Profitable forex traders develop good trading habits and live by them on the market.
These trading habits are learned and practiced daily.
Studying the markets constantly to keep up with the trends, and
having the discipline to trade without their emotions getting in the way
of a profitable trade.
They have learned that Panic or Greed will only cost them profits
if they follow them.
Buy studying the market and learning the ins and outs and then knowing
when to get in or out is the result of their labor.
Practice,practice, practice on a demo account and learn these
habits before you jump in.
Friday, October 31, 2008
Saturday, October 18, 2008
Currency Trading Strategy
Developing your own strategy for a successful online currency trading is as important as your investment decisions. Online currency trading without a strategy is to rely entirely on chances for your success or failure. Making the right trading decisions and developing a sound and effective trading strategy is therefore the most important foundation of forex trading.
For developing an online forex trading strategy, you should have a working knowledge of forex, how the market works, different methods of technical analysis, and knowledge of some of the popular technical studies. A successful trading involves strict guidelines for return on investment as well as an optimized risk management. With the rise of the internet, forex trading is almost instantly. Your online currency trading strategy therefore should be full proof to handle instantaneous decisions.
It is advisable to form the online trading strategy based on some technical analysis, such as, Simple Moving Average (SMA). With huge online and conventional resources, with some research you can understand the theory of many such technical analyses. For example, you can formulate a set of discipline like: if the price of the currency crosses above a 12-period SMA, you will treat it as a signal to buy at the market; when the currency price crosses below the 12-period SMA, you will 'stop and reverse'. So you will always have either a long or short position after the first signal.
Many seasoned traders combine more than one strategy for their online forex trading. For example, they use SMA and apply other indicators to support their assumptions. These indicators work as a filter for them. You may formulate your online forex trading strategy based on technical analysis to find out support and resistance levels of the market. The market tends to trade above the support levels and below the resistance levels. If you find that a support or resistance level is broken, the market will then follow through in that direction. Therefore, if your online forex trading strategy helps you in finding out these breaks you can invest in the direction of the market.
The best way to be a successful forex trader is to study and get experience. There are many web sites with free articles, seminars, forums, which can help you in developing your own forex trading strategy. Simple logic and rational thought process will strengthen your strategy and earn huge profit from the trading. Few tips for preparing your strategy will be:
· Always trade with the trend. · Never risk all your trading capital in a single trade. · Follow strict discipline to limit your loss. · Whenever you are in doubt, get out of the trade.
In this highly volatile and liquidated forex trading market, a strong strategy, which is free from any emotions, will ensure high profits for you.
For developing an online forex trading strategy, you should have a working knowledge of forex, how the market works, different methods of technical analysis, and knowledge of some of the popular technical studies. A successful trading involves strict guidelines for return on investment as well as an optimized risk management. With the rise of the internet, forex trading is almost instantly. Your online currency trading strategy therefore should be full proof to handle instantaneous decisions.
It is advisable to form the online trading strategy based on some technical analysis, such as, Simple Moving Average (SMA). With huge online and conventional resources, with some research you can understand the theory of many such technical analyses. For example, you can formulate a set of discipline like: if the price of the currency crosses above a 12-period SMA, you will treat it as a signal to buy at the market; when the currency price crosses below the 12-period SMA, you will 'stop and reverse'. So you will always have either a long or short position after the first signal.
Many seasoned traders combine more than one strategy for their online forex trading. For example, they use SMA and apply other indicators to support their assumptions. These indicators work as a filter for them. You may formulate your online forex trading strategy based on technical analysis to find out support and resistance levels of the market. The market tends to trade above the support levels and below the resistance levels. If you find that a support or resistance level is broken, the market will then follow through in that direction. Therefore, if your online forex trading strategy helps you in finding out these breaks you can invest in the direction of the market.
