forex 2 you

Technical Analysis In Forex - The Good And The Bad

2007-09-26T01:11:00.001-07:00

by TJ Chiam

Technical analysis is a method of forecasting future price movements and market trends primarily through the use of charts. Technical analysis is only concerned with how the market has actually behaved, rather than what should happen, and takes into account the price of instruments and the volume of trading. Charts are then created from that historical data and used as a primary tool for analysis. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.

Three Principles of Technical Analysis:

Market action discounts everything! This means that the actual price has already been determined by every bit of information that is known to the market. Hence, fundamental issues such as inflation, interest rates, public sentiment, market supply and demand, political factors will not affect the market prices.

Prices move in trends Technical analysts believe that prices have to follow a trend, whether upwards, downwards or sideways. The Dow Theory of market price action states that the market cannot be manipulated. Once a pattern is created, there is a high probability of it producing an expected result. There are also recognized patterns that repeat themselves on a consistent basis.

History repeats itself Technical analysts believe that investors collectively repeat the patterns of investors before them. That is to say, human psychology changes little over time. Since patterns have worked well in the past, it is assumed that they will continue to work well into the future. Because investor behavior repeats itself so often, it is possible to chart recognizable market patterns for analysis.

Disadvantages of Technical Analysis

- Critics of technical analysis include many well know fundamental analysts. Warren Buffet once said, "If past history was all there was to the game, the richest people would be librarians."
- The critics also claim that signals about the changing of a trend appear too late, often after the change had already taken place. Therefore, traders who rely on technical analysis will react too late.
- Technical analysis made in short time intervals may be exposed to noise, and this can result in erroneous reading of market trending.
- The use of most patterns has been widely publicized in the last several years. Many retail traders are quite familiar with these patterns and often act on them like a herd mentality. This creates a self-fulfilling prophecy, as waves of buying or selling are created in response to bullish or bearish patterns.

Advantages of Technical Analysis

- Many traders say that trading in the direction of the trend is the most effective means to be profitable in financial or commodities markets. Many famous traders have each amassed massive fortunes via the use of technical analysis and its concepts. George Lane, a technical analyst, coined one of the most popular phrases on Wall Street, "The trend is your friend!"
- Technical analysis can be used to project movements of any asset (which is priced under demand/supply forces) available for trade in the capital market.
- The technical approach concentrates on prices, which neutralizes external factors. Pure technical analysis is based on objective tools (charts, tables) while disregarding emotions and other factors.
- Signaling indicators can sometimes indicate the imminent end of a trend, before it shows in the actual market. With this, the trader can choose to take profit or cut losses.

Forex Trading - Proven Methods For Generating Consistent Profits

2007-08-31T21:28:00.001-07:00

by Scott

When I see so many people with powerful dreams and desires for their lives looking to the Forex market I really feel for them. I remember when I first started investigating Forex trading and started to get an understanding of what it can do, I could hardly sleep at night because of all the wheels that kept turning in my mind. I kept asking the people I knew who were already involved in Forex trading, "You mean I can now live anywhere in the world or travel as long as I have a laptop and wireless internet?" Yes! "You mean I can start with a very small amount of money and within a year be making more money than I could have after 5 years of real estate investing? Yes! The more I thought about it the more excited I got.

Once I got started learning to trade, however, I started to see that it just wasn't as easy as what the brokers and training salesmen tried to make it out to be. In fact, after visiting some of the forex forums out there and listening to all the negative discussion I began to wonder if anyone really made money in the trading world. I watched many people join various training programs, get discouraged and eventually give up. Fortunately I knew that success was possible and continued to work on my trading while studying every training program I could find. I started to meet people personally who were credible ordinary people who had gotten through the struggling period and actually multiplied their accounts just like the trading plan formulas show. Rather than put 100% faith in a particular program I gathered information from every source I could. During this time I was priveleged to have a series of breakthroughs and insights some of which most traders never see. While others would follow a particular trading program like a religion then give it up and "convert" to another guru's system, I continued to take the best of all that I found and put it all together in the testing ground of my own experience.

After a couple of years I was still trading and finally started to see the results I was looking for. The potential results in Forex trading are so amazing and exciting that once you experience it there is nothing else that compares. The first thing I did was quit my previous business and move to Santa Fe to enjoy the sunny climate, artistic community, the beautiful Rocky Mountains and surrounding desert. Next year I may move to Aspen or to Fiji or Switzerland. Now I am only doing what is most fulfilling in my life. I can finally live by T Harv Eker's wealth statement, "I work because I choose to, not because I have to." There are many things I love being involved in and I don't do them for money because the money department is taken care of.

