Online Forex Trading Education

2007-04-01T14:16:00.000-07:00

Inside The Forex Traders Mind

What is the most important thing for consistent forex trading success? Many traders might think, it's a sound trading system. Then again, most forex traders have more trading systems than they know what to do with and still end up losing trade after trade.

Some forex traders might think it's sound money management and then there are others who believe it's a set of strict trading rules. Guess what? Every one of them would be right ...and all of them would be wrong.

Think about this. I could hand you the most laser precise profitable forex trading system known to man. Money management so sophisticated that Wall St would be envious, and trading rules tight enough to choke an 800 lb. Gorilla, but all of that would be totally useless if you lack an ability to...trade with discipline.

If your emotions are always running out of control, the ballgame is over and you lose. You need to stop getting in your own way and overcome your emotions by learning to FOCUS. The average trader is heading for disaster constantly chasing the Holy Grail of forex trading instead of mastering his own mind.

If you have heard it once, you've heard it one thousand times -- losing trades come with the territory, cut your losses; let your winners run etc. But once a trader runs into a few consecutive losers, it leads to doubting the trading system. Then the trader begins to lose confidence. When doubt and frustration start to kick in, losing traders head into a downward spiral that seems to never end.

The solution is simple. You need to constantly train your mind to trust your trading system if you have put it to the test and it proved profitable. Take the signals when they are given and stop reacting with fear, doubt and confusion.

Are you having a hard time handling losses? Does your trading discipline waiver when markets get volatile? Do you doubt your trading system after a few losing trades? Want to take control of your emotions while you trade, then go here to develop a forex trading mindset.

2006-10-20T20:16:00.000-07:00

Best Forex Trading Advice Bar None

The best forex trading advice you’ll ever get if you are serious about trading Forex or considering trading Forex just may be provided in this ideal opportunity for you. This simple-to-follow mechanical trading strategy has been bringing in verifiable profits month after month.

The profit potential has been as good as anything I've seen and I spend an enormous amount of time sifting and combing through copious numbers of systems and techniques.

Forex Day Trader has developed into a special strategy that consistently profits using a mechanically controlled risk approach and even better, offers a complete managed trading program.

How does all this benefit you? Well, the downside of Forex trading is the fact that the markets are open 24 hours. That can be a two edged sword because sometimes it means very late night or early morning trades. Let's face it, no one really wants to monitor a market 24 hours a day, five days per week, especially when there is a better alternative.

In the exclusive auto trade program they have set up computer servers and specially programmed software that will track the strategy and make the trades for you in your account. Completely hands free. All you have to do is decide that you want to have your account auto traded and it will be like hiring a full-time trading assistant to do all the hard work for you!

Sounds kind of interesting doesn't it?

You can take part in this amazing breakthrough opportunity by starting a subscription to the Forex Day Trader. For a very limited time, you'll be able to receive a Free two week trial to learn a very powerful strategy and even to open an auto trade account without any obligation during your trial period. You'll also receive:

*Daily trade set-ups on the major currency pairs: EUR/USD, USD/CHF, GBP/USD, USD/JPY and USD/CAD

*Free Access to Set-ups, Trading Guide, Trading Video and Trading Logs

*100% Mechanical - No Subjectivity Trading Strategy Designed for Forex

*Managed Trading Option Available Trades the Markets for you 24 Hours per Day

There is simply no sane reason not to look into Forex Day Trader. You'll be joining a very small elite group of traders who actually do consistently profit trading forex.

Take a look at the consistent performance, enjoy a fully mechanical approach to trading, and grab your free trial while it's still available.

2006-08-25T18:03:00.000-07:00

Surefire Forex Trading Plans: Sneak Peek Video

Imagine yourself in the midst of a trade, everything is going well. Your trade is just moving into the positive and pulls back a little then BOOM - the market absolutely sinks through the floor taking all your hard earned windfall gains with it. What just happened?

Were the Big Dogs gunning for stops? Was there some kind of major economic announcement or did the market hit a major support/resistance area? Well it may have been one or all the above but that really doesn't help you unless you can pinpoint the reason why.

Here's something else to think about. The thing that appears on the chart is actually human behavior. There are real people behind all those trades and people tend to trade in herds. The chart simply tells you where the herd is headed at that specific point in time.

How do you think then thousands of other traders are feeling after something like that happens? Have you ever actually watched your dealing platform as your stop loss gets hit? You watch that bid/offer price blink on and off then all of a sudden your stop loss gets hit and the position vanishes from the screen into thin air.

This particular scenario has the uncanny knack of separating the men from the boys and the women from the girls. At this point the traders with a carefully crafted trading plan that works step up and make a virtual financial killing. They know the secret of what to do next!

Now here’s what you should do next. Take a look at this sneak peek video here: http://www.surefiretradingplans.com/Blog

and then quickly check out Mark McRae's new course on how to use his trading plans and build your own trading plan because it’s about to sell out. Only 164 of them remain at last count. http://graburl.com/x.php?79t

If you need help with your trading or my scenario sounds all too familiar then by all means grab yourself a copy. http://graburl.com/x.php?79t

2006-08-21T12:03:00.000-07:00

New Forex Trading Course Update

Well there is only 24 hours to go to before the launch of Surefire Trading Plans. The official release time is 3PM EST Tuesday. However, as one of my valued subscribers to the Forex Trading System Review ezine, you’ll get the first alert at 9AM EST. This is the same time Mark will be letting his early bird clients access the special link, so you will have a 6 hour head start.

No one knows that web page but Mark, not even me, it's that secret. Mark has promised to send it to me first thing tomorrow (Tuesday), just before the launch. I will get it to you as soon as it hits my in box, so watch your in box just before 9AM EST for my email. Hurry over to and get signed up as a one of the Forex Trading System Review savvy subscribers!