The best way to be a successful forex trader is to study and get experience. There are many web sites with free articles, seminars, forums, which can help you in developing your own forex trading strategy. Simple logic and rational thought process will strengthen your strategy and earn huge profit from the trading. Few tips for preparing your strategy will be:
· Always trade with the trend. · Never risk all your trading capital in a single trade. · Follow strict discipline to limit your loss. · Whenever you are in doubt, get out of the trade.
In this highly volatile and liquidated forex trading market, a strong strategy, which is free from any emotions, will ensure high profits for you.
To learn more about developing your own Forex strategy please visit Online Currency Trading Strategy
Thursday, October 9, 2008
Practical Forex Trading Rules
You can develop into a better and more profitable trader by applying some of the more important forex currency trading rules consistently with a suitable amount of discipline. The following are a few principles that can help improve your chances of success if they are understood, practiced, and implemented in your trading on a regular basis.
These rules have been learned in the trenches, mostly through testing and observing the common mistakes nearly every trader makes when starting out in the forex currency trading business.
Set Up and Implement Specific Goals/Objectives
Very few things are more important to your trading success than setting specific goals and objectives for what you are trying to achieve. The majority of forex traders who often find themselves on the losing end of a trade make the same common and recurring mistakes. Many of the missteps, by and large, are not directly related to the mechanics of trading.
As a matter of fact, most forex traders don't have a clear direction, never take the time to develop a sound business plan and lack a formal written strategy for putting a well thought out plan in place.
In order for any business to be successful it must have measurable goals that are both realistic and attainable. In forex currency trading, the primary goal is obviously to make money, but it's important to have goals that are not strictly money related as well.
Never lose sight of the fact that risk and reward are part-and-parcel to forex currency trading and high returns come with a price so don't expect them without the willingness to plan for minor draw-downs in trading capital.
Your personal objectives and goals should be very specific to you, but they should also include the following characteristics if they are going to be useful. They must be measurable, assigned to a specific time frame and provide an ample return on the time investment made.
As an example, here is a quick outline of a few specific goals.
1. Develop and test 2 new trading systems every year.
2. Plan to reduce the error rate installing the trading systems by 37% each year.
3. Achieve a 177% maximum return on capital in 12 month period.
4. During the year take 3 weeks off from trading.
Having a definite idea of what you want to accomplish in your trading and the exact time frame you want to achieve it, make your efforts more focused. In return you will have greater success.
In order to establish a track record of winning trades, you need to develop discipline and a personal forex currency trading system that makes sense for you.
About the Author
These rules have been learned in the trenches, mostly through testing and observing the common mistakes nearly every trader makes when starting out in the forex currency trading business.
Set Up and Implement Specific Goals/Objectives
Very few things are more important to your trading success than setting specific goals and objectives for what you are trying to achieve. The majority of forex traders who often find themselves on the losing end of a trade make the same common and recurring mistakes. Many of the missteps, by and large, are not directly related to the mechanics of trading.
As a matter of fact, most forex traders don't have a clear direction, never take the time to develop a sound business plan and lack a formal written strategy for putting a well thought out plan in place.
In order for any business to be successful it must have measurable goals that are both realistic and attainable. In forex currency trading, the primary goal is obviously to make money, but it's important to have goals that are not strictly money related as well.
Never lose sight of the fact that risk and reward are part-and-parcel to forex currency trading and high returns come with a price so don't expect them without the willingness to plan for minor draw-downs in trading capital.
Your personal objectives and goals should be very specific to you, but they should also include the following characteristics if they are going to be useful. They must be measurable, assigned to a specific time frame and provide an ample return on the time investment made.
As an example, here is a quick outline of a few specific goals.
1. Develop and test 2 new trading systems every year.
2. Plan to reduce the error rate installing the trading systems by 37% each year.
3. Achieve a 177% maximum return on capital in 12 month period.
4. During the year take 3 weeks off from trading.
Having a definite idea of what you want to accomplish in your trading and the exact time frame you want to achieve it, make your efforts more focused. In return you will have greater success.
In order to establish a track record of winning trades, you need to develop discipline and a personal forex currency trading system that makes sense for you.