When some of my associates started asking me to show them how I trade the thought of being involved in forex trading training kind of defeated my purpose for trading. I really don't want another job and training is a job. Plus, I never really cared much for "public speaking" if you know what I mean. Well, after some coaxing I realized that with today's web conferencing technology I can show people exactly what I am doing while sitting in my adobe courtyard watching another incredible Santa Fe sunset. Or from the alpine European style lodge where I vacation in Aspen. Plus I do enjoy helping others succeed and that fits in well with my chosen mission in life. So, here we go!

Forex scalping basics

2007-08-07T23:11:00.001-07:00

by Thomas Lindblom

The forex market is the most liquid of today's exchange, trading in excess of 1.6 trillion dollars daily. This is roughly greater than 5 times the daily trading volume of the U.S. Treasury Bond Market, and 160 times the average daily volume of the U.S. Stock Market. This extreme liquidity gives forex traders an edge in the art of lightning fast execution and the quick trade method referred to as "scalping".

Forex scalping is considered as the art of using high leverage and a large number of short term trades to steadily increase an account. Usually, only 1 to 5 pips are targeted for each trade. This type of trading appeals greatly to day traders and those looking to minimize the risk involved in trading currencies. Next to money management, "risk control" is the single most important trait to a surviving (and thriving) currency trader. The small amount of time that is spent in the market limits much of the risk in exposure in comparison to a longer term system. Also, the freedom involved in a speedy forex scalping system in such a liquid market is a "magnet" that drives many traders from other markets to try their hand in currency. A disciplined and steady scalper could seamlessly double or triple an account, and spend only a fraction of the time in the market as a common day trader.

Effective forex scalping strategies take advantage of extremely slight price fluctuations (sometimes only 1-3 pips) many times in order to steadily build an account. Because of the smaller number of pips gained per trade, larger than normal leverages play a key role in a successful forex scalping strategy. By leveraging much more than a standard day trader in a liquid environment, a very skilled scalp trader is able to make just as much money as the day trader in a shorter period of time. However, this is an obvious double-edged sword. The market can just as easily move against you on a high leverage, which could produce substantial blows to your account.

Also, it is important to take into consideration the physical and mental speed of a trader who will only stay in the market for seconds to minutes. Executing a scalping strategy by hand can be extremely difficult considering the quick amount of time you must be in and out of the market for your strategy to be affective Many successful forex scalping strategies are built to be automated; the rules to the system are coded into a trading platform to automatically perform scalp trades around the clock. Though it is completely possible to trade a forex scalping strategy manually, the majority of today's traders would agree that automating the process based on a set of rules would be the best way to ensure speed and reliability. When choosing a platform to automate your scalp strategy, it is extremely important to stick with those platforms that allow the execution of your system on every tick (such as MetaTrader 4). This ensures that your entrances and exits will be on a per-tick basis, and will give you a much higher probable rate of success than those platforms who will execute your code more periodically.

Though forex scalping may seem like a preverbal "holy grail" at first glance, there are still many unseen hurdles that surround the controversial method of trading. If you do wish to add scalping to your trading toolbox, it is extremely important to pick a broker who can support a scalpers' system. You will quickly find that many brokers do not allow scalp trading, as the method of quickly entering and exiting trades may actually cause the broker to lose money at the dealing desk. Forex scalping also does not give the broker a means to trade against their clients. Out of the hundreds of online forex brokers, only a handful support (and sometimes encourage) scalping.

Forex scalping can be a good method of growing an account quickly, but should not be looked at as the "holy grail" of trading. Most brokers do not support scalping, and a consistently profitable forex scalping strategy can be very difficult to engineer. However, if much time and effort is spent in system optimization and setting up a good relationship with a scalp supporting broker, the benefits could be well worth the time spent.

Become a Professional Forex Trader - Living The Dream In 3 Simple Steps

2007-07-30T19:49:00.001-07:00

by Monica Hendrix

Everything about forex trading can be learned yet 95% of traders lose however if you follow the 3 simple tips enclosed you could enter the elite 5% who achieve currency trading success. Let's look at 3 tips for forex trading success.

Forex trading is one of the few areas you can build wealth quickly and the opportunity is open to all - but to make your forex trading successful you need to have the right approach.

1. Adopt The Right Mindset

Forex trading can be learned buy anyone but that doesn't mean making money is easy - it never is.

This doesn't mean you can't do it though you can.

