Euro shrugs off much better than expected Germany ZEW reading and remains pressured, in particular against Swiss Franc on safe haven flow. Investors are still deeply concerned with bank downgrades in European. Stocks are under pressured too which send the Japanese yen higher. Aussie, Kiwi and Loonie are sent lower on risk aversion. Sterling, on the other hand remains steady after higher than expected CPI reading released. Dollar turns sideway due to mixed developments in major pairs but remains firm in general.
One of the developments to pay attention is the strength in USD/CAD. The pair has been bounded in converging range of 1.1464 and 1.3015 since last Oct. As mentioned in our technical reports, price actions from 1.3015 are being treated as triangle consolidation. Based on the time and pattern, such triangle pattern should be near term completion, if not completed already. Focus will now turn to 1.2765 resistance and break will affirm this case and set the stage for a powerful move through 1.3 level.
Surprisingly, ZEW economic sentiment in the Eurozone and Germany rose much more than expected in February. In Germany, the index jumped for the 4th straight month to -5.8 from -31 in January while analysts anticipated an improvement to -28, signaling confidence has bottomed out. The reading in Eurozone also surged to -8.7 (consensus: -28) in February from -31 in January. We believe the better sentiment in the 16-nation region should not hinder ECB from cutting interest rate in March as other data are yet to show signs of recovery and a negative reading in the ZEW survey means investors remain pessimistic on the economic outlook. Moreover, Eurozone trade deficit narrowed to -0.7B euro in December, significantly lower than -7B euro in forecast and in the previous month. Released earlier, retail sales in Switzerland rose 3.6% mom in December, compared with market expectation of 2.7% and -0.4% a month ago.
Inflation in the UK dropped -0.7% mom (consensus: -1%) in January, the 4th consecutive monthly decline, after falling 0.4% in December. On annual basis, the reading eased to 3% (consensus: +2.7%), the lowest level in 9 months, from 3.1% a month ago. Major contributors to the decline were transport cost, housing and household services as well as food and non-alcoholic beverages. RPI contracted by -1.3% mom (consensus: -1.5%, December: -1.4%) while RPI-X dropped -0.8% mom (consensus: -1.1%, December: -0.5%). On annual basis, both indices showed further moderation, with RPI eased to 0.1% and RPI-I to 2.4% from 0.9% and 2.8%, respectively, in the previous month. Easing inflationary pressure has provided more room for BOe to cur interest rate further, However, as the central bank's policy rate has been reduced unprecedented low level at 1%, investors have already shifted their focuses on Britain's interest rate outlook to other quantitative easing measures. UK's DCLG house price has declined -10.2% yoy, worse than market expectation of -10.1% and November-8.6%, in December.
Released earlier, Japan's Tertiary index plunged 1.6% in December, worse than market expectation of -1.5% for revised -1.1% in November. Japanese Finance Minster Nakagawa said he will resign after accusations that he was drunk at a G7 press conference. According to RBA minutes for February, the central bank believes low interest rate and the AUD42B stimulus plan will help 'to cushion the economy from the contractionary forces coming from abroad'. As it takes time to see the effect of the stimuli, only modest effect will be seen in near term while economic growth and consumer demand will be boosted later this year. Moreover, RBA also said that sales of government-guaranteed bonds should benefit local banks in Australia.
Looking ahead, US Empire State manufacturing index should have retreated to -23 in February from -22.2 in January and a record low of -27.9 in December. Deterioration in the manufacturing conditions was brought by depressed business confidence and cutbacks of investments. Outlook in the coming months should remain gloomy. Net foreign purchases of US long term securities are forecast to have plunged by $20B in December, the 3rd straight month of net outflows. NAHB housing market index probably remained unchanged at a depressed level of 8 in February as high unemployment and tightening lending conditions have continued to pressure housing market in the US.
Forex Exchange Rates - Learn To Watch Currency Trading Rates
The Forex exchange rates of the currencies being traded in a Foreign Exchange Market, or Forex, is the backbone of any of this type of market. Traders make their living or make their profits through the rise and fall of the forex exchange rates of the currencies that they buy and sell or as more aptly called, exchanged.
That is because in the Forex, there is really no buying and selling of currencies (it was just a concept for easier understanding), but in reality, currencies are just exchanged.
It is through this exchange of currencies that traders make their actual profits. For example, a trader buys a currency that is worth 1 US dollar. When the Forex exchange rates move and it moves almost by the hour because it is one of the most volatile markets in the world, then that currency may then now be worth 2 US dollars. When the trader sells or exchanges his currency, the difference between the original Forex exchange rate of the currency and its rate at the time of the exchange is the amount of profit that the trader gained.
Since Forex exchange rates are the most important information that a trader must know, a number of systems have been put up and offered to keep traders regularly updated. There are now websites or companies who provide this kind of service to traders. They keep the trader informed of the current Forex exchange rates of their currencies. Some firms even add extra service of advising the trader on when to exchange his currency.
Spread Betting Advice
According to the London Business School over one million British people will have a spread betting account open by 2011. It is an area of the market that is growing rapidly, and – unusually for British gambling – more often than not features bets on subjects that aren’t sport. It is viewed by some as an easy way of playing and making money off the stock market.
Financial spread betting is actually a very easy concept. It is a way of making money from fluctuations in various markets, though it doesn’t have to be in regards to the FTSE 100 as a whole (it can be single companies, commodities, currencies – you name it). If you put a £1 bet on the stock market to rise, and the FTSE accordingly rises by 50 points, you’ve made £50, however, if it drops by 50 points, you lose £50. Accordingly, if you bet on the market to fall, you can make money on a loss.
The most simple advice is never bet more than you can afford to lose. Whilst for some spread betting is a career, for many it is a hobby and one that is an incredibly imprecise art, even the most experienced stock traders cannot always predict what will happen to the FTSE, and there is no reason why you should be any better placed to know than these experts are.
If you are going to start spread betting expect to lose before you start to win. Make sure that you start as small as you can until you actually begin to get some knowledge of the market. If you’re approaching spread betting as a hobby it’s best to make sure that you do actually enjoy it before you start wagering significant sums of money on it.
Another idea is to specialise, make sure that you play a few markets well, rather than playing all across the board. Most markets tend to fluctuate with their own sort of life and rhythm, and all are interconnected in some way – just see how the U.S sub-prime mortgage crisis is linked to the price of gold! If you get to know how one particular market works, you have a better chance of not making enormous rookie errors that could potentially cost you a lot of money.
Spread betting has quite a lure, there is an assumption that it is quite possible to get rich easy from spread betting. This is, of course, a complete myth. It is possible to make large sums of money and to do so quickly – but it is not easy, and unlikely to be quick. There are specialist companies who deal with spread betting, such as City Link, who will make you aware of the risks when you open an account but there is nothing like being prepared yourself, so before you begin make sure you do your homework.
Hub and Spoke Trading
This is used in multicounterparty portals. Each participant in the network posts bids and offers, making a real market. Hub and Spoke trading allows the traders to see other bids and offers from. An order entry ticket with follow-up trade confirmation. Other traders on the platform and allows the trader to choose the counterparty. This provides excellent transparency a market depth and tighter, more competitive pricing, because there is no trading desk and no price manipulation.
The disadvantage of this type of platform is that a liquidity crisis can occur if all the participants decide to trade on one side and there is no one to take the other side of the trade. This can happen if some damaging news hits the market, prompting traders to sell a particular currency. If no one is buying, that currency will drop until a buyer steps in.
Hub and Spoke trading is similar to the process used on the NASDAQ level II with multiple market makers posting bids and offers. Its mechanism gives the trader the closest view of a whole market available today. You will find this forex trading mechanism in institutional platforms such as Fxall, Currenex, and State Streets FX Connect.
