Signing up with a good forex signal service can make successful forex trading very easy. You will be told when to trade based on somebody else's system that has proved profitable for them. This can cut out a lot of work for you. You do not have to spend months and years analyzing the currency market and developing your own system.
Often times, the forex signal service will send you advice on stop losses and profit aims, and even the size of your position. In this situation all you need to do is follow the instructions and provided the service is a good one, you should make money. In fact, it is a lot like using a forex robot except that you are in full control all of the time.
However, it is important to understand what you are getting when you sign up for forex signals. You should check ahead of time about the likely risk and success rate of their system. All currency trading systems have losses from time to time and it is important that you understand what these are likely to be. That way, you can work out your risk and the amount of backup funds that you will need to support your trading style.
Another thing to consider when you sign up with a signal service is whether you actually will be able to place the trades. There are two questions here.
The first is practical. Do you have access to a computer and internet connection often enough that you can place a trade whenever you receive the alert? If you are relying on an iPhone or similar technology, can you actually access all of the services of your broker's trading platform that way? Have you tried placing a trade, setting a stop loss etc? It is easy to assume that anything that accesses the internet will allow us to trade, but that is not always the case.
The second question is psychological. Sometimes we may receive an alert and find that it suggests risking more than we normally would, or follows right on the heels of another trade that made a loss. Would you be able to stick with the system and go ahead? Or say a signal arrives at a time when you are already under stress for some reason completely unrelated to your trading, such as a family problem. Would you be able to go ahead and trade calmly?
If the answer to these questions is no, then you may not be in a position to make the best use of a forex signal service. Discipline is one of the most important attributes of a forex trader and it is important to cultivate that before you commit to something like forex signals.
However, if you are already trading and have faced up to these questions already, but you are having trouble finding a profitable system to operate, then a forex signal service might be the ideal way to make money as easily as possible.
Sunday, February 28, 2010
Thursday, February 25, 2010
Successful Currency Trading Strategies
Anybody who wants to be successful with forex trading needs to be very clear about their currency trading strategies. And when I say 'successful' here, I don't only mean people who make lots of money but anybody who makes any kind of profit overall, because provided the system and strategies are sound, a small profit can always be scaled up.
A forex trader's strategies should be written down in the form of a plan. It is not sufficient to carry them around in your head because it is too easy to change the rules any time you feel like it. They need to be written down and placed on the desk in front of you and reviewed constantly.
The currency trading strategies that need to be written into this plan include all aspects of the forex system that is used. This includes the signal(s) to open a trade, the position size, the stop loss and the profit target when you will close a successful trade. Depending on your system, these may be the same for every trade or they may vary according to the signal. If they vary, be sure to write down exactly what is different and under what conditions.
In addition, it is important to have goals for your forex trading. Here I'm not talking about profit targets in monetary terms. Most beginners and some experienced traders do set themselves a monetary target such as $x in 3 months, doubling their funds every 6 months, or whatever, but these targets are not true goals and often, they are counterproductive.
Yes, we hear a lot about the importance of goal setting but having that type of financial goal over a certain time can actually harm your trading. It can have the opposite effect and make you lose money. The reason being the time pressure. This adds more stress to forex trading which, less face it, is high enough already.
Imagine a situation where you have set a target of doubling your money every 6 months. Say 5 months has passed and you are not close to that goal. You have made profits, but you have only half of your target. You are clearly not going to reach your goal unless you start taking huge risks - risks that might wipe out all the profits you have made so far and perhaps deplete all of your funds.
In forex trading, it is important to accept that any profit is good profit, and not set yourself up for failure by specifying that you have to make a certain amount in a certain time. Instead, set goals that are broad. For example, set a goal that you want to master the use of a certain indicator within the next 2 months, or read and test the system described in a certain book or ebook. When you set this type of goal, your currency trading strategies are much more likely to lead you to success. Small steps to achieve big gains!
A forex trader's strategies should be written down in the form of a plan. It is not sufficient to carry them around in your head because it is too easy to change the rules any time you feel like it. They need to be written down and placed on the desk in front of you and reviewed constantly.
The currency trading strategies that need to be written into this plan include all aspects of the forex system that is used. This includes the signal(s) to open a trade, the position size, the stop loss and the profit target when you will close a successful trade. Depending on your system, these may be the same for every trade or they may vary according to the signal. If they vary, be sure to write down exactly what is different and under what conditions.
In addition, it is important to have goals for your forex trading. Here I'm not talking about profit targets in monetary terms. Most beginners and some experienced traders do set themselves a monetary target such as $x in 3 months, doubling their funds every 6 months, or whatever, but these targets are not true goals and often, they are counterproductive.
Yes, we hear a lot about the importance of goal setting but having that type of financial goal over a certain time can actually harm your trading. It can have the opposite effect and make you lose money. The reason being the time pressure. This adds more stress to forex trading which, less face it, is high enough already.
Imagine a situation where you have set a target of doubling your money every 6 months. Say 5 months has passed and you are not close to that goal. You have made profits, but you have only half of your target. You are clearly not going to reach your goal unless you start taking huge risks - risks that might wipe out all the profits you have made so far and perhaps deplete all of your funds.
In forex trading, it is important to accept that any profit is good profit, and not set yourself up for failure by specifying that you have to make a certain amount in a certain time. Instead, set goals that are broad. For example, set a goal that you want to master the use of a certain indicator within the next 2 months, or read and test the system described in a certain book or ebook. When you set this type of goal, your currency trading strategies are much more likely to lead you to success. Small steps to achieve big gains!
Tuesday, February 23, 2010
Scalper Expert Advisor : Caution!
Using a scalper expert advisor can be a very profitable way to trade the currency markets but it also carries a good deal of risk. Some people seem to make a lot of money this way while others lose their shirts. So what makes the difference and how can you stack the odds in your favour when you are using a scalper expert advisor?
1. Choose your broker carefully
It is important to get the right broker when you are using a scalper expert advisor. Many brokers do not like scalping strategies and particularly object to the fast profits that can be made with an EA.
Normally these brokers will be market makers who will carry the risk of a trade themselves until they can match it in the ECN. If the EA moves in and out of the market very fast, they do not have a chance to cover their risk, and so you profit will be their loss. As you can imagine, if you are very successful they will soon decide that they do not want your business.
Brokers who have a place in the ECN and do not have to rely on a third party are more likely to be happy to accept your robot's scalping strategies. To find an amenable broker either ask the developers of your EA or look for recommendations from other scalping traders in forex forums.
2. Manage your risk
Many people new to forex trading assume that because scalping strategies rely on many small trades, they are less risky than systems relying on a higher profit per trade. This is not true at all. Scalping is just as risky as any other form of forex trading. Risk management is essential if you do not want to be wiped out of the game.
For the same reason it is important not to overstretch in terms of leverage. Certainly, do not choose a broker by looking for the one that gives you the highest leverage, unless you are very sure of the drawdown of your system and that you can cover it.
The problem with a high leverage means that triggering a stop loss will mean a greater loss. Sure, the profits are higher too, but when you go through a bad patch you can run through your funds very quickly. It is important that your account can take the battering. It is much more likely to be able to do that if you have kept your risk and your leverage low.
3. Understand your EA
It is also important to understand what your scalper expert advisor is doing. This means having realistic expectations about things like the number of times it will trade in a week, how much on average it will make on a successful trade, how much it will lose on an unsuccessful trade, what percentage of trades are successful, etc.
All of this helps you to know what you can expect in terms of your bottom line in the long term and what will be the optimum level of risk. When it comes to risk, by the way, always assume that the worst case scenario is at least twice as bad as the worst patch that you have seen.
You cannot rely on information from the developers or from other users in this respect. This is not a matter of trust, it is just that different variables will apply to each individual. So do your own back testing and demo testing before you start to use a scalper expert advisor live.
1. Choose your broker carefully
It is important to get the right broker when you are using a scalper expert advisor. Many brokers do not like scalping strategies and particularly object to the fast profits that can be made with an EA.
Normally these brokers will be market makers who will carry the risk of a trade themselves until they can match it in the ECN. If the EA moves in and out of the market very fast, they do not have a chance to cover their risk, and so you profit will be their loss. As you can imagine, if you are very successful they will soon decide that they do not want your business.
Brokers who have a place in the ECN and do not have to rely on a third party are more likely to be happy to accept your robot's scalping strategies. To find an amenable broker either ask the developers of your EA or look for recommendations from other scalping traders in forex forums.
2. Manage your risk
Many people new to forex trading assume that because scalping strategies rely on many small trades, they are less risky than systems relying on a higher profit per trade. This is not true at all. Scalping is just as risky as any other form of forex trading. Risk management is essential if you do not want to be wiped out of the game.
For the same reason it is important not to overstretch in terms of leverage. Certainly, do not choose a broker by looking for the one that gives you the highest leverage, unless you are very sure of the drawdown of your system and that you can cover it.
The problem with a high leverage means that triggering a stop loss will mean a greater loss. Sure, the profits are higher too, but when you go through a bad patch you can run through your funds very quickly. It is important that your account can take the battering. It is much more likely to be able to do that if you have kept your risk and your leverage low.
3. Understand your EA
It is also important to understand what your scalper expert advisor is doing. This means having realistic expectations about things like the number of times it will trade in a week, how much on average it will make on a successful trade, how much it will lose on an unsuccessful trade, what percentage of trades are successful, etc.
All of this helps you to know what you can expect in terms of your bottom line in the long term and what will be the optimum level of risk. When it comes to risk, by the way, always assume that the worst case scenario is at least twice as bad as the worst patch that you have seen.
You cannot rely on information from the developers or from other users in this respect. This is not a matter of trust, it is just that different variables will apply to each individual. So do your own back testing and demo testing before you start to use a scalper expert advisor live.
Monday, February 22, 2010
Profitable Candlestick Trading
Profitable candlestick trading is a great way to make money from forex trading. It follows the 'keep it simple' rule which many traders consider to be the first golden rule of currency trading. You do not have to understand a lot of maths or do any complicated analysis.
Simple candlestick trading is often known as price action trading. This type of analysis relies only upon the price chart itself for trading signals. It does not involve use of any indicators based on moving averages such as MACD or stochastic indicator.