Roosevelt

P.S. I know for a fact that Mark has 2554 traders waiting
for only 1000 available courses. Make sure you are around
just before 9AM EST tomorrow.

2006-08-19T18:46:00.000-07:00

New Forex Trading Course Pre-Launch

I have just received a heads up from Mark McRae about the release of his new forex trading plans. Apparently, he has been struggling to keep up with the questions about the new course.

The main questions seem to be:

Is this different from your other courses?

Yes, it is entirely different. In my previous courses I concentrated heavily on Fibonacci techniques. In the plans that I demonstrate in Surefire Trading Plans I don't use Fibonacci at all.

Why is it called Surefire Trading Plans? Is there more than one?

Yes, there are three plans included in the course. The reason there are three plans is because one size does not fit all. Some traders work full time and can only dedicate so much time to trading, others like to trade very small time frames and yet other will just prefer some plans to others.

The idea is to give you three different techniques. All three can be used at the same time if you really want to have a lot of signals each week or they can be traded individually.

How big is the book?

The book is 130+ pages long. No fluff, just real information. There are also many other components of the course, not just the book. In the book there is no section for beginners e.g. the book is not padded with information you can find easily on the Internet. It is all solid content.

One of the bonuses will be an ebook which will contain all the information for beginners. I did not want to put this in the main book because I know many of my clients and subscribers trade already but I have made allowances for beginners in the bonus section.

Will this work on stocks?

The plans will work in any market and any time frame. A good plan should be able to trade any market.

I have one of your other courses, should I buy this?

Yes and no. If you are happy with your results and doing well, then I would not buy anything else. If it ain't broke, don't fix it. If on the other hand you are not doing as well as you would like then yes, I would definitely buy it or if you just want to have a look at other successful plans then it is well worth the money. As a trader you should be constantly looking for ways to improve your trading.

How much is this going to cost?

I was wondering when this would come up. The answer is I don't know yet. It won't be expensive. When I say it won’t be expensive, I mean it won’t cost anything like the other courses out there.

If you have bought something from me before, you know I always deliver good quality stuff. The one thing I can tell you is that the traders on the early bird notification will get a massive discount.

The number of packages that qualify for the discount will be severely restricted and the early birds will have the first option to buy at that price.

How do I know if this is for me?

The short answer is I don't know whether this course or any other course will be right for you. It depends on a lot of factors. It depends on how experienced you are, it depends on your starting capital and it depends on you as a person. All I can say is that only a handful of traders have seen the plans and every single one of them was blown away. Read this:

Having read your Plan #2, I have been putting it to the test on the simulator during these past two days with incredible results - consistent results. I looked at the daily, hourly, 30-minute, 5-minute, and 1-minute charts. I am so impressed.

I do all my trades off the lower three charts so I am excited to see that there are far more opportunities with this plan at the lower level charts I like being in and out.

Tonight I used real $$$. I have been trying to teach my wife how to trade in case I leave this earth before she does and it's been difficult for her. And yet, she picked up on plan #2 right away. -- Ty

I will keep you posted on the launch of his new course!

2006-08-04T18:00:00.000-07:00

Forex Trading Systems: Using Market Orders Right.

Forex trading systems require an understanding of what market orders are and how to use them effectively. The following short tutorial is intended to help you in the proper use of market order implementation.

Market Order: is used to buy or sell a selected currency pair at the current market price. A market order is completed at the price displayed once the forex trader pushes the order button.

Stop Order: a stop order is normally executed in a forex trading system when the market meets or exceeds the stop price. Once originated, the order is held until the stop price is reached. Using stop orders you can close out a position (stop loss), reverse a position, or open a new position. Stop orders can also be used to protect an open position by setting a limit on losses or preserving unrealized gains.

Once the market meets or exceeds the stop price, the order is activated and executed at the next available price. A stop order does not guarantee the stop rate. Market conditions like volatility and low volume at the stop price level may trigger a stop order at a cost less desirable than the stop price.

Read more about forex trading system market orders......

2006-07-16T14:57:00.000-07:00

Forex Trading Systems That Maximize Profit.

Forex trading systems that maximize profit are created from historical testing. Any manual or automated forex trading system should include a large amount of historical data to assist the trader to build a dependable system.

The majority of traders with a documented history of trading live using a particular system develop a risk pattern that consists of volatility, draw downs and position size among other factors. However, any trader experimenting with a new manual or automated forex trading system usually will not have the advantage of live trading know-how.

In the case of...

Read more about forex trading system profits

2006-07-09T17:31:00.000-07:00

Forex Currency Trading: How to Get Started

Forex currency trading how to get started - will examine several important factors that must be considered before you begin in the business. Initially, you'll need to select a forex broker that is right for you in order to facilitate your trades.

Compare Brokers for Better Profitability

The spread generally referred to as the bid/ask spread is what brokers charge instead of commission fees. While comparing brokers you'll notice that spreads in forex currency trading fluctuate much like they do in the stock market. Make certain you're receiving the lowest spread available because it means more...

Read more about forex currency trading......

2006-06-30T19:52:00.000-07:00

Managing Spot Forex Trading Losses

One of the most important rules of spot forex trading is to keep your losses as small as possible. With small spot forex trading losses, you can outlast those times when the market moves against you and still be well positioned for the trend reversal.

The one proven method to keeping your losses small is to set your maximum loss before you even open a spot forex trading position. The maximum loss is the amount of capital that you are willing and able to lose on any one trade.

With your maximum loss set as a small percentage of your total forex trading account, a string of losses won’t stop you from trading for any particular amount of time. Unlike 95% of the spot forex traders out there who lose money because they haven’t implemented wise...

Read more about spot forex trading ......

2006-06-25T20:46:00.000-07:00

Genuine Forex Trading Online – Revealed!

A good portion of the online forex trading information isn’t genuine because marketers cleverly disguise the learning material as a long sales letters to highly priced products, services and software.