Three retail platforms offer a version of hub and spoke trading Hotspotfx, CoesFX, and GFTs Inter Trader Exchange, which allows traders to trade directly with each other. This trading mechanism is the future of retail Forex trading.
Develop A Forex Trading Strategy To Become A Master Trader
If you are interested in becoming an amazing trader in the forex market, you definitely need a powerful forex trading strategy to guide you in your trades. Those individuals who are expert forex traders have learned this early and are now the elite that make a lot of money. There are four simple steps that you can take to develop your forex trading strategy. Follow them and immediately see success in the forex market.
First, you must realize that your success falls only on you. You need to accept responsibility for your own success and each trade. Only you can make yourself successful! This means that you have to take the necessary steps to develop your own trading strategy. The good news for you is that everything you need to know about forex can be found online for free, or very cheap.
Second, you need to focus on learn how to find the right information and increase your knowledge the right way. To be successful in the forex market, you need to learn the right things. This is important because many traders think that knowing more is better. This is simply not true!
You see, in the forex market, you get rewarded heavily for your results and the accuracy for your trades, not the effort you make in your trades. You should also make sure that the forex trading system that you chose to use integrate into your trading strategy is simple and easy to use. Simple systems are much easier to use for a long period of time and work much better than the complicated ones. This will give you confidence and an advantage over those who choose to use complicated systems.
Third, you need to decide right now if you feel comfortable taking a risk and if you have good money management skills. If you don't like taking risks, you probably shouldn't trade forex. Most traders don't realize how big the actual risk is so they enter the market and lose a lot of money and get out quick. Then there are those who are so frightened by risk, that they end up being too conservative in their trades and lose a lot of money. If you want to make a ton of money in the forex money, you need to take risks that are calculated, I mean risk at the right times.
Source: http://www.articlecache.com
Forex Trading Fact
Many traders believe the rubbish, they are told by so called Forex experts, that show made up track records which indicate you will never suffer a string of losses - but this is fantasy not reality. You will Lose - but the good news is you can still make big profits here's why... One of the reasons Forex traders lose is they are unprepared to handle a losing period but they need to learn that to win you have to lose and a simple example will illustrate the point:
I know a trader who manages over $100 million and he losses 70% of the time and has losing periods of two months or more yet his annual compound return is 76% over 5 years. He knows (and you need to know to) that losing is part of the game and losing periods can last for weeks or in his case months. What you need to do is stay on course, when these losing periods come and keep your losses small, by online forex trading with discipline and this is NOT easy! We all have egos and it hurts, when you trade and the market makes you look a fool - but you must keep going, until you hit a home run.The fact is if you don't learn to take your losses cheerfully, you will never win.
Today, traders believe all the so called Forex experts, with their junk robots and they can make a fortune for spending 100 bucks and suffer no losses - dream on, this is not reality. Forex trading is a big boy's game and the professional Forex trader takes his losses. He knows if his system is soundly based he will hit a home run and clean up longer term - he has discipline and you must have it too.
Candid Advice on Forex Trading
If you believe all those ads and promotions going around the Internet these days, making money in Forex trading is so easy a child could do it. While common sense will tell you that are not true, for anyone looking to earn some decent money trading, it's all too easy to fall for the promises made by those pushing forex course and trading systems. It's tempting to think with the right course or system-the "secrets," basically-that you really will be able to cash in all those promises. After all, some people do get plenty rich trading Forex.
However the reality is very much different. Most of those new to the Forex market in fact lose money. There are some even who lose their money over a long period of time. Even so, on the flip side of the coin, there ways to go about to avoid becoming part of the overall section group of people making loss in forex trading. Here we will point out a few things for you to take note off before you begin trading in Forex.
You will always need to trade base on incomplete information
It doesn't matter what charts you use or how much you study the fundamentals, all you're really getting is second hand information. You'll never have precise information unless you're right in the middle of the market. While it's important to do some analysis, if not having 100% accurate information bothers you, stay away from Forex.
Small window of opportunity for deliberation
The Forex market is always dynamic and fluid. Because of its dynamism, it is almost impossible to predict the way how the market will move. In addition, the time that is available for you to response to market changes in extremely short, maybe just one minute. Within this period of time that is available, you have to decide whether you wish to risk maybe an amount that is one hundred times bigger than what you have. As such accuracy in making the right decision is extremely important. For this you will need to rely on a proven and reliable system to help you speed up yr time in deciding to execute and order or not.
A Good Forex Broker Essential
A broker serves a few primary functions in the trading cycle. The brokerage takes orders from sellers and buyers and matches them. The broker also provides the most recent prices and most brokers provide a charting service as well. These services are not provided for free, the broker takes a commission from you each time you trade. This charge is called the pip spread. What that works is that when you enter a trade, you are automatically in the red. This spread varies from broker to broker but on the whole as a market, pip spreads for trading the majors are very low as compared to forex trading exotic currencies.
A good broker can then be define as a broker who provides the basic services and keep the spreads low and fixed. The issue about floating spreads is that there are times when the spreads can go to atrocious levels and that means if you place your stop loss too low, there is a high possibility that you get kicked out of a trade through no fault of yours or because of any market movements. The good thing about having fixed spreads is that you can work the spreads into your trading plan. That gives you control of how you want to direct the trade.
Reliability and stability are absolutely essential for forex traders to have especially when we are faced with an ever changing market. With market situations as such, the last thing you need is for your broker to pull a fast one on you. For example when you are in the midst of a trade and suddenly the trade window hangs. It might be a technical issue you think, so you log back on immediately. To your surprise you realize that your trade has been canceled and that the money you placed into the trade was lost! This is something that you don’t need, so you try to contact the broker, but you emails never get answered and your calls fall on deaf ears.
Overcoming Fear in Forex Trading
One of the reasons so many traders fail to make the gains they had in mind when they first started online forex trading is that when they really start to think about the income potential and the risks involved, they become all but paralyzed with fear. Although the feeling between fear and caution is similar, they are too entirely different subject matters. Here in this article, you will get to learn some tips on how to get rid of that unwarranted fear.
1. Tackling fear at its root cause
The first thing to do is to identify the root cause of your fear. Some will say it is because of the fear of losing money, but most cases the reason runs deeper inside us. In fact one of the primary fears a forex trader has is to get laugh at by their peers making them feel foolish. The second reason is a self fulfilling prophecy that if they see "proof" that they are no good in forex trading.
2. Keep learning
One critical thing you can do to build your confidence is to keep learning about the markets and the forex trading strategy you've chosen. It's perfectly natural to be afraid of taking on a risky venture when you feel like you don't know what you're doing. Books and courses are fine for this, but if you have the chance, finding a mentor is even better.
3 .Understanding where you when wrong
As the old saying goes, "They're not mistakes, they're learning experiences." Trite, but true, especially in a skilled trade like this. When you go back and take an honest look at your past mistakes, you'll most likely be able to see where you went wrong and what you should do next time. By doing this, you'll feel armed with new information instead of held back by fear of repeating a mistake.
Commodity Trading Advisor
Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the responsibility today of a CTA is a constantly evolving role in today's market place.
Once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures fund. There is no question today's investor has become more sophisticated. In response, today's selection of investment products has become ever more complex and varied the need for the CTA to understand the uses and management of these products becomes even more acute.
So what exactly is the role of today's Commodity Trading Advisor? Certainly forex trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.
The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. The uses of hedging to prevent volatility have long been understood by the largest institutions but are now available to the smaller sized company and to the individual investor. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today's professional money manager.
Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.
Learn Currency Trading Online
Forex trading is speculative in nature therefore it should be kept in mind on the part of the investor that he/she is prepared for the unforeseen circumstances. In order to facilitate the online brokerage, there are many online sites that help in providing the methods to learn forex currency trading online that can help in increasing the overall knowledge of the investor.
