There are certain essential things that one must know about before they can ever plan on making income from the forex market. Here are my top 5 things that everybody must be aware of if they wish to achieve success trading the forex market:

1) Expect to have losses – I can’t begin to tell you how many people go into this industry and just expect perfection. Even if they don’t flat out say that, you can tell they were thinking like that because when they received their first loss, they were STUNNED. You’ve got to expect losing trades. There is no such thing as perfection in forex.

2) Don’t Treat This Casino – If you’ve got a gambler’s mentality, you are not going to make it far. You should be taking calculated risks, not hoping on a wing and prayer that each trade will be successful. Forex is both an art and a science. It’s not like the poker machines. Treat it as such.

3) Understand money management – I don’t care if you’ve got the greatest trading system in the world, if you are over-leveraged, you are destined for disaster. All it takes is just one trade to go the wrong way, and all your hard earned money is gone.

4) Handling Fear – For starters don’t ever trade with money that you can’t afford to lose. If this is the money that you use to put food on the table, then obviously you are going to be scared to lose it when you are in a trade. That’s when you know you are playing with scared money.

5) Handling Greed – On the opposite end of the spectrum, when people get in a nice winning streak, some of them have a tendency to feel as if they are untouchable, and they can control the market. These are the people you see getting a margin call a week later.

After you get the basics down, its important to what makes the market really tick. Its not as complicated as you may think. All it requires is a simple bar chart and the knowledge of price action.

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It seems that USD based currency pairs have the lowest spread. However, I am living on the other half of the earth (12 hours ahead/behind New York), and I am new to such forex trading

It’s not entirely about location, since most financial markets are already integrated across the globe. USD based currency pairs have the lowest spread because the USD dollar remains the primary currency of trade across the planet/ among countries. The US remains the dominant economy in the world and so most other currencies are pegged to the USD, although the Euro and Japanese Yen also stand as major currencies. With that being said, volatility/spreads are lower/tighter because of the liquidity and activity of currency traders.

Let’s shift our attention to a common household item like soap (as if it were the USD). If there are a lot of buyers and sellers of this item, then the price and quantity movements would be shifting all the time at minuscule fluctuations. No one trader (buyer/seller) can effectively influence the price level of the soap because if he sold too high, another trader will simply come in and sell it a lower price (albeit at a fractional discount). This also applies to a buyer, if he quotes a price for a soap another guy may step in and offer to buy that soap at a higher price (albeit only at a fractional premium). Since everyone uses (demand) and sells (supply) soap, you can be sure someone will always be there to handle the soap, therefore higher liquidity, lower volatility, smaller spreads.

Rarely traded currency pairs are usually volatile and have bigger spreads simply because their liquidity is low. Let us again use a substitute item, bird cage. Although soaps are frequently seen in most if not all households, a bird cage is not. This means that not everyone is interested in buying or selling a bird cage. The very fact that a currency is infrequently used in market trade, also means that there is no point in handling too much of it. Sellers of a currency can try to offset the risk of not being able to sell it as easily as more popular currencies by demanding wider spreads. They can’t be sure that they will be making a sale in the next minute or so, but they know that in the next hour, the wait will be worth it (kind of like selling furniture).

Just keep demand and supply in mind. I hope this simplifies the concept!

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70-100 pip a day

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What are the Trend Lines?

Trend lines are probably the most common form of technical analysis. They are probably one of the most underutilized ones as well.

If drawn correctly, they can be as accurate as any other method. Unfortunately, most traders don’t draw them correctly or try to make the line fit the market instead of the other way around.

In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys). In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).

How do you draw trend lines?

To draw trend lines properly, all you have to do is locate two major tops or bottoms and connect them.

What’s next? Nothing. Uhh, is that it? Yep, it’s that simple.

Here are trend lines in action! Look at those waves!

Types of Trends

There are three types of trends:

1. Uptrend (higher lows)
2. Downtrend (lower highs)
3. Sideways trends (ranging)

Technorati Tags: Downtrend, Sideways trend, Trend Lines, Uptrend

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I am looking for a book with practical and realistic hints, tips and strategy which is also written in a very coherent way.

Thanks

Here are some that I can recommend to you. Both are filled with good information that both beginning and experienced trader will find useful.

“Forex Patterns and Probabilities” by Ed Ponsi and “Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings” by Kathy Lien.

I have read both of these books. You will find gems in each of them that can only come from those with extensive experience in the Forex market.

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Forex market is complicated but still challenging to get cash from there. It’s about how to trade in this market for long term.

If you’re a potential investment player who’d like to make it big in the business and financial world, then you go for forex trading. The FOREX, also known as the foreign exchange market is one of the largest financial markets in the world with and estimate of $1.5 trillion turn-overs every day. Here are a few strategies on how to make it big in the forex market.

Strategy One: Know your market. The best way to get advantage, earn profit and minimize losses is to familiarize yourself with the market and how the whole system works. In the forex market, the players are usually commercial banks, central banks and firms involved in foreign trade, investment funds, broker companies and other private individuals with large capital. With the speed and high liquidity of asset, most companies engage in this business than in any other trading venture. Transactions are done in a jiffy; there are no membership fees and there is always the allure and promise of big, big profit.

Trading is done in pairs. The most commonly traded currencies are usually the US Dollar, Japanese Yen, Euro, British Pound, Canadian Dollar, Australian Dollar and the Swiss Franc. The more commonly traded currency pairs are the US Dollar and the Japanese Yen, the Euro and the US Dollar, the Swiss Franc and the US Dollar. In Forex trading, everything is speculative and virtual. There is no actual product being sold or bought. The activity mostly consists of computed entries made on the value of one currency against another. Say for example, you can buy Euros with US Dollar, hoping that the Euro will increase it value. Once its value rises, you can sell the Euro again, thus earning you profit.

