Forex and Online Investment Info Centre

7 Stock Market Tips You Can't Live Without

2006-12-09T18:07:00.001-08:00

Every day there are a dozen new HOT stock market tips that guarantee your financial success. Every day there are hundreds if not thousands of people that jump on the bandwagon, and every day, each of those people are disappointed.

When it comes to popular stock market tips, there is no golden ticket to striking it rich. So I'm going to show you how to make your own HOT guidelines that will ensure you stay on the right course-the one that leads to success.

Stock Market Tip #1: Play Your Game

Develop a set of rules that you can follow. Whether they include some of the tips in this article or are strategies you've always lived by, STICK WITH THEM. An inconsistent, but more importantly an undisciplined trader will never make a profit. Chasing stock market tips won't make you money. Your rules are your money. Again, there will always be hot stock market tips that ensure success, but if you continue to whole-heartedly practice your own tips, you'll see profits in no time.

Stock Market Tip #2: Control Your Risk

There are many adventurous traders out there…and those are the ones that loose their fortunes. If you always look out to protect your capital base you'll ensure your financial safety. Now one of the most important stock market tips I can give you is to continue to let that capital base grow. That way, even if all of your investments fail, you won't be jeopardizing your previous profits. As a general stock market tip, never risk more than 3% of your portfolio on any one trade.

Stock Market Tip #3: The High Road in Cutting Your Losses

Things happen. People lose money…LOT'S of money. So don't be one of them. Basically this stock market tip means don't be stupid. If one of your investments turns sour don't stick around hoping it will right itself. Have a set target loss percentage where you can cut and run. Again, it's about being disciplined, remember? Set it no higher than 15% of your opt in, and you'll have a save exit with every trade.

Stock Market Tip #4: The Sky's the Limit

In contrast to Stock Market Tip #3, if a stock is rising beyond belief, don't jump out in fear of it suddenly falling back to reality. Instead, ride it out as long as humanly possible. This is how the biggest and most talked about gains are made-this is how FORTUNES are made. This stock market tip will ensure that you give yourself the best chance possible of striking that gold mine. Now if the stock does in fact start to fall, go ahead and opt out. It'll be worth more to you to risk that little loss in the end for that huge gain you'll make.

Stock Market Tip #5: Back to School

You know the saying, “Learn one new thing every day?” Do it. Seriously. Our stock market is ever-changing, diversifying, and adjusting, and YOU need to do your homework. It takes a lot to stay on top of it all. So if you come across something that you're not familiar with just look it up. If you think you know it all…go LOOK for something. One of the easiest ways to accomplish this stock market tip is to know all of the trading vocabulary. That's also the easiest way to ensure you're prepared to take on any obstacle that comes your way.

Stock Market Tip #6: How to Bring Your “A” Game

Stock market trading isn't only about successful financial advancements. Well actually it is, but you're not going to be able to do that every day if you don't have the emotional strength to pull it off. This stuff is supposed to be fun. If you're not at your best psychologically, you're not going to be focused, you'll make poor judgments, and most importantly you won't make money. Just think about the meaning of this stock market tip. If you're enjoying yourself, it's no longer work, so you are free to “work” in a mentality that will, in fact, play to your strengths…and wallet.

Stock Market Tip #7: Staying Above the Curve

You don't have to make a fortune with every trade you make. You don't have to become a millionaire at the end of every trading day. Here's stock market tip #7: You won't. The people that shoot for that glory every day are the ones that are losing fortunes, not making them. What you need to do is play above the curve. Don't be average, but don't be extraordinary. Extraordinary has WAY too many risks to worry about. Fortunes are made gradually. It takes discipline and consistency…something the “average” trader lacks.

About The Author

Joe Harris provides all the proven stock market investing tools you need to succeed today, including the best tips and strategies. For details visit his site: http://www.myeinevstor.com.

Stock Market Basics

2006-12-09T18:02:00.000-08:00

The term stock market, as the name connotes, is a place where you can market or trade a company's stock, which the corporation issues through shares in order to raise capital. Of course, capital is the cost that a company incurs in relation to producing its products and services.

The people who buy these shares are the shareholders, and the term can refer to an individual or an organization.

The term stock market can also apply to all the stocks available for trading (as well as other securities), for example, when used in terms like "the stock market performed well today."

The stock market involves the trading of bonds, which is a debt security that stipulates that the issuer of the bonds holds the holders a debt. It is exactly like a loan, only that it is in the form of a security. These bonds are traded over-the-counter, which means they are traded directly between two parties. Thisis opposed to exchange trading or the trading that occurs on stock exchanges or future exchanges.

The stock market also involves the trading of commodities, which refer to raw commodities such as agricultural products (coffee, sugar, wheat, maize, barley, cocoa, milk products) and other raw materials (pork bellies, oil, metals).

The stock market is different from the stock exchange, which is primarily concerned with bringing togehter buyers and sellers of stock and securities.

You can participate in the stock exchange as an individual stock investor or as major player (large hedge fund trader). Orders at a stock exchange are usually made through a broker.

There are two types of exchanges where stocks can be traded. There is the exchange that has a physical location where verbal trading takes place. This is the more famous type of exchange because it is often depicted on TV showing animated trader shouting at each other, waving and running around frantically. That's exactly how the stock exchange works. What happens is traders enter into verbal agreements on the prices of stocks. The other type of exhcnage is the virtual kind where traders deal electronically through computer terminals.

About The Author

Jonathon Hardcastle writes articles for http://4investing.net/ - In addition, Jonathon also writes articles for http://1stconsumerinfo.com/ and http://universeofjobs.com/.

Stock Market Speculation or Gambling. What is the Difference?

2006-12-09T17:59:00.000-08:00

The art of speculating in one form or another has been around forever.

When it comes to speculating, there are always three things that you can be sure of – there will be always people willing to speculate, there will always be people who will love to play the game with the first group. Lastly history can be counted on to repeat itself.

Sure the object of speculation may change, the rules may change and the technology may change. But in the end it is always the same.

However what has happened before is 100 % sure to happen again. You can count on it. Everyone thinks always that they are so original when it always the same story again and again. Whether it is tulip bulbs, precious metals, mutual funds, lottery tickets or penny stocks human nature is human nature.

Ignorance, greed, fear and hope determine how people react and thus how prices move and markets behave. People have speculated on everything at one time or another,

For the last hindered years and certainly into the foreseeable future speculating on stock prices offers liquidity combined with legitimacy and purpose. Stock speculation, trading and investing have become an essential and vital parts of both our economy and our lives.

Trading is just another word for speculating and investing is nothing more than speculating, except that it supposedly encompasses a longer time horizon and for some odd reason implies less risk. Speculators speculate, trader’s trade and investors invest to make money. Traders buy stock or any other object of speculation because they anticipate a price appreciation.

Speculation and gambling are similar, with a few important distinctions. One difference is the perception, sometimes true, that successful speculators profit due to their skill or an unseen advantage, while gamblers prosper due to chance or luck.

Remember though that it may not happen to you but in the end given enough time or chances the odds will always prevail. The casinos in Atlantic City and Las Vegas were not built with winner’s money.

Another distinction is that gambling in most forms has been illegal (at least until government got involved and changed the rules in their favor) while speculation plays an essential role in our markets and thus our economy.

These important distinctions make speculating which indeed is what our investment industry purveys as an accepted occupation – indeed one with one prestige and gamblers not being accepted in the same light.

Whether a gambler, a trader or a speculator, in all cases the attraction is the same – the chance to make a lot of money in a hurry. It is the immediate gratification of the win that makes these games irresistible - an opiate of sorts.

Indeed problem gamblers have been compared to alcoholics in needing that rush which gives them such pleasure and serves amazingly to release endorphins to relax their troubled minds.

