theorist in which he describes exactly how the Fed's latest effort to shore up banks' balance sheets has become "High Noon for the Fed's Credibility." Click here to read the Theorist excerpt.

Just how bleak is the future for central bankers if this recently implemented plan doesn't work? Bob Prechter explains in his just-published Theorist:

"Nevertheless, this is probably the single most important central-bank pronouncement yet. But it is not significant for the reasons people think. By far most people take such pronouncements at face value, presume that what the authorities promise will happen and reason from there. But the tremendous significance of this seismic engagement of the monetary jawbone is that if this announcement fails to restore confidence, central bankers' credibility will evaporate."

"At least that's the way historians will play it. But of course, the true causality, as elucidated by socionomics, is that an evaporation of confidence will make the central bankers' plans fail. The outcome is predicated on psychology."

The "socionomics" Prechter refers to is a new social science he has introduced that studies how humans behave in groups within contexts of uncertainty – where fluctuations in social mood motivate social actions. It explains that rather than an event happening that affects social mood (for example, falling home prices make people feel bad), what really happens is that social mood changes first from positive to negative and then lousy things happen (for example, unhappy people make home prices fall). If you can adopt this point of view, then you can see that, in poetic terms, we are fast approaching a bleak midwinter for the economy and the financial markets.

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.

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Happy Trading!!

A Forex Trader’s Lifestyle

2008-03-14T00:40:00.000-07:00

Whether you are a novice Forex trader or a seasoned veteran one aspect you must always take into account is to ensure your lifestyle supports successful trading. Forex trading is no different from any other endeavor in life. Whether you are employee, employer or self-employed you must take the time and effort to ensure your environment is conducive to your success.

Take a look at your surroundings and make sure your lifestyle supports you being a successful Forex trader. Take in all the factors of success (how YOU define success) evaluate your factors to make sure your trading is:

Specific – Do you have specific trading goals and objectives? Do you have a trading plan? Ask yourself is your plan to general?

Measurable – Do you have systems in place to objectively measure your performance? If you don’t know your numbers then do you really have a trading business?

Has a Timeline – Do you have a timeline for which you are measuring your goals and objectives against?

Controllable – There are many aspects in Forex trading you can’t control, ensure that the areas your can control are firmly defined and managed with discipline.

Programmed Into Your Lifestyle – Are your Forex trading activities programmed and congruent with your lifestyle? Balance is important so make sure this passes the test!

Taken in Small Steps - This business is a marathon and not a sprint. Start off with small steps and build. The best practice trading principals do not change with account size.

Accountable – Forex trading (or any trading for that matter) can be such an isolated activity. Find ways to have others participate and hold you accountable for your goals. Make it real and measurable!

True Forex success is built through smart work and dedication. By establishing the trading lifestyle that best supports your personality will guarantee prolonged success. Remember, it is your Forex Journey. Be sure you enjoy the ride!

Happy Trading!!

The ONLY Difference Between Professional Traders and Amateurs Is ...

2008-03-14T00:39:00.002-07:00

He's a blog posting from one of my friends on mySpace, Barry. To close the year I couldn't resist posting this for thought!

****************************************************

Here's a revelation that changed my trading forever:

"Successful trading is imply a business of not making mistakes."

That has become such a cornerstone to my trading that I actually framed that saying and put it on my wall over my trading flat screens.

One of the most productive things you can do to become a profitable trader is to make a list of your most common mistakes.

Awareness is the first step.

Then watch your behavior and don't allow yourself to make those mistakes any more.
Each of us has her or his own challenges, so you must make your own list.

But to get you started, I'll expose my sins and share with you what have been my most common mistakes over the years. This is the official list of my own 7 most common mistakes. Perhaps you'll find it helpful:

1. Missing trades. When my setup occurs I need to make sure I'm aware of it and haven't been distracted by chat rooms, email, phone calls or lulled into boredom by a consolidating market.
I also need to make sure I don't hesitate to pull the trigger when I do see my setups.

2. Trading reversals that are not in extended trends and during which the internal market energy has not reversed.

3. Trading only 1 time frame without the confirmation of a longer term chart.

4. Trading while tired.

5. Over trading. Never try to make up for losses or missed trades. Never trade out of boredom. Never take any trade that doesn't match my rules 100%.

6. Not taking profits on my first exit soon enough. This is critical to adjust my cost position in the trade and therefore keep losses small.

7. Exiting my entire position too soon. I must keep at least part of my position alive until the energy of the trade has shifted so that I can ride the big moves.