Firstly, when learning forex trading you MUST understand that you cannot rely on anyone else to give you success - it comes from within.

You need to create a system you can have confidence in and follow with discipline.

E-book sellers promising you un told riches on the net wont help you, for the cost of a few hundred dollars - if they were successful at currency trading, they wouldn't tell or need you - they would be to busy making money for themselves.

Once you realize it's up to you - you're ready to move to the next step.

2. Get The Right Forex Education

This means only focusing on the important points and skipping the bulk of forex education that will ensure you lose.

You should base your system on forex technical analysis and use forex charts to spot trading opportunities - that put the odds in your favour.

Don't try predicting or following a scientific system - they don't work.

The best you can do is get the odds in your favour however that doesn't mean you can't make a lot of money - you can.

2. Base Your Forex Trading Strategy On

A looking at support and resistance levels on your forex charts then calculating the odds of them breaking or holding and here is the key:

Don't simply buy into support or resistance like most losing forex traders - get confirmation of changes in price momentum, to confirm your view is correct before trading.

If you simply buy into support you are predicting and hoping and the forex markets will wipe your equity quickly.

Don't rely on hope get some momentum indicators to help you - there covered in more detail in our other articles so look them up.

Above all keep your system simple.

Simple systems work best as they are more robust than complicated forex trading systems that have more elements to break.

3. Be patient and Be Realistic

Only execute trading signals in line with signals from your forex charts and adopt a long term approach.

The big trends in currencies last for months or years and catching them should be the basis of your forex trading strategy not trying to trade the daily noise which will see you wiped out.

You don't get rewarded for effort in forex trading or how often you trade - you get rewarded for being right and that's it.

Have realistic aims Rome wasn't built in a day and a forex trader doesn't become successful over night either - it takes time to get experience, confidence and discipline and spot the big profitable trades.

If you made 100% per annum you would be up there with the best traders in the world - so aim for this level and you could do this trading just 2 or 3 times a year have patience and realism and you will give yourself a great chance of achieving success.

The Dream and The Reality

Is being able to sit at home and make big profits in around an hour a day, with just a computer and some small seed capital.

The dream can become reality, it's not easy but that's totally different from being not possible - it is.

If you have a burning desire to succeed, a willingness to learn and confidence in your own ability, maybe you can become one of the minority who make big consistent profits. The question is:

Are you up for the challenge?

Forex Day Trading - Want to Try It? Then Get Ready To Lose

2007-07-30T19:46:00.001-07:00

by Kelly Price

One of the biggest myths in forex is that day traders make money longer term - they don't and if you don't believe me then consider these two facts:

Fact 1 - No Valid Data to Work With

Trillions of dollars are traded daily by millions of different participants and to believe that you can work out where prices may go in a day is laughable.

The data is to short in time span and support and resistance levels are meaningless and cannot be traded.

Volatility is random in short time spans, prices can and do go anywhere and day traders lose over time.

Fact 2 the Evidence

You may not believe the above is true and to be fair, there is a lot of information on the net about how you can scalp profits each day, make a monthly income and predict daily support and resistance with scientific accuracy - but this is just hyped advertising copy and there is nothing to back it up.

Of course, you do get a hypothetical track record (done in hindsight knowing the closing prices) well my 12 year old daughter could make a profit! The problem is you need to trade going forward and you don't have the luxury of knowing the closing prices.

Ask this question of any vendor selling a forex day trading system:

Can I see your track record of real profits over 2 years or more?

See if you get one and let me know if you do - won't hold my breath though.

Fact is the vendors tell a good story and appeal to the greed of buyers and make a guaranteed profit selling them the system and the forex trader who trades it makes a guaranteed loss.

I have been a trader for 25 years and NEVER known a day trader win longer term and am suprised people buy courses and systems without looking for a track record.

Vnedors offer you in many instances your money back if the course doesnt work for you but that's not much consolation when your trading capital gets wiped out!

Avoid day trading and look at longer time spans - forex trading is an odds game and to trade the odds you must have data that can put the odds in your favor and forex day trading wont do that - period.

Treat Trading Less Like a Hobby and More Like a Business

2007-07-25T18:26:00.001-07:00

by Paul Cook

At Emerald Passport they have a video that educates you regarding the pitfalls of FOREX trading. I suggest you go to Emerald Passport and watch the video before proceeding with this article.

When Emerald Passport-educated traders, or any day traders, consider securing a new trading system for stock market trading, they stereotypically do not mull over the expenditure of ownership. But, there are numerous considerations that new Emerald Passport traders should consider when purchasing a modern piece of software, like the price tag of keeping up the software and the expense of the facts and figures the program will need to function.