They help in providing brokerage tips to the budding investors so that they are able to understand the intricacies of the market and predict the nature of the stocks so that they can improve the profit making capacity on their part. In order to learn forex trading online, there are many websites that provide online forex trading courses that can be handy in understanding the basic principles of market trade. It instructs about all the basic terms and technical languages used in the forex trade.
Once the user is well versed in the basics of online forex trading, he/she can approach the broker who will help him in opening the account and dabbling in shares and forex deals. This includes 24-hour open market which is facilitated by the Internet. In this market, the trader can bet on the forex reserves and attain benefit form the share market. Thus, it is very important to learn forex currency trading online. Without its knowledge, one is at the constant risk of losing his hard earned income.
A Smart Currency Trading Tutorial
This market is a great opportunity for all people that have an internet connection, the problem is that most people don't know how to be a forex trader. Some people are born with it and some are not. The good news is that we can all be taught and learn these skills, which is what I hope to do with this article.
Trading Time: The market for currency trading is open 24hrs a day, so you have a lot of time to choose when you can make all your trading decision, but like a lot of things, choice doesn't always help you make the right one. I'll divide up the day into two different types; high volume and low volume. Let's start with the low volume time. You're going to have barely anyone trading at this time, and what will happen is a big bank will make a trade and it'll be so large that the currency will move erratically. This isn't good for you. My online currency trading tutorial recommends doing it at high volume times because there is so many people trading and money moving around that a big bank's trade will be insignificant with respect to the way everyone else is trading.
Control Your Emotions: The last thing you want creeping around your head is those emotional feelings that make us act not in our best interest. I like to refer to these emotions as turning us from business people into gamblers. You'll start to get feelings about trades. The most common is the gut feeling. They all result in the same action. Making a decision based solely on that emotion, rather than fact.
I'm currently giving a 7 day free forex course. Newbies and experienced are all welcome. If you're interested in participating, check out the Casual Forex Trader
Simple Steps to Currency Trading Success
If you want to learn currency trading the right way you need to be aware that 95% of traders lose - not because they because they don't try, its just they get the wrong Forex education and this results in a swift wipeout.
1. Accept Responsibility
If you want to make money in currency trading then you need to accept responsibility for your destiny - no one else is going to give you success you have to take it for yourself. This means no blaming your forex broker, a guru or the currency markets; you are on your own. That's no bad place to be, as all successful traders in currency trading accept this fact and love the challenge.
2. Accept These Facts for Currency Trading Success
The most important fact to accept is that currency trading is a game of odds not certainties, predicting the market and scientific theories, and pinpoint accuracy is a lie perpetrated by vendors and they won't give you success. You’re like a successful card player simply playing the high odds but instead of hands their trading opportunities.
3. Your Currency Trading System
Building a currency trading system should be based on the following points and if you work smart and get the right knowledge, it should only take you a couple of weeks to master the basics and have a robust forex trading system that can get the odds on your side.
1. Use a long term trend following system
2. Learn about support and resistance and the timeless method of breakouts - if you don't know what they are read our other material.
The Trillion Dollar Currency Exchange Market
The Foreign Exchange market is truly the largest exchange in the world. The amount of dollars traded on the Forex market on a daily basis is in the trillions. Most of this currency trading takes place between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. However, individual traders are starting to get in the mix, using internet discount brokers such as Etrade to participate in the currency exchange market.
There is no central exchange or meeting place for the Forex. All trading is done over computer networks between traders in different parts of the world. Also, unlike the stock market, the foreign exchange market is open 24 hours per day, because it is a global market. A trader in Hong Kong may be exchanging currency with a trader in Australia while an American trader is sleeping.
There are several different markets within the Forex exchange system. First, there is the spot market. The spot market deals with trades that are based on the current values of currencies. One person trades a certain amount of currency with another trader in exchange for an equivalent amount of a different foreign currency. Spot trades take two days for settlement.
The other two types of foreign exchange markets are the forward and futures markets. In the forward market, the buyer and seller agree on an exchange rate and a transaction date is set for a specific time in the future, at which point the trade is executed regardless of what the rates are at that time. On the futures market, futures contracts are bought and sold based upon a standard contract size and maturity date. Futures trades take place on public commodities markets.
A currency quote is listed differently from a stock quote. Stocks are quoted in terms of price per share. Currency exchange prices are listed as either a direct quote or an indirect quote. A direct quote uses the domestic currency as the base and the foreign currency as the quote. An indirect quote works the exact opposite way.
Learn How to Profit From Economic Indicators
The traders all over the world currency trade about $3trillion daily in the world foreign exchange markets. The markets are open all over the world 24 hours a day and keep on absorbing new traders every day.
Now if you were to make some sense of what is happening in the currency markets and why there are swings across currency trading combinations then you will have to pay heed to a lot of economic news. There are several economic factors that change the view of the traders towards a particular currency.
Almost anywhere you go the most common term that you will hear is the Fed. Fed is short for Federal Reserve and this is the central bank of the United States. Now the chairman of the Fed always has the best interests of the economy so as to steer it clear of recession and help the people get respite from inflation. Any decision the fed makes an impression on how the US currency behaves. That said, you need to understand how each and every statement of the fed impacts the foreign exchange market.
The price of a currency is a factor of how the economy is shaping up. If the economy is not doing well, the price of the currency reflects that. The economic foundation of the country has to be sound for the currency to be strong. However whether you believe it or no, the currency traders pay particular attention to interest rates in the market and they are best indicators of the economic health of the country and also affect the general consumer market the most.
Trading Online Currency for a Living is it Possible?
Trading currency is essentially the process of earning money through dealing different foreign currencies. This is where you make some predictions about the rise and fall of the different foreign currencies against each other. When you say trading currency one thing that will automatically come into your mind is the money. While it is true that obviously it has something to do with money, have you ever really thought of giving up your day job in exchange for the currency trading as a means of living? The nagging question is that, does anyone who lacks the basic knowledge and skills when it comes to currency trading can have a good chance of having a decent living in currency trading?
The answer of course is a clear NO! It is because in any profession or career that you want to pursue, in order for you to become successful, you have to acquire the basic expertise that is required so you can fulfill your task more efficiently. Though the use of forex robots are not really highly advisable to use due to the unrealistic promises that they make, it will somehow help you gain information if you are thinking of adopting online currency trading for a living. If you desire to do the currency trading for a living, you should go for it provided you are well-equipped and that you know what you are really up to otherwise you will end up losing a lot of money in the end. This is a serious business and it is something that should not be taken very lightly.
Guide to Online Day Trading
A day trader is, in every sense of the word, a short term investor or a speculator. Most of the times, he trades on market momentum, disregarding the fundamentals of the stock he is buying or selling.
Trading Plan
Before starting any trade, it is essential to put in place a currency trading plan, and follow this plan religiously. A trading plan sets out different criteria and parameters which dictate how trading decisions should me made in all market conditions. With a trading plan, you will know whether to stop the loss and close out the trade, or to ride out this volatile period.
Discipline
Make it your habit to be disciplined. In day trading, the price of a volatile stock can fluctuate very fast. There will be times when the price will move against you. Cut loss when you're supposed to in accordance with your forex trading plan. By the same token, take profit when your trading plan dictates so! And don't trade for the sake of trading. If there's no good trading opportunity, stay out of the market.
Keep Your Emotions in Check
Never allow your emotions to rule your online currency trading. Be disciplined, stick to your trading plan, and you will not get emotional during a trade. Trading decisions are often ruled by emotions for a trader who lacks discipline. This leads to bad decisions resulting in trading losses. Fear or greed is two emotions that are detrimental to a day trader.
