Currency Broker Choices: What to Look For

There is a very wide choice of currency broker companies online and when you are starting out in forex trading it can be difficult to find the best. We tend to be attracted by advertising, assuming they are all working in the same way. In fact this is not true. Foreign exchange brokers have very different business models which affect the way that they operate. In some cases, you may be surprised to hear that they could be working against their clients instead of for them.

Of course traditionally a broker carries out his clients' instructions, placing orders for them in the market. Originally brokers worked with telephone orders and simply placed the order for the best price that they could get through their dealing desk. These days, everything is done online so that clients put in their orders for a certain price. However, you do still need a broker who will connect to the market through their software platform.

Many brokers still work in the old way, placing orders for clients as they are instructed. These are often the brokers who run standard forex accounts with minimum investment of $10,000 and upward. But the internet has opened up forex trading to people with much lower investment funds. More recently, companies have come on the scene to cater for these smaller investors and they do not necessarily follow the pattern of traditional brokers. To cut costs, they usually do not have their own dealing desks and they may operate in some very different ways. This can have important consequences for your funds and how they are managed.

So let's take a look at the types of business model that you may come across in your search for a currency broker.

No Dealing Desk (NDD) Currency Brokers

NDD brokers work in a similar way to brokers with dealing desks, but they use a range of liquidity providers to actually match their clients' orders in the market. Competition between liquidity providers keeps the spread low, even though the broker usually increases the spread to cover their own costs and make some money.

Electronic Communications Network (ECN)

Forex brokers who use the ECN can access an online network where trades are filled. Many market makers work this way, as well as some brokers, banks and other large currency traders. Spread is usually low but you may be charged a fee per trade.

Market Makers

Market makers are not brokers in the true sense because instead of placing your order in the market they will match it themselves and then cover themselves against any loss by taking a position in the ECN or market that offsets their commitment to you either partially or fully. Market makers set their own prices, although of course these will be related to market prices. They often do not like clients to use scalping strategies because the very short term nature of these trades makes it hard for them to offset their risk. Some traders are happy to use market makers but others consider that they have a conflict of interest which may work against you as a trader.

Bucket Shops

Forex bucket shops are like bet takers in that they simply match your trade without necessarily taking any position in the market. They may not even have any connection into the real currency market. They win if you lose, so if you are successful they will probably close your account and return your funds. There is really no point in getting involved with a bucket shop unless you just want experience at very low levels of investment, and plan to lose money. They are illegal in some jurisdictions, and do not deserve to be described as a currency broker.

Best Expert Advisors: Reviews

The best expert advisors can help you to make a lot of money with forex trading, while a bad EA can simply be a drain on your cash. So how do you tell them apart? Most people do this by looking at reviews.

However, online reviews can be a mixed blessing when it comes to something as important as an expert advisor. In case you do not know, an EA is a forex robot or automated currency trading system that runs on the popular platform known as Metatrader 4. Basically, you hook up the robot to your broker's software platform, set it to trade for you at the position size etc that you want, and go enjoy your day.

The problem of course comes if things go against you and it starts to lose your money instead of making it. This is always a danger with forex systems and even more when they are trading on autopilot so you may not be aware of what is happening. For that reason it is very important to run the EA on a demo account first until you have absolutely everything clear.

Reviews can certainly help you to narrow down your search when you are looking for a forex robot that will save you tons of time analyzing the market and placing your trades. However, there are two possible problems with reviews. One is that some reviews that you will find online are simply copied from the sales page for the EA itself and the person might not have used the robot at all. In this case you will usually see a very positive review with no indication of the possible downside. On the other hand a review from somebody who has actually used the software themselves can be very valuable because it will often give you hints and tips about how to get the most from it.

The other thing that you may come across is a strongly negative review from somebody who could not make the EA work for them. There may be all kinds of reasons for this which are not the fault of the EA itself. Often, either the person could not figure out how to set it up and became frustrated with it, or they set their risk too high. A common recommendation for risk is 2% per trade. The laws of statistics mean that setting your risk too high will always lead to a busted bank sooner or later, but people who do not realize this will often blame the system that they were using. This can lead to some very vitriolic comments and forum posts and of course it is never recognized that it is the fault of the trader. It must be the system's fault!

What you should be looking for when you search through reviews for the best expert advisors is a general consensus, a balance of views. Rather than simply going by a star system or whether the person liked the EA, check for specific points such as these:

- Is it easy to set up, and how much does that matter to you?

- Is it suitable for somebody at your level? Is it aimed at beginners or experienced traders? Do you need to be taking a certain position size or using a particular broker to use this system?

- Does it suit your trading style in terms of the amount of risk (stop loss settings) and number of trades?

You may need to read between the lines a little bit to work out some of these points. For example, most EAs will claim to work for people at all levels, but a system that only makes a couple of trades a week is not going to make you much money on a micro trading account unless you take huge risks, so that's why the number of trades can be important. However, many people who buy a new forex robot are also trading using other methods and then it does not matter so much if a robot only trades a couple of times a week.

So do check out reviews when you are looking for the best expert advisors, but follow your own agenda when it comes to how seriously you take them.

Free Expert Advisors: What to Look For

Free expert advisors for forex trading can be found online if you know where to look. However, before you go ahead and grab one, take a moment to think about what you should be looking for.

Expert advisors or EAs are automated forex trading systems or robots that work on the Metatrader 4 software platform. MT4 itself is free, and as with most software, there are some people who have developed free applications that you can download. They may hope for donations, they may hope for some kind of paid work to come from becoming known for this, or they may just do it for fun. But the question that you must always ask is: what is the system that they have automated?

If you think about it, it is pretty clear that anyone with a profitable forex trading system is not very likely to spend hours of his time creating robot software to run it automatically and then give it away as a free expert advisor. Nor is he going to pay a programmer to create the software and then give it away for free. No, either he will keep his robot for himself or he will hope to make a lot of money by selling it.

This means that the free expert advisors that are available on the internet are not necessarily the best automated forex systems. You might be lucky and find one that is great, but you could spend a lot of time trying out free expert advisors that never make money or do not even work.

Then you have a problem because support is likely to be minimal. How could somebody spend hours of their time helping you to fix any problems that you have, if they are never being paid anything for it? Most people have to earn a living. Maybe they had a few spare hours or days to create the robot in the first place, but that does not mean they have spare time to devote to you and your problems when you try to use it, which could be months or years after they developed it.

Besides this, there may not be much in the way of instructions for setting up. This may not sound like a problem until you try it. Forex robots are notoriously difficult for the non technically minded among us, and if you do not even have much of a manual and nobody to answer your emails, the outlook is bleak.

In fact, free forex robots could end up costing you a lot of time and perhaps also a lot of money, if you are unwise enough to let them loose on your real money account before you have fully tested them. Free expert advisors are not necessarily an unmixed blessing.

Forex Tutorial: A Necessity For Beginners

A good forex tutorial is essential for beginners. Despite the advertisements, you cannot expect to set out with no experience or training and start making money right away. If you have some knowledge of stock trading or other similar speculative markets you will have a much shorter learning curve but there are still a few things specific to currency trading that you will need to know.

However, do not lose heart. There are plenty of good forex trading training courses out there and with a little investigation you can find the right one for you. There are just a few things that you need to keep in mind when you are looking.

Cost

While a lot of forex training is available for free simply by reading websites or downloading free ebooks, you are not necessarily going to find the best trading information that way. Most traders do not give away their secrets for free.

So although you may be able to cover the basics from free information, you must expect to pay something if you want to learn from the pros. The cost then can range for a few dollars for an ebook describing a successful trading system, to thousands of dollars to sign up with a mentor for private coaching or attend a series of seminars.

All we will say here is that if you are a complete beginner, it could be a waste of money to pay for top level training even if it is good, because you are probably not ready for it. Cover the basics more cheaply first.

Type of forex tutorial

Many people start with books and ebooks. This can be a great way to educate yourself. There are some differences between the two that you should be aware of. Printed books tend to be more general and more informative about the background and history of currency trading, while ebooks are usually shorter and often cover one particular trading system. You need both background knowledge and a profitable if you are actually going to trade.

Of course, ebooks also have the advantage of being instantly downloadable. Sometimes they will come with a video forex tutorial which can be very valuable indeed. Instead of just reading about the author's trading system you can actually watch as he implements it on his computer. You see exactly where to click and everything is much easier to follow. So if you are considering buying a forex ebook, check to see whether videos are included.

When you buy an ebook you will also usually have a method of getting support from the author or his team. This does not come with a printed book and it is essential if there is something that you do not understand. This can also, occasionally, lead on to a mentoring or other relationship that could be very valuable to you in the future.

So do not be surprised that ebooks are usually more expensive than printed books. They contain a lot of hidden value. What you need when you are starting out with forex trading is a practical forex tutorial, and you are much more likely to get this from a forex ebook with videos than any printed book.