On top of that the unpredictability of the wins serves to even reinforce this addictive behavior.

Not far off of the methods of B.F. Skinner and the rats of operant conditioning fame.

Indeed some people will tell you that “it will almost always end with crying!”

About The Author

Amy Goodmann
Senior Investment Analyst
Substantial Incomes Com
frxforex@yahoo.com
http://www.forexforexforexforex.com
http://www.substantialincomes.com

Stocks - Getting Started in the Market

2006-12-09T17:58:00.000-08:00

Hollywood loves the stock market. The chaos of the stock exchange floor, the tension of boiler room day-trading, devious power brokers making back room deals; it all makes for great drama. Then you have the true-to-life stock market stories in the news: insider trading, big money IPOs, the dot com bust. All of it is enough to make you steer clear of the market for good and travel down a safer investment path. But don’t be frightened, history shows that long-term, there’s no better place to put your money to watch it grow. Here are a few tips to get you started.

Stocks 101

Simply put, when you purchase stock in a company, you become part-owner of that company. Along with other shareholders, you all combine as investors in the business, and therefore reap its rewards, or suffer its losses. Stocks are most commonly divided into separate categories depending on the size and type of the company (e.g., mid-cap, small-cap, energy, tech, etc.).

While speculation can drive stock prices in the short term, it’s long-term company earnings that determine a stocks gains or losses. Speaking of short term, that’s when stocks are extremely volatile. Over a span of just a few months or years, stocks can climb to astronomic heights or drop to pitiful lows. But, since 1926, the average stock has returned over 10 percent per year. That’s better than any other investment vehicle out there, and that’s why stocks are your best bet for long-term investment.

Picking Stocks

Before you dive head-first into the market, there are a few things you should know about picking stocks. First, the market’s performance as a whole is not necessarily a reflection of its individual stocks. Good stocks can keep growing even in a down market, while bad stocks have the frustrating tendency to drop or remain stagnant in a strong market.

Also, remember that history is not indicative of a stock’s future performance. Even solid stocks can slip from time to time. Remember that stock prices are based on a company’s earnings outlook, not its past performance. If the future looks bright for a company, a $100 dollar stock is probably a good buy. If earnings look less than promising, even a $5 stock can be a waste. Finally, investors determine a stock’s value by measuring a handful of primary criteria, most notably cash flow, earnings, and revenue.

“Diversify”

It’s the rallying cry of all smart investors. When compiling an investment portfolio of stocks, it’s smart to own shares in companies from several different industries. Consider it a “hedge bet”. When one part of the economy experiences a downturn, you’ll have other stocks in your portfolio to put your faith in.

When building your portfolio, the safest bet is to pick from financially strong businesses with earnings growth above the average. Surprisingly, that limits the lot to choose from, as only around 200 stocks today fit that bill. A solid portfolio features somewhere in the ballpark of 20 stocks selected from seven or more industries. A general rule of thumb is to invest in stocks with an above-average rate of growth and reasonable valuations.

Buy and Hold

Day trading is a great way to lose your nest egg, but quick. As we noted before, stocks over the short term are highly volatile. Sure, brokers today are offering cheap trades, but beware. There are a ton of hidden fees and taxes involved with day trading, not to mention the amount of attention required by you to monitor the blow-by-blow proceedings of the market. Our recommendation: buy and hold. A ten percent return over the long term is nothing to sneer at.

About The Author

Joseph Kenny writes for the Loans Store which offers more information on home loans, secured loans and other loan topics available on site.

Visit Today: http://www.ukpersonalloanstore.co.uk

A Synopsis Of What It Takes To Trade The Forex Amrket With Success!

2006-12-09T17:56:00.001-08:00

A synopsis of what it takes to deal with success trading the forex market

This is the first article of a series whose purpose is both educational and practical. And above all they aim to be interactive meaning that any comments suggestions or ideas are more than welcome.

Lets start from the basics. The first thing someone needs is very good education. And this requires a lot of thorough research as there are many sources but not all are worth the money for their services. So in this sense an online forex course could be a good idea along with some books. But here comes the first major problem. Which course and which books, which aspects to cover? The technical analysis issue? The maxim goes with the trend? The candlesticks analysis? And which system to use and follow? There are thousands of them! So before we even begin a trader is confused. And confusion is a very bad enemy but it can be arranged. How it can be arranged? With some simple steps. Such as simplicity. The more you know the better chances you have to succeed trading forex and it all comes down to probabilities.

Education is a must to all trading aspects from stocks to futures to forex. But forex has two unique features. High liquidity and extremely high leverage. And although the liquidity is a very good feature high leverage is not. At least not until you know what you are doing. Here we focus again on education. Besides a participation in a forex course either online or not, an amount that will be put away as an investment for education is the first thing a trader must do. Some ideas are to focus on analyzing the current conditions of the market and to have a bias for a specific currency pair. A system such as following the trend could be the core of a trading strategy. And a demo account with many virtual trades as many as possible for a long period of time is the next step.

Now the most important part of the trading action is to make a plan, stick to it and apply very strict money management rules because if the capital is finished and it very easy this to happen then our trading career will finish within a few days, months or even hours.

Lets face the truth that trading is not easy. It is unfortunately far easier for someone to lose all his account rather than make wild profits beyond each expectation. That is because emotions and psychology are very crucial for success. Some of the most important emotions are fear, uncertainty, euphoria and revenge. Revenge comes into play very often as when someone loses an amount wants desperately to get it back and often the outcome is that more loses come simply because the trader is on the wrong side of the trend!

Discipline and patience are virtues that distinguish a good trader from a mediocre trader. Without specific goals and a written procedure a trader is like a cargo ship that has sailed without any destination. Someday the fuel will be exhausted and many dangers from the weather to the potential physical damages may happen. Risks exist all the time. The point is how to deal with them.

One of the most useful phrases is taken from the movie Forrest Gump.Life is like a box of chocolates, you never know what you going to get!

It is true. Be as prepared as possible. Do not let the brokers excite you promising very high returns and extremely high leverage? Do some very thorough research before opening an account funded with real money. Compare the bid-ask spreads and technical support to name only a few aspects.

Be very skeptical to previous results as offered from many signal services. The major aim should be to learn to trade and make your own decisions and not blindly follow some others decisions and opinions. Confidence and experience come with the passage of time.

So we mentioned simplicity before. Being realistic and having a controlled life balance is very important. One major goal should be consistency so as to have the ability to make profits each month and keep them.

Fundamental news is another important issue and in essence the technical analysis is the mirror of fundamentals. Expectations change rapidly and emotions also. And if you think about it emotions and expectations mainly move the forex market. Most times like the recent Fed rate hike decision a move is under way but the danger is when it will be finished and certainly not getting in at the wrong time after all the move is completed.

The best approach for a trader would be to set specific goals and if achieved then stop trading. The worst idea is to trade in a choppy market where random noise will make it difficult to get specific profits.

So a tested system with very precise rules such as entering exiting and having stop-loss orders may not be a holly grail but is surely one very good approach to start with and focus on it. Pivot points are such a system. At least it is a good start. They encompass education, discipline, strict criteria, and targets and are a proven system that major players use. They are not foolproof always as nothing is certain but they deal with high probabilities and this is very important.

Also a very practical way is to act as organizes as possible. Meaning that:

1.Develop your own trading journal where you will be writing down your trades and a brief explanation of what made you place a particular trade so as to evaluate performance. Note each day the major economic releases if any because it is often wise to be out of the market before the release of the news and trade only after having a much clearer opinion of what price action may be. Remember it is all about high probabilities.