Currency Trading Strategies
This is a great forex market for new people to get into. It's the major in the world with over three trillion dollars a day being moved around. There is a lot of money to be made, but there is also a lot of risk to lose money. I keep on top of things by forcing myself to stay behind true to the online currency trading strategies that I present to you today.
Supply and demand is supposed to be the things that move the forex market and that is true, for the most part. The problem is that we have government issues that inevitably affect either the supply or demand, which can cause a major change in prices. That's why I focus on the news to keep me informed on economic news. You're going to hear information about the GDP or unemployment rates, which will all affect the market, so if you can anticipate this news, you can stay ahead of the market and profit.
For currency trading strategies to work for you and remain effective, I think it is important to have a journal to record everything. This is a very good accountability tool that will force you to think. When I'm talking about a currency trading journal, you're not going to put literal transactions in there. You're going to explain yourself. Why you made the trade, what you were expecting, etc. This way you get much more value out of it.
Helpful Guide on Currency Trading
Most of the major online currency trading firms provides ample info as well as training material for traders, which are very beneficial. The above is a simple strategy and one that can help you make big profits from currency trading buying options. Day trading fundamentals in stock trading, futures trading or even currency trading and forex trading would certainly send the day trader bankrupt from short term corrections against the fundamental bias.
It only makes sense that a person involved in the serious financial world, such as those involved in foreign currency trading, should gain knowledge and the best way for most people to do that is through a online forex trading course that teaches the basics. You should not underestimate the need for discipline, if you want long-term currency trading success. But if you're interested in learning a new skill and making some money from it, maybe online currency trading is for you.
Forex trading market offers a large number of online options for currency trading. From all these facts you can see there are many advantages, and lots of money to be made, if you decide to enter the world of forex currency trading and learn the basics of the markets behaviors. Swiss Net Broker offers one-on-one technical analysis courses for people interested in methods of doing on currency trading.
In currency trading the major trends last many months or years and these are the ones you need to focus on. Practice Currency Trading as You Learn Online Forex broker sites will also allow you to set up a mock account to practice what you're learning before you actually invest any of your money. For currency trading success you MUST follow the longer term trends, most traders don't they simply bank profits quickly and think their clever for getting a profit.
By: Uchenna Ani-Okoye
Forex Online Currency Trading
Forex online currency trading is becoming increasingly popular as more and more traders want to take their shot at the largest trading market in the world. The lure of nearly $2 trillion in trading going on each and every day is too much for most traders to resist.
So what is the Forex market, and how does currency trading work? Forex is an abbreviated term for foreign exchange market. The Forex is the largest financial market in the entire world, with an average trade volume of nearly two trillion dollars per day. The modern Forex market is what evolved from initial currency trading.
The idea is to use fluctuating currency rates to make money out of money. For example, let's say you buy one mini lot (1 mini lot = 10,000 currency) of the EUR/USD at a rate of 1.1500. Two days later the markets shift and the EUR/USD is now 1.1525, and so you decide to sell. Using the formula to figure out profits/losses, 1.1525-1.1500 is .0025 * 10,000 (the size of the mini-lot) = $25. In this case, a $100 investment for one mini lot yielded a $25 profit, or 25% in only two days. Not a bad percentage by any count. That's quite a profit for two days.
The reason for this is that to trade forex trading you are basically simultaneously buying one of the currencies, while selling the other. If you are selling the EUR/USD pair, then you are selling Euros in order to buy dollars. There always has to be a pair. To buy one currency, you have to do it with another. To sell a currency, you need to get your profits back in another. There must always be two currencies in any Forex currency trading.
By: Jason Fielder
Go For Automated Forex Systems For Big Profits
If it’s mid-day anywhere in the United States it can be late night in Germany or early morning in Australia. But would that affect your forex trade? Never, as it is usual in the forex market to trade 24 hours and nearly 7 days a week. But can you trust your money in manual trade that can be delayed as your transaction order would be placed in a queue? Getting online for forex trading is the accepted norm these days as you will find out once you decide to enter the trade. This is exactly what makes the automated online forex trading software so essential to the forex trader.
Forex traders should be able to transact business in the forex market when their computer is off as well as when their computer is on. Attraction of the popular automated forex trading has gone up due to its flexibility. It can do the job of several traders in no time.
Imagine the luxury of going away to party by just setting a stop loss in place or a buy order to be executed instantly. You set the price and just leave the automated forex trading system to do the rest. As soon as the currency touches the price it will be bought or sold without you doing nothing about it. You losses can be minimized with pre-set stop losses for which you need not have to sit in front of the computer. Like forex software, your headache will be taken over by the automated forex system.
In manual trading there is a time lag and you have to depend on the manual execution of your orders. But when you are online, your risks are managed by forex software. You can make the huge profits now that you were not able to make earlier. You cannot make big profits when your transaction is managed manually. Automated forex trading makes the process easy and quick. Manually it is also not possible to act real fast on any sudden changes in the forex market.
Any subtle change in a political or economic event in any nation can affect the currency and also have an impact on the pair. Real fast action is needed to save the investment in the currency traders’ form any huge loss. Forex strategies are based on limiting the loss factor and expanding the chances of profit and the online automated forex system picks up the charge instantly.
How You Can Avoid These Top 4 Frauds In Forex Trading
Forex brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC) and a NFA member. The CFTC and NFA were made to protect the public against fraud, manipulation, and abusive trade practices. Never make a check or bank wire payable to anyone other that a FCM registered with the NFA.
1. Doing Research: It is most important to thoroughly research Forex trading, and any companies you may be thinking of trading forex with, before making any kind of investments. Be sure to check out any claims made by a company, and make sure they are indeed members of one of these organizations, before even thinking of dealing with them. Some people just park their hard-earned cash with some forex trading organizations without first doing research on that company. It is a risk.
2. Stay Away From Promises That Sound Too Good to Be True: Those Get-rich-quick schemes, including those involving forex trading, tend to be frauds. There is no easy way of learning how to trade forex and earn consistent profits everytime. Always remember that there is no such thing as a "free lunch.", you will really need to spend some time to learn forex basics. Some big investors invest with a large amount of funds, which are never to be seen again if deposited with those schemes.
3. Avoid Any Forex Company that Assures You Large Profits: Be extremely wary of those forex trading companies that guarantee profits. Nobody can offer sure guarantees where currency trading is concerned. In many cases, those claims are false. Learn to trade forex by yourself with a forex trading guide or ebook will be good enough, then slowly make your way up. The following are examples of statements that are most likely are fraudulent:
4. Avoid promises with little or zero risk trading: The guarantee of risk-free forex trading is another fraudulent claim. The fact that more than 90% of people failed in forex trading means there are risks in losing. the currency market is not the place to put any funds that you cannot afford to lose. No can will know how the markets will be performing in the future. Therefore, it's either low risk or high risk trading, and NOT NO risk! Anyone who suggests that forex trading is risk-free is likely to be a liar or fraudster.
For those new in forex trading, you will find the contents in my free ebook very useful as there is free forex trading system for you. And for advanced traders, you will also find value added stuffs inside the ebook, so try not to be attracted to those claims which can make you a lot of money, learning and trading by yourself is the best.
Developing The Best Forex Trading Strategy
Before you plunge into one of the most liquid, unpredictable and profitable markets in the world, there are some things that you should know about before putting your money in the hands of a brokerage. When money is involved, there are a lot of things you should consider, and these are the key to developing the best online forex trading strategy, for you to start making a profit. For instance, there is a great deal of money management that must be put in place before you run off with a lot of hope in your pocket. Hope is not going to pay the bills. Your money is and you need to know when and how much of your money you are going to use.