The outlay for owning a trading system or charting bundle for trading the stock market can be very prohibitive. Several factors come into play when looking at the overall cost, like the type of market you trade and whether or not you plan to use end-of-day or real-time statistics. The format of the information can make a difference too. A package that requires a detailed data structure can be more costly to own. Two common formats of facts and figures for trading software are Metastock and ASCII.

There are pros and cons of using both. But since these are among the industry standards for statistics organization, and make data sellers more abundant, there is more rivalry. Evidently, it is this competition that keys the amount down. When the Emerald Passport trader mulls over a real-time service, they can end up paying much more. However, the cost may be right depending on how regularly the trader trades and the type of market he or she trades.

A trader who trades in markets such as futures, can incur a good deal of volatility and, therefore, they may want to have a real-time package where they can see the instability of instability that occur during the day in the plans of their trading. An alternate to real-time is a delayed service. A provision that delivers delayed quotes can cut the cost of the facts and figures by as much as 80% from the real-time counterpart. This can make a vast difference for traders who are just starting out and may want to use the money to trade rather than pay for real-time data.

The expense of buying a trading system can be pretty frightening for beginners and professionals alike, regardless of whether or not you are interested in stock market trading or some other market. When considering purchasing a firsthand system, should take the cost of their statistics feed into account. This sets their foot firmly on the path of treating FOREX trading less like a hobby and more like a business.

Honey, We're Making 20% to 40% Monthly On This!

2007-07-17T08:03:00.001-07:00

by Brian Sater

A funny thing happened while I was researching my bank's own statement. It stated that it was making 40% per month in something called foreign currency exchange. Hmm. They were only paying me 3% on my account.

The foreign currency exchange market,or forex, for short, is the world's largest financial market. We all know the stock market is huge, but just think of all of the currencies in the entire world being traded on a daily basis. The average daily forex trading volume currently exceeds $1.9 trillion.

Foreign currency exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs.

For example, British Pound/US Dollar or British Pound/Japanese Yen. There is no central location like the New York Stock Exchange since it is a floating exchange rate and so it is referred to as an interbank market.

After doing research on this, called the forex, I found out there is also a huge industry making money off people teaching them to trade the forex. This industry charges thousands of dollars for seminars, charts, signals, trading systems, monthly newsletters and so on. This used to be the playground of only the very rich. In the past few years, the average person has been allowed in.

The forex market is open from Sunday afternoon to Friday afternoon, 24/7. Which is very cool.

People spend thousands of dollars on courses, mentors, charts, signals, and so on. They spend hours trying to learn this stuff and getting up at odd hours to trade at the "best times."

A process has started of bringing this to the "little guy" and show why you don't have to spend all of this money. You can start a forex account with as little as $1,000 (and why you should start with at least this amount), it is extremely liquid, and you can see how to get started and receive FREE signals each month, free charts, and spend only a couple of minutes a day checking out your account.

No systems to learn, no monthly fees, you just plug in the numbers. You won't have to get up at odd hours either.

You may be saying to yourself, 20% to 40% on my money every month is pretty awesome. What is better than that, is that your money will grow exponentially!

When your $1,000 grows to $2,000, you can increase what you risk by adding what they call a lot. So instead of making $200 on your monthly trade, you are now making $400 at 2 lots. That is the greatest part of trading the forex, the exponential potential.

One of the most beneficial things you can do before you invest your money, is you can receive a free practice account from your broker with some play money before you put your cold hard cash in. Try it for a month or two, see your results, then you can feel confident that you can put real money in an account.

If you have enough money to start with a $10,000 account, you would make $2,000 on your 20%. Learn to trade the forex the easy way with minimal effort.

Auto FOREX Trading: Is It worth Your Money?

2007-07-11T23:22:00.003-07:00

by Sandra Stammberger

A lot of people invest a lot of money on Auto FOREX trading software. Besides, with the promise of executing trades according to your preference, you will be able to trade in FOREX virtually 24 hours a day and 7 days a week with this kind of software.

First off, the FOREX or the Foreign Exchange market is the largest and the most liquid market in the world. With trade exchanges that amounts more than trillions of dollars each day and trades that operates for 24 hours a day and 7 days a week, you too would really want to trade in this very large and very liquid market.

It is true that a lot of people have made a lot of money in FOREX trades. However, you have to face the fact that these people are usually seasoned traders who knows what they are doing in the FOREX market. In short, they know all about the FOREX market and is able to easily spot trends in the market that can help them trade efficiently and profitably. By knowing how to do this, they minimize risk as well as maximize their potential in making a lot of money. And, most of the time, it works.