Forex Trading Platform: Finding the Best One for Your Purposes

Whether you are in the forex market as a broker, a professional trader or a complete beginner, you probably know the importance of having the right forex trading platform. Finding the best one for your purposes is not always easy. Here are some tips to follow.

Broker Forex Trading Platform

Brokers need a solution that is reliable and flexible so that they can adapt it to their particular business. Above all, they want it to be user friendly so that it is easy for their clients to use while providing all the information that clients want at their fingertips.

Most brokers either use custom built software or adapt something that is available out of the box. Custom platforms may seem like the ideal solution for a broker but they are expensive and take a long time. Even if you have delivery of your software, you can be waiting a long time for all of the bugs to be ironed out.

Pre designed forex trading platform packages have several advantages. First, you can be pretty sure they work so you are starting with a system instead of starting from scratch. A huge amount of time can be saved by your programmer, who will just have to change things around so that it does what you want.

Do not neglect the customization, however. It is important that broker trading software is branded to your own company and has a different feel for users than other companies' platforms that they may have used before.

Trader Forex Trading Platform

Traders will usually go with whatever interface their broker provides, but they will be looking for something that is easy to use and provides plenty of technical analysis. The software is often a very important factor in the choice of a broker.

Again, reliability is vital. You do not want to be linked up to a platform that makes errors or is frequently offline. Security is another factor. It is important that your funds are protected and your account cannot be accessed by hackers.

If you are using an automated forex system to trade for you on autopilot, it is essential to check that your selected broker's software will work seamlessly with your robot. If you buy a premade robot or forex expert advisor you will usually receive a list of compatible brokers.

Many successful traders now have someone automate their system so that they can switch over to autopilot trading without changing their trading style. The platform of choice for most robots is Metatrader 4. This is free software on which your programmer can build a trading system for you. It is the most popular forex trading platform for the expert advisors that are sold on the open market and it is compatible with many broker software platforms.

Forex Analysis: Technical or Fundamental?

In any discussion of forex trading you will see discussion of the two main types of forex analysis. These are technical analysis, where trading is based on historical and mathematical factors such as price charts and indicators, and fundamental analysis, where traders pay more attention to economic factors such as financial and political news.

Which one of these will give you more successful forex trading signals? It is a difficult question and the answer is not agreed by all traders. If you look around the internet you will probably find more discussion of technical analysis but that is partly because there is more to get a grip on. Beginners are frequently advised to identify trends on price charts and then trade on the basis of those alone. This is one of the easiest ways to begin forex trading and it can be successful.

Fundamental analysis depends on knowledge and news of the constantly changing real world. This makes it more difficult to take into account if you are not in the habit of checking out the financial section of your newspaper. However, there is no doubt that ultimately it is the economic factors which cause major price movements. Advocates of fundamental analysis will argue that any evidence on charts is historical and not predictive. In other words, the charts tell you what happened 5 minutes ago but not what is coming next.

One thing is for certain. Major financial reports and other events of national or international importance can have a huge and sudden effect on currency prices. So even if you prefer the technical method of forex analysis, it is wise to keep an ear to the ground and avoid being trapped in a bad trade when the US government announces a change in interest rates and the dollar leaps or plummets by 50 pips or more.

It can be helpful to think of price movements in the forex market as having a kind of elasticity. They are constantly stretching out to certain limits and then moving back, not necessarily to their starting point but often less or more. The fundamental factors are what make the prices move but technical analysis can be used to predict how far they are likely to stretch and when they are likely to start to reverse.

So the bottom line is that the best way to profit from forex trading is to make use of the technical tools such as charts and indicators but at the same time, be aware of the fundamental factors that are the real driving force behind any trends. The successful forex trader will be comfortable with both types of forex analysis.

Candlestick Analysis: Most Popular Trading Chart

Candlestick analysis is one of the simplest and most effective methods of technical analysis for currency trading as well as stock trading. While there are other types of charts available including line and bar charts, the candle patterns are the most popular.

History Of Candlestick Charts

This type of price tracking chart was developed in Japan in the 18th century and that is why you will sometimes see them referred to as Japanese candlestick charts. It also explains why many of the common recognized patterns have Japanese names such as doji and marubozu.

The charts are believed to have been invented or at any rate used by the very successful Japanese commodity trader Mr. Homma who mainly profited from trading in the price of rice. Previously, simple line charts had been used to track commodity closing prices. Candlesticks gave traders a way of plotting more variables while staying within a two dimensional chart.

While bar charts can also plot the open, close, high and low, the advantage of candlesticks is their visual utility. Bullish and bearing periods are clearly visible at a glance.

Mr. Homma's phenomenal success as a trader led other Japanese commodity traders to adopt his analysis tool and in the early 20th century it was introduced to the American stock market by Charles Dow, the founder of the Wall Street Journal and co-founder of the Dow Jones company.

What Is A Candlestick

A typical candlestick has a block that is the body of the candle, plus vertical lines known as shadows or wicks which stick up and down from the body. The top of the upper shadow is the highest price reached during the trading period and the bottom of the lower shadow is the low.

The top and bottom of the candle block mark the opening and closing prices in either order. The candle was originally unshaded (white) for a rising market where the open was the bottom of the candle and the close was the top, or shaded (black or green) for a falling market where the open was the top of the block and the close the bottom. You may now see other colors used, e.g. green or blue for a rising market and red for a fall.

In a case where there is some coinciding of prices and the open, close, high and low are not all different, the candle may look slightly different. Here are some examples:

Doji - period with an equal opening and closing price, looks like a cross.

Marubozu - period when the opening price was the low and the closing price was the high (white marubozu) or vice versa (black marubozu). Has a candle body block only, with no shadow sticks top or bottom.

Candlestick Analysis In Real Time Trading

Candlesticks can record any measured time period. Typically traders will use 5 or 15 minute candles with the resulting chart showing several hours, but it is possible to set your chart for a longer term or shorter term view. Patterns can be identified that indicate emerging trends or possible forthcoming breakouts. You can then compare with indicators or other time periods to check the signals.

Trading decisions in the live market often need to be made very fast. The colored blocks of candlestick analysis help traders to see movements and reversals at a glance and avoid mistakes.

Currency Trading Brokers: How to Choose.

Anybody involved in forex trading cannot avoid dealing with currency trading brokers. As an individual trader you cannot set up your own dealing desk, so brokers are your way in to the forex market.

As trading from home becomes more and more popular with private individuals who often have relatively low startup capital, new types of brokerage firms are springing up to cater for them. Most of these companies are completely legitimate but you do need to do your due diligence before committing your funds to them. Check which country they are registered in and whether they are regulated there.

What would happen to your funds if the company went out of business? In some cases you are protected by regulatory bodies but in other cases you are not. So this is a good question to ask before you invest.

Most forex traders work with 100 or 200 times leverage. This means that to control a position size of $10,000 you would have to commit only $100 or $50 of your own money. This gives you a lot of power because you can make a lot of money in a short time when things go your way. On the other hand of course it is also possible to lose a lot, if you do not have stops in place to prevent you. For this reason, when you are beginning it could be a good idea to sign up with a broker who will automatically close out your trades when the limit of your account is reached. This protects you from margin calls which can otherwise mean that you could end up owing the broker more than you have in your account.

Currency trading brokers provide many services to their clients these days. You will probably have access to a demo account where you can test out the brokerage software that allows to you trade in the market in real time. You can also use the demo account to test your trading systems before going live with real money.

They will also usually provide some kind of technical analysis in the form of charts and indicators. You can expect candlestick, bar and line charts, and indicators including the Stochastic, MACD and Bollinger bands. Try to look at the charting services provided by several different brokers through their demo accounts and consider ease of use and whether they give you the information that your trading system requires. Of course, many traders sign up with dedicated charting services once they become more successful, but when you start out, getting good technical analysis from your broker can save you that cost.

You will want assurance that the broker's software platform is not easily cracked by hackers. Remember this is your money and you do not want anybody to be able to access your account illegally. Ask the currency trading brokers what security measures they have in place, or check on forums.

Trend Trading Software: How Can it Help Your Trading?

Trend trading software is built to profit from forex and other types of trading trends in order to make money. In most cases the trading is automated, which means that the software acts as a robot that will go ahead and trade for you through your brokerage account, any time that you have it connected.

However, it is possible to develop a system that would simply analyze the markets and provide you with a signal when a trend was identified so that you could trade manually, if you prefer. Some companies providing forex signals have programs that work in this way, although they are not likely to reveal the details of exactly how their trend trading software operates.