Well, that's my confession.

Now you know my sins, but I imagine they're not so different than yours.

Have you committed these trading sins ... or your own unique ones?

The only solution is to REPENT!

That doesn't simply mean to say you're sorry.

It means to change your behavior.

Many people treat trading as:
an intellectual exercise.
a mathematical challenge.
or a research project.

Actually it's more about managing your behavior than anything else ... of course that's often the most difficult thing of all!

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I couldn't have said it better!

Barry can be found at: http://www.myspace.com/topdogtrading

Are you a forex trader or a gambler?

2008-03-14T00:39:00.001-07:00

Here's an article I found in my files. Given the approach of the New Year, now is an excellent time to re-enforce those good trading habits and thoughts ... enjoy!!

How many pips do you need to be wealthy? The answer may surprise you.

A very common thought and question among us forex traders. Of course this is variable in desires; however it is a good idea to put things into perspective. In reality, the following is what separates the gamblers from the traders.

About 2 years ago I sent out a similar letter that changed the outlook and the lives of many traders. While most at the time were mini-traders a simple 25 pip gain equated to a mere $25.00. "How can I live off of that?" I was repeatedly asked. It didn't take long to put this into perspective.

Determining Percent Return

Profits are one thing, percent return is another. Monthly profits may add up to look nice or not so nice, but what is the actual return? I am sure we have all heard traders say, "I made 1,000 pips last month." OK.. what was your percent return? Not only for one month, but for the life of your trading.

Return Calculation

The simple return calculation is used to determine your return on an investment after you sold it. Or in this case, the profits after closing trades over a period of time.

Here is the formula:

Net Proceeds /Cost Basis - 1 x 100

Let's run through a simple example.

Suppose you traded one standard forex contract for a profit of 200 pips. This would be a raw profit of $2,000. The cost in this case was the spread and the margin needed to secure the contract; the most common margin is 100:1. Thus it cost a temporary, $1,000 to secure this contract. We say temporary because we all know we would not trade without a stop loss, most likely the stop would have been worth about $250.

Calculation:

Net Proceeds = $2000

Cost Basis = $20 (spread) + $1,000 margin

($2,000 /$1,020 - 1) x 100 = 96% (Just under 100% in a single 30 days)

So, if you are trading with a 100:1 margin and averaging around 200 pips per month, you are close to a 100% return per month.

What about per year?

Try it, you will be amazed. Hint: Don't forget to compound.

Take Home Message

Trade conservatively, a few 25 pip trades per week (300 pips per month) on a single lot can give you a return of just under 200% a month. Build your account slowly, trade with the same level of caution, just add more lots. This is the best method, the most realistic method and the lowest stress method of enjoying the rewards of forex.

John Keister

ForexInterBank

http://www.forexinterbank.com

Why the Fed is Such a Lousy Wizard of Oz

2008-03-14T00:36:00.002-07:00

Interesting article by Susan C. Walker - check it out!

By Susan C. Walker, Elliott Wave International
September 7, 2007

Central bankers who "follow the yellow brick road" end up in Jackson Hole, Wyoming, every Labor Day weekend for their annual symposium sponsored by – who else? – the Kansas City Fed. (Who can forget Judy Garland saying to her little dog, "Toto, I've got a feeling we're not in Kansas anymore," in the 1939 movie, The Wizard of Oz?)

The Jackson Hole Resort serves as the Federal Reserve's equivalent of the Emerald City, as Fed governors and presidents meet with central bankers and economists from around the world to discuss economic issues. This year, the symposium focused on housing and monetary policy. Usually, the Fed chairman kicks off the symposium and, this year, the new chairman, Ben S. Bernanke, did the honors. He closed his speech with these words:

"The interaction of housing, housing finance, and economic activity has for years been of central importance for understanding the behavior of the economy, and it will continue to be central to our thinking as we try to anticipate economic and financial developments."

Then came the other speeches. And it seems that some of the guests in Emerald City were waiting for their chance to pull back the curtain and prove that the Wonderful Wizard of Oz isn't such a wizard after all. Bloomberg reported that "Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat, arguing they should use regulation and interest rates to prevent asset-price bubbles." Apparently, one academic paper presented at Jackson Hole graded the Fed an 'F' for the way it has handled the repercussions from the rise and fall of the housing market.