Today, many people who want to make more money out of FOREX trades are now relying on Auto FOREX trading systems or software that will be able to help them maximize their trade potential. However, there are some people who still don't get that Auto FOREX trades isn't a money making tool. Some people still view Auto FOREX trading software as a tool that will eliminate the risk of losing money and guarantee them huge amounts of profits overnight.

In the FOREX market, everything is unpredictable. And, as a beginner, it is important for you to understand whether it is right for you to invest in such automated trading systems or software. First off, software like this may be helpful for beginners usually contains programming that will let you do dummy trades. This way, you will be able to practice your trades and also your strategies without the real risk of losing money.

However, when it comes to automating your trades and trading in the real FOREX market, it is important to remember that Auto FOREX trading systems will only work based on your preferences. This means that you have to preprogram the system according to your trading needs and strategy in order for you to trade efficiently in the FOREX market and minimize the risk of losing money.

If you don't know anything about the FOREX market, it is best that you avoid software or systems like this as it will only leave you frustrated and you might end up losing a lot of money. Try learning about the FOREX market first as there is no way to accurately predict the FOREX market. Seasoned traders constantly reprogram their auto FOREX trading systems to suit a particular situation in the FOREX market. In fact, they employ different trading strategies in different trading platforms and different currency pairs.

So, before you get a FOREX auto trading system, make sure that you know about the FOREX market first and know about the different strategies. It may take some time but it will definitely maximize your potential in using the automated system.

Four Topics You Need to Know About to Prepare You for FOREX Trading

2007-07-11T23:22:00.001-07:00

by Paul Cook

All the FOREX trading information you need to become a successful Emerald Passport trader is on hand on the internet for free. Before we tackle the article in detail, I suggest that you go to the Emerald Passport site and watch the FOREX trading video. Here we will show you where to get first-class FOREX trading counseling for free where you can become a profitable Emerald Passport trader.

A frequent mistake made by many rookie FOREX traders is to think that they can purchase a technique or an e-book from a specialist for $100 or so and buy success. Now, while there is some good FOREX trading news sold on the Net, the bulk of it is not worth the money. Most of it is sold by salesmen (who have never traded) or unsuccessful brokers who cannot trade and though they still sell their advice.

It is common sense that you cannot buy FOREX trading accomplishment for $100 or so, since if the FOREX trading guidance worked then it would probably not be sold. A quick way to decide if FOREX assistance for hire is worth your hard cash is to ask for a here and now track record of earnings made in the markets. Then, look for a money-back assurance.

The reason you should go into FOREX with Emerald Passport is that if you get your own FOREX trading recommendations and training, you will have assurance, and therefore, confidence in it. This means you will be more likely to follow it with authority when you come to do actual FOREX trading. It is far harder to follow someone else's instructions with control than your own, as you will always understand your own better.

Here are some basic subjects to look up and become familiar with:

Technical analysis: Everything you need to understand can be initiated from on the Net from advantages to the chart formations.

Technical indicators: You will be knowledgeable about how to draw charts and what the formations mean from point one above. Now, you need some timing indicators. Good ones to look up are: Bollinger bands, stochastics, moving averages, RSI and MACD. Find others but, the above are the ones we find most useful for entering a market. Go to a free chart service such as futuresource.com and have a look at the timing indicators on some live charts.

Breakouts: Now you have looked at some charts and some indicators to help you distinguish and enter trends, you need a methodology. Perhaps the easiest methodology to use is a breakout method. Look it up. It is easy to run and it works.

Putting it altogether: With this FOREX trading advice you can shape an easy method to begin to FOREX trade. Base the system on breakouts and use chart support and resistance to locate lucrative trading set ups. You can then test with a mixture of technical indicators to help you enter breakouts. MY own personal way of trading uses chart support and resistance to set up trades. I then define the entry with stohastics (a momentum indicator) and RSI which is an indication of the strength of the price, and that is it.

There are a lot of FOREX trading instructions on the Net that make FOREX trading seem more intricate than it really is. In fact, anyone with the free FOREX information on the Net can build, check and implement a procedure based upon comprehensive logic. Keep in mind the majority of traders fail because they lack self-control. This comes from the fact that they do not have poise in their system and throw in the towel as soon as they have a few losses.