A price movement is not usually called a trend if it is very short term. Usually you would expect a trend to continued over the medium to long term, that is, at least several days. Sometimes it might continue for many weeks. In currency trading, usually there would be strong economic reasons for a downward or upward trend, especially if it was long lasting. A major financial crisis could produce a downward movement spanning several months, followed by a slow recovery that could take place over a year or longer.

'The trend is your friend' is one of the best known catchphrases of financial trading. Identifying an emerging trend in the early stages is one of the best ways to profit from forex or stock trading. Most beginners are advised to try to identify trends using charts and indicators.

Candlestick charts are commonly used for this purpose. The slope of an upward trend is shown by plotting the low points of the candlestick shadows, and the slope of a downtrend is shown by drawing a line through the high points of the shadows.

Some traders also talk about 'sideways trends' when the prices are fluctuating between two points relatively steadily. In this case lines drawn through the high and low points of the shadows will be approximately horizontal, not converging or diverging. However, others consider that this type of pattern should not strictly be called a trend.

Looking back, it is easy to see the moment when a trend began. But looking ahead into the future it is harder to be sure when you have a trend and when you have a minor fluctuation. Two candlesticks do not make a trend! We all know this, but if you are plotting trend lines yourself manually, it is very tempting to think that you have a pattern before enough evidence is there.

This is where trend trading software can help you, by taking out the human element and producing signals only when all of the conditions are in place.

Forex Trader Currency Trading: Three Basic Tips

If you are a forex trader currency trading tips and hints are something that you should always be looking out for. Here are three basic tips that can help you increase your forex trading profits.

1. Avoid over trading

Many of the most profitable systems only produce a few trading signals. It can be frustrating waiting for the conditions to be right for your system. Many people give in to the temptation to open a few trades when the market is 'almost right'. People who enjoy financial trading are almost always comfortable with risk. However this haphazard risk taking strategy will almost certainly lead to losses in the long run.

Remember there is a reason why the rules of your system are as they are. The aim is to make money - but only by keeping within the set boundaries.

Remember that in forex trading, less is often more. There is no point opening ten trades a day if only one of them is going to be profitable.

If you simply cannot deal with the boredom of a system that produces a very low number of trading opportunities, then look for a second system that you can track at the same time.

2. Be realistic in your goals

One of the things that can ruin an otherwise sound trader is aiming for unrealistic goals. Often this is called greed, but that's too harsh a term for most situations. What actually happens in many cases is that the person starts daydreaming. They are constantly thinking about making a lot of money from a single trade.

Actions soon follow thoughts and they start using high risk strategies that seem to give them a chance of achieving the dream. Instead, they often end up wiping out their funds. Looking back, it was completely predictable, but they were pulled off course by persistent thoughts of riches.

So if you catch yourself daydreaming, cut off that thought right away. Focus on making a realistic profit figure - and no more. If you happen to make a lot more one time, put it aside and tell yourself that it's there to cover the losing spell that may soon follow. Do not start expecting to make that much on every trade!

3. Take a step back

As well as checking your trading signals on daily, hourly and/or minute charts, it can be very helpful to take a broader retrospective view. Look back over the last week's or month's charts regularly.

This will stop you becoming blinkered so that you can more clearly see what went right or wrong for you and why. It may give you ideas that will help you tweak your system or even find a new one. Most importantly, it will help you to refine and improve your forex trader currency trading strategies for success.

Trade Foreign Currency: The Best Time To Trade

If you are serious about making money with forex trading, you will need to know the best time to trade foreign currency. And by the way if you are not serious about it, you probably should not be getting involved! Forex trading is not risk free and there are plenty of things that you need to know before you start trading for real.

Generally the best plan for a beginner is to get into the habit of trading during some of the busiest times. Do not look for quiet periods hoping to make a big break when nobody else is around. It just does not happen that way and you could be caught out. Better to go with the crowd at a time when you can be more sure of being matched at a good price for both your opening and closing deals.

So when are the busiest forex trading times? The answer is the overlap between the London and New York forex trading hours. London is actually the busiest currency trading floor, with New York second. London business hours are good for trading on the euro, British pound and Swiss franc, since most of the major countries using these currencies are within one hour time difference from Britain. New York of course is the home of the US dollar, the most traded currency, and the time zone also covers Canada.

Expressed in British time (the same as UTC in winter), trading starts in London at 8.00 am and finishes at 4 pm, while trading in New York starts at 1 pm UTC and finishes at 9 pm. Therefore the overlap is from 1 pm to 4 pm British time. Expressed in New York time (EST), the overlap is from 8 am to 11 am. That is when the forex market is busiest on practically every day.

Of course those hours may not be ideal for everybody. If you live in one of those time zones and want to trade foreign currency outside of normal business hours when you may be working another job, you will certainly have the opportunity. If you live in Europe you can trade in the evening when the New York market is still open, and if you live in the EST time zone you can trade in the early market when the London floor is already very active.

Also, if you trade cross pairs that do not involve the US dollar, you may find a busy time for that pair based on the business hours of their two countries. For example the AUD/JPY pair can be reasonably busy during the Asian session when Australian and Japanese business hours overlap. However, even on these pairs there is usually more activity if you can also overlap with US or British trading times.

Long term traders who may leave a trade open for several days or weeks will be less constrained by the peak trading times. For day traders, however, it is important to be able to slip in and out of a very busy market if you want to profit from forex scapling strategies. So it is also important to take into account how you plan to trade foreign currency.

Online Currency Trading Explained

What is online currency trading? Put simply, it is a way of making money from the daily changes in currency prices by trading in currency on the internet. It is often called forex or FX trading, which are just short names for 'foreign exchange'. It is a speculative form of investment, so it is risky. At the same time, it allows many people to make money from their home computers by working just a few hours each day.

One of the benefits of forex trading over stock trading is that it is a 24 hour market so you can trade in the evenings. Currency trading can be done in any part of the world, you are not limited to your own country's currency. So you can take advantage of the different time zones which mean that the market is constantly open from Sunday night to Friday night.

In other respects you may think of it as being a lot like stock trading. You are dealing in rising and falling prices, submitting buy orders for currencies that you think will rise and sell orders for currencies that you think will fall in value. You can make these trading decisions on the basis of world economic events or more simply, you can look at charts which show patterns and indicators that many traders follow to make successful trades.

Currency is always traded in pairs because it has to be an exchange: in order to buy one currency you always have to sell another. A common pair for beginners to use is EUR/USD, or the euro and US dollar. These are the most heavily traded pairs so costs are usually low and a lot of information is available, making it one of the easier and cheaper pairs to trade.

When you are trading this pair you are always either buying or selling euros, with the dollar as the quote currency. If you want to buy dollars when trading this pair, you have to place a sell order for euros, and that will automatically mean that you are investing in dollars. This is called 'going short' on EUR/USD. If you want to buy euros, that is called 'going long'.

The aim, of course, is to place a closing order on the trade after the price has moved the right way so that you are in profit. Of course if it goes against you, you can lose, so you need to place stop orders. A stop order cancels out your trade at a certain level of loss so that you are protected from large losses.

Many brokers will accept a very small minimum investment to attract new traders. At the same time, the use of leverage and margins means that you can control large position sizes with a small account balance. You may only have to supply 1% of your trade amount in order to open a trade. The broker guarantees the rest, protecting their position with automatic stops. All of this means that online currency trading does not require a large investment to get started.

Metatrader EA: What You Need To Know About Expert Advisors

The Metatrader EA or expert advisor is a whole family of forex robots that work on the free downloadable software platform called Metatrader 4. MT4 basically acts as a platform or framework that trading robots can be built on. That's why, when you buy a trading robot, you usually have to download Metatrader 4 and install it on your computer before you can set up the robot or expert advisor itself.

Automated trading systems such as expert advisors will act for you in the market, making trades according to their own system with regard to the settings that you put in. This has a lot of advantages if the system is profitable. Your Metatrader EA will not need to sleep, eat, visit the bathroom or have a social life. Provided you can make sure it is always online, it will watch the markets 24 hours and should never miss the right moment for opening or closing a trade.

Robots also have perfect discipline and never feel any emotion. This means that they will not be tempted to make trades that are outside the rules of your trading plan because of fear, greed or over optimism. They do not have hunches that tell them to buck the trend in some disastrous way.

It is easy to set trailing stops in MT4 and this can help to maximize your profits. The trailing stop will automatically move to follow the price when things are going your way, and stop if the market turns. This means that on a successful trade you can play it out to the maximum while guaranteeing profits at a certain level. If things go against you from the outset, of course the stop does not move but is triggered to minimize your loss.

Of course this relies on the Metatrader EA being constantly in touch with the market, like other aspects of the robot's trading. It runs on your own computer and connects with your broker's software platform over the internet. So this means your computer needs to be on 24 hours, except at the weekend when the market is closed, unless you exit all of your trades before the end of your working day.