2.A risk/reward ratio of 1:2 meaning that you risk an amount to get at least the twice if all go well is suggested but sometimes it is best to be conservative and even apply an 1:1 ratio by applying very strict risk management risking no more than 2-3% of total capital per trade. Survival is everything.

3.It would be a good idea from time to time to have breaks from trading. Opportunities exist always so stopping trading when losses of 10-20% maximum of trading capital have accumulated is a good way to revaluate what is going on before a large amount of capital is lost. Trading is not gambling it is a way of investment. The philosophy should be to define realistic goals such as a number of pips per day and if achieved then stop trading. Greed is another bad enemy of traders. On the contrary the notion of compounding profits and retiring a portion of them each month is a good way to build a solid account and keep monitoring its growth.

So in this first article we touched briefly many ideas from education to psychology to a proven trading system etc. Each idea will have more in depth analysis in the very near future. Your comments and suggestions will help us a lot to focus on what you need or want to analyze. Above all interactive communication brings the best results.

That’s all folks!

http://www.forexsynopsis.com

e-mail : admin@forexsynopsis.com

http://forexsynopsis.blogspot.com

About The Author

Stavros Georgiadis
MSc in Economics
Level II candidate in the CFA program

The Start Line Of The FOREX Tradeology

2006-12-09T17:54:00.000-08:00

The foreign currency exchange market is available for people from all over the world. More and more people take their first steps in FOREX trading, contributing to its volume and making it viable and easy to use for the ordinary individual, in contrast to only a few years back when only pros, hedge funds, major banks and institutional traders used the FOREX market. The key explanation for this turn of events is the Internet which dramatically increased accessibility. Almost all firms are now offering, free or in return for signing-up, easy to operate software for online FOREX trading.

Traders’ essential goal in FOREX is to estimate which currency will increase in worth against a different currency, and so getting a hold of a method which helps you to foresee future movements can help you in gaining a nice fortune. Realizing the fact that you are always trading by a ratio between two currencies should clarify the cause for seeing these letters arrangements: EUR/USD, USD/JPY, and GBP/USD etc. The five most important and highly popular currencies are the US Dollar, Japanese Yen, British Pound, Euro and Swiss Franc.

The FOREX market is open 24 hours a day; major firms keep brokers working shifts uninterruptedly so people from all over the world can trade always. This is attributable to the fact that nowadays most trades are carried out through company brokers.

Fear not, you can rest well at nights and even enjoy a day off every once and a while without being logged-on the FOREX market 24/7. All you have to do is give your broker your “stop-loss” / “stop-orders” to buy or sell currency once they have reached a certain price, thus preventing major losses.

The FOREX is considered to be a solid market. Nothing like the stock market which is highly unstable, this market is friendly and easy to comprehend. Another plus is that it has high liquidity which grants you the prospects of getting your money in or out at any given time. Be careful though, even when the FOREX seems like a playground to you, please seek your broker or another pro-trader’s counsel before getting involved in this market unless you have a lot of money to spend that you don’t really need. The big boys of FOREX would not care too much about seeing you lose all your life savings.

“Stop Hunting” - a Simple FOREX Strategy

2006-12-09T17:52:00.000-08:00

Today FOREX world is built around large leverage and constant use of margin, in equities, standard margin is set at 2:1, in options, the leverage increases to 10:1, in the futures market, the leverage factor is increased to 20:1, but in the FOREX market the leverage sets the highest bar by increasing to 100:1 ratio and can climb up to 200:1 meaning that you can invest $100 for a $20,000 value control! An experienced trader would limit his leverage to no more than 10:1.

Alongside leverage usage, or as in many FOREX rookies’ cases using too much leverage, comes the opportunity for either extremely profitable or extraordinarily dangerous and huge loses. You can double your account overnight or lose it all in a matter of hours if you make use of the full margin at your disposal. Considering that fact, most FOREX traders use “stops” order / “stop-loss” - they simply do not have the luxury of nursing a losing trade for too long because their positions are highly leveraged, and here you can step in and take advantage of this knowledge.

Stop order in a nutshell is a form of insurance or security measure that is given to buy or sell when a currencies' price surpasses a particular point. Using stop loss is critical for long-term survival. By setting a predetermined entry or exit price, investors usually use this system to minimize their loses when off for the business day or any other situation in which they are unable to monitor their portfolio for an extended period.

The main FOREX strategy which takes advantage of this knowledge is “Stop Hunting” , which attempts to force some foreign currency exchange investors out of their positions by driving the price of a currency pair to a level where many investors have chosen to set their stop-loss orders (aka “weak longs”), by understanding that the human mind naturally seeks order, most stops are clustered around round numbers ending in "00" (i.e. if the EUR/USD pair was trading at 1.1380 and rising in value, most stops would reside within one or two points of the 1.1400 price point rather than, say, 1.1417). Absorbing that fact alone is priceless knowledge (the price of a currency pair can experience sharp moves when many stop losses are triggered); professional traders place their stops at less crowded and more unusual locations. The possibility of profit from these unique dynamics of the foreign currency market is huge and proven.

About The Author

Mia Milis is an independent trader and provides financial advice regarding foreign exchange to several institutions as well as private individuals. Being an Internet enthusiast, she has taken up to provide advice through her brilliant articles, and in recent years has also founded theforexblogger.com in order to provide a platform online traders worldwide could share experiences through. To learn more about the FOREX market, visit Mia's website at http://www.theforexblogger.com.

How To Choose a Forex Trading System That Works and Suits You

2006-10-29T04:42:00.000-08:00

There are so many different trading systems you could use to trade the forex market, some better suited to certain people than others. For example some people may find it easier to comprehend and take into account fundamental factors as opposed to looking at a screen covered in technical indicators, and vice-versa.

The first logical step in determining what type of trading system would best suit you is actually being aware and understand the widely known methods of analysis used in trading the currency market. Once you are aware of the tools that are available, you can generally tell what type of analysis suits you. For example some of the main technical analysis methods which are popular include:

Pivot points

Chart patterns

Fibonacci retracements

Candlestick patterns

And some fundamental factors which are widely used include analyzing:

Interest rates

Trade balances

Unemployment rates

Gross domestic product (GDP)

You may now actually be able to develop your own system by combining certain methods of analysis together, giving you a method which you are comfortable with. On the other hand you may decide that you would like to trade someone else’s system, either way, that brings us to the next step which is determining the profitability of a trading system.

Determining Profitability

Most people would think that back testing is the best way to determine a systems profitability. However back testing doesn’t always give you a true idea of how profitable a system is. The reason for this is because when you’re back testing your system on historical charts, you are only seeing the obvious setups which have occurred, and not always seeing the ones that are less obvious. These less obvious ones sometimes can produce losses, which is why back testing isn’t always the best method to implement.

A better method of determining profitability is by trading your system in real-time with a demo account. This would give you a true understanding of what your system is capable of. This would also allow you to familiarize yourself with your trading platform at the same time. When determining profitability you must look at it in terms of expectancy and opportunity.

Expectancy & Opportunity

These two factors together will be able to tell you what you could expect to make over a period of time. Expectancy is calculated with the following formula:

(Probability of winning × average win) – (Probability of losing × average loss)

This will give you a figure which is the average amount you can expect to make per trade. This shouldn’t be a negative amount, if it is you should look at some other method of trading since you cannot make money on a system that produces a negative expectancy. Obviously the higher this figure is the better. Now to the opportunity factor.

The opportunity factor is how often you are able to trade using your system. By multiplying your expectancy figure with your opportunity factor it will tell you how much you could expect to make over a period of time. The more opportunity you have to trade, the more money you should expect to make. This now brings us to the last component of a trading system, money management.