By taking some time to construct your own procedure, you will have confidence in it and will be more able to follow it with discipline. The fact is all the FOREX trading recommendations you need to shape and trade for yourself is free. If you put in the time and effort your inquiry will be generously repayed.

If you have not viewed the Emerald Passport FOREX trading video, do it now though.

Forex Day Trading - The Profit Illusion That Sees Traders Lose

2007-07-02T09:46:00.003-07:00

by Sacha Tarkovsky

Forex day trading simply doesn't work and you will never find a trader with a track record of real time profits, however more novice traders try this method than any other type of trading. This is desite the fact it will never work, because you can't get the odds in your favor.

If you are considering day trading then you should read this article.

First let's look at why forex day trading doesn't work.

The time period is to short!

Volatility in short time frames is random - PERIOD

This means daily support and resistance levels are meaningless and you can never get the odds on your side longer term.

Now let's look at the illusion of profits.

The Marketing Illusion

You have seen them the headlines promising you 100% annual profits or a regular monthly income - all for just a few hundred dollars.

Of course the reality is they profits do not exist and it's simply clever marketing copy.

Look at the facts and you will see no substantiation whatsoever to back up the claims.

You will of course get a hypothetical track record, done in hindsight but the key word to consider here is hindsight! The person presenting the track record knows the closing prices when they do the track record.

If I knew tomorrow's closing price today, I would be a multi millionaire but that's not the reality of forex trading.

The people who create the illusion you can make money forex day trading can never present a long term track record of real profits - that's real dollars made in the market by them.

Why Create The Illusion?

These people are mostly failed brokers or marketing organizations that actually have the sense not to trade the system themselves.

Why?

Becuase they can make a guaranteed return selling the system to naive forex traders.

Patterns that don't repeat

Many traders look at back data and see patterns.

They think they can trade themselves but this is a bit like roulette wheel paterns - there appears to be an order but the same sequence never repeat again - its an illusion, that fools many traders and when they try and trade for real they lose their equity.

Still Not Convinced Day Trading Doesn't Work?

Here is a simple test you can do for yourself:

Ask anyone who claims they make money day trading, to produce to you a real time track record of profits, with supporting bank statements and trades.

You won't get one.

Day trading does not make money, apart for the vendors who sell e-books and forex day trading systems and they cheerfully let you take the losses, while they bank a fee for their services thats guaranteed.

Don't fall into the forex day trading can make you money trap! If you do you will lose your equity quickly.

Forex Trading - Earn Bigger Profits Now By Applying the 80:20 Rule

2007-07-02T09:46:00.001-07:00

by Sacha Tarkovsky

The 80:20 rules applies in many spheres of life and if you know what it is and apply it in forex trading you will increase your profits dramatically. So let's take a look at what it is and specifically how to apply it to forex trading.

In the late nineteenth century an Italian economist named Vilfredo Pareto observed that, in his native country of Italy, a small group of people held nearly all the power, influence, and wealth.

Came to the conclusion that in most countries, about 80% of the wealth and power was controlled by about 20% of the population and he referred to this as:

"Predictable imbalance," which became known as the 80:20 rule.

He concluded that in relation to an individual's effort:

20% of your effort or energy output will produce 80% of your income furthermore, 20% of your time will produce 80% of your work out put or income.

Does this apply to forex trading?

Yes it does and the lesson you can learn from the 80:20 rule is to work smart not hard. Concentrate your effort on the trades that have the best risk reward.

Cut The Number Of Trades You Do

It's a fact that most traders trade too much and execute trading signals to often, as they want to force the market to give profits, but of course profits cannot be forced.

The way to apply the 80:20 rule to currency trading is drop your frequency of trading. If you look at forex charts you will see that there are very few big trends each year but when they do occur they produce huge profits.

How do you spot them?

Here is a checklist

1. Look for valid resistance levels, that if broken are considered significant by the market.

2. Learn how to use a breakout methodology and go with breaks of these support and resistance levels.

3. To increase the odds even further make sure that you use momentum indicators to confirm that price momentum is supporting a break.

4. As you are trading less you can afford to risk more on these trades and increase profitability.

5. Don't trail stops to close and have a profit target that relates to the size of the break. The above method will ensure you are trading a lot less and it could be as much as 80%, but your profitability will be increased.

It's a fact that most of the big profits are generated from trades that break from new market highs - NOT market lows.

So if you have been buying dips its time to re think your forex trading strategy.

Trading Less for More Profits

If you like excitement and the thrill of trading this strategy is not for you. The above strategy is all about making money and trading the trades with the best risk to reward which can yield triple digit annual gains.