Many computers automatically shut down when they are left idle for an hour or more, so you will need to make sure that you can alter that setting. In Windows Vista you can change the plan settings in Power Options in the Control Panel. You also have to think about whether anybody else who uses the computer is likely to shut it down after they finish using it. Most traders prefer to have a dedicated computer that nobody else will use, but this is not always possible.

A better option to make the most of your trading robot is to have it hosted remotely. Sometimes the developer of the robot will offer you this option and it is often worth taking. They will then set it up on a server so that it does not run on your computer. This also has the advantage that you can access your Metatrader EA from any computer if you need to go in and change settings.

Currency Trading Australia: A Commodity (Gold) Currency

If you are interested in currency trading Australia you need to know about some of the special factors that affect the price of the Australian dollar. It does not matter whether or not you live in Oz, you still may want to trade this currency from time to time. It can have benefits because the Australian dollar sometimes stays more stable when other major currencies are very volatile. This is partly because of its position as a commodity currency.

Commodity currencies are the currencies of countries whose main exports are in raw materials rather than manufactured goods or services. Raw materials can include food and other agricultural products, iron and other metals, gem stones, oil, etc. In Australia, the main commodity export is gold.

When the average consumer thinks of gold they usually equate it with jewelry. However, in the world of investments, gold is bought and sold more for its commodity value than for use. Gold is something that often preserves its value in times of economic crisis. For example if there is rampant inflation or a major stock market crash, the average person's savings will often become almost worthless but an investment held in gold will maintain or more likely increase its value.

Australia is one of the world's largest sources of mined gold. Production levels have fluctuated a little due to the effect of internal taxation but broadly speaking, Australian gold production has risen from just 20 tonnes a year in the late 1970s to around 300 tonnes a year today.

Because of this, there is a close correlation between the price of gold and the value of the Australian dollar. Interestingly, even though the USA is another major source of gold, even producing slightly more than Australia, the price of the AUD/USD currency pair is also closely correlated with the price of gold, other things being equal. This is because gold is not such an important factor in the huge American economy as it is in Australia.

So when gold prices rise, the price of AUD/USD will often also rise, and when gold falls AUD/USD is likely to fall. Often there is a little delay before the currency price reacts so a foreign exchange trader involved in AUD/USD has the opportunity to use this to his advantage.

You can also expect that commodity prices in general and gold in particular will go up when there is any major economic crisis in the world. Provided that Australia is not too closely involved in a crash, that is often another early indication of an upcoming rise in the price of AUD/USD.

Of course, gold is not the only factor here and if you want to trade AUD/USD you will need to stay informed about anything else that might affect the price. You can never completely remove the risk involved in forex trading. However, understanding the influence of gold prices on the Australian dollar will be of benefit to you if you want to make money from currency trading Australia.

Top Currency Trading Systems

There are many currency trading systems out there. You could probably find hundreds or even thousands on the internet and in books. So how do you pick out a good one?

This is one of the most important questions when you start out as a forex trader. Anyone will tell you that psychological factors are vital in making a successful trader and it is true that it is very important to have discipline and the ability to apply your system consistently. But you must have a system that is capable of returning a profit in the first place.

Now you probably do not want to spend years in demo accounts trying to reinvent the wheel and design your own new system from scratch. So given all of this variety of systems set out in forex books, ebooks and video courses available online, how can you find a reliable system that will have a good chance of making you money?

One factor that you should look at when you are considering different currency trading systems is the success rate of the trades. Usually the publicity will tell you this, or you can ask.

Theoretically a system with a low success rate could be just as profitable, depending on the amount of money gained and lost on the trades. However, a high success rate is important for two reasons. One is that this is a good sign that the system works well in most market conditions. No system has a 100% success rate but something over 80% is achievable. If you put this into practice consistently, and perhaps avoid the very worst market conditions such as a choppy market, you should have a good chance of getting a profitable result.

The second reason that most traders work better with a high success rate is that it increases our confidence in the system. This helps us to keep motivated to apply the system consistently.

For the same reason, it is important to make sure that the system will give you enough trading opportunities to keep you satisfied that you are trading actively. That may sound crazy but if you only have one trade a week you will start looking around for other possibilities and probably take chances with your trading that will lead to losses.

Plus of course you need to be sure that it will only involve you in a level of risk that you are comfortable with.

The best currency trading systems are usually provided by someone who is a professional trader and using the system to make money themselves, so look out for information about the person's trading experience, and check that they will offer support if you have questions.

International Currency Trading Explained

What is international currency trading and why should it matter to you? The answer is that maybe it does not matter at all, unless you are interested in making money from home with this fast growing speculative trading method.

Have you ever thought about the way that the dollar or another currency is constantly rising or falling, and what this means in practice? It means that they can be traded on the open market, just like stock. Money can be made from assessing which currencies are likely to rise or fall, and trading them one way and then the other in order to make a profit on the difference.

Keep in mind that when you see financial news reports on TV, they do not just say "the dollar rose" or "the dollar fell". They always talk about it rising or falling against another currency, such as the euro, or against a basket of currencies. This is because a currency only has exchange value when you compare it with one or more other currencies.

The international currency trading market is usually known as the foreign exchange market, or forex for short. This is a huge global market, much bigger than the stock market, that trades in all time zones, operating 24 hours a day.

It is something that can be done from home these days if you have a computer with a high speed internet connection, but trading currencies can be very risky, especially if you do not know what you are doing. As with any speculative investment there is no guarantee that you will make money and there is always a risk of losing your investment.

However, there is a safe way to get started and that is by opening a demo or practice account. This is a dummy account that lets you trade using real time prices but without any real money. It's a little like the play money that you might use in certain online games.

To make the most of your practice trading you should do everything you can to convince yourself that it is real, so that you learn not to take unnecessary risks. You will find that sometimes you gain and sometimes you lose, but when your profits are consistently exceeding your losses you are probably ready to begin trading with real money.

These accounts are available from forex brokers who are doing all they can these days to attract new clients. When you are ready to start forex trading for real, they will often let you begin with just a few hundred dollars or even less.

There are many facilities available to help you make money from your international currency trading. When you are starting out you will find plenty of books, ebooks, instructional DVDs and online videos aimed at helping beginners to get started and find a successful trading system. You will also find free newsletters, forex forums and charting services. As you become more serious about your trading you may find it worthwhile to attend one of the many currency trading seminars that are run by brokers or successful traders.

The hardest part of learning forex trading is having the discipline to stick to your system so that you do not take too many risks. Focus on this when you are looking for training and you will have the best chance of setting yourself up for success with international currency trading.

Currency Trading Markets: Avoid these Mistakes to Make Money

Making money in the currency trading markets is not nearly as easy as it should theoretically be. The fact is that there are a lot of good systems and profiting from them is actually very simple. Yet it is obviously not easy to put these simple systems into practice, because 99% of new traders entering the market just lose money.

One of the biggest mistakes that traders make, even those with some experience, is that they dream. They are just like lotto gamblers, they spend their time fantasizing about the perfect trade that will bring them hundreds of pips. These fantasies are fueled by other traders who boast about such successes on blogs and forums, which make it hard to let go of the dream.

Of course such trades do happen ... but not to those who spend their time dreaming instead of getting some solid focused forex trading education. All that happens to them is that they feed their hard earned cash into the currency trading markets where it is lost, going into the pockets of the banks or successful private traders who took the time to learn their business.

It is vital to understand your own abilities, neither underestimating or overestimating them. This is hard when you start out, because it takes a while before you realize how much there is to learn. It is not so much a question of theoretical knowledge which you can pick up quickly from a few books. It is the practical experience that gives you a 'feeling' for the currency trading markets.

While a successful trader always follows a plan rather than his own feelings, that kind of experience can help you spot emerging trends and market patterns that signal a trade for your system. More importantly, it will mean that you know when conditions are wrong and you should just switch off and do something else with your day, rather than sitting there trying to find an opportunity to trade until frustration leads you into something reckless.

This is one reason why it is important to have support from more experienced traders. A mentor is ideal but when you are starting out, it can be hard to find one. If you are not in the fortunate position of having a friend or family member who is a successful trader, you are unlikely to find anybody who is willing to spend a lot of time on you when they could be using that time to make money.

The best way is probably to visit forex forums and show that you are seriously trying to learn, rather than hoping to make thousands of dollars overnight like most of the other newbies. That way, you may make some useful contacts.

You can also look for technical help. It is possible to cut corners and start trading for real much faster if you have a good automated forex system such as one of the top expert advisor software programs. They are not expensive and most of them come with a money back guarantee so you can try them in demo and if they don't work, trade them in. Be sure to give them a good run in demo mode and take time to understand the settings, however. You must give them a chance if you want to find one or two that will consistently make money for you.

Of course forex trading is risky however you do it, but good software can certainly help a beginner to start making money in the currency trading markets.

