Jun 3 2010
The trading strategy we are going to look at in this article is all about Forex trading made simple - the strategy is easy to understand, simple to use and can make triple digit gains in around 30 minutes a day. Despite its simplicity, the pro traders use it, novices though ignore this great trading method but don't let that bother you, most novice traders lose money.
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The biggest mistake you can make in Forex trading is to think you can predict Forex prices in advance. Prediction is simply translated in Forex trading as, hoping nor guessing and if you try it, get ready to lose your money. The old saying goes - " A trend in motion is more likely to continue than reverse" and its true!
The way to make money in Forex is to trade the reality of price change and trade trends as they get in motion - You don't predict anything, you simply let the market tell you when to trade.
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So how does every big bullish FX trend start and continue?
Most traders have no idea but they all start the same way by breaking resistance and making a new chart high and furthermore, as the trend progresses, breakouts continue. So if you want to get in on these big trends, simply buy breakouts to new chart highs on a Forex chart.
You do miss the exact turn as this occurs and that's why novice traders don't use this method but at the end of the day, no one can predict the trend change in advance so why bother? Simply, focus on what could be ahead of you in terms of profit, rather than focus on the little bit of the move you have missed.
When you use a breakout trading strategy, be selective in the breakouts you choose to trade. In general terms the more tests of a level before the break the better the odds and the wider they are spaced apart on an FX chart, in terms of time the better the odds. I like to trade at least 6 tests of a level before the break and like at least two of these tests, to be a month apart or more in terms of time.
When the break occurs - execute your trading signal and place your stop below the resistance level that has broken which will not act as support. You can use simple charts and watch and trade breaks but a good idea is to add a few confirming momentum oscillators to confirm price change is accelerating as the break occurs, because this increases the odds of success even more.
Many of the world's top traders use breakout trading methodology and you should to, because it is easy to understand, easy to do and best of all, it can make you huge profits in around 30 minutes a day. Breakout trading is Forex trading made simple and anyone can do it so try it for yourself and see.
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Jun 3 2010
Automated forex signals services provide online forecasts of the forex market through subscription websites or emails. The owners of these forex services claim to have developed a sophisticated algorithm that calculates signals for entry or exit based on analysis of chart data. The promise to you, is a fast, guaranteed way for anyone to make money in the forex market - but only if you subscribe to their service! I will show you why almost all of these services are scams, and how the scam works.
Before I go further, I want to point out that there are legitimate algorithms to find forex trading signals. But successful forex trading systems usually generate a small margin of profit. For example, a real, successful automated forex system may provide the correct prediction only 55% of the time. This is enough to make a profit over the long run, although small-time investors face the risk of Gambler's Ruin, which I will discuss in a future article.
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There is a very simple scam, though, to create the illusion of a forex signals service with an incredible success rate, and many online forex forecast services employ this method. The scam works as follows. Say that a company advertises an automated forex trading signal service with a high success rate. 1000 people sign up to try it. The forex services send signals to 500 subscribers to go long on EUR/JPY and 500 subscribers to go short on EUR/JPY. Let's assume that the forex market in fact goes long for EUR/JPY. Now 500 people are happy, and 500 people are mad. The 500 mad people may quit the service (or they may give it a try for longer).
Next month, the automated forex service takes the 500 happy people, and signals 250 to go long on EUR/USD and 250 to go short on EUR/USD. Again, let's assume that the forex market goes long. Now, 250 are happy, and 250 are mad. Of course, the 250 mad people may still stick around, but the end result is, that the forex service has made 2 months worth of subscriptions from 500 people just by using the "flip-the-coin" algorithm. I would say that is a scam, wouldn't you?
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New traders sign up for the forex signals service each month, and not everyone quits after a poor signal, so the scam can continue indefinitely, profiting the forex trading service, and not you.
To summarize, be very wary of forex services promising to send you automatic trading signals. You are really no better off than gambling your money away. Some people will profit from these forex scams, purely through luck, while others will lose money. Be sure to research any forex product before you make a purchase.
Instead of hoping someone will give you a hands-free, mind-free way of making money in the forex market, the best investment is learning yourself how the forex market works. You will not be scammed if you understand and test the forex market yourself.
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Jun 3 2010
As the Forex global currency trading system has the highest volatility of any investment market today, it's absolutely vital that you get access to as many Forex global trading tips to fast track your Forex education and to lock in faster Forex profits. This article will reveal free Forex global trading tips for the volatile Forex currency trading market.
The beauty of the internet is that Forex global traders can now go online pretty much anywhere in the world at any time of day or night and get access to free Forex trading tips. With the right Forex currency trading system, Forex traders can reap large profits with Forex global trading.
There are some qualities that a Forex trader should have to become the best Forex trader he or she can be and to lock in faster Forex profits.
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It is absolutely vital that you use proven strategies when buying or selling in the Forex global currency trading system. The best way of achieving this is by consulting reputable Forex charts and graphs that are known to be proven indicators and pivot points to follow when investing in Forex global trading.
Contrary to stock trading, as the global Forex market trades in every currency there is never a threat of insider trading. What separates a successful Forex trader and a consistent Forex loser is the level of their Forex trading education and the fundamentals that they follow in their individual Forex currency trading system.
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The more that you can educate yourself about the currencies you are trading in the global Forex market the more accurately you will be able to predict the way these currencies will move and the more profits you will be able to reap.
The most savvy Forex traders understand that the best Forex currency trading system is the one that they have perfected and stuck to, with no exceptions. By creating your very own individual Forex currency trading system and sticking to it you will be virtually able to put your Forex global trades on autopilot as you simply follow the Forex currency trading system that you have already created and that has been proven to work.