Money Management

Without proper money management you will end up as a statistic. In other words one of those 90%+ of traders who loose their money. Money management tells you how much of your account balance to risk per trade. The whole point of money management is to ensure your survival over the long term, and to preserve your capital.

The most common form of money management is the percent risk model which tells you not to risk more than x percent of your account balance on any one trade. A range between 1-3% is generally an accepted amount which has been a reliable percentage to use in order to make money in the long term.

Conclusion

By taking into consideration the above factors you will be able to determine if a trading system best suits you, and with some simple mathematical calculations you will be able to determine its profitability.

About The Author

Bret Freak is the owner of http://www.trading-forex-online.com where you can find information on forex trading systems & strategies available online.

Types of Forex Trading and Strategies

2006-10-29T04:39:00.000-08:00

The foreign exchange market, or forex, being the largest financial market in the World has been the domain of government central banks as well as for commercial and investment banks in a scandalous manner and it exists wherever one currency is traded for another. But recently more numbers of individuals are handling the forex market as it offers trading 24-hours a day, five days a week, and the daily dollar volume of currencies traded in the currency market that exceeds $1.9 trillion daily, making it the largest liquid market in the world.

"Foreign Exchange" is the place where the money of one nation is traded with the other nation. The most popular pair of exchange in the forex market is "Euro Dollar". You can view these pairs in all forex display screens as "EUR/USD". Forex trading strategies are the key to triumphant forex trading or online currency trading. The management team of One World Capital Group bid proficiency in both Forex trading and internet technologies and proven track records that deals with large, global trading and brokerage operations as well. Forex made easy is as simple as you would want it to be.

Forex trading is different from trading in stocks entirely and it uses Forex trading strategies that will give you lot of advantages as well as help you to comprehend greater profits in the short term. There are wide ranges of forex trading strategies that are available to investors. It is one of the most useful of these forex trading strategies called as leverage. Knowledge of these Forex trading strategies can imply the difference between profits along with a loss and so it is essential that you fully grasp the strategies that are being used in Forex trading. The world of Forex trading is highly complicated and success requires education and familiarity with terms, charts, signals and indicators.

As you can be able to access it from home or office from any parts of the country, Global Forex trading is the most profitable and attractive internet income opportunity. And you do not need to do anything or there is no need of internet promotion for getting succeeded. Forex Capital Markets are nothing but foreign exchange markets where the currencies are been bought and sold continuously for profits. These capital markets of forex are present globally and their transactions are always non-stop in this forex cash market. A managed Forex account is forex made easy. Many different companies offer these accounts to their clients. The foreign exchange market is a worldwide market and as per to some estimates is almost as big as thirty times the turnover of the US Equity markets.

About The Author

Usha Rani is a Copywriter of http://www.1worldforex.com/

Six Forex Trading Tips for Newbies

2006-10-29T04:34:00.000-08:00

You have decided to be a trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the market forces determine the value of a currency against another. One unique aspect of the Forex market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency.

In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. The first thing you need to do is open a forex account. You will have to fill an application form which includes a margin agreement stating if the broker will be allowed to intervene with any trade when it appears too risky. Since most trades are done using the broker's money, it is only logical that he protect his interests. However, once you have established an account, you can fund it and begin trading in the forex market.

2. Adopt a trading strategy, that has proven to be successful for you. Remember that strategies will work differently for different traders, so don't try to adopt a strategy that works well for another trader. It might backfire on you. The two available approaches are either technical analysis or fundamental analysis. A combination of the two is a more preferred choice for experienced traders.

3.Understand that prices move by trends. Forex has a popular saying, “The trend is your friend.” There are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.

4. Ensure you know which are the top five currencies pairs in the foreign exchange. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For newbies, it is advisable to maintain two accounts to ensure you learn to play the trading game. Keep one real account, one that you will actually use to trade real money; and the second account should be a demo, one that you can use to test alternative moves in the trading game. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

Gerald Njuguna is the owner of http://www.diamondringscare.com, a site where you can read more articles on diamonds.

Avoid Making Predictions in the Market

2006-10-26T11:06:00.000-07:00

Most people make a big deal out of market prediction. They think they need to be right 70% or better in order to “pass” the exam that the market gives them. They also believe that they might get an “A” if they could be right 95% of the time. The need to predict the market steps from this desire to be right. People believe that they cannot be right unless they can predict what the market is doing.Among our best clients, I have traders who continually make 50% or more each year with very few losing months. Surely, they must be able to predict the market very well to have that kind of track record. Well, I recently sent out a request for predictions and here is what I got back from some of the better traders.

Trader A; “I don’t predict the market, and I think this is a dangerous exercise.”

Trader B: “…these are just scenarios, the market is going to do what the market is going to do.”

Ironically, I got these comments from them despite the fact that I was not interested in any of their specific opinions, just the consensus opinion.

So how do they make money if they have no opinions about what they market is going to do? Well, there are five critical ingredients involved:

They follow the signals generated by the system. They get out when the market proves them wrong.They allow their profits to run as much as possible—meaning they have a high positive expectancy system.

They have enough opportunity so that there is a great chance of realizing the positive expectancy any given month and little chance of having a losing month.
They understand position sizing well enough so that they will continue to be in the game if they are wrong and make big money when they are right.

Most traders, including most professionals, do not understand these four points. As a result, they are very much into prediction. The average Wall Street Analyst usually makes a large six-figure income analyzing companies. Yet very few of these individuals, in my opinion, could make money trading the companies they analyze. Nevertheless, people believe that if analysts tell you the fundamentals of the marketplace, someone can use that information to make money.

Others have decided that fundamental analysis doesn’t work. Instead, they have chosen to draw lines on the computer or in their chart book to analyze the market technically. These people believe that if you draw enough lines, and interpret enough patterns, you can predict the market. Again, it doesn’t work. Instead, cutting losses short, really riding profits hard and managing your risk so that you continue to survive is what really makes you money. When you finally understand this at a gut level, you will know one of the key secrets to trading success. In the meantime, we will continue to make predictions in our column, so that you will begin to understand that they are entertaining, but nothing more!

Meeting Your Goals

2006-10-26T11:04:00.000-07:00

You probably have some specific goals in your trading. And if you don’t, then I’d suggest that you develop some. But if you do, you might need some discipline to help you meet those goals. As a result, I thought I’d focus this week’s psychology tip around helping you to better keep meet your goal. Here are several ideas that may help you to continue your meeting your goal throughout the entire year.

1. Divide a General Goal into Specific Steps.

Most trading goals are usually huge. As a result, I’d suggest that you divide that goal into specific steps. It’s much easier to accomplish small steps that you can imagine doing for the rest of the year (or the rest of your life) than it is to fulfill a giant goal that would be huge. Start with something that is easy and make sure you can accomplish it.

Thus, a resolution to make 50% this year in your account could be broken into a number of steps such as (a) look at ideas that might help improve your trading; (b) test each idea and see how much improvement you will get from each one; (c) implement the best idea following the ten tasks of trading (which is part of the Peak Performance Course).. In fact, your resolution might simply be to follow the ten tasks of trading each day and notice what that means for you.

2. Make Promises to Yourself and Include the Reason for the Promise in the Resolution.

Suppose your promise to yourself is to do a daily mental rehearsal. The way you might phrase that is to promise yourself to do a daily mental rehearsal in order to plan ways to increase your discipline. The second statement is much easier for you to follow through with on a regular basis. Also make sure that the promise you set is something you want to do and not something someone else wants you to do. If I tell you that you must do a daily mental rehearsal, you are not likely to do it. On the other hand, if you decide how important this kind of rehearsal will be for your well being and for your trading, then you are much more likely to do it.