Truth be told, these folks are a little late to the table as critics of the Fed. We're glad they're joining us, but here's what they still haven't learned: It isn't because the Federal Reserve messes up by allowing credit, asset and stock bubbles to form that it's not a wizard. The Federal Reserve isn't a wizard for one particular reason that it doesn't want anybody to know – and that is that the Fed doesn't lead the financial markets, it follows them.

People everywhere want to believe in the Fed's wizardry. But all this talk about how the Fed will be able to help the U.S. economy and hold up the markets by cutting rates now is as much hooey as the Wizard of Oz promising Dorothy, the Scarecrow, the Tin Man and the Cowardly Lion that he could give them what they wanted: a return to Kansas, a brain, a heart, and courage. Because when the Fed does do something, it always comes after the markets have already made their moves.

If you don't believe it, you should look at one chart from the most recent Elliott Wave Financial Forecast. It compares the movements in the Fed Funds rate with the movements of the 3-month U.S. Treasury Bill Yield. What does it reveal? That the Fed has followed the T-Bill yield up and down every step of the way since 2000. And the interesting question becomes this: Since the T-bill yield has dropped nearly two points since February, how soon will the Fed cut its rate to follow the market's lead this time?

[Editor's note: You can see this chart and read the Special Section it appears in by accessing the free report, The Unwonderful Wizardry of the Fed.]

We've got our own brains, heart and courage here at Elliott Wave International, and we've used them to explain over and over again that putting faith in the Fed to turn around the markets and the economy is blind faith indeed.

"This blind faith in the Fed's power to hold up the economy and stocks epitomizes the following definition of magic offered by Teller of the illusionist and comedy team of Penn and Teller: a 'theatrical linking of a cause with an effect that has no basis in physical reality, but that – in our hearts – ought to be.'" [September 2007, The Elliott Wave Financial Forecast]

Because, you see, what makes the markets move has less to do with what the unwizardly Fed does and more with changes in the mass psychology of all the people investing in those markets. The Elliott Wave Principle describes how bullish and bearish trends in the financial markets reflect changes in social mood, from positive to negative and back again. To extend the metaphor: The Fed can't affect social mood anymore than the Wonderful Wizard of Oz could change the direction of the wind that brought his hot air balloon to the Land of Oz in the first place.

As our EWI analysts write, "With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point. The market, not the Fed, sets rates." Being able to understand this information puts you one step closer to clicking your ruby red shoes together and whispering those magic words: "There's no place like home." Once you land back in Kansas, your eyes will open, and you will see that an unwarranted faith in the Fed was just a bad dream.

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.

Forex Journey

FX Trade Central

How To Recognize a Financial Mania When You're Smack Dab in the Middle of One

2008-03-14T00:36:00.001-07:00

By Susan C. Walker, Elliott Wave International
November 12, 2007

When you're caught in the middle of a bad storm, you don't really care whether it's a tropical depression or a full-strength hurricane. You just know you're hanging on for dear life. The same idea applies to financial markets. When a market is trending up strongly, it's hard to tell whether it's just a bull market or a more dangerous financial mania.

The recent tremendous ride up for global and U.S. financial markets, including the Dow, looks and feels more like a mania than a mere bull, says Elliott Wave International analyst Peter Kendall. This distinction is important to recognize in the rising stage, because manias always result in a crash that takes them back beneath their starting point.

Kendall recently published his research into current financial manias throughout the world in SFO (Stocks, Futures and Options) magazine. The article, titled "Financial Manias and the Trade of a Lifetime," suggests an even more stunning finish for the current manias: "The speed and global scope of the unfolding credit crisis suggest that most of the fast-rising markets of the last decade will crash in unison," he writes.

----------------------------------------------------------------

Editor's note: Elliott Wave International invites you to read the full five-page article with charts from the October 2007 SFO magazine by Elliott Wave International's Pete Kendall called "Financial Manias and the Trade of a Lifetime."

---------------------------------------------------------------

As co-editor of The Elliott Wave Financial Forecast, Kendall searches for trends that help traders to move in and out of markets. By comparing other historic manias with the impressive rise of the DJIA since the late 1970s, he focuses on the skyscraper pattern that they all have in common. The four historical manias are the Dutch Tulip mania of the 1630s, the South Sea bubble of 1720, the U.S. stock crash of 1921-1932 and the dot.com bust of the 1990s and early 2000s. Once you can see the similarities, you will be better prepared to face the music when the crash comes. As Kendall writes, "once the belief that the markets will always rise becomes widespread, it actually signals the start of a price swing that tends to be a career-breaker for any trader who tries to oppose it."