I don’t have a problem with them selling products, as long as they offer useful and genuine online forex trading information. You need books that are not biased and provide a variety of resources for continuing education and comparison.

After all, you are expecting to learn about the online forex trading in genuine layman’s terms with easy-to-follow examples. The problem with the majority of books on trading forex is they have been unnecessarily complex and technically dense, written for institutional investors making billion dollar-plus trades.

The resources on this site provide...

Read more about genuine forex trading online ......

2006-06-18T11:50:00.000-07:00

Forex Trading Tips for Success.

Forex trading tip #1 Be consistent and disciplined trading forex systems.

In order to be a consistent and winning trader, learn to trust your trading system. Take each entry signal, adjust your stop and close out each trade exactly the way your trading plan is laid out. Follow your trading rules for entering, adding to, and getting out of your positions

Forex trading tip #2 Let the profits run.

Fear and greed is the trademark of losing traders. So this is a delicate balance. You must realize forex trades are a long string of small winners and losers promptly followed by large winners. It’s the difference between profit and loss. The key to a profit...

Read more forex trading tips......

2006-06-12T17:44:00.000-07:00

Forex Trading charts: Secrets of the Ancient Japanese Candlestick.

The use of candlestick charts as a means of technical analysis has become increasingly popular in the forex trading community. Japanese candlesticks are bar charts with lines above and or below the body of the bar, that look just like candles with a wick.

Candle charting was created in ancient Japan well over a century ago. The mass recognition of this technique by the western world has been credited to Steve Nison of Nison Research International.

Candle charts are based on the exact data that develop bar graphs except candle charts signal price move trends in shorter time frames.

Read more about forex trading chart......

2006-05-25T12:11:00.000-07:00

Is Mechanical Forex Trading the Key to Success?

It’s interesting to find that many of the successful traders have the same basic opinion that some type of mechanical forex trading system puts a majority of traders in the best position to succeed. However, it’s not the sole contributor to a winning trading record.

Knowing how to utilize a mixture of mechanical trading and discretionary (manual manipulation) techniques ...

Read more about mechanical forex trading system ......

2006-05-19T14:46:00.000-07:00

Selecting Forex Trading Signals.

The most common way traders select forex trading signals is shop the charts for the one that shows them exactly what they want to see. The wiser approach would be to learn how each indicator works and use that information to build a unique trading system.

Read more about forex trading signals ......

2006-05-17T19:27:00.000-07:00

Forex Trading Made Easy With a Plan in Hand

Traders who find long-term success develop a trading plan with a checklist of criteria for entry, and exiting positions. Creating a system to trade forex before entry plays a large part in avoiding emotional decisions and staying structured in your trading.

Read full article about forex trading systems......

2006-04-24T12:17:00.000-07:00

Forex Trading Tips

For the average beginner and those who perhaps are losing focus because of significant draw-downs, keeping things simple can help instill much needed focus into your forex trading.

To that end, here are ten quick forex trading tips that can help in your forex trading system education and development.

1. Never add to a position that is losing.

2. Always determine a stop and a profit objective before you start entering a trade. Place stops that are based on market information, and not your account balance. If a "proper" stop is too expensive, it isn’t worth it to make the trade.

3. Remember the power of a position. You should never make a market judgment when you have a position.

4. Your decision to exit a trade means that you are able to perceive changing circumstances. You shouldn’t think you can pick a price, exit at the market.

5. In a Bull market, you never want to sell a dull market, in Bear market, you should certainly never buy a dull market.

6. There are times, due to a lack of liquidity, or excessive volatility, when you should not trade at all.

7. Trading systems that work in an up market may not work in a down market. It is good to know and remember this.

8. There are at least three types of markets like up trending, range bound, and down trading, and you should have a different trading strategy for each.

9. Up market and down market patterns always exist and only one is consistently more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped repeatedly. Select trades that move along with the trend.

10. A buy signal that fails is really just a sell signal. A sell signal that fails is a buy signal.

These forex trading tips have been provided for educational purposes only. Use them at your own risk.

2006-04-11T10:30:00.000-07:00

Mesa, Arizona Foreign Currency Trader Ronald Stephen Holt Settles Fraud Charges with U.S. Commodity Futures Trading Commission for Nearly $32 Million

Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that Judge Paul G. Rosenblatt of the U.S. District Court for the District of Arizona entered a consent order of permanent injunction against defendants Ronald Steven Holt of Mesa, Arizona; International Funding Association (IFA) and Global Management Group (Global), both Arizona companies; and Cambridge Global Group (Cambridge), a Bahamian concern, assessing nearly $32 million in sanctions.

The consent order was issued in an enforcement action the CFTC filed against the defendants in 2003, charging that since 1997, Holt and his companies engaged in solicitation fraud, illegal off-exchange commodity futures trading, and the misappropriation of customer funds. (See CFTC News Release 4841, September 22, 2003.)

The order finds that Holt fraudulently solicited about $25 million from roughly 2,500 customers for the purpose of trading commodity futures contracts, including precious metals and foreign currencies, using false claims that he achieved investment returns of seven to ten percent per month.

The order further finds that the defendants traded illegal futures contracts, and misappropriated at least $14 million of the customers’ $25 million. According to the order, the defendants used the stolen funds to purchase residential real estate, vehicles and trailers, art work, gold coins, and various other items for the personal use and enjoyment of defendant Holt, his family, and friends.

The order provides for a permanent injunction against all defendants, and holds the defendants jointly and severally liable to pay a judgment totaling nearly $32 million, comprised of more than $14 million for repayment to defrauded customers, about $1.5 million in interest, and approximately $16 million in monetary penalties.