Always set yourself some realistic targets and limits to ensure that you do not spend too much money. Also, do not fall prey to the gambling endemic that is afflicting many Forex traders - this means they simply cannot stop trading no matter how much they loose and they often make irrational decisions in order to ‘win’ back the money that they have lost. Set yourself some parameters and stick to them, you will regret the fact that you account has run dry and you start to owe the brokerage a sum of money. Also, always have some risk capital on hand so that when things do go wrong, you will be able to bail yourself out. The total sum of your investment and risk capital should be an amount that you are able to afford.
Nobody should go into trading with their life savings in tow. The capital you put into the commodities market should be capital you can spend and if you do lose, will not have an adverse affect on your life style. That said, Forex trading is all about watching market patterns and market psychology. Unlike normal and traditional commodities trading, many people would say that the Forex market falls into a pattern when it comes to either a crisis or an upheaval within currencies. Issues like inflation, political violence and economic decisions can adversely affect the performance of the currency pair you have chosen. But there is always a pattern and this pattern is the structure of many trading strategies of experienced investors. For example, you must learn that there are many ‘safe’ currencies in the market that investors flock to when there is wind of a calamity in global economies. This is just one aspect.
Market psychology is ruled by major decisions my collective moves in the market. Because of the fact that huge multicontinental banks are the biggest driving forces within the FX market, they have pre planned moves when situations come up. Your job as an investor is to read the signs and react accordingly. The good thing about Forex is that is a very liquid market, so you can pull out any time you want - or on the flip side can invest in a click of a mouse. With these in mind when investing, you will have the key to developing the best Forex trading strategy.
Trade Currencies From Home - Currency Trading Success
If you want to trade currencies from home, then this article will point you in the right direction. Anyone can win with the right education and mindset so let's give you your 4 steps to success... Do not be fooled by thinking online forex trading is easy - its not that's why 95% of traders accounts get turned to dust. It's not because these traders couldn't learn to trade but they chose to get the wrong education. Let's start with a fatal error.
1. Forget Expert Advisors
Forex robots and sure fire trading systems, there all over the internet offering you financial freedom for 100 dollars or so and they don't work. You dont get financial freedom for 100 bucks, its common sense but loads of traders buy into this myth and lose. If you think you can make money with no effort in Forex, then save your money and do something else. Just as in all areas of life to succeed you need to learn some skills and know what you're doing.
2. Focus on Simple System Only
The good news is you don't have to work hard in Forex trading you need to work smart and to learn to trade currencies from home should take you just a couple of weeks. Then you can trade in around 30 minutes a day. Getting a trading method that works together is easy. In Forex trading, as simple systems work best. So keep it simple and if you want an easy to learn way of trading, try trading breakouts. We have written frequently on breakout currency trading systems, so look up our other articles.
Now we need to move to the hard part of Forex trading!
3. Dealing with Losses Cheerfully
At some point you are going to start losing and lose for weeks. Don't let anyone tell you otherwise. Sure the Forex robot vendors and sure fire systems say you won't - but you will. This doesn't mean you can't win long term but you must take your losses and keep them small in the short term. Dealing with a losing period is not easy, as the market takes your money and you feel a fool. It's in this period you must keep going until you hit a home run and for this you need the next trait.
4. Discipline and the Road to Success
Many traders have heard the word but very few people realize how hard it can be to maintain discipline in the face of losses. Discipline comes from confidence, the right education and the courage to keep going. Trading success comes from within, as you rely on your rules to take you through the chaos that is Forex trading.
The Forex Conspiracy Revealed - A Must-Read Free Report
A few days ago I mentioned a brand new report from Options University that discussed why forex trading is the best recession-proof business, and why it will be responsible for creating several new millionaires in the next few years. Well the good news is that they have just compiled a new follow-up report called 'The Forex Conspiracy' which is even more interesting than the first one
The Forex Conspiracy Revealed - A Must-Read Free Report
A few days ago I mentioned a brand new report from Options University that discussed why forex trading is the best recession-proof business, and why it will be responsible for creating several new millionaires in the next few years. Well the good news is that they have just compiled a new follow-up report called 'The Forex Conspiracy' which is even more interesting than the first one
Welcome to ForexArticleCollection.com
The Foreign Exchange market, also referred to as the Forex or FX market, is an international exchange market in the world, with a daily average turnover of approximately from 1.5 trillion to 2.5 trillion US dollar. Hundreds of thousands of individuals have already joined the Forex market.
In order to improve your Forex trading skills, you need to make the most of the information at your fingertips.
Here we collect the most popular and helpful Forex articles. All these Forex articles are written by the excellent Forex traders, strategists and analysts. You'll find the articles, trading courses and methods that are an indispensable inherent part of improving your Forex trading strategy.
1: forex signal provider? which one?
We have developed absolutely superb Forex Signal system based on detailed research, close market watch and careful technical analysis which has perform fabulously so far � bringing over 800 pips a month with 80-90% accuracy. The biggest advantage of our Forex Signal Trading System is that it works!It has performed numerous of winning trades over the last seven months.Forex Money Signal is the key towards a long-term profitable career in forex trading.
2: The opportunities of trading the Forex hedged grid system
This article shows high lights the dangers and opportunities of using grid trading principles in trading the Forex (currency) markets. It also constructively suggests ways of overcoming the dangers
3: Forex Trading System - A Key To Successful Forex Trading And Trading For A Living
For the trader who employs a forex trading system, he can still face the losing trade with a smile, because he has had followed through the trading signals in a disciplined way, and it is only when a trader follows a system, he can be sure of keeping his losses small and to live to trade again another day. Is there a place for day trading in a forex trading system?
10% Of Traders Go Bankrupt
I was thinking about an article I read some time ago that 90% of traders who ever trade lose their account and that 10% actually go bankrupt. If the first number doesn’t scare you then the second definitely should.
Why is it then that there is such a large number of traders failing? It is not because they are stupid; in fact most traders have an above average IQ and are above average in most categories such as education and income. So why do they fail?
Lack of trading education!
By education I don’t just mean learning how RSI works or drawing lines on a chart. I mean thoroughly educating yourself in all aspects of your chosen profession. Educating yourself on the correct psychological approach to the market! Educating yourself in the correct risk management techniques relative to your account size. Educating yourself in the correct entry and exit methods for the trading style that suits you.
This, my friend, is where I hope to be of some help. I don’t have all the answers nor do I profess to be some kind of guru but I will do my best to point you in the right direction.
Common Misconceptions Of New Traders
They think they can trade consistently with an 80% accuracy.
They think they can turn $1000 into $100,000 in six months.
They think they can predict turning points in their given markets to within minutes.
They think they can buy a system that is 100% accurate.
They think they will quit their jobs and make a living full time after a few months of trading.
What’s the reason that so many new traders believe that trading is an easy way to make big profits? Propaganda!
We are continually bombarded in magazines, emails and the general media with claims of making astronomical amounts, just by applying the vendor’s latest method or system.
Don’t get me wrong, there is good stuff out there but the vast majority is not worth the price you pay. At www.surefire-trading.com I also recommend products but I have at least read the ebooks or courses and think they have some value to my subscribers and they all have a refund guarantee.
Fundamentals Of Trading
Trading is not an exact science. You can’t do X and get Y every time. It is as much an art as it is anything else. There is no magic formula. Trading is all about probability. It is the art of correctly applying a set of carefully thought out rules and allocating the probability of that event to result in success.
Each trade is an independent event. The market does not remember if you lost or made dollars the last time you traded.
The way you approach the market psychologically has as much to do with your success as any trading plan.
Risk management is crucial if you want to have any hope of becoming a successful trader.
Matching a method of trading with your personality is the only way you will ever feel comfortable in the markets.
An adequately funded account is necessary - not only to be able to take the trades you want, but also so you don’t feel every trade is a live or die situation.