Currency Trading Course: FAQ, Is Currency Trading Safe?

One of the first questions that many people ask when they are thinking about taking an online currency course, is whether currency trading is really safe. There are so many advertisements and promotions on the internet, as well as in magazines an on TV, that people often become suspicious. Is it really such a great way to make money? Can anyone profit from it? And is your investment secure?

The first thing to understand is how currency trading works. It is also known as forex or foreign exchange trading, and it a kind of speculative investment that allows traders to make money by speculating on the rise and fall of currency exchange values. These are the prices that you often see quoted in the financial pages of the newspaper, that tell you what the dollar is worth against other currencies.

These prices are constantly changing, so a person who can predict which way they will move can make money by buying a currency that is about to rise or selling one that is about to fall. But how can you tell which way the prices will go? Currency values are closely linked to economic performance: when a country's economy is strong, its currency is likely to have a high value. When there is an economic crisis, the currency value will fall.

However, most forex traders do not rely on predictions of the economic status of a nation to make their money. Instead they use analytical tools that help them to identify emerging trends on a mathematical basis. This is called technical analysis. Fortunately these days everything is computerized so there are no calculations to do. Brokers and charting services provide tools such as charts and indicators to give traders signals that tell them when to enter and leave the market.

Forex trading used to be something that was only done by professional traders working from banks, but now everything is online and you can get involved from home. Brokers are keen to attract more clients and so they will let you start with just a few hundred dollars.

There are many kinds of currency trading course and also systems that you can follow that will help you to be successful with forex trading. It is also possible to get software that will trade automatically for you according to a pre set system. This is called a forex robot.

However, even with all the tools and software programs that are available these days, forex trading remains a risky business. Predictions are never 100% correct and all traders make losses at times. Also, an unexpected event such as a terrorist attack or the sudden collapse of a bank can turn everything around without warning. So it is very important to understand the risks and put stops in place to minimize your losses when things go wrong.

Most people who begin forex trading are hoping to make a lot of money in a short time. They soon find out that this is not realistic. It is much better to aim for slow and steady profits, and keep your risks as low as possible. Nevertheless, there are no guarantees that you will make money.

Forex trading is exciting and it can be very profitable but no, it is not safe. As any currency trading course will tell you, forex is for people who are prepared to take a risk.

Make Money On The Internet With Forex Trading

Whether you need a little extra cash or want to dump your job and work from home, it is great to be able to make money on the internet. You do not have a boss and you do not have to leave the comfort of your own living room or den. You can stay home with the kids and work whenever you want. For some people who have trouble getting a job, it is the only option; for others, it is a very attractive alternative to the 9 to 5 world.

The world wide web has opened up so many possibilities for anybody who has a computer and a broadband connection. One of these new possibilities is forex trading, also known as foreign exchange or currency trading.

Forex trading is a way of making money online through financial speculation on the changing values of world currencies. A few years ago the forex market was only accessible to banks and other large financial institutions who could put representatives in the trading floors of the big financial centers of the world, but the internet has changed all of that.

Anybody can get involved these days and you do not need a lot of money to get started. A few hundred dollars is enough. In fact it is so easy to get into online forex trading that many people go live before they should.

We all have dreams of turning a 3 or 4 figure fund balance into 5 or 6 figures, but despite what you may see in the advertisements, this is not easy to do. Forex trading is risky and the only way to make money on the internet with forex trading in the long term is to keep your risks as low as possible. This means that your funds will grow more slowly, assuming you are following a profitable system, but your account is likely to stay in credit even through the inevitable losing runs.

Many people get into forex trading as if they were gambling. They hope for luck and trade on the basis of their intuition instead of looking for a system that works. They talking about 'playing' or 'getting into the game'. The result is that they take too many risks, again like a gambler, and end up losing everything.

This kind of mindset is easy to get into when you are trading with small funds. In fact, forex trading has replaced the online casino for many Americans. That is why so many new traders quickly lose all the money that they put in. If you are serious about wanting to make money, and we hope you are, you must avoid falling into this trap.

Forex trading is simple, in a sense, but it is not necessarily easy. It is tempting to want to rush in and hope that you will be lucky. You must avoid this temptation if you want to be successful. Instead, you will find a good system and master the techniques and tactics that are required to implement it. That is the best way to make money on the internet with forex trading.

Currency Trading Chart: What is it?

The currency trading chart is one of the most important tools for the forex trader. Charts are at the root of forex technical analysis, which forms trading systems based on studying price movements rather than economic forecasts which are the basis of fundamental analysis in forex trading. Most traders these days prefer technical analysis which does not require any special knowledge or training in economics.

Any currency trading chart will show price movements. Usually you can track these over a variable period of time. You can look at the last few minutes, hours, days or longer. Using a chart in conjunction with the mathematical indicators provided by most brokers and charting services, you can identify emerging tendencies and trends that can signal a trading opportunity.

Forex charts come in three formats.

1. The Line Chart

A line chart plots the closing prices at the end of each trading period, which could be anything from one minute to one day, you can set this. These are joined with a line to show the direction of movement. However, a line chart does not tell you anything about what happened at different times during the time period, only the final closing price.

2. The Bar Chart

A bar chart gives you four prices for each period: opening, high, low and closing price. You will see a vertical line for each period. The top of the line marks the high and the bottom is the low. A notch on the left side shows the opening price and a notch on the right shows the close. Usually these are at different levels but they could be the same. Either one of them could be the same as the opening or closing price but more commonly they are somewhere between.

The advantage of the bar chart over the line chart is that it shows you how wide the fluctuations were during the period, giving you an idea of the volatility of the pair at a glance.

3. The Candlestick Chart

This last type of chart gives you all of the same information as the bar chart but in a coloured format which many people find easier to take in.

Again a vertical line marks the high and low prices during a period, but there is also a wider block that runs between the opening and the closing price. This block will be filled with colour, usually red if the price is falling (opening price is the high end of the block, closing price is the low end) and green or blue if it is rising (closing price is the high end of the block, opening price is the low end). If shown in black and white you will see black for a falling price and white for a rising price.

The colours give you an instant view of whether prices rose or fell during the period. This makes candlesticks quicker to read at a glance than a bar chart. You can immediately see a reversal, which will show up as a series of green blocks marking the trend followed by one red marking the reversal, or vice versa. That is why candlesticks are the favorite type of currency trading chart for many traders.

Forex Trading Course: The 5 Essentials

If you want to get involved in currency trading it is worth looking around to make sure that you find a top rated forex trading course. Of course you will want to start making money as soon as possible but forex trading is risky and if you do not get a good grounding you could easily be losing money instead.

It is not so simple to predict which way currency prices will go. There are many factors to take into account. On top of that, it is vital to open and close your trades at the right moment to get maximum profit from any price change. If you try to work all of this out for yourself it will take a lot of time. So why not give yourself a head start by taking a good forex trading course?

Your course should cover all of the basics so that you are well prepared to begin trading. Here is a short list of important points that you will need to understand. Make sure that your course covers all of these before you sign up.

1. Principles of currency trading

Any good currency trading course will explain the basic principles of the forex market including leverage and margins, pips, spread and other costs, and what to look for in a broker.

2. Technical analysis

Technical analysis includes interpreting charts and indicators to identify trends, swings, breakouts and other factors that could be signals for you to open or close a trade. Different systems rely on different indicators. In the beginning, you only need to master the indicators for your own chosen system. Trying to cover them all could be confusing. Later, you might want to refer to other indicators to tweak your system for better profitability, so it's good if you have access to a course that you can dip into again further down the line.

3. Fundamental analysis

Fundamental analysis relates to the economic news, announcements and other events which affect currency prices. In the end, it is each country's economic performance which causes the value of its currency to change. You do not necessarily need to be able to predict these events. In fact many traders stay out of the market completely around the time of a forex news announcement. But it is important to understand how the process works and keep an eye on the alerts for anything that might affect your trading.

4. Risk management

Risk management concentrates on minimizing your losses through the use of stops, and protecting your funds by limiting the position size. In general your risk on any one trade should never be more than 5% and many traders work on 2%, 1% or even less. Broadly speaking you should expect to reduce the risk for larger fund sizes, simply because it will be more important to protect a fund of several million dollars than one of only a few hundred dollars. But you are pretty sure to crash and burn if you exceed 5% so make that your limit. You may feel like taking a chance for quicker growth on a small fund but wiping out your funds is not a good way to go!

5. Mindset

We put this last because it is usually the last thing that beginning traders want to hear about, but it is possibly the most important of all. In the end, if you do not master the mindset of a successful trader you will not be able to profit from the forex market.

