No matter how well you did in school or what kind of IQ you have, we all need specialized training in certain areas. The forex market is no exception to this. Forex training should be a prerequisite for anyone considering getting serious about trading world currencies for profit.
Is formal training truly necessary? After all, there are plenty of books and online articles on the subject. Wouldn’t it be enough to read them on your own and getting into the market without going through the hassle of official training?
Well, look at it this way. You could read manuals on how to fly a plane, but you probably wouldn’t want to try it for real without getting some hands-on training first in a simulator. By the same token, you shouldn’t jump into buying and selling currencies without getting some training first. You might be able to manage successfully without it, but you’ll be so much better prepared with it.
Many forex platforms offer simulators or practice accounts. In these, no real money is involved. It’s pure simulation, giving new traders an up-close-and-personal look at the market without any financial risk. In these demos, you get all the charts, figures and other data you’d get if you were doing it for real. It’s excellent practice for the real thing.
How much training you need depends on how serious you are about joining the marketplace. If you truly want to make money buying and selling currencies, it might be wise to get as much training as possible.
In trading more so then in any other business, when you fail to plan, you plan on failing. In trading you must have a plan of action written out before you place the trade. The Forex market is way too fast to think you can make sound judgments on the fly. It is full of price reversals and head fakes, and if you have not prepared yourself for the obstacles ahead of you, you are not going to succeed.
You need to have studied your Currency Market and plotted out your support and resistance levels before you pull the trigger on a trade. More so then knowing your forecasted price points your Money Management system needs to be sound and in place. Trading Plans are 85% Money Management and 15% analysis. In this article we are going to focus on some of the Analysis.
I have a whole section in my E- Book on Money Management and it needs a lot of depth. It is the most important aspect to your trading.
Part of it is Position Size which I went over in previous articles. I will not belabor the points here, but I do suggest you reread them if need be. The trading plan has more to do with how you are able to trade the currency market, based on your risk capital.
However, no money management system can make profits for a trader that is hap hazard and makes bad trading decisions, conversely and excellent market timer with great trade selection will not be guaranteed profits without good money management. It is a double edged sword. That's part of the 85% of the trading plan. I will now go over some of the more important minor (most often overlooked) aspects.
Minor Rule Number 1
Before you enter your trades write down the price move you forecast that you can capture. Look for modest profits; don't always be looking or a home run. Get on base often and learn to use trailing stops, this way the market takes you out of the trade. When you are in a good position you will be able to ride the wave longer and capture more profits with less head games occurring. Always be mindful of your risk/reward ratio it should be a minimum of 1.7:1. Example you risk $1000. You should be looking for $1700 in profits.
Minor Rule Number 2
Establish profit objectives. It is a bit different then rule number one. In rule one you have your modest gain that you are looking to capture. In this rule we are going that step further where we are in a run away market that is in our favor and have perhaps broke a support or resistance level. You should have an overall profit objective based on a percentage gain to your equity that you would want to lock in.
Example could be a 12% gain of your account equity. You will move your Trailing Stop to that level and let the market take you out if a retracement occurs. This is a crucial point to keep in mind, I have seen trader's double accounts in one day, and lose all the gain and Base equity because of greed and fear, in another trading session. There can be nothing worse then having a great trade turn bad and not having an exit hatch to jettison out of. Believe me you want to keep those gains; it is really annoying when you let them slip away.
Minor Rule Number 3
Have a maximum amount of capital that you are willing to commit at one time. You have to limit your exposure so you do not begin to over trade. Don t open 5 different positions in different currencies at once. Go to were you believe the action is and plan your trades accordingly. If you feel you need excitement go do something that quenches that thirst. Don' t use your trading account to escape boredom.
Minor Rule Number 4
Have plan for increasing or decreasing your positions. If you want to add to a position do it at certain predetermined levels. Always add less then your base position. (Pyramid Profits with a larger base on first) Example would be if you have 100,000 euro on and you are going to add do 50,000 more, then another 50,000 at a different level. When you go to liquidate the position if you're long sell into the rally at predetermined levels (Stepping).