Gregory G. Mocek, Director of the CFTC’s Division of Enforcement, stated:

As this case demonstrates, we place a high priority on pursuing foreign currency swindlers and freezing their assets to give back to retail victims. However, customers should not enter into investments with blindfolds on and expect that everyone in the marketplace is legitimate. Before you fall for a high-pressure sales pitch urging you trade foreign currencies based on rosy profit predictions, do your due diligence and think hard about whether you can afford to lose your whole investment.
Holt Remains Jailed Until He Accounts for at Least $3 Million in Customer Funds

Holt was incarcerated in July 2004 after the court held him in civil contempt for failing to comply with orders that he account for his assets, including $3 million in customer funds that Holt admitted sending to off-shore accounts. Holt has not clarified his assets and remains in prison. The court’s civil contempt order was entered as part of consolidated contempt proceedings brought by the Commission with the Securities and Exchange Commission, which also filed suit against Holt for securities fraud in the same court.

The CFTC and the SEC have jointly worked with the court-appointed Receiver, Lawrence Warfield, and his counsel, Gutilla & Murphy, to seize nearly $1.5 million in assets.

The CFTC acknowledges the ongoing cooperation and assistance of the U.S. Securities and Exchange Commission, Ft. Worth Office; the United States Marshal’s Service; and the Arizona Securities Commission.

The following CFTC Division of Enforcement staff members are responsible for this case: Timothy J. Mulreany, Robert Hildum, Mary Kaminski, Paul Hayeck, and Joan Manley.

A copy of the CFTC complaint, restraining order, contempt order and the consent order are available at www.cftc.gov.

The CFTC encourages members of the public to bring to their attention any suspicious activities involving futures or commodity options, including matters involving foreign currency trading (forex trading) or suspicious Internet websites.

You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382) or visit the Customer Protection web page: (www.cftc.gov/cftc/cftccustomer.htm

2006-04-10T14:08:00.000-07:00

An Easy Forex Trading System Education Anyone Can Use

A forex trading system education theme has been building over the last several posts. We continue with more specific rules for creating a very easy trading system any trader can add to their tool kit.

Rule #1

Do not risk more than 1-2% of total capital on any one trade. As with any system you will have a periodic series of losses so having larger positions can result in draw downs of capital that are more than you can afford.

The idea is to trade long enough to let the winners run overtaking the losers without wiping out your account or reaching unacceptable levels.

Rule #2

Part of any forex trading education is learning to adhere to the risk reward ratio. On any trade there are just three expected results when every trade is started with the following assumptions:

a) A 50 pip stop loss.
b) Never take a profit until 150 pips in profit.
c) The stop loss will always be moved to breakeven when the trade is 75 pips in the money.

In this scenario each trade has a risk reward ratio of 3:1 with the three expected results being:

1. A 75 pip loss
2. 0 breakeven or
3. A 150 pip profit

A position size based on risk management has arguably the biggest impact on long term forex trading success. This will be at the heart of this forex trading system education.

Let’s say for example you have $10,000 in trading capital. According to the assumptions outlined above each trade will have a limited risk of 50 pips. You decide your risk on this trade will be 1.5%. So basically you will not risk more than 1.5% of your $10,000 this trade or $150 dollars.

The risk based position size shakes out like this - $30,000 or 3 mini lots. It’s calculated as follows $30,000 x -50 = -150.

If you have a smaller account you may not be able to trade this system. Doing a little quick math, risking 2% per trade you will take a 50 pip loss on one mini. It’s calculated as follows: 50 /.02 = $2,500. This is the smallest amount of capital to trade this system.

This is a breakout system trying to capture and track several day trends. It does fine when the market is trending and it bombs when the market is turning.

We plug in round numbers in this example to make the posts easier to see; whatever on the currency pair.

Long Entry 1.1050
Initial Stop Loss 1.1000
Long Take Profit 1.1200

and the

Short Entry 1.0950
Initial Stop Loss 1.1000
Short Limit 1.0800

Use buy stop and sell stop transactions types to post out of the money trades in advance because it’s the only way to get it done. Refer to your trading system instructions for these seldom used order types.

More rules to come in the next post.

Information here is strictly for forex trading educational purposes only. As always, consult with your financial and legal advisor.

2006-04-03T17:35:00.000-07:00

Historical Testing is a Great Forex Education Tool

Some of the more powerful forex trading education lessons are learned from historical testing. Including a significant sum of historical data in a manual or automated forex trading system helps the trader to develop reliable systems.

Any trader with a track record of live trading using a specific system forms a risk pattern that include dynamics like volatility, draw downs and position size to name a few. But anyone trying a new manual or automated forex trading system usually will not have the advantage of this live trading experience.

For these traders, historical and live simulated forex trading tests are the best substitutes for actual trades. A reliable historical test helps a trader to identify patterns that can be used in more optimal tests.

The most telling figures are net pips, maximum draw down, consecutive losses, and success rate. These figures give the trader enough data to quickly determine a manual or automated forex trading system’s value.

When the system does not produce positive results, you can reconstruct or scrap it. If the system seems to have promise, you can tweak and maximize it.

Breaking down each trade you can get an idea of what went wrong with just a few data points. With this data and the figures from the live test, you can optimize your manual or automated forex trading system.

Only after confirming the conditions forecasted by the historical test should the system be traded in a real account. Even then, real trades can deviate from the historical trades in many ways.

Many times the process for optimizing a system are obvious – adjust a stop, change an exit signal, change the entry schedule, etc. At other times the way to handle it is not so clear, and that’s when an automated optimizing system is of tremendous value.

Once the forex trading system is complete and optimized by historical tests, a period of live testing is required.

These systems give you a direction to trade in the market and it's only half the battle. The size of the trade, the precise location of the entry/exit points among other risk measures along with the experience of seasoned traders must be applied to have success in trading.

If a trading system merely provides a direction into the market, you do not have the basic necessities for profitability in this global marketplace.

TradingSolutions, is one tool that takes the complexity out of this process and many other aspects of trading and delivers optimal buy/sell signals complete with entry, stop-loss and profit-taking points along with detailed trade analytics, market commentary, proprietary indicators and charting.