He also discusses current manias, such as the Nikkei, which has yet to return to its start after a manic rise to its all-time high in December 1989, and the Dow, which reversed from its rise in 2000 but made a U-turn in 2002. The starting point for the Dow's mania as shown in the chart included in the article is at the 1000 level.

Kendall, who is also writing a book about financial manias, titled The Mania Chronicles, describes five telltale signs that help an investor to tell the difference between a regular bull market and a mania. It's a mania if:

1. There is no upside resistance, and rising prices seem to be perpetual.
2. Everyone in the market looks like an expert.
3. There is a flight from quality investments to riskier investments.
4. As financial bubbles pop in one area, they bubble up in others.
5. The crash after the peak takes back all the gains the mania made.

No. 5 can be viewed only with hindsight. But the first four signs provide essential clues to what's shaping up in the markets.

"By studying past mania experiences, traders can gain valuable insight into the collective emotions that drive their markets," writes Kendall. "It's possible to make significant money in the advancing stages of a mania with no knowledge of its existence. But there is nothing like recognizing a mania for what it is in real time to help a trader keep those gains and deal with the relentless crash after it peaks."

In the last part of the SFO article, he asks the key question, Are we at the peak yet? Find out his answer by reading the whole article for yourself.

Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.

Elliott Wave Free Week

2008-03-14T00:35:00.000-07:00

Just a reminder:

It's FREE Week at ElliottWave.com!!

Click here and get your FREE content

Free Week End August 29.

Forex Journey Interview on Forex Education

2008-03-14T00:34:00.001-07:00

Hey Team!

Click here to hear a recent interview I did with Interviews with Prosperity on the importance of Forex Education.

Happy Trading!!

Forex Education Tip – 5 Steps to Successful Forex Trading

2008-03-14T00:32:00.002-07:00

Close to 95% of all Forex traders will lose money. We're not just talking about novices, either. Whether you trade Forex for a living, as a hobby or just for fun, odds are against your success. That's a simply astonishing fact. However, the remaining 5% of Forex traders somehow manage to break even and there are those lucky few that actually make money in the currency market – consistently!

Like the TV show says … “How’d they do that, anyway?”

That's the million dollar questions, isn’t it? Countless books, seminars and expos have been hosted to answer this very question. That sad fact is that thousands of books have been written and countless seminars and interviews have been conducted in an attempt to answer the magic questions. The reality of the situation is that there is no magic formula; no one single Holy Grail of Forex trading.

So what do the successful traders do that the rest of us have simple not comprehended. They have mastered a process of winning where they combine and customize several factor to produce consistent results. They have mastered the Process of Trading.

The Process of Trading is:

Strategy > Money Management > Self-Mastery

Here are some simple Forex Education tips to help you master the process of forex trading:

Forex Success Tip #1 – You’ve Got To Have a Plan

You must have a written business plan that will detail all aspects of your trading. When are you going to trade, how much to risk, strategies for entries and exits are just o name a few. To become a consistent (profitable) Forex trader you have to plan your trade sand trade your plan.

Simplicity rules! Don’t make this plan too complicated. One sheet of paper for you mission statement and another for your trading plan should suffice. Anything more is probably too complicated.

Forex Success Tip #2 – Focus on Your Personal Psychology

Knowing yourself will allow you to master the discipline necessary to execute high quality trades with solid money management techniques. Lack of discipline is fatal in Forex trading. Go on a personal journey to identify you attitudes towards risk and money. Get intimate with your strengths and weaknesses as a trader and build in to your trading plan strategies to minimize those weaknesses and maximize your strengths.

Different personalities lend to different trading styles. Get familiar with all the different styles and over time you will begin to gravitate towards one particular style. Don’t fight the urge like I did. I insisted I was a day trader, but had only limited results. I found my winning percentages were much higher when I entered swing trades. Guess what’s my bread and butter strategy now!

Forex Success Tip #3 – Be Realistic About Your Expectations

This is a hard one, I know! I am on the internet every day and the amount of advertising is staggering. Brokers are offering free education (fox in the hen house if you ask me), forums of all different trading styles and points of view. Gurus pushing their system as “the one” that will make you the big bucks. How do you get through all that noise?

Let me tell you loud and clear right now – everyone is right and everyone is wrong. You have to make a personal commitment to become a successful trader, find a trading style that works for you and expect a slow and steady approach to wealth building through Forex.