3. Determine Your Triggers.

If you are setting a resolution, it is probably because you want to do something that you have not been able to do. There is probably a reason for your inability to do it - certain triggers that set you off. What are those triggers? Are there environmental triggers, such as the presence of certain people or certain conditions? Are there certain internal feelings that set you off? What are those feelings and when do they occur?

Once you determine what your triggers are, you are much more prepared for them. I strongly recommend doing extensive mental rehearsal around the issue of dealing with those triggers. Use the mental state exercises in book four of the course and rehearse dealing with those triggers so that you have more discipline in situations in which you will need it. Awareness is a big part of keeping your resolutions.

4. Look at the Positive Side of Your New Goal.

When we get into the act of keeping our resolutions, we sometimes feel as if we are denying ourselves. Instead, look at the positive side of what we are accomplishing. Turn on something positive. For example, if you are trying to stop taking trades that have nothing to do with your system, then concentrate on the joy of following yours system and making money. Concentrate on the joy of the new behavior instead of the negative that you are trying to overcome. You’ll find that moving forward is much easier.

5. Keep a Diary of Whatever It is You Are Working On.

A lot of what I’ve suggested for you involves mental awareness. Most people are unaware of the big picture that’s involved in accomplishing some goal. However, when you keep a diary that lists your accomplishments and your thoughts, you’ll find it much easier to understand what is going on inside of you.

Listing your accomplishments is also a form of reward. When you start focusing on your accomplishments - especially if you’ve followed step one and have set small steps toward your total goal - you’ll feel great about what you achieved and where you are going.

6. Make It Okay to Give In Occasionally.

If you are attempting to make a major change, you may have occasional setbacks. If you view that setback as failure, then the resolution is over. You can give yourself a bad name. On the other hand, if you make it okay to have occasional setbacks, then you can keep going - it’s just a setback.

Realize that your setback is an opportunity to learn something about yourself. What happened? What were your thoughts? Write down all of that information in your diary and determine what you can learn from that. You might discover a new trigger and then you can plan for how to get around those triggers. In any case, forgive yourself for the setback and then move on.

Quite often setbacks are due to inadequate preparation. Perhaps you didn’t do enough research with respect to your trading. Perhaps more mental rehearsal was needed. Perhaps you discovered something about your thought process that you didn’t expect, but can now use in your preparation. What additional preparation can you do to make sure that you move ahead toward generally keeping your resolution?

7. Reward Yourself Throughout the Process.

You need to acknowledge accomplishments early in the process. The first few days will probably be the hardest. Consequently, when you get through those days and accomplish your goals, find a reward. Make the process fun through a system of rewards.

Forex Trading And The Obsession To Win.

2006-10-07T08:42:00.000-07:00

Article by Adrian Pablo

Forex trading is one of the great money making opportunities available these days. People from many walks of life, men and women, decide to join the forex trading world everyday looking for the great style of life a profitable forex trader can achieve.

But Forex trading is also a war where you can lose your money and confidence if you are not wise enough in your battles against the market, a wise, often formidable and even brutal enemy.

There is an old saying by the Chinese military genius, Sun Tzu that says, "the obsession for victory is a state of mind that benefits the enemy". And these wise words apply without any doubt to the world of forex trading. In the war with the markets nothing is more damaging to a trader than "the obsession with victory".

There are many new traders that think they must never close a trade until it will turn into a profitable one; or think their predictions based on a particular indicator and technical analysis will always be right and the forex market will start behaving in the way they had predicted in any moment, no matter if the charts clearly indicate that it's not doing it and the margin of the account is getting depleted.

This is, in no way, a wise forex trading strategy; it is not a wise war strategy. With that behavior you will only be giving free money to the markets, i.e., you will be defeated by your own obsession with being profitable even if everything is going against you indicating you must close the trade or tighten your stops.

So, never fall for obsession when trading the forex markets; nothing good can result from this behavior. You must always place your stops according to your tolerance level and be wise with your indicators. Remember they can fail you. They mostly tell probabilities and when dealing with probabilities there is always room for strange behaviors that won't agree with what you were expecting.

My recommendation; be wise, use your criteria and never ever obsess with a trade.

About the Author
Adrian Pablo is a Forex freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of forex trading , visit:

http://www.1-forex.com

Forex Scam How to Spot Them

2006-09-29T21:53:00.000-07:00

In recent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market one of the fastest growth areas. Many of the leading Forex brokers reported up to 500% rise in the number of new retail customers. However, the growth of the Forex market has been accompanied by a sharp rise in foreign currency trading scams.

Many of these Forex scams are promoted on the radio, television, newspapers and the Internet. Investors who fall victim to these schemes, often lose all of their money.

As an illustration, let’s examine the facts of a recent case involving Forex fraud and its consequences. W learned of a foreign currency trading opportunity through an infomercial on the radio. K, the owner of a Forex asset management firm, spoke during the infomercial, promising viewers significant profits with minimum risk. After seeing the infomercial, W contacted K, and later attended a seminar presented by K and his firm. The seminar was so convincing that W wrote a check to K for $100,000.

Several months later, W received statements (which were false) from K’s firm reflecting significant returns on his initial $100,000 investment. Thereafter, W attended another seminar and decided to invest more money. W took a loan and invested another $800,000 in K’s Forex trading operation. Short while after W’s second investment, the Securities and Exchange Commission filed a complaint against K and his firm for engaging in a scheme to defraud investors. K’s firm’s assets were frozen, including the $900,000 invested by W. A receiver was appointed to distribute the remaining assets of K’s firm to defrauded investors. The assets were distributed on pro-rata basis with no legal preference given to any of the victims. Since K’s firm’s assets were not enough to satisfy all of the defrauded investor’s claims, W received only about $22,000 of the $900,000 he invested.

Since a whole book can be written on the various tactics and methods used by Forex scam artists, in this article, I will focus on the major warning signs that one needs to identify to avoid falling victim to Forex swindlers.

1. Promises of Little or No Risk

If you encounter a Forex firm that claims to have developed a foreign currency trading strategy that carries very little or no risk, stay away. The reason Forex trading can be very profitable is because it also carries a very high risk of loss. The Forex market is very volatile, and, without good money management, an investor can lose most if not all her capital within few days. Thus, individuals and firms who make claims that are far from market realities, as is riskless Forex trading, are really after your money.

2. Guarantees of Large Profits

Beware of firms that guarantee large profits in Forex trading. These so called “guarantees” are mere ploys to entice investors and make them believe that their money is safe and that they will definitely make large profits. Such claims are simply untrue, because even the best professional traders cannot guarantee that they will make a profit any given day. The Forex market, as most financial markets, is very unpredictable. Hence, be suspicious of such claims and those who make them.

3. Employment Ads For Forex Traders

Many Forex trading firms use employment ads to attract individuals with capital to trade using their systems. The employment ads, which often appear in newspapers and on the Internet, state that a foreign currency trading firm is looking for individuals to teach how to trade the foreign currency market using firm capital. Those who reply to the ad are convinced by the firm that they will make a fortune trading currencies if they participate in the firm’s training program. During the training process, which often occurs on a demo system, the novice traders are encouraged and told that their demo trading records show that have made significant profits, that they are ready to make real money and would very successful. Despite the firm’s assessment of the novice trader as a brilliant newcomer, no firm capital is provided to the trader, instead the excited novice is told to use her own capital to trade using the firm’s platform. In addition to various fees imposed on traders using the firm’s platform, the Forex firm makes money as an introducing broker. Each time the novice trader trades through the firm’s system, a good part of the spread charged by the broker is shared and goes into the firm’s coffers. After few months, the novice trader loses all of her capital and leaves. The Forex firm, having made money during the novice trader’s short stint, moves on to new traders eager to become rich trading foreign currencies.