Free download TradingSolutions software

2006-03-31T16:13:00.000-08:00

Forex Trading Course Review:
Bird Watching in Lion Country

You won't find the usual turn the market upside and dump truck loads of money into your account hype in this forex trading course. But you will find a realistic, practical and easy to understand introduction to the forex currency trading market.

This forex trading training goes into great detail and in simple terms a practical trading system. The trading system provides a foundation for the absolute novice and the losing trader. Rest be assured you will have a powerful set of tools to identify what your doing wrong and what you need to do right.

Losing money when you just start to trade live after months of demo trading is not necessarily failure. Bird Watching tells the main reasons why many lose instead of make money early on and struggle to turn it around.

If you know what these basic mistakes are and if you adapt your system to avoid them you'll be a winning trader.

Check this forex trading course out, it's highly recommended and you won't regret it.

2006-03-29T17:42:00.000-08:00

5 Simple Steps to Build a Forex Trading System

All too often novice or inexperienced traders get caught up in chart gazing. Like deer in headlights, frozen in time desperately looking for the path to safety – in this case a winning trade.

Traders have to understand that building a forex trading system is a clear step by step process without the confusion created by most charts. Now, let’s jump right into the 5 step building process:

Step 1 – Build

In the first step the trader has to make two important decisions, what currency pair to trade and will the system be based on trending or not. Each currency pair moves differently. Some systems may be just as effective in both a bear and bull market while others depend heavily on trends.

The core of every system is the signals for trade entry. These signals take on many forms, but most basically spot market tops and bottoms. After the entry triggers are established, the entry type and schedule should be selected.

You can have the perfect entry point, but if you don’t know how to exit trades (to book profit) your entry expertise is useless. Exits can be knee-jerk like fixed and trailing stops or hands-on like limit exits and exit signals. Each has pros and cons while having a very different impact on system performance.

Trailing stops can be used to catch moderate moves while limit exits are good for high percentage pip grabs.

Step 2 – Valuation

The value of the system has to be determined after it’s built. Every system has a bottom line, potential and leveraged value. The best method to measure the value a system is historical testing. This test determines if the system is worth pursuing.

Step 3 – Fine Tune

Your first design will more than likely be flawed to some degree. Run a historical test to identify the flaws and then fine tune the system for maximum performance. Reduce losing trades with a tighter entry schedule. Implement a stop limit entry to avoid the stop being hit too often. Use an exit signal if winning trades produce less pips on average than losing trades etc.

Step 4 - Duplicate

After building one basic system duplicate it into several more. Every duplicated system can have a single factor altered. You can break down a number of systems into separate components and mix match them to form new systems each with a different setup.

Step 5 - Monitor

When a system is complete the final step is to monitor the system in live test trades in a demo account. Monitoring the system test against a live price feed lets you know how the system will react in a variety of trading situations. The live test validates the system and gives you the confidence to use the system in a real trading account.

TradingSolutions is a comprehensive technical analysis software package that helps you make better trading decisions by combining traditional technical analysis with state-of-the-art neural network technologies. It has the ability to learn patterns from historical data, allowing you to create highly accurate trading systems that inform you when to buy and sell. This trading software effectively performs market timing for FOREX.

Free download TradingSolutions software

2006-03-24T21:05:00.000-08:00

Forex Trading Rules of Thumb

You can develop into a better and more profitable trader by applying some of the more important trading rules consistently with the right amount of discipline. The following are a few things that can help improve your chances of success if they are understood, practiced, and implemented consistently in your trading.

These rules have been learned the hard way, mostly through trial-and-error and the inevitable mistakes that everyone makes when they start a trading business.

Set up and Implement specific goals and objectives

Few things are more important to your trading success than setting specific goals and objectives for what you are trying to achieve.

For any business to be successful it must have measurable objectives that are both realistic and attainable. In trading, the primary objective is obviously to make money, but it's important to have other objectives that are not strictly cash-related.

Always remember that reward and risk go hand-in-hand in trading and you cannot expect to achieve high returns without planning and bracing for draw-downs.

Your objectives and goals have to be very specific to you, but they must also include the following characteristics if they are going to be useful. They should be measurable within the allotted time frame and be worth the time and effort involved.

As an example, here is a quick outline of a few actual objectives.

1. Create two new positive-expectancy trading systems each and every year.
2. Strive to make fewer errors implementing the trading systems each year.
3. Work to achieve a maximum return of (specific percentage).
4. Take 2 weeks vacation from trading during the year.

If you have a better idea of what you're trying to accomplish in your trading and when you are trying to achieve it, your efforts will be more focused and you will have greater success.

2006-03-23T20:09:00.000-08:00

Learn to Trade Forex with Confidence and Skill

Using a balance of fundamental and technical analysis can help to develop that sixth sense you need to succeed in the Forex markets. Having said that, it's not only about the mechanics of trading.

The majority of traders who often find themselves on the losing end of a trade make the same common and repetitive mistakes. These miscues are not for the most part directly related to trading. The traders still lack a clear direction, fail to develop a sound business plan and have no formal strategy to implement such a plan.

Many of them jump around from one half baked system to another just trying to stumble on to something that will help them nail home run trades. Rather than learning to think like a trader, understanding the big picture, learning new concepts or trying longer time frames they instead become more narrow minded and look to profit take on shorter time frames at random.

In order to establish a track record of winning trades, you need to develop discipline and a personal forex trading system that makes sense and that you feel comfortable with.

2006-03-22T18:18:00.000-08:00

Understanding Spot Forex Trading Spreads

To understand the spot forex trading spread you need a working definition of what it is. A spread is the difference between the ask price (the buy price) and the bid price (the sell price ) that is quoted in the pips. If the quote between EUR/USD at a given moment is 1.2222/4, then the spread equals 2 pips. If the quote is 1.22225/40, then the spread is going to equal 1.5 pips.