What works for me may not work for you. Expect to go through an exploratory period where you are learning and at the same time exploring yourself as a trader. Keep an open mind and don’t pay attention to all the noise out there.

Forex Success Tip #4 – Be Patient

Rome was not built in a day and neither will your trading account. In fact, I tell all of my students that while they are studying to become successful Forex traders they should not look solely at their account balance as an indication of success or failure.

By tracking and increasing your percentage of high quality trades you execute is a far better barometer of your progress than your account balance. Cause and effect rule here. Over time when you increase your probabilities through the execution of high quality trades your account balance will respond accordingly.

Keep the focus on the process and with time your results will blow your mind.

Success Tip #5 - Money Management Is Top Priority

I would rather have a shaky strategy and excellent money management techniques than the other way around. This topic warrants its own blog post to do it justice. Limited your exposure (read “risk”) allows for you to stay in the game and allow the laws of probability to work.

Let’s take a casino for an example. They need gamblers to frequent their slot machines to make money. Why? They have a game that has a greater than 50% chance of making money for the house. The more people that play the slots, the greater the casino’s profits.

The casino controls risk by payout tables (always favoring the house!) and increases their probabilities by keeping gamblers at the slot machines (read “free drinks”). As a trader you must limit your risk by committing only 1% - 3% of available capital to a single trade. When you execute enough trades with a high probability strategy you too can clean up like the casinos – but only by staying in the game long term.

In conclusion, Forex trading is not easy. It’s hard work and will test the limits of your patience and perseverance. If anyone tells you otherwise .., buyers beware! It can be a very rewarding and profitable venture if done correctly. In the end it is a profession that requires a learning curve and practical experience, no different than an airline pilot or engineer. Understanding how to approach and learn this game will allow you to reap all the benefits advertised. It is your Forex Education that you will master the Process of Forex Trading.

Happy Trading!!

Forex Education Tip - Stops

2008-03-14T00:32:00.001-07:00

Let me just give you a quick tip about setting stop losses.

I once took a class where I was instructucted to place my stop loss 30 pips below my entry. Why 30 pips I asked? I was told it was an "acceptable" risk. Based on what? I see a lot ot traders basing their risk management strategy on some pre-defined pip value risk without any consideration for support and resistance.

Don't do this!

Like I say - trading Forex is a process and setting your stops is a key component. Your stop should be placed near support and/or resistance based on the charts and not some pre-defined pip value. Caution: stay away from the herd!

Simply:

1. Locate support and/or resistance for your stop
2. Calculate your target to determine a reward-to-risk ratio
3. Determine whether you can afford the trade
4. If all systems are a go then pull the trigger

Setting a pre-defined stop makes no sense if all you can guarantee is to get stop out of your trade and have it eventually go in your direction. Let the market tell you where to protect your trade and when to take profits. This is why 2 traders can look at the same charts, establish the same trade and one trader pull the trigger an the other traders pass.

Follow YOUR trading plan and begin to take your trading to new heights. Your Forex Education is the path to true Forex profits!

Happy Trading!!

Is Paid Forex Education Worth It?

2008-03-14T00:31:00.002-07:00

I am scanning the internet looking for information about how I can be a better trader just like most people out there. I am on a quest looking for each and every golden nugget of information out there on the web. I have alerts set up so Google can email every keyword topic of choice.
I have been getting fired up recently about the amount of just plain bad Forex advice slewed across the web. It is definitely a “buyers beware” market and every word of advice (including mine) should be taken with a grain of salt. Why? Because everything I say and write is based entirely on my own experiences.

One of the topics gaining some momentum is the fact that everyone pitching a Forex product is not a trader, but a marketer and if they were a trader they would be trading and not trying to sell you something.

What a bunch of BS!

Yes, I do believe all the information that one needs to trade the Forex profitably is available free on the internet. I challenge anyone new to Forex to assemble the information, study and execute without any assistance. I would imagine every trader out there has gathered free information and put it to use, but the truly valuable information often is not free!

Example – I read Steve Nison’s books and DVD’s (highly recommended by the way) to gain the necessary insight into candlestick charting. I also paid a couple of hundred of dollars to attend a live seminar. During that seminar Steve Nison made one comment that allowed all of my previous work in candlesticks to click and take my trading to the next level! Was it worth it? Hell yah! That one comment was the only peice of new information I gathered, however it has paid for the seminar 100 times over. Not only that, the opportunity to network with other traders introduced new ideas and approaches that I hadn't thought of previously.