Margin trading is a very easy way for Forex beginners to lose their money fast. Don't even venture into this Forex currency trading system until you have perfected your own strategies and know exactly what you are doing.
Forex currency trading is not risk free. It is critical that you bear in mind the volatility of the Forex global currency market in combination with what is going on politically and economically in many countries around the world.
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Jun 3 2010
On January 13th, 2010 the Commodity Futures Trading Commission ("CFTC") issued a press release regarding its latest rule proposal for the regulation of retail forex transactions. The proposal seeks to adopt a new regulatory scheme to implement the CFTC Reauthorization Act of 2008 and limit leverage to 10:1.
This has been met with outrage from all quarters. Some are predicting the end of the retail forex industry (in the USA at least), others describe it as lunacy. If the stats are anything to go by, most retail forex traders are united in their opposition to the proposed CFTC lowering of leverage to 10:1 from 100:1 (which more or less supports the statistics -and my contention- that 90% of retail forex traders don't know what they are doing most of the time).
My reaction to all the above? Yawn.
Listen fellow traders, let me tell you why CFTC is going to "win" and why it doesn't matter.
It may not be 10:1 but the regulator will lower it. Remember November 2009 when our friendly
forex broker was told to reduce leverage from 200:1 to 100:1. (Remember also what that meant? - how you now had the right to wipe out your account in six weeks in instead of the three weeks it was usually taking you). Did any protesting help then? It went from 200:1 to 100:1 (for major pairs) and 50:1 (for minor pairs). Did protesting help when they enforced FIFO execution thereby snuffing out same currency hedging? It is going to happen, nothing you and I can do about it.
Frankly, who cares, I don't. And you shouldn't either.
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When everything goes belly-up in the markets, as it has of late, regulators need to do something or they'll lose their jobs. The fact that the forex retail trader had nothing to do with sub-prime loans is irrelevant. Someone (the regulator) has to be seen to be doing something (lowering leverage in the retail forex industry) - as though that has anything to do with Bear Stearns and it's ultimate bear run (brought on by 30:1 leverage) or the embarrassment of 'Government' Sachs.
Regulators are there to regulate, and they will regulate, and if you care to cast your mind back over the last 10 years of the forex industry, it is pretty much unrecognisable from what it was. Since an initial bout of regulation hit retail forex in 2002 with the "Futures Modernization Act" (in the US) the regulator has pushed through every regulation proposal he has announced for discussion.
I've got a little conspiracy theory I am going to share with you soon (rubbing his hands). There are a lot of people in the futures industry whose business has been hurt by the new forex kids on the block. It is actually a far more interesting story, but the most interesting for me with this whole brouhaha remains why people think it matters so much.
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Jun 3 2010
Any Forex trading tutorial has to start with some history and background on the currency trading market. Here is a short course on billions of dollars and millions of daily trades. That's volume of the foreign exchange currency market, or Forex for short. Newcomers are often amazed at how huge this trading market is, and how many trades are executed in a window of 5-10 minutes at selected times each 24 hour day. It isn't like the frantic picture we have in our minds of wildly strenuous trading activity on the floor. Most of the work in Forex trading is done in advance. Programs are tweaked in response to world events, financial news, other trading markets and global trade indicators. Unlike our mental picture of a trading floor in a busy exchange, this trillion dollar currency trading process can be like watching grass grow. There are certain timing windows when trades are best executed. Traders prepare themselves in advance and either move positions or hold during these windows. Some traders rely on information gathering and intuition, while others have completely automated systems. A Forex trading tutorial would explain to newcomers why automated systems work well.
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Unlike the stock market, Forex doesn't not rely on the trading of tangible products. Instead, this system operates by buying, selling, and trading currencies of different areas and economies around the globe. Remembering the different time zones, currency trading is essentially a six day a week, 24 hour a day activity. Additionally, there is no governing body to regulate the Forex market. This is just about the only real free enterprise system left in the world. No regulatory body means no one is tinkering with exchange rates or manipulating the system to corner the market. Forex traders depend on each other to make money, and there is a certain level of respect and trust among traders. When someone or an institution gets out of line, the word gets around fast and no one will do business with them, which cuts off their ability to make money. It's a self governing market, and...surprise...it works! I may sound a little jaded concerning regulation, but I've seen it carried to extremes that defeat the purpose of a free market system. There are many Forex trading tutorial programs that explain the lack of regulation and why it works.
Foreign currency exchange works on the concept of floating currencies that are tied to intangibles. This is easy to explain. Free floating currencies are not backed by something like gold or silver or some other commodity that retains a certain value worldwide. Here's a quick Forex trading tutorial history lesson. Before 1971, a Forex market wouldn't have worked because of something called the Bretton Woods agreement, which mandated that all economies involved would try to hold the value of their currency close to the US dollar value. In 1971, the signers of the Bretton Woods agreement bailed out. Why? Because the US was going broke trying to maintain a war time economy and printing more paper currency than could be backed by their gold, which was leading to runaway inflation. By the year 1976, almost all major world players had left the BW system and allowed their currencies to run free floating. This meant that there could be huge discrepancies in other countries currency value, depending on how individual economies were faring.
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Essentially, this is some of the Forex trading tutorial background that explains how the currency markets work and why you can make money trading currencies. Because currencies fluctuate independently, it feasible to make a profit from the changes in a currency value. Everything in the Forex currency market is dependent on the exchange rate of various currencies. Predicting the fluctuations and learning when to buy, hold and sell are at the heart of most Forex trading tutorial programs. Once you've gotten a taste of how fascinating and profitable currency exchange can be, you'll want to find our more about how you can cash in on this lucrative area.
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