About the Author
LearnForexSystemTradingDirectory.com
© 2006 Roosevelt Jones Publishing
Monday, October 6, 2008
How to Figure Pivot Points
A technical indicator called 'Pivot Points' is becoming increasingly popular. The usefulness of any single technical indicator is always up for debate. But one thing is certain: pivot points are a valuable idea and should be part of every Forex trader's toolkit.
One possible reason pivot points have become so widely used is their sheer simplicity. Many indicators, such as Parabolic SAR or even Exponential Moving Averages, require some knowledge of fairly heavy duty mathematics to calculate. Many traders are reluctant to use an indicator that they only partly understand, and depth of understanding is only possible when you can calculate the indicator personally.
To calculate pivot points is simplicity itself. The formula is:
Pivot Point = (H+L+C)/3
where C is the currency pairs' closing price for a given day, H is the high for the previous 24 hour period and L the low. In short, the pivot point is simply the arithmetic mean (the 'average') of the three prices.
Picking the time for C is somewhat arbitrary since Forex markets trade 24 hours per day. C is often measured at the New York Forex market closing time, 4 p.m. EST. This number, usually denoted P, is used in conjunction with several others - called resistance and support points - in order to form the basis of a trading strategy. The resistance and support points are also simple to calculate. The formulae are as follows:
R1 = (P x 2) - L
S1 = (P x 2) - H
R2 = P + (R1 - S1)
S2 = P - (R1 - S1)
Of course, how to choose a price for the resistance and support levels is key and traders differ, even though there is often a consensus. Some strategies select the pivot point itself as a point of support or resistance, depending on the direction of recent price movements. Others will choose the closing price of the previous day.
If the price moves above the pivot point, trending upward, the market is tending bullish and vice-versa. In the first circumstance the pivot point would be a point of resistance, since prices 'resist' moving above that level. In the latter case, it's a support point.
Beyond attempting to evaluate trends, pivot points can be used as part of an entry and exit strategy. An investor might choose to place an order to purchase a currency pair if the price breaks through a resistance point.
Similarly, any good strategy will involve deciding in advance when to liquidate a position. Pivot points can be used to help select a stop-loss price in the event it moves below a support level.
No single indicator can be used reliably as the sole input to a good trading strategy. Pivot points, however, have been shown to perform well as part of an overall approach involving other indicators such as MACD (Moving Average Convergence/Divergence).
Owing to the enormous volume of transactions, currency prices are not much swayed by the action of any one trader, as is sometimes the case with stocks. That makes pivot points much more useful in Forex trading than in equity trading. Keep in mind, however, that such swings are possible as the result of central bank interest rate hikes, major political events and other fundamental factors.
Many analysts hold that pivot points achieve their useful status as a result of two tendencies.
If the day's price begins above the pivot point, prices will tend to stay above that point until it reaches the first resistance point. Remember, 'begin' is a somewhat arbitrary point in time in Forex trading. Alternatively, if the price begins below the pivot point, it will tend to stay below that point until it hits a support point.
Sometimes called 'trading between the lines', this is one popular approach. Traders wait for the reversal of the trend off a resistance point, then sell. Similarly, when the price trends upward after bouncing off a support point, a buy order can be triggered. If the market trades near R2 or S2, prices will tend to move back toward the pivot point.
Of course, this approach has to be viewed with some skepticism, as most strategies should be. Resistance and support points are broken all the time - that's what makes trading exciting. So, one has to wonder what makes those particular numbers resistance and support points.
To what degree those points influence trading decisions is a matter for debate. But, that they exist and have some influence is unquestionable.
It's always difficult to judge when a price movement is a temporary correction versus the beginning of a trend. By the time the trend is clearly established, it is often too late to profit. As with any form of trading, there's no substitute for experience as an aid to forming a sound, independent judgment.
For more Forex Trading information goto Forextradinginfo.biz You will find, Forex Educational, Trading Systems, Trading Strategies and Forex Broker information to start making a reliable income as a forex trader.