If you have been trading and making marginal profits, apply the 80:20 rule to your trading, cut the frequency of trades and increase the profits!

Forex Education - Success You Follow These 2 Golden Rules

2007-07-02T09:45:00.001-07:00

by Sacha Tarkovsky

I read a lot about forex education and most of it is wrong; it's a fact that 95% of traders lose, because they learn forex trading in the wrong way. Forex Trading success is easy but most traders simply have no idea how to acquire the right forex education and that's what this article is all about.

Learn these two golden rules and you can have a successful forex trading strategy and they are:

1. You are Responsible for Your Success

The problem for most forex traders is they think they can buy success from a vendor for a few hundred dollars. These gurus and mentors make millions from gullible and naive traders.

Most of the currency trading systems sold on the net are junk and simply promoted by clever marketing and the best example is perhapsforex day trading. Great story but it doesn't work.

The only person who can make you successful is you.

This means devising your own forex trading strategy for success.

If you devise your own strategy (its not as hard as many people think and is covered in our other articles) you will have a total understanding of your system and why it will work. This will give you two key character traits for success:

Confidence in your system and the discipline to follow it through inevitable losing periods.

2. Work smart and learn the RIGHT knowledge

There are those traders who are naive and gullible and believe someone else can give them success for a few hundred dollars, on the other hand there are others who believe that to make money you need to work hard - their logic is the more you put in, the more you will get out but this is simply not true.

There are plenty of smart people working hard trading forex and a lot of them lose.

Why?

Because in the world of forex trading you only get a reward for being RIGHT and the market gives you nothing for effort.

So what does working smart entail?

Firstly, if you are new to forex trading develop a simple technical system with just a few indicators.

Simple systems work far better than complicated ones, as there are less elements to break in the brutal world of currency trading. Then, you need to focus on the long term trends and use a breakout methodology - it's easy to understand, easy to apply and it's very profitable.

All the information you need is available free on the net.

If you seek out this forex education, you will be able to get a system that is robust and works and get a forex trading strategy together in less than 2 weeks.

If you are a long term trend follower you will only be executing forex trading signals a few times a month and your forex analysis will take under half an hour a day.

Is It Really That Simple?

Yes it is.

Currency trading success is built on a simple robust system and the ability to apply it with discipline.

Unless you develop it yourself, you won't confidence to follow it with dsipcline and without discipline, you don't have a method in the first place.

Currency trading is all about having the right knowledge and the right attitude to apply it.

It's a fact that everything about forex trading can be learned and anyone can become a successful trader, but 95% don't for the reasons outlined above - don't make the same mistake.

How To Choose a Forex Trading System That Works

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There are so many different trading systems you could use to trade the forex market, some better suited to certain people than others. For example some people may find it easier to comprehend and take into account fundamental factors as opposed to looking at a screen covered in technical indicators, and vice-versa. The first logical step in determining what type of trading system would best suit you is actually being aware and understand the widely known methods of analysis used in trading the currency market. Once you are aware of the tools that are available, you can generally tell what type of analysis suits you.

You may now actually be able to develop your own system by combining certain methods of analysis together, giving you a method which you are comfortable with. On the other hand you may decide that you would like to trade someone else's system, either way, that brings us to the next step which is determining the profitability of a trading system.

Determining Profitability: Most people would think that back testing is the best way to determine a systems profitability. However back testing doesn't always give you a true idea of how profitable a system is. The reason for this is because when you're back testing your system on historical charts, you are only seeing the obvious setups which have occurred, and not always seeing the ones that are less obvious. These less obvious ones sometimes can produce losses, which is why back testing isn't always the best method to implement. A better method of determining profitability is by trading your system in real-time with a demo account. This would give you a true understanding of what your system is capable of. This would also allow you to familiarize yourself with your trading platform at the same time. When determining profitability you must look at it in terms of expectancy and opportunity.

Expectancy & Opportunity: These two factors together will be able to tell you what you could expect to make over a period of time. Expectancy is calculated with the following formula:

(Probability of winning × average win) - (Probability of losing × average loss) This will give you a figure which is the average amount you can expect to make per trade. This shouldn't be a negative amount, if it is you should look at some other method of trading since you cannot make money on a system that produces a negative expectancy. Obviously the higher this figure is the better. Now to the opportunity factor. The opportunity factor is how often you are able to trade using your system. By multiplying your expectancy figure with your opportunity factor it will tell you how much you could expect to make over a period of time. The more opportunity you have to trade, the more money you should expect to make.