In the end it's a personal decision. After all it's your money. Trading is a profession just being a pilot, a doctor or an engineer. Each requires dedicated training, personal development and instruction to gain proficiency. You would never go to a dentist that learned how to fill cavities on the internet (this information is available there too!), so treat your Forex account the same way.

I am calling all you freebie seekers out! Stop being cheap. Your Forex Education is an investment and not a cost. Cutting corners will only cost you more money in the long run.

Happy Trading!!

Forex Education Tips - Overcoming Fear

2008-03-14T00:31:00.001-07:00

Have you ever been in a situation where you have evaluated the market, saw your strategy set-up perfectly and then just couldn’t pull the trigger? You become paralyzed, unable to move even though you know your high probability set-up has just triggered.

This fear is very real for many traders and very detrimental to your account. Fear is a powerful emotion, distorting fact from fiction and often creating an emotional response. Many experts tell you to trade without emotion, but is that really practical? We are indeed human. Remember the basis for the reaction is real, but the fear usually is not.

Fear blocks your ability to execute high probability trades and we must find strategies to manage our fear. With time comes experience and for traders it is the ultimate super hero for fear.

In the meantime, if you are struggling with fear-based execution challenges here are some simple tips to get you over the hump.

Embrace the Emotion

Acknowledge your emotions. If you find yourself analyzing a trade to the point of paralysis don’t try to ignore the emotions. Separate yourself from this river of negativity. Visualize yourself on the river bank as these torrents of emotions are flowing by. You will gain great awareness to the triggers and learn a lot about who you are as a trader.

Separate Fear from Fact

If you fear pulling the trigger because of loss (what if I am wrong?), that will stop you from enjoying the profits the market may make available to you at any given time. Don’t avoid the action that might cause the loss, but re-frame the problem as fear itself. You have evaluated the market, figured out your reward –to-risk ration and accepted your potential for loss through your stop-loss and money management plan. At this point loss is not the obstacle – fear is. There is no such thing as failure, only feedback and that will guide you to consistent and profitable trading.

Re-Think the Consequences

If your mind is off to the races with all sorts of possibilities what’s the worst that can happen if Murphy’s Law gets enacted during your trade? You have already addressed this in your trading plan. Plan your trade and trade your plan. Again fear is trumped and the only way it can be realized is if you didn’t follow your plan. Sticking to your plan is the clearest way to distinguish between a losing trade, which is just a part of business, and a bad trade which is a career killer!

Act in Spite of Fear

Feel the fear and do it anyway. Return to your mission statement or your “why?” statement. The reasons you trading should be big enough to overcome any possible obstacle your fear emotion can conjure up. Acknowledge the fear and do it anyway. You may not have a winning trade, but you will have executed your plan and over time probability will pay you back.

What is all comes down to is the intangibles of trading. Why do I and so many others drive home discipline-based Forex Education and Training approaches. You will never get rid of fear, but with practice you can turn it into a manageable obstacle and deploy it to your advantage.

Happy Trading!!

Forex Education - Fully Present

2008-03-14T00:30:00.003-07:00

This means rejecting thinking that doesn’t support your current trading objectives, including rejecting non-trading related mental chatter (what’s for dinner, balancing your check book, who’s on American Idol tonight, whatever). Your goal is simple -- to zero in on the trading task in front of you. Enter your personal trading zone. Deny all incoming calls. Don’t check your email and please do not even think about logging into your Instant Messenger account. You’ve got to be in a place and time where you can trade without being disturbed.

Ask yourself – Where Am I? The answer is - Here

Ask yourself – What Time Is it? The answer is – Now

When you become fully present on the task of trading, you are able to achieve peak performance and gain an edge on the other traders in the market at that moment. How many times have you often have you been trading, felt in rhythm with the market, and then you become distracted, surfed the web (OK, you busted me!), checked your email and all of a sudden, your trade fell apart because you overlooked an indicator or failed to see what economic releases where due out during your trading session.

Trading in the here and now is not only powerful, it is extremely profitable! When you can direct your focus on your trading task without distractions you become invigorated and infused with the energy that comes from requiring yourself to be fully present when trading, you’ll find that your trading all of a sudden becomes a little easier and enjoyable. When you reach this state, stop briefly to observe it and how you feel so that you can summon this mental state more easily in the future. And journal it so you can recall all the factors that contributed to your success. That way you’ll be able to set yourself up in a repeatable, successful trading environment. Your journal will become the greatest trading tool you'll ever own!

