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    • Month: February 2017

    Some Basics of Reading Forex Charts

    1. When you are buying a currency pair, you always want the currency pair to go upwards. When selling a currency pair, you always want the currency pair to go downwards.  This is how you make a profit.

    2. Charts use different timeframes for listing entries.  It is a good idea to find one chart and only use this chart so you won’t make mistakes because you didn’t realize the timeframe difference. Always set up your Forex software or systems based on the same timeframe as the chart you use.

    3.  Many charts will only list the bid price, even though you must buy at the ask price which is more expensive. Also, keep in mind that there is almost always going to be some slippage which occurs before your order is placed.  For example, you may place your order when the price is 1.2999 but actually, buy at 1.3004.

    4.  Be aware of time zones when trading with foreign currencies.  Some factors that influence markets, such as financial reports, will occur at specific times.  You should have a world clock handy so you know when, for example, the German chancellor is going to announce the new economic plan.

    5. See if the Forex charts are basing trades on the candle opening or candle closing. When you need to make a trade on a time-specific parameter, such as after an economic announcement, this can make a major difference.  You will want to make sure that the trades are happening at the moment after the announcement and not the candle after the fact.

    How to trade Forex? Winning Strategy for Forex Trading

    In the world of forex trading, there are simply many different approaches and strategies to trade the market. You could trade forex with techniques such as breakout strategy, reversal on a double top and double bottom, trend trading strategy or simply you can use technical indicators to help you identify probable entry positions of trade. Seeing that there are so many different kinds of strategy, have you ever pondered about what winning strategy for forex to use? The fact is this; all you need is just ONE winning strategy to succeed in forex!

    Identify entry positions in forex

    So, how do you how to spot entry positions in forex? Of course, you’ll need to know how to identify entry positions in forex. You’ll need to have at least some technical knowledge of price action and technical analysis skills in order for you to spot a good trade setup to enter.

    More importantly, entry positions are also judged by what is the risk reward amount that you are willing to take. A good entry position will have a feasible TP and SL position that will give a good risk reward.

    For example, if a trade setup allows you to set a TP of 150 and a tight SL of 50, the risk reward would be 1:3. Which means if you will the trade, your take profits are 3 times the amount of SL. In such a scenario, it is a good trade setup to enter

    Keeping it simple

    The foundation to be successful in your trading career be it part-time or a full-time trader is to keep things simple. Do not make your trading complicated but as simplified as possible. It is not necessary for a forex trader to use complicated chartings and indicators to increase his or her winning probability. Instead, all you need to do is to adhere to rules and winning methods that will help you to profit in your trading.

    Winning rules and methods

    Such rules include using of proper risk reward and risk management strategies. You’ll need to deploy the right lot size per trade. Please take note that liquidating too much equity per trade could jeopardize your trading capital. Another rule to take note is to apply currency correlation in your trade.

    It is important that you consider the correlation of currency pairs before placing them in position. If you place multiple positions of highly correlated currency pairs in the same direction, you could risk losing all of the positions if one of the positions went against the trend.

    The matter of fact is, there is no fixed winning methods and forex strategy that you everyone can follow. Nonetheless, it is up to you to devise you own methodology by applying the techniques that have helped you to win in your trades consecutively. However, I personally applied price action strategies in my trades. To me, price action trading strategy is one of my winning methods that I use for every trade.

    Do not test the market

    Most importantly, never ever try to over trade. Many new traders ended up winding up their forex accounts by over trading. They entered the position even if they are unsure. At times there are situations where setups are unclear and it is hard to predict where is the currency pair trending. In situations like this, it is not wise to enter a position. If the trend is not clear, simply stay out of the trade. Do not enter a trade and to risk your position away. Trading in an unclear trend without knowing hen your position is going to trend is simply gambling. It is always good to live and fight another day!

    To put this in a nutshell, follow this checklist before you trade

    1. Calculate your risk reward before you place your trade. Is the setup worth to enter?
    2. Use proper lot size. Apply forex money management.
    3. Assess your selected currency pairs with correlation theory before placing them into a trade.
    4. Stick to methods that you’ve tried which have a proven track record of winning.
    5. Be disciplined and follow these steps for every trade.
    6. Have good forex money management practices

    All right, hopefully, this article had been helpful to you. Remember, to succeed in forex is to keep things simple!

    Discover the effective forex strategies

    Generally, if we observe a forex trader, we usually say, he/she won because of luck. This might be true at times but not all the time. Traders especially the experienced ones have their own tactics to be able to stay in the forex enterprise for a certain period of time. Here are some of the effective forex strategies practiced by successful traders.

    Adopt trading Tools

    Similar to a carpenter, traders need tools as well to be able to work effectively. The skill is not enough if a decent gain is to be considered.

    Examples of trading tools include trading assistance tool, which composes Signal Software, Trend Analyzer, and MetaTrader Software and Charts used to analyze trends; and Market Tracking. The purpose of these tools is to alert the trader, guide appropriate actions, and analyze trends in the forex market.