Many forex trading systems are built around these indicators and they may be successful in many cases, but the fact remains that they are lagging indicators. This means that they describe what was happening in the market in the past, not now. Profitable candlestick trading is based upon looking at the most recent markers possible.
For this method, bar charts can be used, since they give the same information as candlesticks. However, most traders find the visual clarity of the candles makes it much simpler to look at the candlestick chart. In some cases you may draw trend lines or support and resistance lines, but sometimes a trading signal may be taken from just one or two candles.
A simple system may be based around following either a bullish market (rising price) or bearish market (falling price). In a bullish market you would open a trade to buy the currency pair, and in a bearish market you would open a trade to sell it. We will take the bullish market as an example.
In a bullish market you would expect to see a white (unfilled) candle. If your system uses green/red or blue/red candles, the candle would be either green or blue respectively. This means that the close price was higher than the opening price. In addition, you would expect the close price to be fairly close to the high: that is, within around the top third of the full range from the low to the high. In visual terms, this will mean that the candle has a short upper wick. In some cases of course there may be no wick at all.
That situation suggests that the next period will see a test or an improvement on that closing price. So while the next period may not close higher, the high of the next period is likely to be above that closing price, other things being equal. This is how a trading signal can be taken from just one candle.
Often however, a trader would check the signal before going ahead and opening a trade. You could do this by looking at a longer period or by requiring that the previous candle also reflected an upward price movement.
As you can see, this is a simple system that is very quick to apply. Speed can be important in short term trading where a few seconds spent checking lagging indicators could mean that you miss out on the profit potential.
If you want to put this system into practice, keep in mind that it is always best to practice your skills in a demo account before going live. A bullish candle does not guarantee that the price will go higher and there is always a possibility of loss in currency trading. So be sure that you know what you are doing and are comfortable with the system before using real money. That way you can reduce your risk with profitable candlestick trading.
Simple candlestick trading is often known as price action trading. This type of analysis relies only upon the price chart itself for trading signals. It does not involve use of any indicators based on moving averages such as MACD or stochastic indicator.
Many forex trading systems are built around these indicators and they may be successful in many cases, but the fact remains that they are lagging indicators. This means that they describe what was happening in the market in the past, not now. Profitable candlestick trading is based upon looking at the most recent markers possible.
For this method, bar charts can be used, since they give the same information as candlesticks. However, most traders find the visual clarity of the candles makes it much simpler to look at the candlestick chart. In some cases you may draw trend lines or support and resistance lines, but sometimes a trading signal may be taken from just one or two candles.
A simple system may be based around following either a bullish market (rising price) or bearish market (falling price). In a bullish market you would open a trade to buy the currency pair, and in a bearish market you would open a trade to sell it. We will take the bullish market as an example.
In a bullish market you would expect to see a white (unfilled) candle. If your system uses green/red or blue/red candles, the candle would be either green or blue respectively. This means that the close price was higher than the opening price. In addition, you would expect the close price to be fairly close to the high: that is, within around the top third of the full range from the low to the high. In visual terms, this will mean that the candle has a short upper wick. In some cases of course there may be no wick at all.
That situation suggests that the next period will see a test or an improvement on that closing price. So while the next period may not close higher, the high of the next period is likely to be above that closing price, other things being equal. This is how a trading signal can be taken from just one candle.
Often however, a trader would check the signal before going ahead and opening a trade. You could do this by looking at a longer period or by requiring that the previous candle also reflected an upward price movement.
As you can see, this is a simple system that is very quick to apply. Speed can be important in short term trading where a few seconds spent checking lagging indicators could mean that you miss out on the profit potential.
If you want to put this system into practice, keep in mind that it is always best to practice your skills in a demo account before going live. A bullish candle does not guarantee that the price will go higher and there is always a possibility of loss in currency trading. So be sure that you know what you are doing and are comfortable with the system before using real money. That way you can reduce your risk with profitable candlestick trading.
Sunday, February 21, 2010
Forex Spread : What Is It?
To make money with forex trading it is necessary for a trader to understand forex spread. This is the main cost that most traders will have, so it is important to understand how it is calculated and how much difference it can make to your profits.
Spread is the difference between the bid and ask prices of a currency pair, or the difference between the price given by a market maker if a trader wants to sell the currency pair (the bid price) and the price the trader must pay if he wants to buy the pair (the ask price).
This is how most brokers make their money. To see how it works, let us take a simple example.
Imagine that a trader is working with the currency pair EUR/USD. The ask price might be 1.4323 and the bid price 1.4320. If the trader wants to buy the pair, he will pay 1.4323. If he buys at that price and then sells with no change in the market, he will get 1.4320, 3 pips less. So the broker will have made 3 pips on the transaction.
Obviously this is a very important consideration for a trader because in order to begin making money on any trade, he has to first cover the cost of the spread. Spreads can be anything up to about 5 pips depending on the broker and the currency pair. This is a factor that needs to be taken into consideration when deciding on a trading system. The spread must always be allowed for when working out any system, especially if you are backtesting a system. It is easy then to forget it, but the spread can make a huge difference to the accumulated profits over time.
Not surprisingly, brokers will try to compete on spread and therefore the rates for the more popular currency pairs can be relatively advantageous. However, spread is not the only factor to consider when choosing a broker or analyzing your costs. Some brokers that have very low spreads have other ways of making money that must be taken into consideration.
In some cases there may be a fee per trade. This can be fine if you tend to make a low number of very profitable trades, but it is not so good if you make many small trades. In that case you would probably be better off with a broker who charged a slightly higher forex spread but no fee per trade.
Spread is the difference between the bid and ask prices of a currency pair, or the difference between the price given by a market maker if a trader wants to sell the currency pair (the bid price) and the price the trader must pay if he wants to buy the pair (the ask price).
This is how most brokers make their money. To see how it works, let us take a simple example.
Imagine that a trader is working with the currency pair EUR/USD. The ask price might be 1.4323 and the bid price 1.4320. If the trader wants to buy the pair, he will pay 1.4323. If he buys at that price and then sells with no change in the market, he will get 1.4320, 3 pips less. So the broker will have made 3 pips on the transaction.
Obviously this is a very important consideration for a trader because in order to begin making money on any trade, he has to first cover the cost of the spread. Spreads can be anything up to about 5 pips depending on the broker and the currency pair. This is a factor that needs to be taken into consideration when deciding on a trading system. The spread must always be allowed for when working out any system, especially if you are backtesting a system. It is easy then to forget it, but the spread can make a huge difference to the accumulated profits over time.
Not surprisingly, brokers will try to compete on spread and therefore the rates for the more popular currency pairs can be relatively advantageous. However, spread is not the only factor to consider when choosing a broker or analyzing your costs. Some brokers that have very low spreads have other ways of making money that must be taken into consideration.
In some cases there may be a fee per trade. This can be fine if you tend to make a low number of very profitable trades, but it is not so good if you make many small trades. In that case you would probably be better off with a broker who charged a slightly higher forex spread but no fee per trade.
Thursday, February 18, 2010
Expert Advisor Review : Advice
My advice is to look at expert advisor review websites when you are considering buying one of these automated forex trading systems. If you are successful in finding and installing a good expert advisor then you are on your way to making some serious money with forex trading.
However, if you do not set it up right, or if you pick a bad one or just hit a bad point in the market, it can simply lose money for you. Of course you can avoid that to a large extent by using a demo account until you are sure that the robot is profitable. Most expert advisors come with a 2 month guarantee so you can test it out in demo for that time and get a refund if it does not prove profitable for you. However, you could waste a lot of time if you did that with one EA after another. So reviews can help you pick your way through the huge choice of EAs that you will find from a brief search.
One difficulty with expert advisor review websites is that some reviews do not tell you anything about the product that is not already on the developer's website. In other words, instead of doing their own review, these site owners have just taken some facts and copied out. They will probably say nothing negative about the robot and the page may read more like a sales letter than a genuine review.
A real expert advisor review should give you some indication of how suitable the robot is for beginners, how easy it is to install, and perhaps some hints and tips on getting the most out of it. This type of information can be very helpful. Sometimes, even if there were things that the reviewer did not like about the robot, you might want to go ahead because those negative points would not apply to you. Other times this kind of article can help you choose between several robots that might be reviewed side by side.
Another point to look for in an expert advisor review is the trading style. Some robots use a scalping system that will make many small trades in a short time. Others will open fewer trades, but leave them running longer. Both methods can be equally profitable but some people are more comfortable with one than the other.
For example, many people will complain about robots that do not trade often enough, as if more trades automatically meant more profits (it doesn't). However it is true that if you only have a very small balance in your account, you cannot risk much per trade and you may find it frustrating if your robot only makes one or two trades per week.
You may have to read between the lines a little bit to work out some of these points. However, you will be in a much better position to assess which is the best EA for you if you keep these tips in mind any time that you are reading an expert advisor review.
However, if you do not set it up right, or if you pick a bad one or just hit a bad point in the market, it can simply lose money for you. Of course you can avoid that to a large extent by using a demo account until you are sure that the robot is profitable. Most expert advisors come with a 2 month guarantee so you can test it out in demo for that time and get a refund if it does not prove profitable for you. However, you could waste a lot of time if you did that with one EA after another. So reviews can help you pick your way through the huge choice of EAs that you will find from a brief search.
One difficulty with expert advisor review websites is that some reviews do not tell you anything about the product that is not already on the developer's website. In other words, instead of doing their own review, these site owners have just taken some facts and copied out. They will probably say nothing negative about the robot and the page may read more like a sales letter than a genuine review.
A real expert advisor review should give you some indication of how suitable the robot is for beginners, how easy it is to install, and perhaps some hints and tips on getting the most out of it. This type of information can be very helpful. Sometimes, even if there were things that the reviewer did not like about the robot, you might want to go ahead because those negative points would not apply to you. Other times this kind of article can help you choose between several robots that might be reviewed side by side.
Another point to look for in an expert advisor review is the trading style. Some robots use a scalping system that will make many small trades in a short time. Others will open fewer trades, but leave them running longer. Both methods can be equally profitable but some people are more comfortable with one than the other.