4. Is the Forex Firm a CFTC or NFA Member

Before you sign a check and give your capital to a Forex company, make sure you investigate the entity. Check to see whether the Forex firm, with which you plan to do business, is registered with the United States Commodity Futures Trading Commission or the National Futures Association. Many scam artists falsely claim that their firms are registered with the CFTC or the NFA to gain a prospective investor’s trust. Do not trust anyone, research the firm and the background of the individuals involved before parting with your hard earned money.

The Internet has paved the way for many new opportunities for retail investors. The Forex market is both exciting and fast paced. Investor’s who are careful and diligent are likely to avoid the perils of this market, and will profit from the opportunities foreign currency trading has to offer.

John Bekian is the founder of http://www.electronicforextrading.com, an informative resource for novice and professional Forex traders.

Forex - Related Frauds and Scams.

2006-09-29T21:48:00.000-07:00

A lot of people have been ‘burnt' from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt whether they would have gone through all that trouble building a trading platform just to steal your money. Beware.

The first thing I look for is the geographical location of the broker. If I find that they are based in a country where the financial industry is, in my opinion, relatively unregulated and under-developed, I quickly forgo signing up. This is terrible news for honest brokers in those countries, but your job as a trader is to protect your capital. If you loose that, then you cannot trade. The onus is on them to convince you that they will do the right thing by you as an investor.

I started out with an Australian broker. Currently I am using an American one. I have not tried UK-based brokers but the British financial industry is one of the best. Companies that are based in countries such as Japan , Germany and France are probably just as good too, if their website speaks your language.

Notice any license numbers that they may have registered with regulatory bodies that act like government watchdogs who oversee the finance and investments industries. These are organisations that impose strict rules to safeguard your investment. Some of these rules may include the requirement that brokers segregate all customer funds from the operational funds of the business. Your money is required to be put in highly-reputable banks and the funds are only withdrawn from these accounts upon specific withdrawal requests.

Take note that there are some fake regulatory bodies being thrown around in cyber-space as well. Take a look at how long they have been operating for. Try and search out any reviews or comments made about them. See if you can find forums where traders have discussions about their brokers.

Below is a list of things to keep in mind to help you avoid being a victim of a scam:

• Stay Away From Opportunities That Sound Too Good To Be True

There are people who may have just acquired a large amount of money just and recently are the same and are shopping around for safe investment vehicles. These may include retirees who have access to their retirement funds. It is understandable why retirees would be drawn to ‘high-return, low-risk investments'. This is also what makes them very vulnerable. If you identify yourself to be one of these people, be careful. A lot of deceitful characters are after your money. Furthermore, only allocate a tiny amount of your money to trading until you can start growing it. Not all people can trade successfully, so it is a venture you should take on haphazardly. It is your life savings at risk.

• Avoid Individuals Or Organizations Who Claim To Predict Or Guarantee Large Profits

Any form of trading is hard. Trading currencies is no different. Be wary of statements that make it sound easy. Statements like:

• “Whether the market moves up or down, in the currency market you will make a profit”;

• “Make $1000 per week, every week”;

• “We are out-performing 90% of domestic investments”;

• “You'll make returns of 70% a year”;

• “Here is a no-risk strategy”.

If they could make such returns, why would they even bother letting you know about it.

• Be Wary Of Companies Who Downplay Investment Risks

Hold your wallet tight and zip up your purse when companies say that written risk disclosure agreements are routine formalities imposed by the government. Watch out for statements like:

• “With a $10,000 deposit, the maximum you can lose is $200 to $250 per day”;

• “ We promise to recover any losses you have ”.

• Be Wary Of Companies That Claim To Trade In The ‘Interbank Market'

Do not believe it when some people say that they have access to the ‘Interbank market' or that they can give you access to trade in that market because that's where bargain prices can be obtained. This is not true. The ‘interbank market' is not a place, it is not a physical building. It is simply a loose network of currency transactions that are negotiated between big financial institutions and other large companies.

• Ethnic Minorities Are Often Targeted

Ethnic newspapers and television ‘infomercials' are sometimes used to attract Russian, Chinese and Indian minorities. Sometimes these ads offer so-called ‘job opportunities for account executives to trade foreign currencies', whereby the recruited ‘account executive' is expected to use his own money to trade currencies and would often times be encouraged to recruit members like their friends and family to do the same.

• Seek Out The Company's Background

Check any information you receive to be sure that the company is who they claim to be. If at all possible, try and get the background of the people operating the company. Do not rely solely on oral statements and promises made by the company's employees.

• If You Are In Doubt, It Is Not Worth Risking Your Money

If after trying to solicit information and at the end of it all, you are still in doubt about the credentials of a particular company, my suggestion is to start looking elsewhere.

You may find further information by contacting government ‘watchdogs' because they keep up to date with trends and reports regarding scams and other fraudulent activities. Please check the resource section of this site for the information of organizations that regulate the securities industry, sorted by country. There is also a list of brokers that you may want to look at.

This is an excerpted from the book: The Part-Time Currency Trader.

Marquez Comelab is a private forex trader. He is the author of the book: The Part-Time Currency Trader – A Trading Guide For Working Men And Women. The book outlines the process of how you can develop your own trading methodology that suits your psychology and financial circumstance to buy and sell currencies in the forex market, while minimizing your risks. It can be purchased from marquezcomelab.com. The latest versions of his articles can be found there.

Theory:When To Trade?

2006-09-17T13:52:00.000-07:00

...you actually make bugger all money if you can't execute and exit as precisely as you entered...

Welcome to another article, this time on when to exit a trade. When beginner traders start looking for that magic "make me a bucket load of cash" trading system, quite often the last thing thought about is their exit strategy. Usually the first and most important thing on a traders mind is when to enter a market, forgetting that you actually make bugger all money if you can't execute and exit as precisely as you entered.

There are three main scenarios that a trader will find themselves thinking of their exit:

A trade has moved as expected and they are in profit
A trade has moved opposite to what they expected, and they are in loss
A trade is dancing around the neutral zone of their trade

At first glance, you would think the easiest scenario of the three to exit under is number 1, i.e. when you are in profit, after all you are "cashing in" so how hard can it be. In fact, in reality all three can be as hard as each other. The reason?, like most things with trading, it comes to emotion. Below I have added the underlying emotions that might stop you closing a trade under these three scenarios:

A trade has moved as expected and they are in profit (GREED)
A trade has moved opposite to what they expected, and they are in loss (OPTIMISM)
A trade and dancing around the neutral zone of the trade (FEAR)

Let's look at them one by one.

Cannot close a profitable trade (Greed)

Everyone fights greed every day in life, always "wanting" rather than sticking to what you actually "need". It is part of a materialistic modern day culture that most of us are subject to. Trading is no different, and it is usually greed that can turn a nice logical, well planned and profitable trade into a losing one. When this happens, a trader reacts two ways, one, they are distraught at themselves for letting it all get away, or two, they tell themselves "well I was right with my prediction, the market just had it in for me".

Think of this, you set up a trade, monitor the setup closely, wait for the exact time to enter a trade, calculate your stop loss, your order is hit and you are in the trade. The price action moves beautifully, moving quickly towards your scantily thought about target (if you set one), and the sense of delight sends your brain into overdrive, working out the profits, imagining the ferrari soon to be in the drive-way, wondering if 2000 pips has ever been done in one day. This is when you know you are in some trouble, this is when greed has started to set in, you remove your profit target thinking "let's see how long this goes", you don't move your stop loss, cause you don't even contemplate that it might reverse, and you "go for the ride".

A common saying is "cut your losses, and let your profits run" (or something like that ;)), and it is a very good theory that should be followed. However, how do you ride your profits, without risking a reversal that you will undoubtedly put down to "a correction that will soon move back my way".

