Forex Trading

Beginners Trading Guidelines

How difficult is it to make money trading the Forex market
? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.

Always Place Stop-Loss Orders

The most common and important risk management tool in forex trading is the Stop-Loss order.

A Stop-Loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against your position.

We recommend you always place a Stop-Loss order immediately after a new position is opened, as it can be very tempting to overrun losses on losing trades if a Stop-Loss order hasn’t been placed.

So often have I seen situations where a novice trader is 500 points out of the money
when he only intended to make or lose 50! By not placing a Stop-Loss order the trader has lost much more than planned, and the Risk/Reward Ratio is exceedingly poor.

In order to avoid this scenario you must follow a simple rule – Always place Stop-Loss orders, liquidity of the Forex market ensures Stop-Loss orders can be easily executed.

Usually Place Take-Profit Orders

Aswell as placing Stop-Loss orders, we recommend in most cases to enter Take-Profit orders at the same time using the OCO order function that most trading systems now have. The reason for this is similar to that for placing Stop-Loss orders.

Whereas with losing positions it can be very tempting to overrun losses, with winning positions it can be just as tempting to lock in a profit too early. By placing limits you will eliminate the risk of not being patient enough and taking profit too early.

However, you may feel confident in your ability not to profit take too early, prefering to monitor the market and taking profit at an opportune moment. In this case placing only a Stop-Loss order is an option.

Positive Risk/Reward Ratio

You should always trade using a positive Risk/Reward Ratio. By a positive Risk/Reward ratio we mean “The amount you’re willing to make on a trade should be more than or equal to the amount you’re willing to lose”.

All successful traders trade using a positive Risk/Reward ratio. There is no sense in having five 30 pip winning trades, and then one 200 pip losing trade because at the end of the day you are 50 pips down!

Unfortunately, many novice and unsuccessful traders use a negative Risk/Reward ratio. When trading this way losing positions are always going to be greater than profitable ones, and it can be difficult to recoup the losses in the short term.

It is not uncommon for unsuccessful traders to increase trade size in order to recoup losses quickly, therefore greatly increasing trading risk relative to trading equity.

This is a recipe for disaster, you must trade with consistancy and control. The easiest way to manage your Risk/Reward is to use the Stop-Loss and Take-Profit orders mentioned above.

Overtrading

Some online forex brokers now offer 3 to 5 pip spreads in the liquid currencies such as EUR/USD and USD/JPY. These are very competitive prices which a few years ago were unthinkable. As recently as the mid 1990’s brokers were quoting 10 pip spreads in the major currencies plus a commission!

Thankfully due to the internet, the current boom in Forex trading and the competition between Forex brokers, those days are well and truly over.

The excellent value available from trading on tight spreads works very much to the traders advantage. However, you should avoid overtrading and entering trades for just a 5-10 pip profit or loss. Even trading this way on 3 pip spreads can adversely affect your profitability.

Below are examples of both a winning trade and losing trade when trading for a 10 pip profit or loss:

Winning Trade:

Buy EUR/USD at 1.2020 (price = 17/20)
Sell EUR/USD at 1.2030 (price = 30/33)
Market moves 13 pips before taking profit

Losing Trade:

Buy EUR/USD at 1.2020 (price = 17/20)
Sell EUR/USD at 1.2010 (price = 10/13)
Market moves 7 pips before taking loss

The above example highlights that the risk/reward of trading for a 10 pip profit or loss is poor.

For the same 10 pips P&L, the market must move 13 pips for your winning position, but only 7 pips for your losing position.

As a general rule of thumb, we recommend that your Take-Profit or Stop-Loss levels are at least 10 times the spread you have traded on. This strategy will help avoid overtrading and improve risk/reward.

Chasing the Market

If you are a day trader or short term trader, in general we recommend not to “chase the market”.

By this we mean you shouldn’t for example buy Euro after it has already risen 100 pips and is trading at the days highs. Or sell USD/JPY after it has come off 150 pips and is trading near the days lows. The rationale behind this is that in many cases the market will consolidate and there will be better opportunities to enter into a new position.

A common scenario when chasing the market is panic buying or selling when a novice trader reverses a position in the hope that they can quickly make back losses. Unfortunately what often happens is that they simply instead end up repeatedly buying the high, and selling the low. This situation must obviously be avoided.

Managing your Margin

We recommend you only risk a maximum of 10% of your total trading equity on a single trade.