Strategy Two: Learn the language. There are three concepts you need to know in the currency market. Pips refer to the increase of one hundredth of a percent of the value of the currency pair you are trading. Usually each pip has a value of $10 or $1. Volume is the quantity or amount of money being traded at one particular time in the market. Buying is the acquisition of a particular currency. A trader buys with the hopes that the price of the currency will increase. Selling is putting a currency up for grabs in the market because of a potential or possibility of a decrease in its value. There are also two techniques of analysis usually used in this business – the fundamental and the technical analysis. Technical analysis is usually used by small and medium players. Here, the primary point of analysis revolves on the price. Fundamental analysis, on the other hand, is used by bigger companies and players with higher capital as it involves looking at the other factors affecting the value of a particular currency. In this type of analysis, the player also looks at the situation of the country, particularly issues like political stability, inflation rate, unemployment rate, and tax policies as these are seen to have an effect on the currency’s value.

Strategy Three: Develop a sound trading strategy. Your trading strategy would depend on what kind of trader you are. The basic thing with developing a trading strategy is to identify what kind of forex trader you are. A good trading strategy should lessen, if not, eliminate losses. Plan also the size of your transactions. It is better to conduct many different trades than one huge transaction. Not only does it develop discipline, but it also lessens any possible loss as only a fraction of the capital is affected. Part of a trading strategy is developing the values of discipline and proper money management.

Strategy Four: Practice. Try paper trading, a great way to practice your skills, see how the market works and get acquainted with the software and tools being used. There are online brokers who allow free paper trades, which allows practice and experience before doing it with real money.

Strategy Five: Choose the right forex dealer. Make sure that they are regulated by the law. Take not of dealers with investment schemes that give out too-good-to-be-true-just-false-hopes promises. Look at investment offers before getting started.

Forex trading may seem easy and manageable. But the emotional stress, the demands and challenges of being a forex trader requires more than just the knowledge of the market. It requires more than just a keen and sensible head for business. It’s all about a gameplan, a strategy.

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I like a strategy that;

1) reduces the market risks associated with Forex market
2) pays me an interest rate payment 7 days a week
3) takes advantage of downtrends to buy additional shares
4) takes advantage of uptrends to capture profits
5) requires minimal time staring at a stupid computer screen
6) requires less than 1 hour a week to monitor all my accounts
7) can consistently generate at least 7% per month

Oh wait……that’s the strategy that I use right now!

Paul Upp
(925) 236-1839

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My Top 3 Forex Trading book(s)
* ‘Forex Made Easy’ – James D.
* ‘Forex Revolution’ – Peter Rosenstreich
* ‘New Trading Dimensions’ – Bill M Williams

Combine these with an online forex trading platform like Forex Tracer and you’re good to go. Start small, be realistic and have a monetary goal. Of course, a level of experience and mentoring is critical as well to your success.

Know that forex trading is risky but is also very profitable. Nothing ventured nothing gained. It’s easy to get started with a demo account that ‘simulates’ real world forex trading, so you can learn the ropes from there and move on to actual trading. It’s really not as hard as you think.

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I am going to be 18 years old in a few days, old enough to invest money. I have had a practice forex trading account with FX Express and have discovered some interesting things and have found ways to make money consistently at 10% compounded daily by developing my own trading rules by using only 1:25 leverage and setting a stop-loss of the value of all my trading capital so I don’t keep on losing small amounts of money consistently. So far this has worked out fine at me winning every trade so far since I started doing this. What I’d like to know is if I should copy someone elses trading styles and strategies, or develop my own ones to suit my personality? Please advise.

If your trading strategy is working for you there is no reason to change it. You may decide to improve on it as you go along. Fixing leaks where you feel your strategy may be losing. Your strategy should be based on your trading style and ability and no two traders are alike.

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How A 19th Century Wall Street ‘Fat Cat’ Laid The Groundwork For Forex Day Trading

In all my years of studying and researching the markets, I’ve run across a few critical ideas that ended up becoming part of the “DNA” of my trading philosophy. I’m going to reveal a few of these in this letter.

The first of my key influences was a Wall Street legend, statesman, and presidential adviser born in 1870 in Camden, South Carolina.

I’m talking about Bernard Baruch… the man was a financial genius.

Luckily, his genius has been documented in several books for those willing to listen, and my students and I have been benefiting from it for years… and you can, too.

I’m paraphrasing a bit here, but here’s one of the most profound things he ever said:

“I can’t help making money – I just wait for the market to bottom and buy on the way up, then I sell before the top. I’m satisfied with the middle one-third of the move.”

The middle one-third!

That may not seem too profound to you, especially if you’re a beginner, but here’s why it’s a big deal:

Too many traders think they need to capture the entire market move, and end up throwing away perfectly good trading methods because of this misunderstanding. They also drive themselves crazy trying to achieve this impossible feat.

The reality is, the only way you’ll buy at the exact bottom and sell at the exact top of a market is through sheer luck… and my students and I don’t trade on luck.

Baruch was very clear about this when he said, “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”

So it’s far better to go after that middle one third, where the probability of being able to know the direction of the prevailing trend is high.

It is the middle one third where all of the opportunity lies. So I believe you should wait for the dominant trend to show itself and then swing trade on corrections and rallies within that middle one third.

Technorati Tags: Bernard Baruch, dominant trend, market move, Wall Street

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