For example, many people will complain about robots that do not trade often enough, as if more trades automatically meant more profits (it doesn't). However it is true that if you only have a very small balance in your account, you cannot risk much per trade and you may find it frustrating if your robot only makes one or two trades per week.
You may have to read between the lines a little bit to work out some of these points. However, you will be in a much better position to assess which is the best EA for you if you keep these tips in mind any time that you are reading an expert advisor review.
Wednesday, February 17, 2010
Free Forex Expert Advisor? : Think About It!
Many forex trading beginners start out looking for a free forex expert advisor that will, they think, make money for them on autopilot without any problem at all. But people who think this way are likely to find their dreams have no substance in reality. The reality of the forex market is that nothing is that easy and anybody trying to cut corners to that extent is likely to come down to earth with a crash.
Sure, you can find a free forex expert advisor: that is, a forex robot developed on the Metatrader 4 platform. Free EAs do exist. But they cost time and money to develop, so it is unlikely that most developers would release a good one for free.
Think about it. There are probably four reasons why a person might develop an expert advisor:
1. The person has a great trading system and they want to automate it so they can make millions. In this case, they are likely to want to keep the resulting EA to themselves.
2. The person has a good trading system, they want to automate it and make money from selling it. This is an EA that you would have to pay for.
3. The person is more interested than developing software than trading. They might create an EA and give it away for free, but it might not be based on a good trading system. This one could lose you a ton of money.
4. The person has something to sell in the forex world. This might be a training course or a upgrade to their free EA. They give you the free EA to draw you in to their sales funnel so that they can keep on emailing you about their services.
So which is likely to be the best? Probably number 4 if you are not able to pay anything at all for your EA. However, this EA will probably not be built from the developer's best system, because he is hoping to sell that to you later.
Another thing to consider is how much support you will get. Forex EAs are notoriously difficult to set up. Somebody who is giving away their software is unlikely to have the time to provide support for it.
Expert advisors are so variable that it may well be true that a good free robot is better than a bad paid robot. But then as you probably know, it is better not to trade at all than to use a bad robot. Clearly, the free forex robots that are available online will probably not be as effective as the best of the robots that you pay for. Since most of these come with a money back guarantee and you can use them in demo mode while you try them out, there is no risk, so why not just go buy one? Anybody who is serious about making money with forex trading would probably not choose a free forex expert advisor.
Sure, you can find a free forex expert advisor: that is, a forex robot developed on the Metatrader 4 platform. Free EAs do exist. But they cost time and money to develop, so it is unlikely that most developers would release a good one for free.
Think about it. There are probably four reasons why a person might develop an expert advisor:
1. The person has a great trading system and they want to automate it so they can make millions. In this case, they are likely to want to keep the resulting EA to themselves.
2. The person has a good trading system, they want to automate it and make money from selling it. This is an EA that you would have to pay for.
3. The person is more interested than developing software than trading. They might create an EA and give it away for free, but it might not be based on a good trading system. This one could lose you a ton of money.
4. The person has something to sell in the forex world. This might be a training course or a upgrade to their free EA. They give you the free EA to draw you in to their sales funnel so that they can keep on emailing you about their services.
So which is likely to be the best? Probably number 4 if you are not able to pay anything at all for your EA. However, this EA will probably not be built from the developer's best system, because he is hoping to sell that to you later.
Another thing to consider is how much support you will get. Forex EAs are notoriously difficult to set up. Somebody who is giving away their software is unlikely to have the time to provide support for it.
Expert advisors are so variable that it may well be true that a good free robot is better than a bad paid robot. But then as you probably know, it is better not to trade at all than to use a bad robot. Clearly, the free forex robots that are available online will probably not be as effective as the best of the robots that you pay for. Since most of these come with a money back guarantee and you can use them in demo mode while you try them out, there is no risk, so why not just go buy one? Anybody who is serious about making money with forex trading would probably not choose a free forex expert advisor.
Tuesday, February 16, 2010
Make Money Online From Home : Forex Trading
One of the most popular ways to make money online from home is forex trading. Since the world of finance opened up to the average person with the rise of the internet, there are more and more people getting involved.
So what is forex trading? Forex, FX or 4X are all short forms of 'foreign exchange', which means the buying and selling of currencies. Of course, if you want to get some foreign currency you have to exchange your own or another currency for it.
If you have ever done this for the purpose of foreign travel, you will know that the exchange rate is constantly changing depending on the relative values of the two currencies - the one that you are buying and the one that you are selling. If you change money back after your trip, you may end up making a profit on it, if the exchange rate went your way.
So from there you can easily understand how forex trading works. You buy (or commit to buy) a currency that you think will rise in value, then sit back and relax until it is time to trade out with a good profit. That is the idea, anyway. Of course it is not that easy. You cannot just make a guess. The prices can go the wrong way and then you lose.
So how can you know whether a certain currency will go up or down in value? Of course, this is the million dollar question. Nobody can predict the fluctuations in currency prices with 100% accuracy. The market is just too huge and volatile, with too many contributing factors.
The forces that drive changes in currency prices are economic ones. Anything like a rise in interest rates, an improvement in the GDP, higher retail sales or employment rates is a sign that a country has a strong economy. The big investment houses will want to invest in that country, so its currency will be in demand and the chances are good that its currency will strengthen.
However, these economic factors are hard to predict unless you have a deep interest in international economics and political finance. Fortunately, there are other ways. Most traders do not even try to analyze the market in economic terms (this is called fundamental analysis). Instead they rely mainly on technical analysis.
Technical analysis is based on charts that show whether a certain currency pair has been moving up or down lately, with all the fluctuations over many different time periods from one minute to one day. These are provided by most forex brokers. On top of this, your broker will normally offer mathematical indicators which plot other factors that may help you to assess trends, such as moving averages.
This may sound complex but most of the work is done for you. The skill lies in learning or constructing a system to use with the charts and applying it with consistency and discipline. If you are a visual-oriented person who is comfortable with figures and can generally stick to what you resolve to do, then you have a good chance of learning to make money online from home with forex trading.
So what is forex trading? Forex, FX or 4X are all short forms of 'foreign exchange', which means the buying and selling of currencies. Of course, if you want to get some foreign currency you have to exchange your own or another currency for it.
If you have ever done this for the purpose of foreign travel, you will know that the exchange rate is constantly changing depending on the relative values of the two currencies - the one that you are buying and the one that you are selling. If you change money back after your trip, you may end up making a profit on it, if the exchange rate went your way.
So from there you can easily understand how forex trading works. You buy (or commit to buy) a currency that you think will rise in value, then sit back and relax until it is time to trade out with a good profit. That is the idea, anyway. Of course it is not that easy. You cannot just make a guess. The prices can go the wrong way and then you lose.
So how can you know whether a certain currency will go up or down in value? Of course, this is the million dollar question. Nobody can predict the fluctuations in currency prices with 100% accuracy. The market is just too huge and volatile, with too many contributing factors.
The forces that drive changes in currency prices are economic ones. Anything like a rise in interest rates, an improvement in the GDP, higher retail sales or employment rates is a sign that a country has a strong economy. The big investment houses will want to invest in that country, so its currency will be in demand and the chances are good that its currency will strengthen.
However, these economic factors are hard to predict unless you have a deep interest in international economics and political finance. Fortunately, there are other ways. Most traders do not even try to analyze the market in economic terms (this is called fundamental analysis). Instead they rely mainly on technical analysis.
Technical analysis is based on charts that show whether a certain currency pair has been moving up or down lately, with all the fluctuations over many different time periods from one minute to one day. These are provided by most forex brokers. On top of this, your broker will normally offer mathematical indicators which plot other factors that may help you to assess trends, such as moving averages.
This may sound complex but most of the work is done for you. The skill lies in learning or constructing a system to use with the charts and applying it with consistency and discipline. If you are a visual-oriented person who is comfortable with figures and can generally stick to what you resolve to do, then you have a good chance of learning to make money online from home with forex trading.
Monday, February 15, 2010
Forex Rebellion : Product Review
This Forex Rebellion review takes a look at the new system introduced by Russ Horn in late 2009. Russ Horn is a former T shirt printer who says that even a beginner can learn his system in 25 minutes. So, what is Forex Rebellion and does it really work? Are users actually making money with Forex Rebellion?
What's In The Box?
So what is Forex Rebellion? Let's be clear from the start, this is NOT another robot but it does have an automated component. Let me explain:
This is a manual trading system that identifies trades with a high probability of success. But you also get a piece of software called a 'trading assistant' which will alert you when conditions are favourable for a trade according to the system. You then decide whether to go ahead and trade or not.
This means you are in complete control of your trades, but at the same time, you do not have to waste your life scanning the markets 24 hours a day. It's the best of both worlds. It also means that you can cover more than one currency pair.
As well as the trading assistant, you get over 40 videos showing how the system works. This includes footage of Russ trading the system live on the real market. It also includes different kinds of situations that may arise in the market and how to deal with them.
You also get special chart indicators that have been developed specifically for the Forex Rebellion system. You will not find these indicators anywhere else but they come free with this system. Other systems leave you to tweak standard indicators as best you can - Forex Rebellion serves them up to you on a plate.
Plus of course, you get a manual. This is great for referring back to, after you watched the videos. Or if you are the kind of person who prefers to learn from the written word, you will find the system very well explained in the manual. (But it is best to watch the videos at least once, especially the bonus videos. There's information and strategies there that are not in the manual.)
The System
This is a short term trading system (day trading) which will suit anybody whose time on the computer is limited. It can be used in any time zone and on any currency pair. Since forex is a 24 hour market, people with a regular job can use this in the evenings or early mornings, while a stay at home parent could trade while the kids are at school. It's very flexible.
Another advantage of this kind of flexibility is that the market will not be saturated with traders using the same system at the same time. Forex Rebellion traders will be dispersed through different time zones and different currency pairs.
However, when you are starting out with the system it is best to stick with one currency pair. EUR/USD will be easiest to begin with, because of the high volume of trades. You also have a choice of time frames and we recommend starting with one hour.
How To Use The Videos
40 videos is a lot! And as for the claim that you can learn this system in 25 minutes - well, you would be missing a lot if you only spent 25 minutes on this. But it is a simple system that is quick to learn.