You must develop a cool headed approach and work on your discipline so that you can follow a trading system without letting fear, excitement or other emotions get in your way. You also need to understand how to handle losses on the psychological level. Risk management techniques can help but if you let your emotions get the better of you, it is easy to fall into a pattern that will guarantee more losses. A good forex trading course will include teaching and exercises to help you master the art of self discipline and keep your emotions off the trading floor.

How To Trade Currency: The Basics

If you are considering getting involved in forex trading, it is essential that you know the basics of how to trade currency. Even if you plan on using an automated forex trading system (or forex robot) you will need to understand something about what it is doing in order to set it up right.

Forex trading and currency trading mean the same thing. You will be trading world currencies on the foreign exchange market. Forex and FX are simply abbreviations of 'foreign exchange'.

If you do not use a robot then you will need some system that will help you sort out whether a country's currency is rising or falling, so that you can decide whether to buy or sell the pair that you are trading. You always have to trade a pair of currencies because you are exchanging one currency for another. A popular pair for beginners is EUR/USD, the euro and the US dollar.

Currency trading systems are usually based on technical analysis, which means watching price movements and indicators on charts. Most brokers supply this kind of data or if you do not get everything that you want from your broker, you can sign up to one of the many online forex charting services.

You can get started for a very low initial investment these days. Competition between brokers and the ease of access through the internet has meant that brokers are offering mini and micro forex trading accounts to encourage the smaller investor to get involved.

Costs are generally low too. Most brokers do not charge a fee or commission, but make their money from the difference between the bid and ask prices of the currency pair (that is, the different prices depending whether you are buying or selling). This is good for small investors who can make many small trades without paying any fixed fees. This is one of the reasons why more and more private individuals are getting into forex and wanting to know how to trade currency.

The forex market is open 24 hours a day from Sunday evening to Friday evening (or Monday morning to Saturday morning if you are in Australia or Asia). This can be very convenient if you have a day job and want to get into trading in the evenings. It is also a huge market, with deals totalling almost $4 trillion a day. Prices move fast and there is a lot of money to be made.

Of course there is also a risk. Like any speculative investment, you may lose more than you make, especially in the beginning. You should be prepared to possibly lose your investment funds so do not trade with money that you need for other purposes.

It is important to stick to a system exactly and keep clear records of your trades. If you do not do this you will be shooting in the dark and the net results could be damaging. You need to be sure of what you are doing and able to look back and see what worked and what did not work.

There are many forex trading systems sold online but remember that you only need one profitable system to make money. It is not a good idea to try to use more than one system, and certainly do not switch from one to another all of the time, because that will not work for you. Being consistent in your trading is the key.

Forex trading is risky, but it can also make you a lot of money. Follow these pointers and you will soon have mastered how to trade currency.

Currency Trading Pip - What is it?

If you are getting into forex trading it is essential to understand the currency trading pip. This is how your profit, loss and costs are measured. Your broker account may translate pips into dollars or other currencies for you, but it may not. In any case you will want to know what it means for yourself.

A pip is a percentage in point which is a transferable unit of measure, much more useful for the purpose of comparison than a dollar profit figure. It is used in price quotes and as a measure of the change in currency prices.

The pip is the smallest measure of movement in the quoted price. Prices for most currencies are quoted to four decimal places, so one pip is 0.0001 units of the quote currency. (The exception is the Japanese yen which is much less valuable and is therefore quoted to 0.01 yen.) The quote currency is the second of the two currencies in a pair. So for example in the pair EUR/USD, the quote currency is the US dollar.

Some brokers are now beginning to quote to five decimal places and there is some argument among traders as to whether a pip then becomes 0.00001, or whether this would just be confusing, since it would mean that some brokers' pips were 10 times as big as others.

If you visit forex forums you will see traders all the time talking about their profitable trades in terms of pips. They will not tell you how many dollars they made, because that depends on their position size which another person would not necessarily replicate. Talking in terms of pips also means that they do not have to reveal the size of their account.

For example you may see a trader talking about making 200 pips profit on a trade in EUR/USD. They could be an amateur who traded a micro lot or a professional bank trader who traded tens of thousands of lots. Each would have made 200 pips, but the value of those pips would have been vastly different.

To know how much it would mean to you in terms of profit and loss, you simply multiply by 0.0001 and then by the lot size. The result will be the profit in the quote currency.

The quote currency for EUR/USD is the US dollar. So if the trader is dealing in standard lots of $100,000, one pip is 0.0001 x $100,000 i.e. $10 per lot. If he made 200 pips profit, that is $2,000 per lot. But if he uses mini lots of $10,000 it's a profit of $200, and on a $1,000 micro lot it's only $20 profit.

Still, if you assume 100 times leverage, he has only had to put up $10 for his $20, $100 for his $200 profit or $1,000 for his $2,000 profit. So it's a pretty good return and no wonder he is haunting the forums to boast about this trade!

Anyway, you can see how it is an advantage to be able to talk in terms of pips.

Also, of course, the currency itself could vary. The quote currency will not always be the dollar. If that example trade was in EUR/GBP then the 200 pip profit would be 20, 200 or 2,000 British pounds. If you wanted to know what that was in US dollars you would need to add another step into the calculation, multiplying by the current exchange rate.

This may sound confusing at first but when you start trading, even in a demo account, you will soon understand what a currency trading pip means in practice.

FX Trading Software - How Useful is It?

FX trading software programs include the automated systems or robots that help you to trade online from the comfort of your own home. They are very popular but are they necessary? What do they really do?

Many people are unwilling to trust their trading decisions to a computer program, especially at first. It is true that it is wise to be cautious in the beginning, because there is always the chance that you will misunderstand something. But you can almost always use the software in demo mode until you are familiar with all of its settings and features.

The main point to remember is that you are controlling the software, not the other way around. You tell it what to do by setting it up in a way that follows your preferred system.

An automated forex trading system can do many things that you cannot. For example, it can trade 24 hours a day. As the currency markets are international and operate in almost every time zone, they are never closed for business from Monday morning in Australia to Friday afternoon in New York. FX trading software can exploit these very long hours and watch the markets all day and all night, never missing a possible trade.

If you join a retail forex trading company online, you will almost certainly be offered software so that you can operate your account from your own computer. This takes the pressure off the company's website. You can use this type of software to check the currency values and operate your account. This is different than a robot, because you are making the trading decisions and simply using the software to put them into effect.

Automated forex robots, by contrast, are not linked in to one particular broker or company. They run on a trading platform and offer historical market analysis and trend data as well as real time currency values. This data can be extremely valuable for identifying patterns. You can look back to see how currency values fluctuated around the time of certain major events such as an epidemic or an election. Even something like an international sports event can affect national confidence and so cause a change in currency values.

As you become more skilled in interpreting the market trends, you will use all of this data to help improve the success of your trades. Of course there is no guarantee that the currency markets will always behave as they did in the past but any expert will tell you that you cannot ignore the historical data. To put it simply, getting information like this from your FX trading software can help you to make more money from your forex trading.

Trade Forex For Profit: The One Thing You Must Do

To be successful and trade forex for profit is like any other profitable business. You must have a trading plan. You need a goal and a strategy for achieving that goal. This is particularly important in the forex investment market which is fast moving with many twists and turns which, for the unprepared can lead to financial disaster. The advertising you see, particularly on the internet, gives the impression of rich pickings and dreams being fulfilled overnight. Ok, some people can be lucky but the same applies to gambling. If you liken forex trading to gambling then you will lose money. So how do we establish our goal and develop a strategy to achieve it?

First you need to establish the correct mindset. You must be devoid of emotions such as euphoria, greed, fear and above all panic. By creating a trading plan in advance and being determined to stick to it you are less likely to be tempted to make emotional decisions.

Be realistic with your goal. Don't set out to make a fortune overnight or even over a few days, weeks or months. The higher the goal, the bigger the risks you will take to try and achieve it. Like any business, plan for a slow level of increasing profits over time.

Establish your boundaries. The most basic being how much money will you set aside for trading. Do not expect to win on every trade. To be successful and trade forex for profit it is simply a matter of winning more often than losing. Do not trade with money you cannot afford to lose. Your position size for each trade must be calculated within this boundary.

Your strategy or trading plan needs to be based around a tried and tested system and your position size will relate to your system. Some systems go for a high number of winning trades but the losses when they inevitably occur are big. At the other end of the extreme, some systems allow for a high number of losing trades where the losses are small but can expect several losses in a row. Most traders will settle for something between those extremes.

Finally, choose your indicators. This is the information and advice you will use with your system. Always use at least 2 or 3 different indicators and only trade when they all point in the same direction.

Ok, so how do we develop our strategy? My advice is to paper trade using a demo account for as long as it is necessary to establish a system, trading style or preference which will achieve your goal. Once you are trading profitably with your demo account, you will move into real money trading with a lot more confidence and a lot less likely to be influenced by emotion.