If you're short buy into the dips at predetermined levels as well.
Minor Rule Number 5
Do Not Force A Trade!
This is really not a minor rule; really there are no minor rules just ones that seem to have less glamour then others. I would like to go over something that I feel is a real important point. Realize how fortunate you are that you do not have to trade every day.
When I worked at the bank I was forced into trading every day and night at times due to customer orders, Interest Rate Swap tails that needed to be bought or sold, Money Market desk activities; that's the borrowing and lending of currencies taking interest rate positions. So my point is do not force a trade if it s not there for you. Enjoy the process of being a sniper, and entering on your terms.
This is an article written by Thomas Strigano, from Forex Confidante.
Making mistakes is a natural part of any learning process. When learning to trade or invest in the Forex market, mistakes can lead to losses and become very expensive. Mistakes are made not only by new but also by experienced traders.
Here's some of them:
1. Do not use too much margin when trading or investing. Margin is the use of borrowed money to purchase securities. While it is true that using margins can increase your profits, it can also make your losses bigger. Never look at margins as “free” money, otherwise your potential to lose much more money will greatly increase. Margin is not free money and using it too much can end up making more debt than profits. You would not buy stocks using a credit card, so you should not use margins to trade currency. When investors use margins in Forex trading, it requires the investor to watch their investments much more closely than when margins are not used. Margins should never be used if the investor does not have the experience or time to closely monitor their trades.
2. Do not buy and trade on unfounded tips. Unfortunately, this is one of the most common mistakes, even with more experienced traders. It is easy to be tempted to buy or trade currency or even stocks when you overhear someone talking about the next big “thing”. Do not fall victim of investing and trading based on tips you hear or read about on television or on the Internet. If you hear about a trade that interests you, do some research and talk to your broker before trading or investing. If possible get a second opinion about a Forex tip before buying, selling or trading any form of currency.
3. Understanding how the foreign exchange market works, the terminology and terms used in the Forex is very important to new traders. Go through the tutorials and free demos widely available on the Internet that show how to use the Forex market to your advantage. It is also wise to choose an experienced broker that can help you trade and invest. Brokers should know everything about the Forex Market and be able to help traders and investor make wise choices. To be on the safe side, find a broker that is tied with a good financial institution and that has experience in the Forex. 4. Avoid buying or selling any currency just because the rate is low. Sometimes this may be a good move, but a low rate does not necessarily mean that it will profit the investor. Instead of choosing a currency to buy or trade just because it is low, it would be best to look at all of the factors that affect the exchange rate and look at the trends and history. Most of the time, there is a distinct reason why these rates are low. Research the trends of the currency and find out, which ones are the best profit makers when trading on the foreign exchange market.
5. Do not underestimate your trading ability. Some investors feel that they do not understand the Forex well enough to trade to their fullest ability. Anyone with willingness to learn the Forex can profit with some education and research. The process of learning all the aspects of the foreign exchange market can take some time, but it is within the reach of new investors to learn how to obtain success and profits in forex trading.
Fundamental analysis and technical analysis are the two basic tools used to follow and predict the behavior of the forex market.
While fundamental analysis considers the factors that affect a country's economy and its effect on its currency, technical analysis predicts price movements and market trends by studyimg what has actually happened in the past. Technical analysis looks at the past performance and history of an investment and creates charts to be used as primary tools. It relies on data showing this history and current trends and patterns to make predictions of future market activity. It ignores the intrinsic value of the investment in favor of its statistical abstract. Technical analysis is only concerned with price movements and not with the reasons for any changes.
Technical analysis is used to identify significant patterns of market behavior. The history of the value of currency pairs is a matter of statistical record and can be easily accessed. Its supporters claim it is the only sure way of understanding the market and predicting its future based on the high probability that certain recognized patterns tend to repeat themselves on a consistent basis. This is especially true in the Forex market. Fans of technical analysis say that the economies of modern nations are so complex that they no longer can be accurately predicated. It is only in the study of the past history of the currency and the trends that are revealed that a possible glimpse of the future be found.