While some people will happily watch the whole video series right through from start to finish, for beginners that could be confusing. So instead, a great way to use this type of video training is to sign up for a broker demo account and actually follow along with what Russ Horn is doing. Using a demo account means that you do not have to risk any money.
At the same time, take brief notes of what is included in each video. This makes it way easier to find what you want if you want to come back and watch a strategy again.
User Feedback
People are raving about Forex Rebellion! You will see plenty of testimonials from users on the site, but the place to look for genuine impartial feedback is the forex forums. Comments there are extremely positive, with plenty of 5 star reviews.
We didn't really find any negatives except people recommending that you start small - start in demo to find your feet, pay attention to the training on risk management and stop losses, and don't start right out with 10 different currency pairs all at once. It's just common sense.
Some users do go live right away but this would only be appropriate for experienced traders who can see that the system is going to work from the videos. Beginners need to get accustomed to the mechanics of trading and this is best done in a demo account where a mistake will not cost you anything.
Guarantee
You have a guaranteed refund here if you are not happy with this system. You have up to 60 days to test it out.
In order to make this a truly risk free 60 days, it is best to use a demo account. For newbies who do not already have a broker, there is a special link to a recommended broker in the download area. With this service (and most others) you can trade in demo mode at first until you are completely confident in the system and your trading abilities.
Summary
There is a PPS that Russ Horn has put on the site: "Fate brought you here and fate can take you to a whole new level in the Forex Trading niche. I've done all I can to help you find true success. The rest is up to you."
We could say the same about this Forex Rebellion review. Destiny ... or something ... has brought you here and you can be thankful, because you have actually come across a real money making forex system among all of the dubious forex strategies out there. This is highly recommended and I hesitate to say this but I sincerely believe if you can't make money with this, you shouldn't be trading.
Forex Rebellion Click Here!
What's In The Box?
So what is Forex Rebellion? Let's be clear from the start, this is NOT another robot but it does have an automated component. Let me explain:
This is a manual trading system that identifies trades with a high probability of success. But you also get a piece of software called a 'trading assistant' which will alert you when conditions are favourable for a trade according to the system. You then decide whether to go ahead and trade or not.
This means you are in complete control of your trades, but at the same time, you do not have to waste your life scanning the markets 24 hours a day. It's the best of both worlds. It also means that you can cover more than one currency pair.
As well as the trading assistant, you get over 40 videos showing how the system works. This includes footage of Russ trading the system live on the real market. It also includes different kinds of situations that may arise in the market and how to deal with them.
You also get special chart indicators that have been developed specifically for the Forex Rebellion system. You will not find these indicators anywhere else but they come free with this system. Other systems leave you to tweak standard indicators as best you can - Forex Rebellion serves them up to you on a plate.
Plus of course, you get a manual. This is great for referring back to, after you watched the videos. Or if you are the kind of person who prefers to learn from the written word, you will find the system very well explained in the manual. (But it is best to watch the videos at least once, especially the bonus videos. There's information and strategies there that are not in the manual.)
The System
This is a short term trading system (day trading) which will suit anybody whose time on the computer is limited. It can be used in any time zone and on any currency pair. Since forex is a 24 hour market, people with a regular job can use this in the evenings or early mornings, while a stay at home parent could trade while the kids are at school. It's very flexible.
Another advantage of this kind of flexibility is that the market will not be saturated with traders using the same system at the same time. Forex Rebellion traders will be dispersed through different time zones and different currency pairs.
However, when you are starting out with the system it is best to stick with one currency pair. EUR/USD will be easiest to begin with, because of the high volume of trades. You also have a choice of time frames and we recommend starting with one hour.
How To Use The Videos
40 videos is a lot! And as for the claim that you can learn this system in 25 minutes - well, you would be missing a lot if you only spent 25 minutes on this. But it is a simple system that is quick to learn.
While some people will happily watch the whole video series right through from start to finish, for beginners that could be confusing. So instead, a great way to use this type of video training is to sign up for a broker demo account and actually follow along with what Russ Horn is doing. Using a demo account means that you do not have to risk any money.
At the same time, take brief notes of what is included in each video. This makes it way easier to find what you want if you want to come back and watch a strategy again.
User Feedback
People are raving about Forex Rebellion! You will see plenty of testimonials from users on the site, but the place to look for genuine impartial feedback is the forex forums. Comments there are extremely positive, with plenty of 5 star reviews.
We didn't really find any negatives except people recommending that you start small - start in demo to find your feet, pay attention to the training on risk management and stop losses, and don't start right out with 10 different currency pairs all at once. It's just common sense.
Some users do go live right away but this would only be appropriate for experienced traders who can see that the system is going to work from the videos. Beginners need to get accustomed to the mechanics of trading and this is best done in a demo account where a mistake will not cost you anything.
Guarantee
You have a guaranteed refund here if you are not happy with this system. You have up to 60 days to test it out.
In order to make this a truly risk free 60 days, it is best to use a demo account. For newbies who do not already have a broker, there is a special link to a recommended broker in the download area. With this service (and most others) you can trade in demo mode at first until you are completely confident in the system and your trading abilities.
Summary
There is a PPS that Russ Horn has put on the site: "Fate brought you here and fate can take you to a whole new level in the Forex Trading niche. I've done all I can to help you find true success. The rest is up to you."
We could say the same about this Forex Rebellion review. Destiny ... or something ... has brought you here and you can be thankful, because you have actually come across a real money making forex system among all of the dubious forex strategies out there. This is highly recommended and I hesitate to say this but I sincerely believe if you can't make money with this, you shouldn't be trading.
Forex Rebellion Click Here!
Sunday, February 14, 2010
Forex Seminar: What To Expect
There are forex seminar advertisements all over the internet, on TV and even in magazines. They tempt you to sign up with the hint of huge profits to be made from forex if you just know how to trade in the right way. But will you learn anything useful from a forex seminar, or are they just a big waste of time and money?
The first thing to keep in mind is that one forex seminar can be very different than another. Whatever we say here about this type of forex training course will not apply to all seminars. As with most things in the world, some are better than others.
There are also seminars for different levels of trader. Those aimed at beginners will spend a lot of time covering the basics. If you are an experienced trader you may learn very little or even nothing that is new to you. On the other hand, if you are a beginner and you go to an event that is designed for active traders, you could be completely lost. Even if the information is great, you might not understand enough to gain any benefit from it.
Sometimes you will see a free forex seminar advertised. These can be interesting, but it is important to understand that the company that runs such a seminar needs to cover the costs in one way or another. So you can expect that they will either provide only very basic information for free and then want you to sign up for some kind of paid training program, or they will be promoting books, software or brokerage services. People are often drawn in to spend more than they planned at these events, so watch out.
A good forex seminar will give you practical training in forex trading that you can actually use right away. This should include a workable forex system that you can try out for yourself in demo. They may give you hands on experience of a demo account during the course. Just be aware that if they have you actually sign up for a broker account, this might not be the best broker for your needs. Often they will be earning commission from any fees or spread that you pay the broker later.
Another question to ask is whether there is any ongoing support after the day is over. This is more likely for higher end courses, but even if they do not offer one on one support, there may be a forum for seminar graduates where you can discuss your experiences with others who have taken the same course. This can be very useful if you have trouble putting into practice what you learned.
It is important to remember that even the best trading courses are only aiming to teach you to trade forex. They will not make money for you directly. You have to put into practice what you have learned. If you understand this and allow yourself plenty of time for developing your trading skills, you may be in a good position to benefit from forex training. But if you turn up expecting to pay your entrance fee and be making thousands of dollars the next day on autopilot, you will probably be disappointed in the forex seminar.
The first thing to keep in mind is that one forex seminar can be very different than another. Whatever we say here about this type of forex training course will not apply to all seminars. As with most things in the world, some are better than others.
There are also seminars for different levels of trader. Those aimed at beginners will spend a lot of time covering the basics. If you are an experienced trader you may learn very little or even nothing that is new to you. On the other hand, if you are a beginner and you go to an event that is designed for active traders, you could be completely lost. Even if the information is great, you might not understand enough to gain any benefit from it.
Sometimes you will see a free forex seminar advertised. These can be interesting, but it is important to understand that the company that runs such a seminar needs to cover the costs in one way or another. So you can expect that they will either provide only very basic information for free and then want you to sign up for some kind of paid training program, or they will be promoting books, software or brokerage services. People are often drawn in to spend more than they planned at these events, so watch out.
A good forex seminar will give you practical training in forex trading that you can actually use right away. This should include a workable forex system that you can try out for yourself in demo. They may give you hands on experience of a demo account during the course. Just be aware that if they have you actually sign up for a broker account, this might not be the best broker for your needs. Often they will be earning commission from any fees or spread that you pay the broker later.
Another question to ask is whether there is any ongoing support after the day is over. This is more likely for higher end courses, but even if they do not offer one on one support, there may be a forum for seminar graduates where you can discuss your experiences with others who have taken the same course. This can be very useful if you have trouble putting into practice what you learned.
It is important to remember that even the best trading courses are only aiming to teach you to trade forex. They will not make money for you directly. You have to put into practice what you have learned. If you understand this and allow yourself plenty of time for developing your trading skills, you may be in a good position to benefit from forex training. But if you turn up expecting to pay your entrance fee and be making thousands of dollars the next day on autopilot, you will probably be disappointed in the forex seminar.
Saturday, February 13, 2010
Forex Trading Platforms: How To Choose
Forex trading platforms are used by every player in the market, from brokers through professional traders to the newest of beginners. If you want to trade forex you will be working online and that means accessing the market through some kind of software. The choice is important and it is not always obvious which solution will work for any particular situation. Here are some points to keep in mind.
Forex Trading Platforms For Brokers
Brokers need reliable software that will interface with their clients and the market. The ideal solution in most companies' eyes is a custom built platform, but this does not necessarily have to be written from scratch. There are several packages these days that are very adaptable but where the basics are done for you. This can save a lot of programming time and, therefore, money.
Probably the first thing to consider when designing broker trading platforms is ease of use. Traders want something that is user friendly and intuitive. Most people hate having to read a manual; they prefer to learn by trial and error. This means you have to allow for clients to explore and try things out without having the system crash on them because they did not do everything in just the right way.