The spot forex trading spread is how brokers make their money. Wider spreads will result in a higher asking price and a lower bid price. The end result is that you have to pay more when you buy and get less when you sell, which makes it more difficult to realize a profit.

Brokers generally don’t earn the full spread, especially when they hedge client positions. The spread helps to compensate for the market maker for taking on risk from the time it starts a client trade to when the broker's net exposure is hedged (which could possibly be at a different price).

Spot forex trading spreads are important because they affect the return on your trading strategy in a big way. As a trader, your sole interest is buying low and selling high (like futures and commodities trading). Wider spreads means buying higher and having to sell lower. A half-pip lower spread doesn't necessarily sound like much, but it can easily mean the difference between a profitable trading strategy and one that isn’t profitable.

The tighter the spread is the better things are going to be for you. However tight spreads are only meaningful when they are paired up with good execution. Quality of execution will decide whether you actually receive tight spreads. A good example of this is when your screen shows a tight spread, but your trade is filled a few pips to your disadvantage or is mysteriously rejected.

When this occurs repeatedly, it means that your broker is showing tight spreads but is effectively delivering wider spreads. Rejected trades, delayed execution, slipping, and stop-hunting are strategies that some brokers use to work around the promise of tight spreads.

Spread policies change a great deal from broker to broker, and the policies are often difficult to see through. This certainly makes comparing brokers much more difficult. Some brokers actually offer fixed spreads that are guaranteed to remain the same regardless of market liquidity. But since fixed spreads are traditionally higher than average variable spreads, you are paying an insurance premium during most of the trading day so that you can get protection from short-term volatility.

Other brokers offer traders variable spreads depending on market liquidity. Spreads are tighter when there is good market liquidity but they will widen as liquidity dries up. When it comes to choosing between fixed and variable rates, the choice depends on your individual trading pattern. If you trade primarily on news announcements that you hear, you may be better off with fixed spreads. But only if quality of execution is good.

Some brokers have different spreads for different clients based on their accounts. For example; those clients that have larger accounts or those who make larger trades may receive tighter spreads, while the clients that are referred by an introducing broker might receive wider spreads in order to cover the costs of the referral. Some offer the same spreads to everyone.

Problems can come up when you are trying to learn about a company's spread policy because this information, along with information on trade execution and order-book depth is rather difficult to get. Because of this, many traders get caught up in all of the promises they hear, and take a broker's words at face value. This can be dangerous. The only real way to find out is to try out various brokers or talk to those who have.

2006-03-21T13:54:00.000-08:00

Forex Trading Strategy 201

Forex trading strategy begins with fundamental and technical analysis. The following explains why this analysis is vital to building a solid forex trading strategy:

Fundamental Analysis

Fundamental analysis is mainly used to better understand long-term trends in the currency market. There are a number of factors that determine the value of a country's currency.

The overall political, economic, and social climates of a specific country are the primary issues measured in fundamental analysis. As you can imagine, it can be difficult measure how these issues affect one another.

Every trader should be aware of the affects of political events, central bank news, non-farm payrolls, consumer price index, imports, exports etc. on the value of currency before trading.

Technical Analysis

Technical analysis is based on the assumption that trends of price movement in the past will be repeated in the future. It's the most widely used method to analyze the forex because many traders find it a reliable way to identify and measure sustained trends. Some of the more popular forms of technical analysis used in forex are Candlestick Formations, Fibonacci Sequence, Financial Breakouts and Trend Lines.

Candlestick Formations

Japanese candlesticks are generally considered more user friendly to the novice trader and many times preferred by experienced traders because they often provide reliable buy/sell forex trading signals. Candlestick formations appear in 15 minute, 60 minute, 4 hour, daily and weekly time frames.

Learning how to accurately read Japanese candlestick formations increases the chances of locating turning points and having the market move in your direction from the beginning and that is exactly what all traders want. Ideally you want a charting package that finds the candlestick formations for you.

Fibonacci Analysis

The Fibonacci ratio assumes trading cycles and market waves have a tendency to flow inrhythmm with the natural price movements of the forex market. Properly identifying the Fibonacci extensions levels enables the trader to profit take before the next major retracement.

Learn to Trade the Fibonacci Way: Video Seminar Download

Financial Break-Outs

Currencies may have a volatile reaction to fundamental announcements. Educated traders respond rather than react to the news. Consolidation normally happens before most major fundamental news. Straddle the market becomes the trading strategy of choice to take advantage of the break-outs.

Trend Lines

Drawing trend lines properly is an art. Knowing how to draw the inner, the outer and the long term trend lines enables a trader to get in on a trend at the right location. Trend lines also help in placing your protective stop while preserving and locking in profit on your open position.

Many of the most successful traders use a combination of the above to make more accurate predictions. Others prefer to create trading systems in an effort to repeatedly locate buying and selling opportunities.

Choosing Your Strategy

Traders who are profitable will develop a personal forex trading strategy and perfect it over time. Some people will focus a specific study or calculation, while others use broad spectrum analysis as a means of determining their trades.

Most experts suggest that you try using a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. Whatever you finally decide, the fact remains that trading is a discipline that requires preparation and hard work.

Your overall personal forex trading strategy should include three vital ingredients; the currency pair you decide to trade, what technical indicators you use for entry/exit plans and sound money management.

Information here is strictly for forex trading educational purposes. As always, consult with your financial and legal advisor.

2006-03-20T17:07:00.000-08:00

Learn Forex Currency Trading Terms

Ask: The quoted price at which you can buy a currency pair. Also called ask price, offer price or ask rate.

Base Currency: Forex currencies are quoted as a currency pair. The first currency listed in the pair is the base currency.

Bid: The quoted price at which you can sell a currency pair. Also called bid price or bid rate.