Personally I look at it this way:

Move your stop loss to break even or better as soon as is logically possible without risking being whipsawed out, that will ensure you will not lose money on the trade, ease the stress, and bring peace to the world (ok maybe not that). I take the view of never let a winning trade turn into a losing one so at least lock in 1 pip if it makes you feel better.
If the move was stronger that you anticipated, and you had a 20 pip profit target. Remove your profit target, and move your stop loss to the profit target as soon as possible. What you effectively have done is close your trade (because your stop loss is at your original target) and you are letting your profits run at the same time, two for the price of one, bargain!
Continue to follow the trade with your stop loss, and remember, 20 pips was your target, be satisfied with whatever you can get after that, but don't take any less. You can use one of the many trailing stop techniques to do this or look at the parabolic SAR indicator.

Cannot close a losing trade (Optimism)

I was tempted to use the word "Dillusion" for this one but felt perhaps that is a little harsh, you know the deal, you enter a trade, you set a 25 pip stop loss, the trade moves the wrong way and you are -20 on the trade, you look at the chart again frantically, and optimistically think "Oh of course ... I should have set the stop loss beyond that resistance level from the year 1967, what was I thinking" and you change your stop loss, making it -35. The price continues to move in the wrong direction, and you either cop a -35 pip loss instead of -20, or you remove your stop loss all together and spend the next week driving everyone nuts asking "will the EUR/USD go up?" to every trader in the chat room.

... Some may say, that they removed their stop loss and eventually, their -100 pips turned into +10, so there .. stick that up your jumper ...

What you do when you move a stop loss further away from entry, is completely change the ratio of the trade you entered. What was originally a 2:1 trade, i.e. your potential gain was twice as large as your potential loss, becomes a 1:1 trade, which is just asking for a margin call very quickly.

My advice on this? NEVER NEVER (I think that is pretty clear) move a stop loss further away from your entry, you can move it closer or break even if you wish, as this improves your risk/reward ratio, but never away. Some may say, that they removed their stop loss and eventually, their -100 pips turned into +10, so there .. stick that up your jumper ... the only problem is, that while they waited the week out waiting for the price to turn around (sometimes it never does .. look at the USD/JPY at the moment) they have tied up the entire margin, meaning they are locked out of many many more potentially profitable trades. So while you might end the week at +10, in the meantime other trades cut their losses at -20, entered 15 more trades in the week, and finished +100 for the week and at the same time learnt a hell of a lot more.

You want to close a trade dancing around the neutral zone (Fear)

This one is different, this is when you have a trade at +1, 0 or -1 pips, right around your entry, and it hangs there for quite a while, what do you do? Do you take a really small gain of +1 "just in case" it turns? Personally, and this one is up to you, I say never close a trade around the neutral zone of a trade, the ultimate aim of a trader, is to see a movement before the majority of others, you can then get in early, and when the others have caught up, let them make you money.

If you have spent the time analysing a trade, trust your judgement, if you analysed correctly, you may have got in early and it will take some time for the others to catch up. Don't be fearful of a losing trade, instead trust what you saw in the first place when you placed the trade. Sure there will be times when you end up losing, but if you cut your losses and let profits run, then you will be well in front in the end.

... If a trade has moved 1 pip past your target (that you have not automatically set), why close it? ...

So that is it, to summarise:

Always assess your potential profit target, and close, or lock it in as soon as possible with your stop loss.
Never move a stop loss away from your entry price.
Don't be fearful you could be wrong, instead be trusting in that you are probably right.

One last little tip, I personally never manually close a trade when it goes my way, my trades are closed either by my profit target being hit as set, or preferably, because I have moved my stop loss to my target and I am following the trade from their on in. If a trade has moved 1 pip past your target (that you have not automatically set), why close it?, why not move your stop loss to the target point, at which point you the price will either close you at your target as you originally wanted (congratulations, well done, bravo!), or it will continue it's run and you are essentially "playing with the markets money". This exact strategy turned my trade last night on the USD/CAD from a +45 target trade to eventually it being closed out at +93, it won't work all the time but you have nothing to lose if your target is locked in.

Trading with Strategy

2006-09-17T13:46:00.000-07:00

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint. ACM does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers. As market professionals, we can however point the novice in the right direction and indicate what are correct trading tactics and considerations and what is total nonsense.

Anyone who says you can consistently make money in foreign exchange markets is being untruthful. Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.

Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side:

Trade with money you can afford to lose:
Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

Identify the state of the market:
What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.

Determine what time frame you're trading on:
Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term. This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

Time your trade:
You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.

If in doubt, stay out:
If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade logical transaction sizes:
Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.

Gauge market sentiment:
Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

Market expectation:
Market expectation relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.

Use what other traders use:
In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

by Nicholas H. Bang
ac-markets.com

Intro to Forex Trading

2006-09-12T08:31:00.000-07:00

The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market, which means it dwarves the stock market of any country, even the United States, for example. Because currencies are traded in markets in various countries, currencies can be traded 24 hours, six days a week. The bulk of currency trading takes place in London, with New York coming second and Hong Kong, Japan and Singapore seeing the bulk of currency trading during Asian business hours.

The only time when currencies are not trading is after Japan closes for business on Friday, there is a one day window before Europe is open for business. Currency markets are also one of the most volatile markets. One of the reasons for this is the sheer size of the market, and its sensitivity to so many variables. Whereas a company trading on the stock market is susceptible to its own news and the health of the economy where it does business, there are many more variables that can affect currencies. International politics, enthusiasm for one currency that causes another to weaken even though there's no apparent reason for it, weather, and war – there is a virtually endless list.

Most traders buying and selling currency in the foreign exchange market are doing so on a speculative basis. Like stock market traders, they buy currencies they think will get stronger and sell the ones they think will get weaker. (Associated Foreign Exchange does NOT engage in speculation of this kind. AFEX buys and sells foreign currency strictly based on its transactional needs) Most of this speculative activity is undertaken by investment companies, banks and brokerages. The high volume of currency trading means rates change every 4.8 seconds. Companies that buy and sell foreign currency as a part of their normal business activities make up a very small percentage of currency trading.

Trader Psychology - Understanding Yourself

2006-09-11T08:08:00.000-07:00

Taken from http://forex-world.org

Some people dismiss this area but in my opinion it is a huge determining factor as to whether someone will make it or crash and burn as a trader.

In meeting many new traders I find that most questions that they pose revolve around trading systems and how to make the most money from the market.

Rarely am I asked questions related to the mentality and mind of a trader which we all soon discover in our trading journey is a major facet that will determine if we will be successful or not.

In this post I wanted to illustrate the importance of trading psychology and understanding your own mental parameters by using the experiences of 3 different traders that I met.

The first trader I ever met was veteran bank trader who had little formal education, was divorced, drank too much and enjoyed drugs. I was shocked as to how someone with excessive habits like this could have had such a long trading career.

It was not too long into my trading journey that I discovered that this type of individual was common place on the trading floor. I spent much time with this trader to try to pick up any useful tips or what trading system he used.

I noticed that he placed very little weight on technical analysis (walk onto the FX trading floor of any bank and ask them what they think of the RSI indicator and the stochastics - most won't have a clue what you are talking about and the rest will probably say something obscene!). He traded more based upon 'gut instinct' of the market that was developed over considerable time.

His key to success was learning over time price behaviour (price action). In addition he told me that he never trades when he has a hangover, is high or had a recent arguement with his ex-wife!!

How true it is that events taking place in our lives outside of our trading can have a major impact upon our trading. How many traders have traded whilst angry at the market and then make a trade to try to get one back only to further their losses.