It is also important that the package is flexible, if you did not have it custom built. Your company's software must have a different look and feel to anybody else's if you want to brand yourselves as a professional concern.
Forex Trading Platforms For Traders
As a trader, you have a very wide choice of brokers and their trading platform will be one of the important factors in making a decision. It is important that it is easy to use and provides clear information in a readily accessible way.
If you are relying on the broker trading platform for your technical analysis rather than subscribing to a third party charting service, it is important to check out the charts and indicators very thoroughly. You can usually do this best by opening a demo account. Be sure that the platform provides all of the indicators that you might need, not only for your current forex trading system but for any others that you might be likely to develop or use in the future. The relationship with a broker is an important one and may continue for many years, so it is best to get it right from the start.
Many traders these days use automated forex systems or robots to trade for them on autopilot. Some are commercially available and others are custom built for an individual trader's forex system. Many of these robots (called expert advisors) are built on the Metatrader 4 platform. They then need to communicate with a broker's API or interface. Some broker platforms are compatible and some are not, so again, if you are planning to use any kind of automation either now or in the future, the question of having compatible forex trading platforms will be important.
Forex Trading Platforms For Brokers
Brokers need reliable software that will interface with their clients and the market. The ideal solution in most companies' eyes is a custom built platform, but this does not necessarily have to be written from scratch. There are several packages these days that are very adaptable but where the basics are done for you. This can save a lot of programming time and, therefore, money.
Probably the first thing to consider when designing broker trading platforms is ease of use. Traders want something that is user friendly and intuitive. Most people hate having to read a manual; they prefer to learn by trial and error. This means you have to allow for clients to explore and try things out without having the system crash on them because they did not do everything in just the right way.
It is also important that the package is flexible, if you did not have it custom built. Your company's software must have a different look and feel to anybody else's if you want to brand yourselves as a professional concern.
Forex Trading Platforms For Traders
As a trader, you have a very wide choice of brokers and their trading platform will be one of the important factors in making a decision. It is important that it is easy to use and provides clear information in a readily accessible way.
If you are relying on the broker trading platform for your technical analysis rather than subscribing to a third party charting service, it is important to check out the charts and indicators very thoroughly. You can usually do this best by opening a demo account. Be sure that the platform provides all of the indicators that you might need, not only for your current forex trading system but for any others that you might be likely to develop or use in the future. The relationship with a broker is an important one and may continue for many years, so it is best to get it right from the start.
Many traders these days use automated forex systems or robots to trade for them on autopilot. Some are commercially available and others are custom built for an individual trader's forex system. Many of these robots (called expert advisors) are built on the Metatrader 4 platform. They then need to communicate with a broker's API or interface. Some broker platforms are compatible and some are not, so again, if you are planning to use any kind of automation either now or in the future, the question of having compatible forex trading platforms will be important.
Friday, February 12, 2010
Forex Trading Signals: Fundamental Or Technical?
The type of forex trading signals that you need will depend upon one thing above all else: which type of forex market analysis you prefer to use. The two types are fundamental analysis, which is based around economic performance indicators and technical analysis, which relies upon charts and mathematical indicators.
Which is best? It is a difficult question, and one that forex traders do not always agree on. Both can provide useful forex trading signals. It is true that discussion on the internet tends to center around systems based on technical analysis but that does not necessarily mean that these systems are more successful. They are probably easier for the home trader to access, and certainly easier for most people to understand without the need to know a lot about economics or international affairs.
Supporters of fundamental analysis will argue that it is the fundamental factors like interest rate changes, GDP, sales and employment figures, etc, that drive the currency markets and therefore the only reliable forex trading signals are based on these economic factors. Some even say that technical analysts are just studying the past, imagining patterns from out of chaos, and cannot possibly hope to predict any future price movements.
However, this does not explain the number of successful traders who base their forex trading signals and systems on trends identified with technical analysis tools. Certainly for the beginner, a good grounding in charts and indicators is vital.
So how can we base predictions upon a chart that only records the price movements of the recent past? It may help if to think of a currency price as if it had some of the properties of elastic. It can stretch out to certain limits, and then it will bounce back. It may not bounce back to exactly where it was before; it could stop short or go further, but it will not keep on moving in the same direction forever. Technical analysis tools can give us an idea of the strength of a trend so that we can predict how far the price will stretch and when it might turn back.
At the same time, it is certainly true that any economic report or announcement will have an effect on the market. Usually there is a lot of volatility around the time of any forex news. To some extent this is predictable, since most economic reports are released at pre arranged times. This means that even traders who are fully committed to technical analysis for their forex trading signals need to be aware of the forex news calendar, just so that they can stay out of the market when a news release is due.
Which is best? It is a difficult question, and one that forex traders do not always agree on. Both can provide useful forex trading signals. It is true that discussion on the internet tends to center around systems based on technical analysis but that does not necessarily mean that these systems are more successful. They are probably easier for the home trader to access, and certainly easier for most people to understand without the need to know a lot about economics or international affairs.
Supporters of fundamental analysis will argue that it is the fundamental factors like interest rate changes, GDP, sales and employment figures, etc, that drive the currency markets and therefore the only reliable forex trading signals are based on these economic factors. Some even say that technical analysts are just studying the past, imagining patterns from out of chaos, and cannot possibly hope to predict any future price movements.
However, this does not explain the number of successful traders who base their forex trading signals and systems on trends identified with technical analysis tools. Certainly for the beginner, a good grounding in charts and indicators is vital.
So how can we base predictions upon a chart that only records the price movements of the recent past? It may help if to think of a currency price as if it had some of the properties of elastic. It can stretch out to certain limits, and then it will bounce back. It may not bounce back to exactly where it was before; it could stop short or go further, but it will not keep on moving in the same direction forever. Technical analysis tools can give us an idea of the strength of a trend so that we can predict how far the price will stretch and when it might turn back.
At the same time, it is certainly true that any economic report or announcement will have an effect on the market. Usually there is a lot of volatility around the time of any forex news. To some extent this is predictable, since most economic reports are released at pre arranged times. This means that even traders who are fully committed to technical analysis for their forex trading signals need to be aware of the forex news calendar, just so that they can stay out of the market when a news release is due.
Thursday, February 11, 2010
Free Expert Advisor Advice!
The main question in the mind of anybody looking for a free expert advisor is going to be whether there is one that really works. There are many expert advisors available, in fact people are developing them every day. Sometimes they keep them to themselves, sometimes they sell them and sometimes they let them loose on the internet for free.
One thing to think about is why would anybody give away a successful automated forex system. Are people really going to be that generous when they have spent a lot of time and skill developing it? Forex traders are typically people who are very conscious of the value of an investment.
This means that usually a free expert advisor comes from one of two situations. The first possibility is that it was developed by somebody who is interested in the software itself. They may also be a trader but not necessarily a successful one. They will release a robot in the hope that it may help someone, or because they want experienced traders to test it. There is not necessarily going to be a successful trading system behind this type of free EA.
The second possibility is where somebody is giving you a free piece of software as a marketing strategy. It's a little like the free samples that many businesses use to attract new customers. Here, the software will probably be useful. If it was not, it would fail in its purpose of making you trust the guy who gave it to you. The point to remember is that he has something bigger, better and more expensive that he is going to try to sell to you later.
It is a good idea to know something about the system behind the software before you start using it. Even if you only plan to use it in demo mode, you will be spending time on it, and time is valuable. In most cases when EAs are available for sale, the developers will not reveal much about the system that it is based on, for fear of competition. However, with a free expert advisor this might not be the case. You may be able to discover how the system works and save time by looking at back tests. This could save some time.
Using a free EA can be a gamble. Approach them with caution. In most cases, it is worth paying a few dollars for something that has a better chance of making money for you.
One thing to think about is why would anybody give away a successful automated forex system. Are people really going to be that generous when they have spent a lot of time and skill developing it? Forex traders are typically people who are very conscious of the value of an investment.
This means that usually a free expert advisor comes from one of two situations. The first possibility is that it was developed by somebody who is interested in the software itself. They may also be a trader but not necessarily a successful one. They will release a robot in the hope that it may help someone, or because they want experienced traders to test it. There is not necessarily going to be a successful trading system behind this type of free EA.
The second possibility is where somebody is giving you a free piece of software as a marketing strategy. It's a little like the free samples that many businesses use to attract new customers. Here, the software will probably be useful. If it was not, it would fail in its purpose of making you trust the guy who gave it to you. The point to remember is that he has something bigger, better and more expensive that he is going to try to sell to you later.
It is a good idea to know something about the system behind the software before you start using it. Even if you only plan to use it in demo mode, you will be spending time on it, and time is valuable. In most cases when EAs are available for sale, the developers will not reveal much about the system that it is based on, for fear of competition. However, with a free expert advisor this might not be the case. You may be able to discover how the system works and save time by looking at back tests. This could save some time.
Using a free EA can be a gamble. Approach them with caution. In most cases, it is worth paying a few dollars for something that has a better chance of making money for you.
Wednesday, February 10, 2010
Forex Forum with Caution!
A forex forum can be a very valuable asset to the trader who knows how to make good use of the facility. Forums can seem like great places for discussing systems and getting advice. But can you trust what you are told? Are you really going to get information that is helpful, or are you just wasting your time?
The word forum comes from the big open square in the middle of Roman cities where citizens would gather to hear the news and discuss important current issues. Formerly known as bulletin boards or message boards, online forex forums are sites where traders can go to discuss issues related to forex trading. A few are restricted to paid members, but most of them are free and can be accessed by anybody who chooses to register a free account.
In an active and popular forum, there are usually several discussions underway. If you post a question or comment you can expect to receive a fast reply. The only problem with this is that you usually do not know whether the replies can be trusted.
Forum members may appear to be experts but they could be anybody at all. It is easy to hang around long enough to pick up the language, then start handing out advice to others. Some might be complete beginners. Is their advice really valuable to you?
Of course in some cases there may be indications that a person is well qualified to help you. For example, you can often see how long the person has been a member and how many posts they have made. Someone who has been an active member for a long time may be a better advisor that someone who just joined. Or so it seems. But what if that long standing member just likes hanging out in forums?