To not become fully present when trading is to short-change your Forex Education AND you’re your account balance … it’s like not accepting the greatness within your at the time the market provides you with your pip rewards.

Which mental time zones do you what to be in for your trading? There are only three: past (FEAR), future (ANXIETY) and HERE. It’s been said that most traders spend only 1% of their time in the present. Could you imagine what kind of profits your mind can produce when you become fully present when trading?

Carpe Diem and Happy Trading!!

We're #1

2008-03-14T00:30:00.001-07:00

Well, as I return to my desk from a break to welcome the new addition to my family I was pleasantly surprised to received notification that Forex Journey has been ranked as the #1 Forex Blog by CurrencyTrading.Net on their “Top 25 Forex Bloggers.

Check it out ==> http://www.currencytrading.net/2007/top-25-forex-bloggers

Thanks everyone for inspiring me to follow my passion!

Happy Trading!!

Forex Education Mind Set

2008-03-14T00:29:00.002-07:00

Here's a forex education blog post I like and thought you might too! You can find the article at:
http://financial-blogs.blogspot.com/2007/07/forex-trading-do-you-have-what-it-takes.html

or below:

Forex Trading - Do You Have What It Takes?

There are some facts that you simply must accept to have a fair chance to be successful at Forex trading. Let's have a look at what these facts are and if you can succeed in the worlds most exciting investment environment.

Trading markets are not scientific

The thought of approaching Forex trading by applying science is appealing. However, Scientific theories dont and never will work, because humans determine the market prices, and doing so, they dont consider scientific criteria.

Most people would prefer to be able to make money without risking anything. Many vendors try to gain from this fact, offering trading systems which are described as a possibility to trade with low risk and make a regular income. The fact you must accept is:

If the reward is big, the risk will be mirrored. Pure and simple, risk and reward walks hand in hand. If you can't accept taking risks, you should look for another small business idea.

So far it has been kind of negative, lets have a look at the bright side

To be successful at Forex trading will not require hard work! Work smart not hard is a perfect expression here, meaning that you don't need to learn just for the sake of learning. You'll only need to learn one system/strategy. It wont take long to learn because...

Simple straight forward systems work best. A simple system in Forex trading will outperform a complicated system, short term and long term. Why is that a indisputable fact?
Because it will always be easier to implement a simple system in a complexed market. A complexed system with a lot of parameters, makes it much harder to find the right trading opportunities. The most reliable currency trading systems all tend to be simple.

You can learn everything about currency trading

If thats a fact, why do so many Forex traders lose? The answer is the lack of mental discipline.
Currency trading is more about mindset rather than just a method. If you dont maintain discipline to follow your method, the method isn't there anymore. The best way to gain the necessary discipline is to develop your own method. You'll be confident in your trading because of full understanding of the method.

If you are able to accept and take calculated risks at the right time, Forex trading can be very profitable, due to the leverage at your disposal. Forex trading is not rocket science. Its a lot simpler than you may believe, and thanks to the Internet it's available for everyone.

The key points:
Education
Learn to accept the risks
Rely on yourself
Trading discipline

Forex Education Success Formula

2008-03-14T00:29:00.001-07:00

You read about the risk trading the Forex market every day. I talk to many successful traders and investors about the Forex market and it is mind blowing the fear this market produces amongst the conservative investors and daredevil attitude of the aggressive traders. Yes, it is a fact that 95% of traders lose money in Forex. I was taught that if you want a better answer then you have got to ask a better question and my question is why?

The answer is rather simple – most traders seek the path of least resistance and that will inevitably lead to failure. They failed because they didn’t take the time to gain a proper understanding and cheated their Forex Education!

Look, the market is neither for you nor against you. It makes profit opportunity equally available as the chance to take a loss. It will take money from you no matter your age, sex, experience or effort you put into your trading. The Forex market only rewards those who are correct and nothing else. It’s the old saying – work smart and not hard.

That leads to the next question; how can I be correct and smart? The answer is simple – through Forex Education. I have put together my Success Formula for trading the Forex market.

1. Strategy – it’s not a one size fits all world. Different strategies play to us based on our individual trading personalities. Understanding the rules and tools are critical when applying them to the market. This comes with time and experience. Don’t short change your learning curve. It will eventually lead you to profit.

2. Money Management – planning your risk will keep you in the game as you climb the learning curve as well as exploding your account once you’ve gained the experience and knowledge. Mastering this skill is not optional!