The journey to the road of successful trading will make you confront your deepest fears. Your armor on this journey will be confidence, knowledge and belief in yourself that you can achieve your dreams.
Never, equate your success or failure in the markets with who you are as a person!
The Flaw In Our Emotions
As humans we have a natural tendency to try and influence our surroundings and events we take part in. This is one reason we, as a species, have succeeded but it is also one of the fundamental flaws we all have when trying to achieve success as a traders.
As traders we have to realize we have no control over the market and if we accept that then we have to accept that we can not influence the direction of the market.
The problem of course is we have a tendency to try and succeed and when inevitable losses come, it is easy to let those losses effect us emotionally. Becoming euphoric when you hit a winning streak is almost as detrimental as becoming depressed when you have a string of losses.
We as traders have to try and achieve the state of impartiality. We have to accept that we will have losses as readily as we will have wins. Reaching the stage where you can comfortably accept loss in the knowledge that your method of trading will produce profits in the longer term is the state we have to aspire to.
Risk Management
Whenever I think of risk management I always think of an article I read on 925 CTA programs between 1974-1995. It essentially confirmed what I have long held to be true. To summarize the report, of all the CTA’s who managed funds, the most consistently profitable were the ones with the best risk management systems.
To trade successfully you have to take a long look at yourself. Ask and answer the following questions.
How much equity do I need to start? How much should I risk on any one trade? Am I undercapitalized?
During the course of these lessons I will do my best to help answer these and other questions.
Entry And Exit
As a trader you will probably fall into two main categories, traders who like to trade the breakout and traders who like to join the trend once established. We could also add congestion traders, reversal type traders and mechanical signal traders but for the vast majority of traders you are going to fall into one of the two categories.
If you are a trend trader, you like to define a trend and then find a way in. This may be with the aid of fibonacci retracement levels, moving averages, Gann or one of the other many indicators available today. Your goal is to enter the trend as early as possible with the least amount of risk.
Breakout traders like to enter the market on the breakout of a previously identified range. This may be support/resistance areas, rectangles, triangles or one of the many other chart patterns. The secret to this type of trading is to determine a valid break.
In future lessons we shall begin to look at the more technical side of trading and how you can apply technical analysis to the markets to increase your probability of success.
Conclusion
During this lesson I have tried to give you a glimpse into the world of trading. I have also taken a slightly negative stance, as I don’t want you to get unrealistic expectations of what to expect.
On the more positive side, trading is a fascinating world, which will allow you to really exercise your brain. There is no other arena where you get to play with some of the best minds in the world on a level playing field.
Once mastered, if you can ever use that term then the possibilities are endless. Hopefully I can help you achieve your goals
Good Trading
Introduction to Fibonacci trading techniques.
First, a few words about Fibonacci himself…
Leonardo Pisano (nickname Fibonacci) was a mathematician, born in 1170, in Pisa (now Italy). His father was Guilielmo, of the Bonacci family. His father was a diplomat, as a result Fibonacci was educated in North Africa, where he learned "accounting" and "mathematics".
Fibonacci also contributed to the science of numbers, and introduced the "Fibonacci sequence"
The Fibonacci sequence is the sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, introduced in his work "Liber abaci" in a problem involving the growth of a population of rabbits.
Aside from this sequence of number where every next number is the sum of the proceeding two, 0, 1 (0+1), 2 (1+1), 3 (2+1), 5 (3+2), 8 (5+3), 13 (8+5), etc.
There are the "Fibonacci ratios".. By comparing the relationship between each number, and each alternate number, and even each number to the one four places to the right, we arrive at some fairly consistent ratios.. The important ones are .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and for good measure we include 1.00 ..
It turns out that the ratios are mathematical principles prevalent in nature around us, and is also in man-made objects. There are many interesting, entertaining, and poetic observations about Fibonacci numbers and ratios in the universe (see the reference section below). Fibonacci numbers appear in ancient buildings, in plants, planets, molecules, the dimensions of human bodies, and of course snails… But of what use is all that to the lowly trader?
What really interests you, the application of Fibonacci techniques in the trading environment..
Traders usually study charts! Fibonacci ratios may be applied to the Price scale, and also to the time scale of charts. I study the price scale. My focus here will be on the price scale for now, perhaps in the future I’ll add some time-scale studies.
Prices never move in a straight line. Look at any chart, you will see many wiggles, as price advances and retraces.. Stocks, Futures, Forex, all instruments which are liquid, will often retrace in Fibonacci proportions, and advance in Fibonacci proportions. Not always, and not precisely to the penny. But very often, and reasonably close! This happens often enough that profitable trades can result. I will show you some examples below.
I used Fibonacci ratios with a few simple indicators to help determine probable price turning points, optimum entry, exit and stop-loss levels. My complete techniques are available in on-line video seminars, in-person seminars, and via my real-time on-line chat facility. For more details, see the this web page
The application of Fibonacci to trading can be very complex, and take much time and experience to perfect. Many traders enjoy making the process as difficult and as complex as they can tolerate.. I do the opposite, I try to simplify, try to bring clarity.
Fibonacci example - Microsoft Weekly chart.
This lesson demonstrates a very basic way to use Fibonacci levels. You just read about Fibonacci ratios. We will use just one of those ratios for now, the .382 Fibonacci ratio. In this chart MSFT made a high of (approximately) $59.97 in December of 1999. After that, it moved down to make a low of $30.19 in May of 2000.
The down move was $29.78 (59.97-30.19), quite a substantial amount.
Projecting from that low in May, and using a Fibonacci ratio, we can calculate 29.78*.382=$11.37 . So 38.2% of 29.78 is 11.37 . If MSFT were to rally 38.2% of the down-move it would reach $41.57 (11.37+30.20). I’m using rounded numbers in my calculations, the chart above calculates it to be $41.564, we don’t need that degree of accuracy!
Several weeks later, MSFT rallied and resisted right near that .382 Fibonacci level !!
So we were able to predict a future probable turning point (after the low of May 2000), using the Fibonacci ratio of .382!! If only it were always so easy.
The steps involved are:
1. Calculate the total value of a significant price-move (high to low, or vice-versa).
2. Calculate a Fibonacci retracement (in this case .382) of the prior move.
3. Look for price to confirm, by resisting (or support in an up-move) near that predicted retracement area.
Fibonacci example - Microsoft Daily chart.
This chart shows how a different Fibonacci level (61.8%) predicted resistance and a market turn.
Notice how the market behaved at the .382 level (30.80 area). Initially the market spiked through, then fell back to that level (late October). We cannot expect a chart to retrace at every Fib level. We can expect some support/resistance as buyers/sellers enter the market at these levels, but we can’t always predict whether the market will actually turn at any particular level. Fibonacci techniques are used to alert you to a possible trade, if that price level does cause support or resistance. These techniques are not used as a trigger for entry. Other indicators are used in conjunction with Fibonacci studies to provide higher-probability entries..
As mentioned before, there are several Fib levels, .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and 1.00 .. So there are several places to look for a market turn. They can be calculated in advance, but trading blindly at a fib level can be dangerous, because you never know for certain (in advance) whether the market will turn at any particular Fib level. I use other indicators to help overcome that problem, click here to learn how to determine which Fib ratio is likely to be strong enough to turn the market.
Important notes from this lesson:
1. There are several Fib levels.
2. It takes some skill to determine which Fib level is likely to cause the market to turn.
3. There are some techniques to help you determine where a market is more likely to turn.
4. Do not blindly anticipate a market turn at a Fib level.
More Fibonacci examples.
QQQ Weekly chart with a deep retracement to .618 and a weak attempt to rally after that. However, consider the daily chart and intraday traders. they would have enjoyed the rally from $75 to $100, after going long from a support level that could have been predicted in March!
QQQ daily chart. Multiple Fib levels timing the market perfectly in 3 consecutive waves up!