Even the best traders who are actively making money from forex can sometimes give conflicting advice. Traders have different attitudes, systems, strategies and priorities. Oftentimes they may take more of a risk than a beginner would be comfortable with. This means that it may not be possible for a beginner to follow what they suggest.
A forex forum is a useful place for certain types of discussion. For example, it can be great to get feedback from other traders who have used a particular product or service such as a broker or an automated trading system. You still have to keep in mind that different people have different abilities and expectations, of course. Just because somebody could not figure out how to use something, does not mean that anybody else would have a problem with it. Try to get a range of opinions and look for responses from people who are in a similar situation to your own, when checking out reviews on a forex forum.
The word forum comes from the big open square in the middle of Roman cities where citizens would gather to hear the news and discuss important current issues. Formerly known as bulletin boards or message boards, online forex forums are sites where traders can go to discuss issues related to forex trading. A few are restricted to paid members, but most of them are free and can be accessed by anybody who chooses to register a free account.
In an active and popular forum, there are usually several discussions underway. If you post a question or comment you can expect to receive a fast reply. The only problem with this is that you usually do not know whether the replies can be trusted.
Forum members may appear to be experts but they could be anybody at all. It is easy to hang around long enough to pick up the language, then start handing out advice to others. Some might be complete beginners. Is their advice really valuable to you?
Of course in some cases there may be indications that a person is well qualified to help you. For example, you can often see how long the person has been a member and how many posts they have made. Someone who has been an active member for a long time may be a better advisor that someone who just joined. Or so it seems. But what if that long standing member just likes hanging out in forums?
Even the best traders who are actively making money from forex can sometimes give conflicting advice. Traders have different attitudes, systems, strategies and priorities. Oftentimes they may take more of a risk than a beginner would be comfortable with. This means that it may not be possible for a beginner to follow what they suggest.
A forex forum is a useful place for certain types of discussion. For example, it can be great to get feedback from other traders who have used a particular product or service such as a broker or an automated trading system. You still have to keep in mind that different people have different abilities and expectations, of course. Just because somebody could not figure out how to use something, does not mean that anybody else would have a problem with it. Try to get a range of opinions and look for responses from people who are in a similar situation to your own, when checking out reviews on a forex forum.
FX Trading Defined
FX trading is an abreviation of forex which in turn is short for foreign exchange or currency trading. So what is that exactly? Well, it is a kind of speculative investment a little like stock trading, but instead of buying and selling stocks and shares, FX trading involves buying and selling foreign currencies.
Like all speculative trading this is a risky type of investment but it can also be very profitable. Professional traders can make a lot of money in just a few hours per day. However, you do not have to be a professional to get involved.
Currency trading is a worldwide market without a fixed trading floor. This means that it goes on in all time zones and trading takes place 24 hours a day during the business week. This has some advantages for anyone wanting to get involved from home, because it means that you can trade at any time of day or night that is convenient for you. Most FX trading is done via the internet which makes it accessible to almost anyone with a computer and high speed internet connection.
As the name 'foreign exchange' suggests, FX trading involves exchanging one currency for another. For this reason, traders talk in terms of currency pairs. An example of a currency pair would be the euro and US dollar, which is written EUR/USD. You would buy this pair (buy euros) if you thought that the euro was likely to rise in price against the dollar. This is called 'going long'. You would sell this pair (sell euros, buy dollars) if you thought that the euro was likely to fall against the dollar. This is called 'going short'.
EUR/USD is the most heavily traded pair, but currency trading is a huge market with trillions of dollars worth of deals made every day. Most of this trading involves the major currencies US dollar, euro, Japanese yen, British pound, Swiss franc, or the Canadian, Australian or New Zealand dollars. Any combination of one of these currencies with the US dollar is known as a major pair. A combination of two currencies not including the US dollar is known as a cross pair.
The market is driven by economic forces such as interest rates or the GDP which mark the strength of a nation's economy. A strong economy usually means a strong currency. However, predictions of price changes are usually made on the basis of charts on which traders can identify trends in price movements. These charts are normally provided free by forex brokers.
Using the internet, traders can control their own account and make trades through the software on their broker's website. There is no need for phone calls to a broker these days. Of course, it is not always possible to predict price movements correctly and there is a risk that money will be lost. To minimize the effect of this, traders place stop orders so that if a trade goes against you, the trade will be closed before the loss is too great.
Brokers offer many services including demo accounts where you can try forex trading for yourself without risking any real money. This is the way to start for any new trader. When you are ready to trade for real, many brokers will accept a very small minimum investment. Brokers are keen to attract more home based traders and this makes it very easy to get started with FX trading.
Like all speculative trading this is a risky type of investment but it can also be very profitable. Professional traders can make a lot of money in just a few hours per day. However, you do not have to be a professional to get involved.
Currency trading is a worldwide market without a fixed trading floor. This means that it goes on in all time zones and trading takes place 24 hours a day during the business week. This has some advantages for anyone wanting to get involved from home, because it means that you can trade at any time of day or night that is convenient for you. Most FX trading is done via the internet which makes it accessible to almost anyone with a computer and high speed internet connection.
As the name 'foreign exchange' suggests, FX trading involves exchanging one currency for another. For this reason, traders talk in terms of currency pairs. An example of a currency pair would be the euro and US dollar, which is written EUR/USD. You would buy this pair (buy euros) if you thought that the euro was likely to rise in price against the dollar. This is called 'going long'. You would sell this pair (sell euros, buy dollars) if you thought that the euro was likely to fall against the dollar. This is called 'going short'.
EUR/USD is the most heavily traded pair, but currency trading is a huge market with trillions of dollars worth of deals made every day. Most of this trading involves the major currencies US dollar, euro, Japanese yen, British pound, Swiss franc, or the Canadian, Australian or New Zealand dollars. Any combination of one of these currencies with the US dollar is known as a major pair. A combination of two currencies not including the US dollar is known as a cross pair.
The market is driven by economic forces such as interest rates or the GDP which mark the strength of a nation's economy. A strong economy usually means a strong currency. However, predictions of price changes are usually made on the basis of charts on which traders can identify trends in price movements. These charts are normally provided free by forex brokers.
Using the internet, traders can control their own account and make trades through the software on their broker's website. There is no need for phone calls to a broker these days. Of course, it is not always possible to predict price movements correctly and there is a risk that money will be lost. To minimize the effect of this, traders place stop orders so that if a trade goes against you, the trade will be closed before the loss is too great.
Brokers offer many services including demo accounts where you can try forex trading for yourself without risking any real money. This is the way to start for any new trader. When you are ready to trade for real, many brokers will accept a very small minimum investment. Brokers are keen to attract more home based traders and this makes it very easy to get started with FX trading.
Tuesday, February 9, 2010
How To Read A Candlestick Chart
If you do not yet know how to read a candlestick chart, do not be concerned. Everybody has to start sometime, and candlestick analysis is really very simple. The charts are easy to read at a glance. In fact, it is one of the simplest methods of financial trading analysis. Not surprisingly, it is also the most popular type of financial trading chart.
You may see these charts referred to as Japanese candlestick charts, and that is because they were invented by a Japanese commodity trader named Homma in the 18th century. Before that date, traders had relied only upon simple line charts that tracked only the closing prices. Bar charts were developed to show the open, high and low as well as the close, but Homma's candlesticks did the same thing in a much more visual way.
Homma was a phenomenally successful trader and this meant that his candlestick analysis chart was soon copied by other traders in Japan. Charles Dow, who founded the Wall Street Journal and the Dow Jones Company, brought it over to the USA early in the 20th century.
The regular type of candlestick consists of a block which may be shaded, colored or blank, plus two vertical lines protruding from the top and bottom of the body, known as shadows or wicks.
Each candle represents one time period. Generally you can set this for various options, e.g. one minute, 15 minutes, one hour, one day.
The top of the upper wick is the high for the period. The bottom of the lower wick is the low.
The top and bottom of the candle body show the opening and closing prices (either way around). Traditionally, the candle would be hollow (i.e. white) if the price rose during the period, and filled (black or any color) if it fell. However, some charts now color all of the candles, so that an upward candle is green or blue and a downward candle is red. This sounds confusing but if you just use one charting service, you will soon get accustomed to the way that they show the candles.
Of course, sometimes the open, high, low and close are not all different prices. For example the price might go up and down during the period but then close at the same as the opening price. In this case there is no visible candle body, just a cross, with the upper and lower wicks crossed by a horizontal line at the open/close level. This is called a Doji pattern.
Alternatively, you may see candles that are all body and no wick. In this case, the price moved in one direction from open to close, without exceeding either the opening or the closing price. This is called a marubozu pattern.
The colors and thick bodies of the candlestick chart make it easy to read, cutting down on errors. This is crucial in the fast moving trading environment. Knowing how to read a candlestick chart is important for any trader.
You may see these charts referred to as Japanese candlestick charts, and that is because they were invented by a Japanese commodity trader named Homma in the 18th century. Before that date, traders had relied only upon simple line charts that tracked only the closing prices. Bar charts were developed to show the open, high and low as well as the close, but Homma's candlesticks did the same thing in a much more visual way.
Homma was a phenomenally successful trader and this meant that his candlestick analysis chart was soon copied by other traders in Japan. Charles Dow, who founded the Wall Street Journal and the Dow Jones Company, brought it over to the USA early in the 20th century.
The regular type of candlestick consists of a block which may be shaded, colored or blank, plus two vertical lines protruding from the top and bottom of the body, known as shadows or wicks.
Each candle represents one time period. Generally you can set this for various options, e.g. one minute, 15 minutes, one hour, one day.
The top of the upper wick is the high for the period. The bottom of the lower wick is the low.
The top and bottom of the candle body show the opening and closing prices (either way around). Traditionally, the candle would be hollow (i.e. white) if the price rose during the period, and filled (black or any color) if it fell. However, some charts now color all of the candles, so that an upward candle is green or blue and a downward candle is red. This sounds confusing but if you just use one charting service, you will soon get accustomed to the way that they show the candles.