Forex technical analysis aims to support the investor in determining his views and forecasts regarding the exchange rates of currency pairs. The technical approach concentrates on prices and is based on objective tools like charts and tables, which neutralize external factors and emotions. It can and should be used to project movements in the Forex trade. Of course, in the end, it is going to be the investor's own preference that settles the question, and this is true of the market. Both fundamental analysis and technical analysis are mere tools that help make the decisions that in the end only the investor can make.
Before you commence Forex trading for real you need to learn the basic concepts and the inner workings of the Forex market. Individuals who attempt to enter the foreign currency exchange market without an understanding of market fundamentals often end up losing money. To be a successful Forex trader takes education, determination and discipline.
The foreign currency market is a massive, nonstop global trading arena where knowledge and experience are critical to success. The Forex market moves at lightning speed and can take new directions from moment to moment. The ability to identify the direction the market is going to and to invest in the right currencies at the right time is acquired through observation, training and practice. In Forex trading, a great deal of real-time information has to be absorbed, analyzed and acted upon throughout the day. Trading successfully is by no means a simple matter. It is a skill that is developed over time.
Luckily, a lot of resources and training is available online. Websites and book stores are loaded with Forex trading advice. Anyone with a computer and access to the Internet already has access to a world of information on the basics of the foreign exchange market, technical analysis, trading terminology. More specialized publications (Forex forums included) offer charts, forecasts, Forex outlooks, indices.
Trading platforms provide tutorials, guided tours, seminars and courses.
One can also learn and practice Forex trading with absolutely no financial risk at all through demo accounts offered by many trading platforms. Free demo accounts are designed to familiarize the user with the trading software, as well as test his/her knowledge and strategies under real market conditions. The demo account works exactly like real trading account, except that the user is not exposed to immediate risk. It is advisable to practice with this kind of simulated trading system before using real money and keep detailed records of the trading results to analyze performance.
Other experts and trading platforms recommend starting with very small volumes and increasing them as one gains experience and confidence. For as little as $25 one can start trading and learning in real time.
Forex trading is a profitable and attractive investment opportunity you can do from home or office and from any country in the world. A true trader is a professional who employs knowledge and discipline and uses the latest in technology to execute his daily trading orders.
On the 12th January 2009 John Kaplan and Kevin Hansen are releasing the 7-figure 100% mechanical forex system that earned them more than $112,000 in just 3 months.
It's called "Forex Miracle" - a radical forex formula that exploits the forex markets in such a devious way that the resulting profits are in the realms of the *insane*.
It consistently generates 91.72% winning rate.
Let me just throw some other figures your way...
- $1,221.59 Per Day...
- $8,551.15 Per Week...
- $36,647.70 Per Month...
...and this was from a relatively small trading account.
That's why the anticipation of this system has been extraordinary.
"Forex Miracle" is an ultra powerful system that gives you the exact trading techniques they use to generate hundreds of thousands of dollars trading just one SMALL account. This is created by highly esteemed forex traders - John Kaplan and Kevin Hansen - and the purpose of this brand-new forex system is to give ordinary forex trader a proven, battle-tested forex trading system and replicate their success.
In fact, some of their own successes in this area have been featured in some of the most well-known financial publications.
They have some incredible proof of making huge income trading VERY small accounts. What makes this both unique and vastly different is that this $112,386.56 was made *without* the help of a huge capital, without any time commitment AND without any trading skills.
From what I have seen, this is unlike anything else that has been released before and it eliminates most of the problems that the majority of forex traders have when trying to generate income.
The good news for most people (and what really sets ‘Forex Miracle’ apart from other forex products) is that to make money with it, you as well don’t need a huge investment, any time commitment, or any trading skills at all. In other words, literally anyone can become successful with this and the good news is it takes very little time to set up.
Listen, every one knows that 2009 is going to be a tough year economically. There are going to be a large number of job losses no matter which country you live in and as a result there could be a very strong possibility that you will need some sort of financial back up if the unthinkable happens.
If you can read and are able follow step by step instructions then you’ll be able to implement this incredible system and build your own $1 million forex empire.