10% may sound like too little risk considering many online forex brokers offer 1% margin or 100 times leverage. However, trading on high leverage can be very risky as you could lose everything in a single trade.

By risking only 10% of your equity on a single trade, you will still be able to make good profits from successful trades whilst avoiding the risk of being wiped out during a bad streak.

Even the most profitable traders can have losing streaks in which they could for example have 3 or 4 consecutive losing positions.

Finally

Successful forex trading is a long term investment which can produce excellent returns if traded with control, discipline, patience and consistency. Your target should be to make substancial profits over the course of anything over 3 months.

Wanting to double your money in a week is not the right mindset with which to start trading. The risks involved are way too high and belong in the casino!

In forex trading the old cliche definately rings true — knowledge equals power!

Beginners Trading Guidelines / Martin Chandra

Martin Chandra is a full-time investor. Get limited offers at here.

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What is Online Forex Trading?

Online Forex Trading
is the arena where a nation’s currency is exchanged for that of another currency of another nation. The foreign exchange market
is the largest financial market expression within the world and is the equivalent of over 1.5 trillion USD changing hands daily, which is more than three times the collective amount of the US Equity and Treasury markets combined.

Unlike other financial markets, the Forex Trading market lacks physical location and has no central exchange. Thus it operates all the way through a global network of banks, corporations and individuals that trade one currency for another.

The need of a physical exchange enables the Online Forex Trading market to operate on a 24 hours a day and 7 days a week basis, spanning from one zone to another in all the major financial centers in the world.

By resting on the Forex Trading market a person can easily trade main and exotic currency pairs and crosses quickly and easily, from his or her home or the office too. Many companies offer both individual and institutional customers instant “click and deal” trades on live deal-able quotes during the Online Forex Trading.

The Online Trading is very much influenced on a margin that allows a person to open positions as large as 200 times the opening amount. A person can easily earn interest on a strong currency position even if the market is not moving enough.

Dealing in Online Forex Trading

Companies dealing with Online Trading try to be as practical as possible to their customers which is why the companies are constantly improving and enriching their services.

In such a stage the customers can execute directly from streaming prices through a platform, which is fast, reliable, stable, easy to use, secure and also contains powerful functions. They even highlight within the most demanding trading environments of the Online Forex Trading.

The orders are executed and finalized within seconds. Real-time tables and real-time interactive charting are both flexible and customizable. They include a precision feature that allows the customers to work with other applications and yet are able to monitor their trading activities.

The platform that is used is proprietary software that has been created in-house by Online Forex Trading stock’s information technology department. They enjoy a distinctive ability to repeatedly develop the same and to meet the evolving needs of their customers.

All the trading activity is tracked onscreen in real time, including the current open positions, real-time profit and loss, margin availability, account balances, and all the historical transaction details too.

The responsive and well-informed staff is available 24 hours a day and 7 days a week to assist the customers with any question that comes to their mind. While dealing with the Online Forex Trading customers can trade currency via our online dealing room and also by the telephone in English, 24 hours during the working days and can also easily chat with the dealers round the clock.

To deal with Forex Trading there are many online Forex trading platforms available with proprietary softwares that are based on the superb qualifications of professional currency traders. They are effective, efficient and reliable to use too.

Placed direct orders in Forex Trading are executed on streaming currency prices and can never be re-quoted. The market orders that have not been filled instantly are confirmed within seconds at prices accepted by the client during Online Forex Trading.

As soon as a live trading account is opened, the customers are provided with the Charting package. Multiple Online Forex Trading forex charts can be opened in virtually any time to view the currencies that matter most to the customers.

The transparency feature helps the customers to work with multiple windows as it supports the multiple screens and yet keep a bull’s eye on each and every single one of them.

Eliminating all commissions and fees enhances the trading performance. In addition, various companies offer complete transparency of where the Forex market is Online Forex Trading and where it can be bought or sold.

Through the unique map function that some companies offer, the customers can easily place the open platform’s windows outside the visible area of the screen and easily move them back in. Thus facilitating in the process of trading.

The Online Forex Trading platform has user-friendly, customizable windows, through which you can easily track the current Forex holdings in your account, the quantity of your position their average price and the current market price too.

What is Online Forex Trading? / William Smith

William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Online Forex Trading (All is Free)

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Forex Day Trading Versus Position Trading – The Pros and Cons

Trading can be fun and exciting when you daytrade and very boring when you position trade. Our motto: get in, get out and go play!