Of course, sometimes the open, high, low and close are not all different prices. For example the price might go up and down during the period but then close at the same as the opening price. In this case there is no visible candle body, just a cross, with the upper and lower wicks crossed by a horizontal line at the open/close level. This is called a Doji pattern.
Alternatively, you may see candles that are all body and no wick. In this case, the price moved in one direction from open to close, without exceeding either the opening or the closing price. This is called a marubozu pattern.
The colors and thick bodies of the candlestick chart make it easy to read, cutting down on errors. This is crucial in the fast moving trading environment. Knowing how to read a candlestick chart is important for any trader.
Currency Trading Account: 5 Things To Consider
Opening a currency trading account is a very important step in becoming a successful forex trader. Some people new to forex trading assume that all brokers are the same and open an account with the first one that they find. This is a mistake. There are many points to consider before you sign up with a forex broker.
1. Regulation
Forex brokers may be based in any country in the world. Some countries have tight financial laws while others do not. It is important to check whether the broker you are considering is regulated under the laws of their country, and what those laws actually mean for you. Is the company a member of any regulatory bodies and if so, do they offer you any protection? What would happen to the money in your currency trading account if the company collapsed?
2. Account size
Brokers tend to market their services at a certain level in terms of account size. Some only offer standard accounts with a minimum of $10,000 investment or more. However, more and more brokers these days are targeting their services at the smaller time home investor. In a few cases the minimum investment is less than $100.
The important factor here is to go with a broker who wants clients like you. Do not invest more than you can afford just to get in with a high level broker. There is always a risk that you will lose whatever is in the account. It is better to go with a broker who tailors their services to suit clients at your level.
3. Services
You will want to use a demo account in the first stages of trading so check that this is available and that it works in the same way as the live account.
You will also want to check the charting services that are available. What you need will depend on your trading system, but you can expect brokers to provide candlestick charts as well as the option of bar and line charts, and several indiators including the Stochastic, Bollinger Bands and MACD.
4. Leverage
Leverage varies with different brokers. The most common levels are 100 times or 200 times, meaning that to control a position size of $10,000 you would commit $100 (100 times leverage) or $50 (200 times). Occasionally, 400 times leverage is offered.
High leverage means a greater potential return but also greater risk. If you have a very small balance you may be willing to risk losing it for the chance of greater returns if you are successful, but otherwise it is usually better to keep the leverage relatively low.
In some cases, brokers will offer different levels of leverage to different clients, depending on their balance and other factors such as their trading history.
5. Security
Your money is accessible via the broker's website so it is important that they have high levels of security. This can be hard to assess so you may want to check for user experiences in forex forums or ask questions of the broker through their support center. Also, of course, make your password as secure as possible by including upper and lower case letters plus numbers and symbols.
There are many forex brokers available and the number is growing. The choice can be confusing, but it is important. If you take account of all of these factors, you will be in a good position to find the best broker for your currency trading account.
1. Regulation
Forex brokers may be based in any country in the world. Some countries have tight financial laws while others do not. It is important to check whether the broker you are considering is regulated under the laws of their country, and what those laws actually mean for you. Is the company a member of any regulatory bodies and if so, do they offer you any protection? What would happen to the money in your currency trading account if the company collapsed?
2. Account size
Brokers tend to market their services at a certain level in terms of account size. Some only offer standard accounts with a minimum of $10,000 investment or more. However, more and more brokers these days are targeting their services at the smaller time home investor. In a few cases the minimum investment is less than $100.
The important factor here is to go with a broker who wants clients like you. Do not invest more than you can afford just to get in with a high level broker. There is always a risk that you will lose whatever is in the account. It is better to go with a broker who tailors their services to suit clients at your level.
3. Services
You will want to use a demo account in the first stages of trading so check that this is available and that it works in the same way as the live account.
You will also want to check the charting services that are available. What you need will depend on your trading system, but you can expect brokers to provide candlestick charts as well as the option of bar and line charts, and several indiators including the Stochastic, Bollinger Bands and MACD.
4. Leverage
Leverage varies with different brokers. The most common levels are 100 times or 200 times, meaning that to control a position size of $10,000 you would commit $100 (100 times leverage) or $50 (200 times). Occasionally, 400 times leverage is offered.
High leverage means a greater potential return but also greater risk. If you have a very small balance you may be willing to risk losing it for the chance of greater returns if you are successful, but otherwise it is usually better to keep the leverage relatively low.
In some cases, brokers will offer different levels of leverage to different clients, depending on their balance and other factors such as their trading history.
5. Security
Your money is accessible via the broker's website so it is important that they have high levels of security. This can be hard to assess so you may want to check for user experiences in forex forums or ask questions of the broker through their support center. Also, of course, make your password as secure as possible by including upper and lower case letters plus numbers and symbols.
There are many forex brokers available and the number is growing. The choice can be confusing, but it is important. If you take account of all of these factors, you will be in a good position to find the best broker for your currency trading account.
Monday, February 8, 2010
Forex Mini v Micro Account?
Forex mini or micro accounts are the the most popular choice for new forex traders, but what is the difference between them and which is best for your situation? In this article we will look at how much money you need to invest in each type of account in order to get the best from them.
So what are the different types of forex trading account? First let's take the standard account, which has the highest minimum investment. Most brokers ask for at least $10,000 and with some you need $50,000 to open an account. The standard lot size is 100,000 currency units. So with leverage of 100 times you would be putting up 1,000 currency units per lot.
It's a lot of money (excuse the pun) and it comes as a relief to most traders to know that they can have a mini account with one tenth the position size, ie requiring 100 currency units to control a lot size of 10,000 units. The forex micro account is one tenth of the size of the mini, with a lot size of 1,000 units that you could control with just 10 currency units assuming 100 times leverage.
So why is the standard lot size so big? Years ago, before the rise of the internet, forex trading was done through dealing desks. Most trading was in the hands of the large financial institutions such as banks. It was possible for private individuals to get involved, but they had to phone a broker to give their instructions. The time cost of this meant that brokers would only consider taking on clients with a substantial amount to invest.
However, when brokers began transferring their services onto the internet, the costs were slashed almost at once. It was no longer necessary to have a staff of dealers answering a bank of telephones. Traders could control their own accounts from their own homes or offices, by logging on to the brokers' website.
This means that it is now cost effective for brokers to offer much lower lot sizes and therefore much less of a minimum investment. Brokers leapt at this opportunity to attract a huge number of new clients, and the forex mini account was born, soon to be followed by the micro.
The minimum investment varies with the broker. Scaling down from the standard lot size you might expect the minimum for a mini forex account to be $1,000 to $5,000. In fact, many brokers will let you start with less, but it is better to have that kind of sum if you plan to trade mini lots. If you have less than $1,000 to invest in your trading, it would probably be better to start with a micro account.
There is something else to consider too. Taking the example that we gave earlier with 100 times leverage and assuming that the currency unit in question is the US dollar, if you open a forex mini account you will be dealing in lots of $10,000, requiring you to put up $100 for each trade. To many people that can seem like a lot of money. Remember, forex trading is very risky and your trades will not always be profitable. Some losses are inevitable. Are you comfortable with committing $100 to every trade?
If not, then a micro account might suit you better, at least at first, even if you have more than the minimum required to open a forex mini account.
So what are the different types of forex trading account? First let's take the standard account, which has the highest minimum investment. Most brokers ask for at least $10,000 and with some you need $50,000 to open an account. The standard lot size is 100,000 currency units. So with leverage of 100 times you would be putting up 1,000 currency units per lot.
It's a lot of money (excuse the pun) and it comes as a relief to most traders to know that they can have a mini account with one tenth the position size, ie requiring 100 currency units to control a lot size of 10,000 units. The forex micro account is one tenth of the size of the mini, with a lot size of 1,000 units that you could control with just 10 currency units assuming 100 times leverage.
So why is the standard lot size so big? Years ago, before the rise of the internet, forex trading was done through dealing desks. Most trading was in the hands of the large financial institutions such as banks. It was possible for private individuals to get involved, but they had to phone a broker to give their instructions. The time cost of this meant that brokers would only consider taking on clients with a substantial amount to invest.
However, when brokers began transferring their services onto the internet, the costs were slashed almost at once. It was no longer necessary to have a staff of dealers answering a bank of telephones. Traders could control their own accounts from their own homes or offices, by logging on to the brokers' website.
This means that it is now cost effective for brokers to offer much lower lot sizes and therefore much less of a minimum investment. Brokers leapt at this opportunity to attract a huge number of new clients, and the forex mini account was born, soon to be followed by the micro.
The minimum investment varies with the broker. Scaling down from the standard lot size you might expect the minimum for a mini forex account to be $1,000 to $5,000. In fact, many brokers will let you start with less, but it is better to have that kind of sum if you plan to trade mini lots. If you have less than $1,000 to invest in your trading, it would probably be better to start with a micro account.
There is something else to consider too. Taking the example that we gave earlier with 100 times leverage and assuming that the currency unit in question is the US dollar, if you open a forex mini account you will be dealing in lots of $10,000, requiring you to put up $100 for each trade. To many people that can seem like a lot of money. Remember, forex trading is very risky and your trades will not always be profitable. Some losses are inevitable. Are you comfortable with committing $100 to every trade?
If not, then a micro account might suit you better, at least at first, even if you have more than the minimum required to open a forex mini account.
Sunday, February 7, 2010
Currency Trading Tips: Top 3
There are many currency trading tips available on the internet. A lot of them seem obvious when you read them but in fact are often overlooked by most currency traders. Here are our top 3 lesser known tips. All of them have the power to seriously improve your trading performance.
1. Cross check your trading signals
Many systems mention the importance of cross checking your trading signals against another time chart, but it is amazing how many traders go ahead and open a trade without bothering to do this. Yes, it adds a few extra seconds onto your analysis time. Yes, the price may change while you do this. In some cases you may miss out on a pip or two. But a lot of the time, that second chart will save you from a bad trade, so it is worth doing.
The usual method is to start with a shorter time chart and then cross check against the longer. For example, if your system is based on a 5 minute chart you would check with 15 minutes to 1 hour. If your system is based on the 1 hour chart you would check against the daily chart.