Intraday chart, QQQ 30-minute. Notice the two market Fib retracements (there are others in this chart too).. The rally from 29.26 stopped at 31.10, then it supported **twice** at 30.39, for two good scalps. The next highlighted Fib support is at a retracement of .618 from the move up 30.47 to 32.49 .. Both of these support levels were predictable before the market supported there.. Hint:--- See how the rally continued after the shallow retracement to 30.39 ... See how the rally after the deeper retracement to .618 near 31.25 was a weaker rally.. This is common, a deeper retracement often foretells a weaker rally... See the next lesson in the table of contents for more on these advanced Fibonacci trading principles.
Another intraday chart, S&P 5-minute.. The first Fib retracement is on a bearish move, an opportunity to short. The second is bullish, with a long entry near 999.25 .. Note that popular charting software will calculate Fibonacci to rediculous precision, we don’t need anything closer than one tick! Actually, you should allow some room don’t expect precision every time. Allow the trade some room to develop, or you will be stopped out too often.
More Advanced - Microsoft Daily chart.
By now you’re probably quite interested, perhaps applying all those Fibonacci ratios to many charts.. You should experiment with your own charts. As long as the instrument traded has a lot of liquidity (not a penny stock for example), you should start to see Fib support and resistance at work. You will start to notice that Fibonacci levels "work" sometimes and not others. Sometimes the trades are not profitable, or are less profitable than others. You need to develop the skills required to select better trades.
In this mini-lesson I want to show you how to evaluate price action based on which Fib levels it responds to, and how the market behaves immediately preceding the Fib support/resistance.
The chart below actually has many Fibonacci levels "performing well", providing support or resistance to the market. I want you to focus on the two that I have identified, for the purposes of this lesson.
The first up-move that I have identified topped out at $26.90, and then retraced 61.8% before supporting at that Fib level. There was a pause at the .382 level, but it was not sufficient to hold the market. Now look at the rally from the support level near .618, it rallied but did not exceed the prior high of 26.90 … As a general rule, a retracement to .618 or below indicates that the preceding up-move is losing steam. A shallow retracement which supports at .382 is more likely to rally beyond the prior high than one which has a deep retracement beyond .50 all the way to .618 ..
The impressive thrust from 22.55 up to 26.90 was negated by a quick move back to .618 at about 24.20, so a trader should not be too optimistic about a continuation of the initial up-thrust.
Similarly, the move up in June, from 23.50 to almost 26.50 would also not inspire much optimism for a huge rally above the high of 26.50 … In general a shallow support at .382 would indicate a probable rally beyond the prior high. However, if the up-move preceding the retracement was sluggish rather than thrusting, you also should temper your enthusiasm.
If the second rally which only retraced to .382 had the thrust of the first rally, it would be a more attractive trade!
These are not firm rules, instead they are used as a guide, to help you filter for better trades. Every Fib level is not equal, some are more attractive than others.
Important notes from this lesson:
1. Not all Fib levels are alike.
2. No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.
3. Price action just before a Fib retracement can tell you something about the future.
4. Which Fib level causes the end of a retracement also can give a hint to future price action.
5. No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.
Good Trading
The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
What to trade in Forex Market?
In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.
Understanding Forex quote
* Base currency: The first currency in the pair.
* Counter Currency: The second currency in the pair. Also known as the terms currency.
The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.
BID and ASK Prices
When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).
Commission-free, but with spreads
Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.
Rollover - What happens to my open positions at the end of the trading day?
Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.
Leverage & Margin
The leverage available in forex trading is one of main attractions for many traders. Leveraged trading, or trading on margin, simply means that you are not required to put up the full value of the position. Forex brokers provide more leverage than stocks or futures. In forex trading, the amount of leverage available can be up to 400 times the value of your account.
10% Of Traders Go Bankrupt
I was thinking about an article I read some time ago that 90% of traders who ever trade lose their account and that 10% actually go bankrupt. If the first number doesn’t scare you then the second definitely should.
Why is it then that there is such a large number of traders failing? It is not because they are stupid; in fact most traders have an above average IQ and are above average in most categories such as education and income. So why do they fail?
Lack of trading education!
By education I don’t just mean learning how RSI works or drawing lines on a chart. I mean thoroughly educating yourself in all aspects of your chosen profession. Educating yourself on the correct psychological approach to the market! Educating yourself in the correct risk management techniques relative to your account size. Educating yourself in the correct entry and exit methods for the trading style that suits you.
This, my friend, is where I hope to be of some help. I don’t have all the answers nor do I profess to be some kind of guru but I will do my best to point you in the right direction.
Common Misconceptions Of New Traders
They think they can trade consistently with an 80% accuracy.
They think they can turn $1000 into $100,000 in six months.
They think they can predict turning points in their given markets to within minutes.
They think they can buy a system that is 100% accurate.
They think they will quit their jobs and make a living full time after a few months of trading.
What’s the reason that so many new traders believe that trading is an easy way to make big profits? Propaganda!
We are continually bombarded in magazines, emails and the general media with claims of making astronomical amounts, just by applying the vendor’s latest method or system.
Don’t get me wrong, there is good stuff out there but the vast majority is not worth the price you pay. At www.surefire-trading.com I also recommend products but I have at least read the ebooks or courses and think they have some value to my subscribers and they all have a refund guarantee.
Fundamentals Of Trading
Trading is not an exact science. You can’t do X and get Y every time. It is as much an art as it is anything else. There is no magic formula. Trading is all about probability. It is the art of correctly applying a set of carefully thought out rules and allocating the probability of that event to result in success.
Each trade is an independent event. The market does not remember if you lost or made dollars the last time you traded.
The way you approach the market psychologically has as much to do with your success as any trading plan.
Risk management is crucial if you want to have any hope of becoming a successful trader.
Matching a method of trading with your personality is the only way you will ever feel comfortable in the markets.
An adequately funded account is necessary - not only to be able to take the trades you want, but also so you don’t feel every trade is a live or die situation.
The journey to the road of successful trading will make you confront your deepest fears. Your armor on this journey will be confidence, knowledge and belief in yourself that you can achieve your dreams.
Never, equate your success or failure in the markets with who you are as a person!
The Flaw In Our Emotions
As humans we have a natural tendency to try and influence our surroundings and events we take part in. This is one reason we, as a species, have succeeded but it is also one of the fundamental flaws we all have when trying to achieve success as a traders.
As traders we have to realize we have no control over the market and if we accept that then we have to accept that we can not influence the direction of the market.
The problem of course is we have a tendency to try and succeed and when inevitable losses come, it is easy to let those losses effect us emotionally. Becoming euphoric when you hit a winning streak is almost as detrimental as becoming depressed when you have a string of losses.
We as traders have to try and achieve the state of impartiality. We have to accept that we will have losses as readily as we will have wins. Reaching the stage where you can comfortably accept loss in the knowledge that your method of trading will produce profits in the longer term is the state we have to aspire to.
Risk Management
Whenever I think of risk management I always think of an article I read on 925 CTA programs between 1974-1995. It essentially confirmed what I have long held to be true. To summarize the report, of all the CTA’s who managed funds, the most consistently profitable were the ones with the best risk management systems.
To trade successfully you have to take a long look at yourself. Ask and answer the following questions.
How much equity do I need to start? How much should I risk on any one trade? Am I undercapitalized?
During the course of these lessons I will do my best to help answer these and other questions.
Entry And Exit
As a trader you will probably fall into two main categories, traders who like to trade the breakout and traders who like to join the trend once established. We could also add congestion traders, reversal type traders and mechanical signal traders but for the vast majority of traders you are going to fall into one of the two categories.