Be prepared to modify or fine tune your strategy over time to increase your level of profitability as you gain more experience and acquire more knowledge but NEVER EVER change anything during an open trade. You must open and close a trade on the same strategy.

I sometimes liken forex trading to playing poker. Poker is one of the few 'gambling' games which can be profitable if the player has a rigid game plan. A successful player will expect to lose sometimes and knows what his potential gains and potential losses are at every stage of the game and will bet accordingly. A good poker player with be calm and play without emotion and the same goes for a good forex trader.

This is a very brief overview of the need to develop a trading plan in order to trade forex for profit and hopefully will make you feel more comfortable about proceeding further.

The 5 Golden Rules on How To Make Money On The Forex Market

1. Keep Cool

Successful traders do not let their trading depend on their emotions or their emotions depend on their trading. They do not risk more because they are feeling lucky, they do not hesitate when the signs are right, or pull out of a trade too soon out of fear. Equally, they are unlikely to celebrate a gain, nor will they sulk, shout or kick the dog when they lose.

A person who is ruled by their emotions will not make it as a forex market trader. Self discipline can be learned but make sure that you have fully mastered your emotions on a demo account before you think of going live. If you are still taking unplanned risks you are not ready for real trading.

2. Think For Yourself

Different traders have different techniques. This means it there is limited value in getting advice from anybody else. In fact, unless you know that the person follows your system and techniques, their advice is probably worthless to you.

Do not copy somebody else's system just because they seem to be making money with it. Do your own research and check everything that you are told. Even then, consider carefully before abandoning the system that you have chosen before. There may be factors that you have not taken into account. Something that works for somebody else will not necessarily work for you.

3. Keep Records

Keep a spreadsheet detailing every trade so that you can see patterns in your own results. You do not necessarily need to use it to change anything, but refer to it often to remind yourself of the many small trades that add up to success or failure.

What should you record? At a minimum, the currency pair, your position and the opening and closing prices. However, these bare facts will be much more informative if you can also add why you took the position. Did it fit the criteria of your system? What made you think that the trend would go your way? When you look back you will have a much better view of why your trading history is going well or not so well.

4. If In Doubt, Don't

Do not open a trade if you are hesitant or unsure about it, provided of course that you have a reason other than fear for your hesitation. A trade can only go one way or the other, so if it is not completely right, it is wrong. Wait. There will be plenty of better opportunities.

5. Limit Your Trades

Do not be drawn into thinking that you must never miss an opportunity. You do not have to be on top of a lot of different currency pairs and jump into every market regardless of what else you may be doing.

Limit the number of open trades that you have. It is not a good idea to have more than two open positions at the same time, and unless your first trade in the forex market is profitable you should not even consider opening a second.

Forex Trading Signal Providers: What To Look For

As the popularity of trading the currency exchange markets online from home increases, the number of forex trading signal providers is increasing too. In fact they are proliferating to such an extent that it can be very difficult to know how to find the best one.

Signals are the main source of information for some traders who do not have the time, experience or inclination to analyze the markets for themselves but do not want to trust their trading to a robot. Equally they can be a useful source of additional information and trades for those who mainly make their own trading decisions.

You usually have to pay to subscribe to a forex signal service. Fees may be charged per month or per signal. Some companies offer a trial period where you can test their service on a demo account. If not, you will be paying out money from the start so to have a chance of making profits, you need to be trading at a level where you can expect to make more money from the signals than they are costing you.

The first thing that most people look at when considering forex trading signal providers is their recent results. This can be a mistake. Recent results are not as important as performance over the long term. So do not be seduced into signing up with a company who make a huge deal of their last month's good results but will not tell you what their signals have made over a full year. Also remember that when they show their profits, they do not have to take account of the cost of the signal service itself.

Remember that most traders starting out in the forex markets lose money. Forex is a risky form of investment and you should be prepared for this. Losses are not always the fault of the information. Even if you are receiving profitable signals, you can make losses if you do not have a clear plan for managing your funds. It is very easy to take bigger risks than you should, so that an unexpected loss has a big impact.

Most companies who offer forex signals will send them to you by email and/or SMS text message. It is best to get both, although SMS alone can be enough for some people. The only problem with SMS messages is that it is very frustrating when one arrives and you are too far from a computer to access your account. If you are a serious forex trader relying on signals, you may want to get your PDA hooked up to your trading account so that you can deal with those signals that arrive when you are stuck in traffic or having lunch with a client.

Remember that the foreign exchange is a 24 hour market. Be prepared to be woken in the middle of night by your cell phone bleeping with an SMS that you need to act on right away. You may want to check how your spouse feels about this too. Even the best information from the top forex trading signal companies is probably not worth getting a divorce for!

FX Charts: How To Use The MACD Indicator

The MACD or Moving Average Convergence Divergence indicator is one of the most popular tools on FX charts. It can be used either as an indicator in itself, or as a check when you are mainly relying on other tools.

The MACD chart measures faster and slower moving averages and whether they are getting closer together (converging) or farther apart (diverging).

When they are converging you will see the two lines on the chart approaching each other and the bars on the histogram at the bottom of the chart become smaller. This usually indicates that the current trend is coming to an end or has ended.

Of course the faster line reacts to a change in price movements more quickly than the slower line. So when a new trend forms, the faster line will get closer and finally cross the slower line. If it then separates or diverges from the slower line, this is often an indicator that a new trend has formed.

When the two lines cross, the bars of the histogram will be at zero and then cross their axis so that if they were below the axis before, they are now above it, and vice versa. If a strong new trend is forming, the bars will quickly lengthen in the new direction.

So this crossover could be used as a signal to place an order. You have a buy signal when the faster line crosses the slower line from below, and a sell signal when it crosses from above.

However, there are disadvantages to the MACD which make the crossover unreliable as a self standing signal. The main problem is that even the so-called fast line is significantly behind actual prices because it measures averages of the past prices. So when the market is very volatile, trends could be ending before the MACD crossover marks that they have begun.

Generally the MACD is a better indicator of the strength of a trend than it is of its direction. For this reason some traders ignore the crossover and look instead at the length of the histogram bars. However it is not a good idea to enter a trade on the basis of this histogram (measuring divergence) and then leave it as soon as the price goes against you.

So if you decide to trade the MACD, you should probably use it for both your entry and exit signals. This takes a lot of nerve and experience, and it is not recommended for beginner forex traders. So if you are just starting out, you are probably better advised to base your trading decisions on other indicators on FX charts and refer to the MACD only for background.

FX Technical Analysis: What Is An MACD Indicator?

The MACD indicator is one of the most useful tools of FX technical analysis but it is not usually well understood. This is a pity because many traders could probably use it more effectively if they understood it better.

The letters of its name stand for Moving Average Convergence Divergence. It is true that the name sounds rather complicated and unfortunately this is often enough to put people off from wanting to know more. So they only use the very simplest applications without understanding the power of the tool itself.

Like most forex tools, this indicator is used to show us when a new trend is forming, so that we can get in on it and make money. The MACD does this by plotting the relationship between two moving averages.

Settings

The settings are usually expressed as three numbers. Commonly you might see 12,26,9.

Traders using FX technical analysis often make the mistake of thinking that the first number on the MACD indicator (12 in this example) relates to the faster moving average line, the second number (26) relates to the slower moving average line and the third number (9) relates to the histogram at the bottom of the chart. That is not quite correct.

In fact the first two numbers (12 and 26) indicate the number of periods used to calculate two moving averages. The faster moving average line, which is often green on the chart, measures the moving average of the difference between the 12 period and the 26 period moving averages.

The slower moving average line is often red on the chart. This line plots the average of the last 9 (or whatever is the third number) periods of the faster moving average line. It usually shows smoother curves because its effect is to smooth out the fast moving average line.

Divergence And Convergence

The histogram that measures convergence and divergence is the series of blocks stretching above and below an axis near the bottom of the chart. This simply records the difference between the faster and slower moving averages.

As the two moving averages separate from each other (diverge), the blocks of the histogram will become longer. As they get closer (converge), the blocks become shorter. If the two lines cross, the blocks of the histogram will switch from stretching above the line to dropping below it or vice versa.

So the histogram measures the convergence and divergence of the two moving averages. And that is why this tool for FX technical analysis is called a Moving Average Convergence Divergence or MACD indicator.

What is a Stochastic Indicator and How Can I Use it?

A Stochastic Indicator is a measure of price momentum. Otherwise known as Stochastic Oscillator, it was developed by George C Lane in the late 1950's. Based upon a predetermined high and low range, it will indicate a closing price after a consistent level of either high or low closing prices measured over a set number of periods. A consistent high level near the top of the range creates an accumulation or momentum known as 'buying pressure' and a consistently low level near the bottom of the range creates a distribution or momentum known as 'selling pressure' The Stochastic Oscillator will indicate when a trend is about to turn and flags up a buy or sell signal to the trader.