WHY We Want To Day Trade Versus Position Trade

1) We want to spend only a few short hours each day trading, sometimes just a few minutes!

2) We don’t want to hold any overnight positions!

3) We don’t want to hedge!

4) We want the fun of the quicker action and quicker profits!

5) We want more profits with less risk!

So keep these goals in mind as you learn our trading techniques!

Be patient in your learning process and keep in your awareness that if you learn this trading system successfully, you will have a cash cow system FOR LIFE that is safe, independent, portable and highly profitable. It will give you the freedom to quit your J.O.B. (Just Over Broke) and travel the world and earn a great living, with just a portable laptop and your debit card!

The currency pairs are made to swing, so trade with ease and without fear. Quickly close out a losing position…don’t dream/hope that it will turn back into profit! It often doesn’t!

Don’t be radically bullish or bearish, swing trade within the trading range of the day, go with the short term trend.

If you can develop the mental and emotional disciplines to trade according to these guidelines, you’ll do very well and become very successful!

Ideas About Trading in the Different Time Frames

Each person needs to experiment with the different time frames and moving averages to find out what he/she is most suited for, time-wise and personality-wise. This takes time and lots of practice and patience in your demo account.

If you have a J.O.B., then what we teach is perfect for you if you can trade during the busiest hours, between 3 am to 11 am EST. Even 1 hour of trading in the 1-5-10 or 15 minute chart will make you enough money for the day. You can do multiple scalping trades in the 1 and 5 minute chart, or one trade in the 10 or 15 minute chart, and then go to work. If you get lucky and hit a breakout or breakdown, no matter what time frame you are in, you can make as much as 30 -100 pips in a few minutes! YOU ONLY NEED 20 PIPS A DAY TO BE RICH!

Some people love scalp trading, which are quick trades in the 1 and 5 minute charts for small but quick profits; and some love day trading, mostly done in the 10 and 15 and 30 minute charts, which simply means you close out all positions before the end of the trading day.

If you do one or more trades in one day that rides the price up and down and you close each position out, that is called day trade swing trading. And some prefer swing trading over the course of several days or weeks, which I call position trading, mostly done in the 1 or 2 or 4 hour charts.

We personally scalp and short term day trade, which is really just one-day swing trading. If you use a 1 or 5 minute chart with a 20 pip initial stop loss with a 10-15 pip trailing stop after breakeven, and/or a 10-50 pip limit, you will do very well without big risk or staring at your computer screen until you fall asleep or go blind!

Our motto: get in, get out and go play!

The beauty of this method is that you don’t have to have your PC on all the time or be glued to it or worry about overnight positions. The trade-off is that the longer plays make more money, although, they do carry more inherent risk. So again, staying with your trade in the beginning until you’ve moved your stop to a breakeven, is your first goal, and this is true for every time frame you decide to trade in.

Keep a trading journal

Finally, it is a good practice to keep a simple trading journal. This way you can keep track of your trades and progress and be able to analyze, improve and hone your trading skills.

Simply include the time you entered and exited the trade, the currency pair, the chart time frame (this is important), and the strategy (breakout, trend or top or bottom). Also include write down what happened and what you could have done differently for future reference.

Not every trade can be a winner but in order for you to be a consistent winner, you need to do two things: keep your losses small and manage your margin conservatively.

We recommend that you trade no more than 5-10% of your account size in each trade. 5% is safer. It’s easier to make up the losses, when they happen, and they will happen!!! And ALWAYS use stops!

Learn to manage your money wisely…invest small amounts each time and keep your losses small and when you’re in profit, let your profits run with a trailing stop.

What “Rich Dad, Poor Dad” says about trading:

“It’s not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a trade and praying. The idea in trading is to use your technical knowledge, wisdom and love of the game to cut the odds down, to lower the risk. Of course there is always risk. It is financial intelligence that improves the odds.” Robert T. Kiyosaki

“Knowing how to take a loss for the trader is as significant for him or her as learning to overcome the fear of death was for the samurai warrior.” Robert Koppel

What’s the best way to stay positive no matter what? Celebrate your losses! Get up and dance, do a little jig, blow a horn, yell yippie, another loss! Remember, you love the game and winning and losing are both part of the game!

Forex Day Trading Versus Position Trading – The Pros and Cons / Cynthia Macy

Erol Bortucene and Cynthia Macy are co-authors of The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading: The Day Trade Forex Trading Systems

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