    Be keen on news

    Traders who are always abreast with the news are probably the clever traders and are anticipated to enjoy trading. This is because there is less chance for them to lose and more chance to gain. News impacts on the decision making of the trader. This way, the trader may change the way he/she trades.

    For instance, if there is news of mass demonstration in Europe, the trader anticipates its effect on the EUR currency in general and has to adjust his trading style. To most traders, listening to the news is among the best forex strategies not to be taken for granted as most of the time it protects their money.

    Attend forex Programs

    Although, this strategy is usually for novice traders, there are also programs for advanced traders. Forex programs are available online which is divided into topics to make sure the participants understand each program well.  Programs are offered so that traders may really learn to profit from trading. It has been known that some traders become sick because of their frustration and stress thinking how to conquer the forex world.

    Finally, learn to manage your money

    Since forex trading entails money, you should know how to disburse your cash. This includes learning when to stop trading and to resume it. If you gain, learn how to control betting and if you lose the same principle should apply.  In addition, risk the amount you accept to lose but do not go beyond it. This is to survive long enough in forex trading until you become a pro. Some traders also consider this strategy as the best forex strategies of all.

    Why Do Professionals Use Forex Market Trading Strategy?

    Giving definitions for your own Forex market trading strategy is a critical step before you become a successful investor. Traders who do not have proper experience and knowledge on market research cannot set their goal.

    Chances are there for an inexperienced trader who tries to do business in forex market trading strategy in losing of all savings, money as well as assets. If you are a new trader and planning to do forex market trading, then you need to ask some certain questions within yourself whether it really works best according to your life style.

    The following are some of the possible questions that you need to find out answers within yourself before investing money in Forex market trading strategy. They are:

    1. How can you describe your risk tolerance?

    You need to check whether you can handle with several risks or it will result you in stress by handling with several risks. Traders who can handle with various risks can easily gain good results in the Forex market trading strategy.

    1. Whether you are a short-term trader or long term trader?

    If you prefer to select in long term, then you can build a forex trading strategy that will leverage with fundamental data’s. Similarly, if you are concentrating on a part time or short term, then you can identify with several data’s that are technical and also it is possible to identify certain trading scenarios.

    1. Are you doing Forex Trading for getting income or for growth?

    Traders who want to gain ongoing income will show interest to invest more in the day trading strategy. There are some traders who will seek for opportunities for gaining income that will help to take out their investments back at a short period of time.

    Like these above three questions, you need to seek answers for several aspects within you and then try to invest money in Forex market trading strategy.

    Which Forex trading time frames are the best

    Most Forex traders are not well informed of how or why Forex prices move to make key errors in how time frames they trade. Let’s take a look at three popular periods and see the best idea period of time to swap your trading strategy.

    In Forex markets, all of the fundamentals supply and demand news will likely be shown inside the price action therefore to will the views of all the traders, so let’s break the value action into 3 periods.

    Long Term Trends

    The large trends in currencies which go on for a couple weeks to numerous months and they also reflect the cost-effective and political health from the country’s currency. These big fundamentals change slowly from expansion to contraction so in retrospect these trends last way too long.

    Intermediate Term Trends

    Even though the big fundamentals prevail in the long run, in the shorter term traders emotions can spike prices too far up or down that are visible in intermediate trends, from the big trend that may be either using the major trend or opposite to it. Typically, these trends will last a short time to every week.

    The Short Term Trend

    This is the action in a day and it is not really a trend in any way it’s simply random price action. Per day prices may go anywhere and so they do.

    The best idea Time period to Trade?

    Through the above, it’s clear that trading the long term trends can provide you with the most important level of profit using the least amount of training. All you do is get in on the trend and hold it but lasting trend following only really suits an explorer that’s patient and disciplined.

    Trading the intermediate term trends can be quite profitable as well as less patience and discipline than trading lasting trends. You can create profit both periods as well as the one you ultimately choose, only will be as a result of your personality.

    I have not mentioned day trading yet as well as the most famous time frame to trade in nonetheless it provides you with no real probability of success. You will find there’s big industry that sells junk robots and also other, so called low risk day trading and methods nonetheless they don’t generate profits and day traders lose.

    If you want to make big money on Forex trading, don’t make the mistake the bulk do and trade only short term. Trading in long term, you’ll find a lot of chances to produce a great income.

    Eliminate the Emotion while doing Forex Trading

    It is very obvious that a trader of forex trading may be the prey of some emotions, which may lead a wrong way. Actually, you can suffer many hazardous results if you do not control your emotions. Trading is a business where a cool mind and calm behavior plays an important role. Whether you feel the positive or negative feeling, excess of both can drive bad effect on the results. Here are some common emotions associated with trading, which must be avoided at the time of trading or making predictions.

    Excitement and happiness are the most common emotion and captures when most of your trades fall in the right direction of your predictions. You feel a joy by making profits and play some more to add more money to your bucket. One needs to understand that when a trade wins good money, appreciation is must but stop the excitement then and there if you are about to launch another trade. Next trade must be taken as a new game overall, which needs all concentration and effort, your excitement produced because of previous trade should not spoil the result.