In addition, it is worth taking a look at even longer term charts from time to time, not for signals but just to get an eye for the patterns. If you are a scalper focusing in on very short trades, look at the daily chart from time to time. If you go for longer term trades, check over several months or even years.
2. Be disciplined
It is hard to stay out of the market when you have not had a clear trading signal for a while. The conditions are almost right - but not quite. This is where you really understand the meaning of discipline, and find out whether you have it.
Do not be tempted to trade when the signals are not right. You will almost certainly lose in the long run. You may also drift into a situation where you are trading more on luck or wishful thinking than on a system. Again, this is a sure fire loser.
Keep in mind that less can be more. If you make only one trade and it is a winner, you are in profit. If you make four trades and one is a winner, you probably have a loss.
3. Keep your goals realistic and your risk level low
It's good to have a dream and we would all love to have that dream house and dream car in the driveway, but focusing your thoughts on this too much is likely to lead to taking big risks. Realistically there is no way that the average Joe with a few thousand in their broker account can make a million in a couple of trades. For every person who gets rich quick with forex there are a hundred or more who lose their shirt because the high risk wiped them out.
By applying these currency trading tips you will have a much better chance of surviving for the long term, making steady money and achieving your dreams.
To learn more about getting rich in a controlled way then my latest ebook Quick and Easy Forex Trading is an essential guide and is on special offer now.
1. Cross check your trading signals
Many systems mention the importance of cross checking your trading signals against another time chart, but it is amazing how many traders go ahead and open a trade without bothering to do this. Yes, it adds a few extra seconds onto your analysis time. Yes, the price may change while you do this. In some cases you may miss out on a pip or two. But a lot of the time, that second chart will save you from a bad trade, so it is worth doing.
The usual method is to start with a shorter time chart and then cross check against the longer. For example, if your system is based on a 5 minute chart you would check with 15 minutes to 1 hour. If your system is based on the 1 hour chart you would check against the daily chart.
In addition, it is worth taking a look at even longer term charts from time to time, not for signals but just to get an eye for the patterns. If you are a scalper focusing in on very short trades, look at the daily chart from time to time. If you go for longer term trades, check over several months or even years.
2. Be disciplined
It is hard to stay out of the market when you have not had a clear trading signal for a while. The conditions are almost right - but not quite. This is where you really understand the meaning of discipline, and find out whether you have it.
Do not be tempted to trade when the signals are not right. You will almost certainly lose in the long run. You may also drift into a situation where you are trading more on luck or wishful thinking than on a system. Again, this is a sure fire loser.
Keep in mind that less can be more. If you make only one trade and it is a winner, you are in profit. If you make four trades and one is a winner, you probably have a loss.
3. Keep your goals realistic and your risk level low
It's good to have a dream and we would all love to have that dream house and dream car in the driveway, but focusing your thoughts on this too much is likely to lead to taking big risks. Realistically there is no way that the average Joe with a few thousand in their broker account can make a million in a couple of trades. For every person who gets rich quick with forex there are a hundred or more who lose their shirt because the high risk wiped them out.
By applying these currency trading tips you will have a much better chance of surviving for the long term, making steady money and achieving your dreams.
To learn more about getting rich in a controlled way then my latest ebook Quick and Easy Forex Trading is an essential guide and is on special offer now.
Saturday, February 6, 2010
Automated Forex Trading Uncovered
Automated forex trading involves software known as forex robots or expert advisors that trade automatically for you at any time of night or day. They do this by means of an API or application programming interface that allows them to receive price information from your broker's website and send instructions that will open and close trades on your account.
The most important aspect of automated forex trading software is the system that is behind it. Most forex trading systems can be automated so that a robot will recognize the trading signals and act on them. Depending on the system, this may be an easy job for an experienced programmer or it could be more complicated. But however good the programmer is, the system must be successful in the first place. Automating it will not change the system itself.
Usually, the program runs on a trader's own computer, which must be connected to the internet at all times that the robot might need to trade. For most people, this means having a dedicated computer that nobody else uses. While a trade is open it is important that the robot can connect to close it at the right moment, so you do not want to risk having one of the kids shut it down when they are finished playing.
At the same time, of course, if your computer normally shuts down or goes to sleep when it is left idle for a number of hours, you need to fix that so that it stays online. In Windows Vista, you can do this quite simply. Go to the Control Panel and click on Power Options (or System And Maintenance, then Power Options). There you can change your plan setting and set the sleep option to Never.
There are two ways to get an automated forex trading system. The first is to have your own successful system automated by a programmer, as we just described. Usually they would use a platform such as Metatrader 4. However, this option can have high costs unless you are able to do the programming yourself.
The second way to get a forex robot is to buy one that has been developed from a successful system by somebody else. There are plenty of these available to buy online. In fact, there are so many that it can be difficult to know which to choose.
One point needs to be made very clear. You cannot assume that the most expensive is necessarily going to be the best. The forex market can be very unpredictable and not all forex robots make money. So check reviews and forums for feedback before you invest in an automated forex trading system, and always start out in demo mode until you are sure that you have it working correctly.
The most important aspect of automated forex trading software is the system that is behind it. Most forex trading systems can be automated so that a robot will recognize the trading signals and act on them. Depending on the system, this may be an easy job for an experienced programmer or it could be more complicated. But however good the programmer is, the system must be successful in the first place. Automating it will not change the system itself.
Usually, the program runs on a trader's own computer, which must be connected to the internet at all times that the robot might need to trade. For most people, this means having a dedicated computer that nobody else uses. While a trade is open it is important that the robot can connect to close it at the right moment, so you do not want to risk having one of the kids shut it down when they are finished playing.
At the same time, of course, if your computer normally shuts down or goes to sleep when it is left idle for a number of hours, you need to fix that so that it stays online. In Windows Vista, you can do this quite simply. Go to the Control Panel and click on Power Options (or System And Maintenance, then Power Options). There you can change your plan setting and set the sleep option to Never.
There are two ways to get an automated forex trading system. The first is to have your own successful system automated by a programmer, as we just described. Usually they would use a platform such as Metatrader 4. However, this option can have high costs unless you are able to do the programming yourself.
The second way to get a forex robot is to buy one that has been developed from a successful system by somebody else. There are plenty of these available to buy online. In fact, there are so many that it can be difficult to know which to choose.
One point needs to be made very clear. You cannot assume that the most expensive is necessarily going to be the best. The forex market can be very unpredictable and not all forex robots make money. So check reviews and forums for feedback before you invest in an automated forex trading system, and always start out in demo mode until you are sure that you have it working correctly.
Friday, February 5, 2010
The Best Time To Trade Currencies
You can trade currencies at any time of the night or day. Monday through Friday, the forex market never sleeps. Nevertheless, there are some times of day that are better than others for most traders.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
Tuesday, February 2, 2010
MACD Chart: What is it?
The MACD chart is normally shown below the candlestick chart and provides useful forex trading indicators. MACD stands for Moving Average Convergence-Divergence. As the name suggests, it shows the convergence (coming together) or divergence (moving apart) of two exponential moving averages, one of which is fast and the other slow.
The indicator was invented by a New York stock analyst named Gerald Appel in the 1970s. Designed for the stock market, it nevertheless can be applied very well in other markets including forex.
On the MACD chart you will see two lines. One tracks the average of the difference between the two moving averages mentioned. Example settings for those might be 12 and 26 period moving averages. The other line on the chart is an exponential moving average of the MACD line itself, with a typical setting of 9. This is used as a signal line.
There are two simple ways to use the MACD. The first is to open a trade on the crossover of the two lines. If the faster line (the signal line) crosses the other from above, that can be treated as a signal to buy. If it crosses from below, that can be a signal to sell.
This can form the basis of a simple forex trading system which can be refined by checking the MACD in a second time frame. For example in day trading, look for the crossover on an hourly or 30 minute chart before moving in to the shorter time frame to make the trade. Then watch the higher time frame again for a signal that the trend is ending.
It is always best to consult the higher time frame first when trading on the basis of this indicator. This helps to prevent problems caused by trading against a longer term trend.
MACD can also be used to indicate overbought and oversold markets. When both lines are significantly above zero, the market can be said to be overbought. When they both fall significantly below zero, it is oversold.
The chart also includes a histogram giving a visual indication of convergence or divergence between the two lines. If the histogram is growing smaller, the lines are coming together. This can indicate that a crossover is approaching. The histogram is at zero when crossover occurs.
MACD is a lagging indicator and is prone to whipsaws when the market changes. Traders can be badly caught out. This is particularly true in the stock market where traders are relying less on the MACD these days. However, the MACD chart is still a useful provider of trading signals in many other markets, including forex.
The indicator was invented by a New York stock analyst named Gerald Appel in the 1970s. Designed for the stock market, it nevertheless can be applied very well in other markets including forex.
On the MACD chart you will see two lines. One tracks the average of the difference between the two moving averages mentioned. Example settings for those might be 12 and 26 period moving averages. The other line on the chart is an exponential moving average of the MACD line itself, with a typical setting of 9. This is used as a signal line.
There are two simple ways to use the MACD. The first is to open a trade on the crossover of the two lines. If the faster line (the signal line) crosses the other from above, that can be treated as a signal to buy. If it crosses from below, that can be a signal to sell.
This can form the basis of a simple forex trading system which can be refined by checking the MACD in a second time frame. For example in day trading, look for the crossover on an hourly or 30 minute chart before moving in to the shorter time frame to make the trade. Then watch the higher time frame again for a signal that the trend is ending.
It is always best to consult the higher time frame first when trading on the basis of this indicator. This helps to prevent problems caused by trading against a longer term trend.
MACD can also be used to indicate overbought and oversold markets. When both lines are significantly above zero, the market can be said to be overbought. When they both fall significantly below zero, it is oversold.
The chart also includes a histogram giving a visual indication of convergence or divergence between the two lines. If the histogram is growing smaller, the lines are coming together. This can indicate that a crossover is approaching. The histogram is at zero when crossover occurs.
MACD is a lagging indicator and is prone to whipsaws when the market changes. Traders can be badly caught out. This is particularly true in the stock market where traders are relying less on the MACD these days. However, the MACD chart is still a useful provider of trading signals in many other markets, including forex.
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