Conclusion: By taking into consideration the above factors you will be able to determine if a trading system best suits you, and with some simple mathematical calculations you will be able to determine its profitability.

How To Choose A Good Forex Broker

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To become successful in forex trading, you will need a good forex broker. Your forex broker is one who will execute all your trades according to your wishes while earning a commission for each trade. There many forex brokers out there competing for your business and it can be quite hard to determine which one is best for you. Here are some key points to look for when choosing a good forex broker.

1. Available Currency Pairs

Every forex broker will at least have the seven major currencies (USD, CAD, AUD, EUR, CHF, JPY and GBP). However, if you plan on trading Danish krones or New Zealand dollars, you should make sure that your forex broker is able to do so.

2. Transaction Costs

Forex brokers are paid based on the bid ask spread, there should not be any hidden fees or charges to trade. However, additional charges may be required to access certain reports and optional services. Of course, the smaller the spread the better it is for you. Pip spreads vary by broker (and also by currency pairs), so shop around for competitive rates.

3. Free Analysis Tools

To facilitate your analysis of spot trends, currency prices and plan entry and exit points, you will require charting and technical analysis tools. Most forex brokers offer basic services free of charge with an expanded arsenal of tools for an added charge.

4. Immediate Execution of Orders

Currency prices are constantly fluctuating and any delay in the execution of your orders can lower your profits or increase your losses. Look for a forex broker that can consistently execute your trade at the price you see on your screen. An occasional delay may be understandable, but if it happens frequently find yourself a new forex broker.

5. Superior Customer Service

This is something forex traders often overlook when choosing a forex broker and later regret when they require assistance. Any quality forex broker should be able to respond quickly to any question you have. Knowledgeable representatives should be available 24 hours a day by phone and email.

6. Margin Requirement

The lower the margin requirement, the more leverage you will have. If a forex broker allows you to use 100:1 leverage, which means you can use $1,000 to trade $100,000 in currency; you can use margin to produce huge profits. However, do not margin yourself too much or you will find yourself cleaned out fast.

7. Minimum Account Balance

As a small individual investor you will need a forex broker that does not require a large balance to open a forex trading account. Most forex brokers today will allow you to open a mini account with as little as $300.

8. User-friendly Trading Platform

Some forex brokers may require you to download a trading program to your computer in order to make trades. Others may let you make trades directly over the internet. Choose a few forex brokers and sign up for a free demo account. It is highly advisable to trade with play money while you test out their program and decide which one works best for you.

The above key points provide a general guideline to choosing a good forex broker and is an important step towards successful forex trading.

Global Forex Trading - Lesser Known Facts That Can Lead To Your Personal Wealth

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Global forex trading is a lesser known facet of money making or wealth creation among the general population. You will no doubt hear about stock markets and share prices daily and also about oil prices and other commodities, but when it comes to forex trading, there is much less publicity on this compared to stock market trading and futures. However, it is a fact that the global forex trading market actually dwarfs the stock markets and even the commodities market.

At any one time, more than $2 trillion of currencies are transacted every day on the global forex market.

What is helping forex market to reach that distinction of being the largest tradeable market is that forex is tradeable at any time of the day for every day- 24/7 ! Compared to stocks and shares or commodity markets that have specific opening and ending trading times. By necessity, forex markets are available for trading anytime since price of currencies changes and fluctuates everytime. This makes it possible for the trader who has the acumen to profit from these price fluctuations.

Another characteristic of forex trading that can catapult you into wealth is the application of the system of leverage. In wealth creation, leverage accelerates your ability to create wealth from a small amount. Many people are attracted to trading stocks and shares on margin because they can get leverage on a margin account. For example, by margining your stocks and shares, you can get a leverage of 50% to 75% of your stocks so that if you have $100,000 worth of stocks and shares, you may be able to get additional margin to trade worth $50,000 to $75,000. But compared to forex margin accounts where you can get leverage of 20 times to 50 times, which is common and even up to 100% margin in some special cases.

Leverage is a main key to forex trading wealth, and is a powerful tool that can cuts both ways. You will need a good education in forex trading to gain the edge and be profitable consistently. Otherwise this immense leverage can work against you and gets you wiped off and even move into bankruptcy even faster than it can help you become a millionaire.

It is this leverage that draws people to forex trading, giving it a tint of speculative activity. While one cannot deny that there are many speculators in the forex market, there are many traders who are able to extract continuous and consistent profits trading the forex market for a living. This group of people constitute 10% of the forex traders, and the key element with them is their ability to take advantage of the price movements either as day traders, swing traders or position traders.