Bid/Ask Spread: The point difference between the bid and ask price.

Counterparty: The person on the other side of an OTC trade. For retail customers, the dealer is always the counterparty.

Cross-rate: The exchange rate between two currencies where neither of the currencies are the US dollar.

Currency pair: The two currencies that make up a forex trade. Euro/Yen is a currency pair.

Dealer: A firm acting as the counterparty to foreign currency transactions.

Euro: The common currency adopted by Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain in 1999.

Interbank market: A loose network of currency transactions negotiated between financial institutions and other large companies.

Leverage: Control of a large dollar amount of currency with a small amount of capital. Also
known as gearing.

Open position: Any transaction not closed out with a corresponding opposite transaction.

Pip: The smallest unit of trading in a foreign currency price.

Quote currency: The second currency in a currency pair is called the quote currency.

Security deposit: The amount of money needed to open or maintain a position. Also called margin.

Settlement: The actual delivery of currencies made on the maturity date of a trade.

Spot forex market: A market of immediate delivery of and payment for forex currency.

2006-03-17T19:29:00.000-08:00

Basic Forex Trading Strategy Education

Since the forex market is not located on a central exchange, it's the forex dealer that determines the execution price and you're relying on the dealer’s integrity for a fair price.

Typically, forex currency trading positions are closed out by placing an equal and opposite transaction with the dealer. For instance, you buy Yen with US dollars, when you close out the trade you sell Yen for US dollars. This is also known as offsetting or liquidating your position.

There is a settlement date for many forex transactions when currencies are to be delivered. In order to keep your position open past the settlement date, you have to roll-over your position into the next settlement date.

A few dealers will roll-over open positions automatically. Some dealers require you to manually request the roll-over. You may incur a fee based on the interest rate difference between the currency pair.

Be sure to check your dealer agreement for roll-over instructions and any fees you may have to pay.

Currency pairs are quoted as bid-ask spreads and the first currency listed is known as the base currency. The first half of the spread is what the dealer is willing to pay to buy the base currency from you (bid price). It's the price you get if you SELL the base currency.

The second half of the spread is what the dealer is willing to sell the base currency for (ask price). It's the price you get if you BUY the base currency.

Take a look at a EUR/USD spread of 1.2170/1.2178 - this basically means you can sell one Euro for $1.2170 USD and buy one Euro for $1.2178 USD. It may also be quoted as 1.2170/78

In this example, the amount of the Euro spread is .0008 (1.2178 - 1.2170 = .0008). So if you bought (or sold) the Euro and quickly sold (or bought) it before the prices changed, you would have a $.0008 loss on each Euro, or an $80 loss on a 100,000 Euro transaction.

The wider the spread, the more the price has to move before you break even. Now let's say you buy Euros at $1.2178 per Euro (low) and sell Euros at $1.2188 per Euro (high). The transaction size is 100,000 Euros. You calculate your profit or loss this way: ($1.2188 – 1.2178) x 100,000 = $100 profit.

Assume you want to know what your profit and losses on open positions. Simply plug-in the current bid or ask price at the time your thinking of closing out the position.

Let's say you buy 100,000 Euros at 1.2178 and the current bid rate is 1.2173, you have a potential loss of $50. ($1.2173 – $1.2178) x 100,000 = –$50

On the other hand, if you sold 100,000 Euros at 1.2170 and the current ask rate is 1.2165, you have a potential profit of $50. ($1.2170 – $1.2165) x 100,000 = $50

Information here is strictly for forex trading educational puposes. As always, consult with your financial and legal advisor.

As stated previously, over-the-counter foreign currency trading involves risk and may not be suitable for everyone. The only funds that should ever be used are funds that you can afford to lose without affecting your financial situation.

2006-03-16T15:20:00.000-08:00

Forex Trading Training: Who Needs What?

The multitude of people who want to learn to trade, traders who need a different approach, and the many who want to discover the forex trading system "secret formula" to become a profitable trader all need to have the right training explained in a language they can understand.

No matter which category you fall into, don't expect to be successful trading for a living until you have set realistic income goals, developed the proper mind-set, picked the appropriate forex trading strategy and practiced trading a demo account for at least 2-3 months.

Now let's get into a little more detail about what it takes to trade forex successfully:

Set Realistic Income Goals

If you intend to learn to trade forex for a living, you need to treat it like a business and not a hobby. Bear in mind you should never risk any money you can't afford to lose as a cost of doing business. You should only be using disposable income set aside for investment purposes.

Be specific about your income goals. Don't use vague statements like "I'll trade part time and if it goes okay then I'll trade on a full time basis. Instead, use this outline;

1. I plan to study the forex market and practice trading a demo account for 3 months until dd/mm/yy.

2. On dd/mm/yy I will make my first live trade with real money.

3. I will initially commit $3,000 - $10,000 (insert your number) in capital for live trading.

4. One year from going live I plan to earn $2,000 - $6,000 (insert your number) per month.

5. During this 12 month period I want to:

A. Preserve my capital and minimize losses while perfecting a personal forex trading system
B. Double my initial capital and keep all the profits on account
C. Take my profits quarterly to cover living expenses, take vacations etc.

Develop The Proper Mind-set

You should know that studying and practicing trades on a demo account only helps you to better understand the mechanics of day trading. Your real forex trading education begins when you start trading with real money on the line.

In the first few months consider any losses as tuition for training class. It takes patience and dedication to develop into a consistent winning trader over the long term. Trading can be exciting and fun but it's not easy. If it were that easy everyone would be driving truckload of cash out of the market but not everyone is.

Don't fall into the trap of believing the line from Billy Crystal's movie "City Slickers", you can learn that 'one thing' that will make you an instant success. Over time you will put together several tactics that suit your personal risk tolerance and trading approach.