This article tells you how a Stochastic Indicator is calculated and how it is used to help make successful trades.

The calculation is as follows:

100 X ratio (recent close - lowest low)/(highest high - lowest low) = %K, where the lowest low and highest high is taken over a specified period. The most common period is 14days with the highs and lows recorded for each of the 14 days and the recent close is the closing price on the 14th day. This in effect mathematically compares the latest closing price to previous prices over the number of periods being considered. Clearly, since this ration is a percentage figure, it will vary or 'oscillate' between 0 and 100 over a period of time and is represented by a %K line on your chart.

The signal line or %D line is simultaneously plotted alongside the %K line and is normally a 3 period moving average. It effectively smoothes out the oscillations making it easier to spot the turn in trend which is why it is called the signal line.

What I have just described above is in fact known more specifically as a Fast Stochastic Indicator. There is also a Slow Stochastic Indicator and a Full Stochastic Indicator which are similar but more advanced and beyond the scope of this particular article. If you follow my articles on my by blog at http://forexinvestmentmarket.blogspot.com/ I will be posting more on this subject in due course.

There is no need for you understand the mathematics here or to even make this calculation yourself because most trading software will do this for you and will be shown plotted on a chart provided by your system supplier or forex broker account.

However, unless you are using a robot to trade for you, it is necessary for you to know how to use the Stochastic Indicator to help with your forex trading decisions.

In very simple terms, if both the %K and %D lines are high relative to your horizontal 'sell' trigger line then it is a signal that the market is overbought and about to reverse. This is and indication to sell.

Conversely, if the lines are low relative to your 'buy' trigger line then it is a signal that the market is oversold and about to reverse. This is an indication to buy.

Of course the trigger lines are set to suit your own trading style, usually somewhere between 70 and 80 for the high and between 20 and 30 for the low.

Different traders interpret the Stochastic Indicator lines in different ways. For example when they intersect going up or coming down is often used as a trigger to buy or sell. Before making any real trading decisions based on Stochastic Indicators, as always you should paper trade to become familiar with then and the positioning of your horizontal trigger lines. In other words develop your own system.

Never ever use the Stochastic Indicator as your only guide to trading. You should always use a combination of indicators which all point in the same direction before you make a decision.

Foreign Exchange Basics - The 6 Main Influences

To be successful in the forex market is is necessary to understand foreign exchange basics. Technical analysis with charts and trends is one thing but it's equally important to understand the fundamental reasons why the various currencies around the world are constantly moving relative to each other. Being able to understand what influences a currency movement and correctly predict a movement in one direction or another is what makes a successful forex trader. Let's look at the 6 main influences

1. Current Affairs and the News.

Be aware of what is happening around the world especially within the major world economies. Monitor national and international news channels for such events as political unrest, social disorder and in particular financial news.

2. Unpredictable Events

A major natural disaster or significant terrorist activity can influence a sudden currency movement. You should always protect your trades from unpredictable events by using stop losses to minimize the affect of a sudden adverse currency movement.

3. Predictable Events

A political event such as a general election is predictable. A major international sporting event such the Olympic Games is predictable. The important thing here is to be able to understand which currencies are likely to be affected and in which direction they will move. It's not just the events themselves which may influence a currency movement but also the announcement of such an event. So be aware of the timing of such announcements.

4. Financial Reports

Be familiar with the timing of financial reporting from countries of influence. Announcements concerning GDP, interest rates, inflation etc., will often influence currency movements. Monitor the financial results for the major international companies, particularly the banks and other major international financial institutions.

5. Rumors

It's difficult to avoid rumors but you should be very careful if making a trade based on a rumor because very often a rumor is simply no more than just a rumor and often a rumor is spread to fool traders into thinking the market will move one way when in fact the opposite happens.

6. Currency Pairs

You should pay particular attention to applying foreign exchange basics in the two countries concerned with your currency pairs. It is fact that the US dollar has the strongest influence on other currencies particularly if one of the pair is a minor currency.

The problem for the beginner in forex trading is how to apply all this fundamental analysis to successful trading. The best advice I can give is to gain experience with fundamental analysis and how each type of influence effects currency movement before you use it to make real trades. After a while you will develop a feel which will give you more confidence as you become familiar with the foreign exchange basics.

Read more about foreign exchange basics in my new eBook - Quick And Easy Forex Trading is aimed at understanding the fundamentals of forex trading...it's on a special launch offer now Forex Trading eBook

FAPTurbo Evolution Pre-Review

FAPTurbo Evolution Pre-Review

In this FAPTurbo Evolution pre-review I look at this new forex trading robot due to hit the market on the 14th July 2009.

As you will know if you have been around the forex market for a while, FAPTurbo was the big automated forex software hit of late 2008 and is still trading well in mid 2009. The economic downturn seemed to do nothing to prevent this automated forex trading system from making money for its users. So why the release of FAPT Evolution, the new revision of FAPTurbo from the same developers?

The first thing to note is that FAPT Evolution is designed to work with one brokerage company in particular, the Swiss based Dukascopy. In fact until they ran into trademark issues the developers' original plan was to name this new robot FAPT Swiss.

However, the robot remains independent and Dukascopy will not be providing support for the automated software, only for their own trading platform. Still, this makes FAPTurbo Evolution a very different creature from the old style expert advisor forex robots that, like the original version of FAPTurbo, run on Metatrader 4 and are compatible with a number of brokers who support this platform.

Dukascopy is a highly regarded broker and we do not envisage the close dependence to be a problem. However, if you were thinking of getting FAPT Evolution to run with a few hundred dollars in a mini trading account you will have to think again. The minimum investment at Dukascopy is $10,000. So this is a not a robot for the small time investor.

For obvious reasons the developers are planning to limit the number of copies sold. FAPT Evolution is already making a big noise in the market and Dukascopy may be flooded with new account enquiries, so we recommend you get in fast if you want in.

The development team is fast becoming the market leader in the world of forex robots. They say themselves that "FAPT Evolution is the most powerful and stable Forex Robot we have ever developed, period."

Some patience may be needed in the first few days while the brokers deal with so many new accounts and you deal with the learning curve required to set up your new robot. However, the software will have its own forum where you can pick up support and suggestions from other users as well as the developers. This takes a lot of pressure off the developers' own support system and should be your first port of call for any minor issues.

The differences here mean that 'Evolution' was maybe not the best choice of name. This new version of FAP Turbo is not so much a new model as an alternative choice for a different type of investor. In short, the release of Evolution should not stop you from buying the original FAPTurbo with its proven results, if that would suit you better.

So for beginners and those with smaller investment funds, I recommend starting out with the original version of FAPTurbo which you can operate on a mini account with several brokers.

FAPTurbo

However, serious forex brokers should take a close look at FAPT Evolution. My conclusion from this FAPTurbo Evolution pre-review is that this could revolutionize your forex trading and take automated forex systems to a whole new dimension.

FAPTurbo Evolution

For a full FAPTurbo Review register on my blog and as soon as it is ready I will send it to you, also if there any changes to the launch program I will let you know.

Forex Trading Strategies: 3 Golden Rules

When you have read a few forex books or visited a few online currency trading forums, you will quickly realize that there are almost as many different forex trading strategies as there are traders. People have their own style; but more than that, in currency trading there are many different ways of making money.

So there is not one top forex system that you must follow to profit from foreign exchange trading. However, there are some guidelines that apply to the way in which you approach your trading and these are true for just about anybody. I call them the golden rules of trading.

1. Follow The Trends

Most forex trading strategies and systems focus on identifying trends and there is a good reason for that. Whether the trend shows a rise or a fall, get in to go long or short as appropriate and do not go against it. Bucking the trend will see you losing money fast.

2. Safeguard Your Funds

Risking too much on one trade has been the downfall of many a promising trader. Never risk a lot of money on a single trade, however strong your feelings may be that this one cannot go wrong. They can all go wrong.

So how much do you risk? It depends on your strategy and how much it matters to you if you lose all of your funds, but never more than 5% of your balance. 2% per trade is a safer option.

Some people maintain the percentage as their funds increase, so that they gradually risk more in real terms on each trade. That is up to you but consider carefully before you do this. When you have more money in your account, you will probably be more unhappy if it is wiped out, so you may want to keep the same position size (reducing your percentage risk) as your funds increase.

3. Set Goals For Each Trade

Have a clear profit goal for each trade, so that before you enter, you have already decided when you will take the profit and close. Do not get greedy and try to stay in there for more and more.

In the same way, if it turns bad, do not try to hold on in the hope that the market will turn back your way. Cut your losses and get out.

Using stop losses to do this automatically is a very wise strategy.

Those are the first three golden rules of currency trading: the guidelines that can help you develop profitable forex trading strategies, whatever your system.