How many people have traded whilst convinced that their broker is out to get them only to make more bad trading decisions. How many have traded at times when their life is undergoing major changes only to lose the necessary concentration and confidence that it takes to be successful.

Another trader that I know told me that he went to a seminar about swing trading and came back from the seminar fired up that he was going to change his method to swing trading.

Convinced that this was the path to greater profits he began to research various swing trading systems until he finally found one that he was going to adopt. After failing miserably and having to go back to day trading that had been working for him he told me why he had failed.

He said that he would spend time researching a possible trade and then would execute with the various stop loss/ take profit parameters in place. He said that he found himself lying awake at night wondering what the market was doing and would get out of bed and check on his trade.

He said that he also would execute a trade and then panic when the trade went against him because he could not wait for the big swing that he was expecting.

Finally he concluded that this style of trading just was not good for his personality and went back and resumed his day trading style and was able to sleep at night again without worrying what was happening in the Asian session!

This reminds me of the old adage 'if it aint broke then don't fix it'. How often are traders enticed away from models that have been working for them in favor of the latest or most fashionable indicator.

If your trading model is working and making you money then keep doing it. Secondly it is important that your trading method works within the parameters of your own mentality.

Whilst you can work on changing your mentality it may be better to understand yourself and adapt a style or method around yourself as opposed to trying to adopt someone elses mentality.

The third trader that I met is one that I met recently. This trader told me that whilst he has had some success this was somewhat diluted and in some cases replaced by his losses.

His money management strategy was reasonable but it became apparent to me the more we chatted was that he was lacking in a key area that is essential if one is to become a successful trader - CONFIDENCE.

Every time his trade was up 10 pips he would exit the trade being afraid that the trade would turn against him and every time the trade was down 5 pips he would exit afraid that it would get worse. This is a common obstacle in trading because no one can say with 100% accuracy where the market is going.

If they could they would have all the money in the world. Lack of confidence will destroy you as a trader. Confidence needs to be developed over time and in trading it does not come over night but it can be developed as we understand the market better.

One way to boost your confidence level is to thoroughly research your trading model - know it inside and out and especially know how it responds around the vulnerable areas because all trading models have an achilles heel and it is how you handle those points which is vital.

Well there it is folks just a few things that I have picked up along the way in the wonderful world of trading. If this business was easy everyone would be doing it but over time and with the right approach and mentality success (whatever you define it to be) can be achieved.

Wish you all the best in becoming the best trader YOU can be.

- Monaco

"Comfort Is The Enemy Of Achievement"

Forex A kickstar for new beginner

2006-09-09T05:02:00.000-07:00

"Study, Study, Study".

Forex traders use fundamental analysis, technical analysis, quantitative analysis and sometimes a combination of all three to make their trading decisions. Fundamental analysis nvolves the use of economic, financial and political news to determine trading decisions. Technical analysis involves the study Charts of to predict future price movements based on past price patterns and trends. Quantitative analysis consists of the use of preset statistical models and properties in quantifying price formations such as averages, retracements as well as identifying oversold and undersold situations.

In order to help novice and experienced traders alike, MG has developed www.forexnews.com, a leading site on foreign exchange analysis, news and education. Comprehensive previews and summaries updated 4 times per day, insightful editorials covering the latest market developments and an open forum for discussing trading tips and ideas, are just some of the many features of Forexnews.com and MG's commitment to educating and informing Forex participants.

Step 3: Manage your money wisely.

You should always be aware of the amount of money in your account before placing a trade. If you think a long-term trend is developing, then you should consider whether you have enough funds to maintain your margin and withstand any movements against your position(s) that may occur. We encourage everyone who opens an account with us to ask themselves the following questions prior to entering each trade:

1) How much am I willing to risk?
2) What is my upside and downside potential?
3) What are the market conditions? (Is the market volatile or calm?)
4) What is the logic behind entering this trade?
5) When can I conclude if the assumptions/logic behind the trade are/is correct or wrong?

Before entering an order, you should consider both your entry and exit points. One of the mistakes most commonly made by traders, especially new traders, is letting emotions get in the way of their strategy.

Step 4: Stay Connected:

It is impossible to follow the forex market 24 hours day, 7 days a week. For better management of your account, we encourage you to use our Wireless and Broadband Services provide by your local internet provider.

Step 5: Open a Live Account.

If you feel ready to trade this market, you can select any platform which is available online. Since the emotional factor may be higher than it was when you were demo-trading (as you are now committing real money), it is essential that you develop an effective strategy while demo-trading and plan to abide by it when trading your live account.

"Practice makes perfect"

Forex History

2006-09-09T04:33:00.000-07:00

The Bretton Woods Agreement

In 1967, a Chicago bank refused a college professor by the name of Milton Friedman a loan in pound sterling because he had intended to use the funds to short the British currency. Friedman, ho had perceived sterling to be priced too high against the dollar, wanted to sell the currency, then later buy it back to repay the bank after the currency declined, thus pocketing a quick profit. The bank's refusal to grant the loan was due to the Bretton Woods Agreement, established twenty years earlier, which fixed national currencies against the dollar, and set the dollar at a rate of $35 per ounce of gold.

M. Friedman

The Bretton Woods Agreement, set up in 1944, aimed at installing international monetary stability by preventing money from fleeing across nations, and restricting speculation in the world currencies Prior to the Agreement, the gold exchange standard--prevailing between 1876 and World War I--dominated the international economic system. Under the gold. exchange, currencies gained a new phase of stability as they were backed by the price of gold. It abolished the age-old practice used by kings and rulers of arbitrarily debasing money and triggering inflation.

The Bretton Woods Agreement

But the gold exchange standard didn't lack faults. As an economy strengthened, it would import heavily from abroad until it ran down its gold reserves required to back its money. As a result, money supply would shrink, interest rates rose and economic activity slowed to the extent of recession. Ultimately, prices of goods had hit bottom, appearing attractive to other nations, which would rush into buying sprees that injected the economy with gold until it increased its money supply, and drive down interest rates and recreate wealth into the economy. Such boom-bust patterns prevailed throughout the gold standard until the outbreak of World War I interrupted trade flows and the free movement of gold.

After the Wars, the Bretton Woods Agreement was founded, where participating countries agreed to try and maintain the value of their currency with a narrow margin against the dollar and a corresponding rate of gold as needed. Countries were prohibited from devaluing their currencies to their trade advantage and were only allowed to do so for devaluations of less than 10%. Into the 1950s, the ever-expanding volume of international trade led to massive movements of capital generated by post-war construction. That destabilized foreign exchange rates as set up in Bretton Woods.

The Agreement was finally abandoned in 1971, and the US dollar would no longer be convertible into gold. By 1973, currencies of major industrialized nations became more freely floating, controlled mainly by the forces of supply and demand which acted in the foreign exchange market. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, giving rise to new financial instruments, market deregulation and trade liberalization.

In the 1980s, cross-border capital movements accelerated with the advent of computers and technology, extending market continuum through Asian, European and American time zones. Transactions in foreign exchange rocketed from about $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later.

The Euromarket

A major catalyst to the acceleration of Forex trading was the rapid development of the eurodollar market; where US dollars are deposited in banks outside the US. Similarly, Euromarkets are those where assets are deposited outside the currency of origin. The Eurodollar market first came into being in the 1950s when Russia's oil revenue-- all in dollars -- was deposited outside the US in fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the control of US authorities. The US government imposed laws to restrict dollar lending to foreigners. Euromarkets were particularly attractive because they had far less regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euromarkets a beneficial center for holding excess liquidity, providing short-term loans and financing imports and exports.

London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. London's convenient geographical location (operating during Asian and American markets) is also instrumental in preserving its dominance in the Euromarket.