3. Self-Mastery - is having the discipline and emotional control to manage your strategy and money management plan. Knowing yourself will be skill that catapults you in to the elite 5%. It takes self-awareness training, accepting full responsibility for all of your trading actions and the ability to go beyond trading and finding your true personality. Talk to any successful trader and you will quickly see the control they exert not only in their trading, but in their lives in general.

Learning to trade Forex isn’t rocket science. Keeping things simple and working smarter will lead you to success in this market and the path forward can only b accomplished by investing in your Forex Education.

Happy Trading!!

Forex Education - No Pain, No Gain

2008-03-14T00:28:00.004-07:00

Forex trading breakthroughs have a lot to do with your ability to get comfortable with being uncomfortable. Success usually comes from staying in the here and now, as well as accepting the fact that the market literally can do anything at anytime.

Many of your actions now may seem frustrating - such as designing a trading plan, sticking to just a few currency pairs, learning the intricacies of a strategy. It can seem downright overwhelming too. Just remember that each step you take in the process is adding value to your eventual trading success.

Why is it that so many people are always seeking the easy way out? I guarantee the amount of time searching will be less than just digging in and climbing that learning curve as fast as possible. Just imagine where you're going to be a year from now with a little bit of effort and determination!

Here are some thoughts to get you through that learning curve at lightning speed:

1. Hard Work Now Will Pay Off Later

All the work you do now mastering the process of trading through Forex education will pay off. Will it pay off today or tomorrow? Probably not, however, the small things done consistently in the right places will pay huge dividends later.

2. Every Experience Is A Lesson

Learn from both your mistakes and your success equally. As the question - what lesson am I meant to learn from this and journal it!

3. Focus On The Positive

Losing is a part of trading. Except it and keep your self-talk 100% positive. You will find that at the end of your Forex Journey you were your own worst enemy.

4. Choose The Difficult Action Over The Easy

Doing this will make you a stronger person, not just as a trader. You will find that your characteristics follow you in trading. When you grow as a person you will enhance your ability as a trader. Ask yourself - what action would a profitable trader take and then do it!

Remember this when you get frustrated by learning a new trading technique or in transitioning from demo to live trading -- if you are uncomfortable you're growing as a trader -- and take comfort in being uncomfortable.

Happy Trading!!

Forex Education Mastering The Forex Market

2008-03-14T00:28:00.003-07:00

Forex Education is always king. That being said, I thought this was pretty interesting...

Investing in the forex, currency market even with small capital is very risky advanture. Before taking on the forex trading market, it's important to be armed with a good understanding of the market itself. This is what makes a good free forex education resource, invaluable to both new and veteran forex traders.

The forex, or Foreign Exchange, market is the largest financial exchange market in the world. Every day, more than 1.8 trillion dollars are traded on the forex market. In the past, it was often difficult for smaller traders to take part in this huge money market, due to a lack of contacts and resources. But that situation has changed. More and more, individuals and smaller banks and companies have the opportunity to invest in the forex market, particularly via the internet, making currency trading an exciting and lucrative enterprise for individual traders as much as for the banking industry. However, it's important to keep in mind that currency trading of even small amounts and modest investments can be risky.

Before taking on the forex trading market, it's important to be armed with a good understanding of the market itself, along with an overview of current market trends and risks. This is what makes a good free forex education resource, like free-forex-education dot com, invaluable to both new and veteran forex traders.

At free-forex-education website, established forex traders as well as those with a burgeoning interest in currency trading can learn everything there is to know about the market. Learn what world currencies are making the most money. Know what the risks are, and when and how to make the most money on a trade. Acquire all the knowledge you need in order to make anywhere from a dollar to a million on this highly liquid market, without leaving the comfort of your computer.

Along with using resources available at free forex education sites like Free-forex-education dot com, it's important to as much research as possible before doing any major forex trading. For a free forex ebook and various information on forex trading please visit. This amazing free resource will provide you with all the information you need to get started trading today.

About Author:Joe Karakas is the owner of the forex online resource found at http://www.free-forex-education.com . Our site help with informations and resources to learn to trade forex online. Check out the website for free forex education more details. Please note that our site is just for information purposes and not an advice whatsoever!Article

Source: http://www.BharatBhasha.comArticle Url: http://www.bharatbhasha.com/finance-and-business.php/62780

Remember the free stuff is a good start, but a Forex Coach will accelerate the process.

Happy Trading!!