    The worst side of this emotion is that it can make you overconfident enough to make a wrong decision. There should be a logic behind every trade, which is overlooked in the joy of winning.

    Same is with the larger percentage of losses when a trader faces in forex trading. More losses bring discouragement and trader becomes panic at a point of time. He is gripped with fear of losing money and this affects his decisions. This may lead to future opportunities go in vein as trader feels like quitting throughout the entire trading time. The logical approach to fighting this emotion is that one must admit the mistakes and realize that this may happen to anybody on a trading day. It may need to get more experienced and educated about the trade and the market.

    Between these two extreme lines, all differences are made. As we all know that forex trading is a time-bound business, one may run out of time when in a panic state. In forex trading, there is little room for missed lines and opportunities. One always needs to be under control in every situation and while the trade is no emotion should take over him.

    Frustration is another enemy, which grips over new traders. When one after one trades are not falling your way, you may be at a hitting point and get frustrated. If it is so, it is the time to take a break and analyze all the moves made in trading. You may require a little help and more information on the strategies and money management.

    Frankly speaking, there is no any standard way to get rid of these emotions, they are sure to occur while you trade. This is led by the first result you get on the start of your trading day. You need to be calm and composed when you start your second trade of the day.

    The Golden Rules of Becoming an Expert Forex Trader

    Have you ever thought that what do professional forex traders do that most of the novice forex traders neglect? Have you thought of uplifting yourself from the category of a novice to that of an expert in the field of forex trading? Have you ever thought what are the various techniques and methodologies that can make you a hugely successful forex trader?

    If your answer to all these questions is yes and you are looking for ways to become an expert forex trader, then here are some golden rules which can help you achieve that goal:

    1. Confidence matters

    A person who has faith in his abilities and has full belief in his skills can very easily progress from a novice to an expert forex trader. Confidence in your abilities matters a lot while trading in forex. This is due to the fact that if you are confident about yourself you would be able to judge the market in a better manner and would also be able to take risks and earn higher profits.

    2. Avoid huge margin calls

    Expert or professional forex traders avoid trades that are highly levered. This is due to the fact that higher the margin, the higher is the risk. And even though these margins are quite lucrative to look at, you can lose a lot if you end up making a mistake.

    3. Go with the market

    Most of the traders make the mistake of trading against the market. This needs to be avoided at all costs. Always try to make and execute trades that are in line with the current prevailing trend in the market. This would protect you from making trades that are highly risky and would also help you earn a lot of profit.

    4. Don’t be emotional

    A trader who trades using his emotions is never successful. Most of the people out there cannot resist the movement of currency prices in front of their eyes and end up putting a lot of money on trades that are not at all profitable. One should try to avoid falling into such a trap in order to be successful in the forex market.

    5. Always analyze

    Most of the people, who trade in the currency market, use no analysis at all. They rely on their judgmental skills and insights to predict market changes and trade accordingly. This can be quite risky for a novice investor who has no experience at all. So, in order to trade profitably in the market, you need to know how to perform market analysis. Market analysis can help you determine current market scenario and can also help you make informed decisions while trading.

    Conclusion

    These are some of the golden rules which if followed religiously can help you rise from the ranks of a novice forex trader to that of an expert forex trader and can help you make huge profits from your investments in the currency market.

    Use of Bollinger Bands in Forex Trading

    There are several ways of predicting or forecasting the volatility in the currency markets. One of the best and the most widely used method of judging the volatility in the price action of a particular currency pair in the forex market is the use of Bollinger bands. The basic principle behind Bollinger bands is to plot the standard deviation of the prices below and above the simple moving average of the price levels of a currency pair.

    This method helps in finding out the volatility in the price of a particular currency pair by creating an envelope around the simple moving average that shows the variation in price levels of a currency pair. If this envelope is thick it means that the market or the particular currency pair is quite volatile in nature and if the envelope is thin it means that there is very little volatility in the market or in the price of the particular currency pair. Bollinger bands are also used for another purpose. They are used to estimate the amount of overbuying and overselling in the currency market.

    Following are some of the tips that need to be taken into consideration while using Bollinger bands:

    1. These bands are plotted either above or below the simple moving average.
    2. These are generally plotted for 20 time periods but the duration can be easily modified or changed according to need or convenience.
    3. The default setting for the two bands is two standard deviations above or below the simple moving average.
    4. One thing that needs to kept in mind while using these bands is that if you are changing the time periods you should also change the standard deviation between the bands. For example, if you are increasing time period to 50, then increase standard deviation to 2.5.
    5. The time frame used to find out the volatility using Bollinger bands can be very easily varied from 5 minutes to daily to monthly or even yearly.
    6. The tightening of the bands is generally followed by rapid movement of the prices.
    7. A sure shot sign of exhaustion is a move outside the band followed by a sharp retracement.
    8. The movement of price in the upper Bollinger bands is a sign of strength and the movement of prices in the lower Bollinger bands is a sign of weakness.

    These are some of the tips that need to be taken into consideration while using Bollinger bands to determine the volatility in the market. Apart from this, one must realize that no estimation technique is perfect, so some amount of care should be taken while using this technique to look for profitable trades in the market.