Winning traders at some point experienced that aha! Moment. Many times it's not that they necessarily learned anything new but they became seasoned at the right time. They developed a different perspective. A new and clearer way to understand a concept instead of another complex technical indicator or trading signal.

Well, this should be enough food for thought for now. In the next post we'll explore some basic forex strategy.

Information here is strictly for forex trading educational puposes. As always, consult with your financial and legal advisor.

2006-03-15T18:01:00.000-08:00

Online Forex Trading : How to Get Started

There are several things you should consider before starting your forex trading education. Initially, you need to decide on the broker that’s right for you in order to facilitate your trades. There are a number of different forex brokers to choose from so do your homework before making a final selection. Use the following guidelines as a starting point in your decision making process:

Compare Brokers for the Lowest Spread Offers

The difference between the buying price and the selling price at which a currency can be sold at any given time is known as the bid/ask spread. The spread is where brokers earn their money since they don’t charge commission fees.

While comparing brokers you’ll notice that spreads in forex currency trading fluctuate as widely as the spreads in the stock market. Try to ensure that you’re receiving the lowest spread available in order to save money on your trades.

Use Qualified and Reputable Firms

Unlike equity brokers, forex brokers are typically associated with large banks due to the large amounts of capital that is required to operate in the market. Make certain the forex brokers you’re considering are registered with the Futures Commission Merchant (FCM) and the National Futures Association (NFA) as well as regulated by the Commodity Futures Trading Commission (CFTC).

You can find this and other financial information and statistics about a forex brokerage on the company’s website or the website of its parent company. You will want to make sure that your broker is backed by a reliable institution.

Evaluate Tools and Research Support

Forex brokers offer many different trading platforms for their clients just like brokers in other markets do. These different trading platforms often show real-time charts, technical analysis tools, real-time news and data, and even support for the various trading systems.

Prior to committing to any one broker be sure to make use of free trials and practice accounts to compare the different trading platforms and services. Brokers usually provide technical as well as fundamental commentaries, economic calendars, and other research as a means of assisting you. Basically, you want a broker who will give you everything that you need to succeed.

Keep Your Leverage Options Open

Leverage is the key to forex currency trading because the price deviations (the sources of profit) are set at mere fractions of a cent. Leverage is expressed as a ratio of total capital available to actual capital, which is the amount of money a broker will lend you for trading.

For example, when you have a ratio of 100:1, this means that your broker will lend you $100 for every $1 of actual capital. Many brokerage firms will offer you as much as 250:1.

Bear in mind that lower leverage equates to lower risk of a margin call, but it also means that you get less return for your buck (and vice-versa). Basically if you have limited capital, you need to make sure that your broker offers high leverage.

Having a variety of options lets you vary the amount of risk you are willing to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile currency pairs.

Select a Trading Account That Fits Your Budget

Many brokers offer several types of accounts. The smallest account offered is known as a mini account and only requires you to trade with as little as $300. This offers you a high amount of leverage (which you need in order to make money with so little initial capital).

The standard forex currency trading account allows you to trade at a variety of different leverages. This account level requires a minimum of $2,000 initial capital to get you started.

A premium account often requires a significant amount of capital to get started. It offers the same leverage options as the standard as well as additional tools and services.

At the end of the day, select the broker that has the right leverage, tools, and services that meet your budget needs as well as your investment goals.

The information here is strictly for forex trading educational puposes. As always, consult with your financial and legal advisor.

2006-03-14T20:14:00.000-08:00

Online Forex Trading Education Overview

Online forex trading commonly known as foreign exchange trading, is the buying and selling of currencies from different countries. Not to long ago the extent of forex currency trading was banks sending deposits around the world, corporations hedging their exposure to currency risk in different countries, central banks forwarding national economic goals through monetary policy, and massive investment funds playing the role of speculator.

In the 90's a chain of events enabled small investors like you and me to take advantage of the forex market. It’s the largest trading market in the world; nearly $2 trillion in size and several times larger than all US stock markets combined.

Online forex trading functions through what is known as the "interbank" market. Interbank is simply a way of saying that banks trade with each other absent of an exchange like the New York or London exchanges.

There are four major currency pairs generally considered for speculation trading; Euro vs. US dollar, US dollar vs. Japanese yen, British pound vs. US dollar, and US dollar vs. Swiss franc. This is how they appear on the forex market: EUR/USD, USD/JPY, GBP/USD, and USD/CHF.

Currency prices are determined by simple supply and demand. The more traders at any given moment during the 24 hour trading day want to sell Euros for US Dollars, the price of Euro relative to USD will weaken and USD relative to EUR will strengthen.

There are also other factors that determine the value of a country’s currency. Political strength, economic strength and interest rates are the three primary issues.

Political Strength

Investors around the globe want to be certain a particular country’s government is absolutely stable before investing in that currency. This means the absence of civil unrest, conflicts with other nations, extreme poverty and the like.

Economic Strength

A strong economy is an overriding factor to people investing in foreign currency. A trader is looking for steady economic growth with increased employment, production of goods and exports.

Interest Rates

Higher interest rates tend to draw money into a country from around the globe. Investors are always looking for the best return on their money so keeping an eye on major economic news and events is vital.

Unlike the futures and stock markets, currency trading does not happen on an exchange. Trading shifts from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and lastly back to the U.S. That’s the function of an international time zone.

In the past, the forex inter-bank market was inaccessible to small investors because of the large minimum transaction sizes and strict financial requirements. Now, through a forex market broker you can open up what is known as “mini accounts” for as little as a $300 deposit.

Learning a forex trading system may seem risky and difficult in the beginning, but with the proper forex trading education and mental approach you can be successful.

The information here is strictly for forex trading educational purposes. As always, consult with your financial and legal advisor.

Like many other investments, forex trading carries a high level of risk and may not be suitable for all investors. Forex trading requires constant monitoring and an understanding of the relationship between currencies, as well as what factors influence the currencies' value.