If you are a trend trader, you like to define a trend and then find a way in. This may be with the aid of fibonacci retracement levels, moving averages, Gann or one of the other many indicators available today. Your goal is to enter the trend as early as possible with the least amount of risk.
Breakout traders like to enter the market on the breakout of a previously identified range. This may be support/resistance areas, rectangles, triangles or one of the many other chart patterns. The secret to this type of trading is to determine a valid break.
In future lessons we shall begin to look at the more technical side of trading and how you can apply technical analysis to the markets to increase your probability of success.
Conclusion
During this lesson I have tried to give you a glimpse into the world of trading. I have also taken a slightly negative stance, as I don’t want you to get unrealistic expectations of what to expect.
On the more positive side, trading is a fascinating world, which will allow you to really exercise your brain. There is no other arena where you get to play with some of the best minds in the world on a level playing field.
Once mastered, if you can ever use that term then the possibilities are endless. Hopefully I can help you achieve your goals
Good Trading
Fibonacci Trading Techniques
Introduction to Fibonacci trading techniques.
First, a few words about Fibonacci himself…
Leonardo Pisano (nickname Fibonacci) was a mathematician, born in 1170, in Pisa (now Italy). His father was Guilielmo, of the Bonacci family. His father was a diplomat, as a result Fibonacci was educated in North Africa, where he learned "accounting" and "mathematics".
Fibonacci also contributed to the science of numbers, and introduced the "Fibonacci sequence"
The Fibonacci sequence is the sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, introduced in his work "Liber abaci" in a problem involving the growth of a population of rabbits.
Aside from this sequence of number where every next number is the sum of the proceeding two, 0, 1 (0+1), 2 (1+1), 3 (2+1), 5 (3+2), 8 (5+3), 13 (8+5), etc.
There are the "Fibonacci ratios".. By comparing the relationship between each number, and each alternate number, and even each number to the one four places to the right, we arrive at some fairly consistent ratios.. The important ones are .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and for good measure we include 1.00 ..
It turns out that the ratios are mathematical principles prevalent in nature around us, and is also in man-made objects. There are many interesting, entertaining, and poetic observations about Fibonacci numbers and ratios in the universe (see the reference section below). Fibonacci numbers appear in ancient buildings, in plants, planets, molecules, the dimensions of human bodies, and of course snails… But of what use is all that to the lowly trader?
What really interests you, the application of Fibonacci techniques in the trading environment..
Traders usually study charts! Fibonacci ratios may be applied to the Price scale, and also to the time scale of charts. I study the price scale. My focus here will be on the price scale for now, perhaps in the future I’ll add some time-scale studies.
Prices never move in a straight line. Look at any chart, you will see many wiggles, as price advances and retraces.. Stocks, Futures, Forex, all instruments which are liquid, will often retrace in Fibonacci proportions, and advance in Fibonacci proportions. Not always, and not precisely to the penny. But very often, and reasonably close! This happens often enough that profitable trades can result. I will show you some examples below.
I used Fibonacci ratios with a few simple indicators to help determine probable price turning points, optimum entry, exit and stop-loss levels. My complete techniques are available in on-line video seminars, in-person seminars, and via my real-time on-line chat facility. For more details, see the this web page
The application of Fibonacci to trading can be very complex, and take much time and experience to perfect. Many traders enjoy making the process as difficult and as complex as they can tolerate.. I do the opposite, I try to simplify, try to bring clarity.
Fibonacci example - Microsoft Weekly chart.
This lesson demonstrates a very basic way to use Fibonacci levels. You just read about Fibonacci ratios. We will use just one of those ratios for now, the .382 Fibonacci ratio. In this chart MSFT made a high of (approximately) $59.97 in December of 1999. After that, it moved down to make a low of $30.19 in May of 2000.
The down move was $29.78 (59.97-30.19), quite a substantial amount.
Projecting from that low in May, and using a Fibonacci ratio, we can calculate 29.78*.382=$11.37 . So 38.2% of 29.78 is 11.37 . If MSFT were to rally 38.2% of the down-move it would reach $41.57 (11.37+30.20). I’m using rounded numbers in my calculations, the chart above calculates it to be $41.564, we don’t need that degree of accuracy!
Several weeks later, MSFT rallied and resisted right near that .382 Fibonacci level !!
So we were able to predict a future probable turning point (after the low of May 2000), using the Fibonacci ratio of .382!! If only it were always so easy.
The steps involved are:
- Calculate the total value of a significant price-move (high to low, or vice-versa).
- Calculate a Fibonacci retracement (in this case .382) of the prior move.
- Look for price to confirm, by resisting (or support in an up-move) near that predicted retracement area.
Fibonacci example - Microsoft Daily chart.
This chart shows how a different Fibonacci level (61.8%) predicted resistance and a market turn.
Notice how the market behaved at the .382 level (30.80 area). Initially the market spiked through, then fell back to that level (late October). We cannot expect a chart to retrace at every Fib level. We can expect some support/resistance as buyers/sellers enter the market at these levels, but we can’t always predict whether the market will actually turn at any particular level. Fibonacci techniques are used to alert you to a possible trade, if that price level does cause support or resistance. These techniques are not used as a trigger for entry. Other indicators are used in conjunction with Fibonacci studies to provide higher-probability entries..
As mentioned before, there are several Fib levels, .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and 1.00 .. So there are several places to look for a market turn. They can be calculated in advance, but trading blindly at a fib level can be dangerous, because you never know for certain (in advance) whether the market will turn at any particular Fib level. I use other indicators to help overcome that problem, click here to learn how to determine which Fib ratio is likely to be strong enough to turn the market.
Important notes from this lesson:
- There are several Fib levels.
- It takes some skill to determine which Fib level is likely to cause the market to turn.
- There are some techniques to help you determine where a market is more likely to turn.
- Do not blindly anticipate a market turn at a Fib level.
More Fibonacci examples.
QQQ Weekly chart with a deep retracement to .618 and a weak attempt to rally after that. However, consider the daily chart and intraday traders. they would have enjoyed the rally from $75 to $100, after going long from a support level that could have been predicted in March!
QQQ daily chart. Multiple Fib levels timing the market perfectly in 3 consecutive waves up!
Intraday chart, QQQ 30-minute. Notice the two market Fib retracements (there are others in this chart too).. The rally from 29.26 stopped at 31.10, then it supported **twice** at 30.39, for two good scalps. The next highlighted Fib support is at a retracement of .618 from the move up 30.47 to 32.49 .. Both of these support levels were predictable before the market supported there.. Hint:--- See how the rally continued after the shallow retracement to 30.39 ... See how the rally after the deeper retracement to .618 near 31.25 was a weaker rally.. This is common, a deeper retracement often foretells a weaker rally... See the next lesson in the table of contents for more on these advanced Fibonacci trading principles.
Another intraday chart, S&P 5-minute.. The first Fib retracement is on a bearish move, an opportunity to short. The second is bullish, with a long entry near 999.25 .. Note that popular charting software will calculate Fibonacci to rediculous precision, we don’t need anything closer than one tick! Actually, you should allow some room don’t expect precision every time. Allow the trade some room to develop, or you will be stopped out too often.
More Advanced - Microsoft Daily chart.
By now you’re probably quite interested, perhaps applying all those Fibonacci ratios to many charts.. You should experiment with your own charts. As long as the instrument traded has a lot of liquidity (not a penny stock for example), you should start to see Fib support and resistance at work. You will start to notice that Fibonacci levels "work" sometimes and not others. Sometimes the trades are not profitable, or are less profitable than others. You need to develop the skills required to select better trades.
In this mini-lesson I want to show you how to evaluate price action based on which Fib levels it responds to, and how the market behaves immediately preceding the Fib support/resistance.
The chart below actually has many Fibonacci levels "performing well", providing support or resistance to the market. I want you to focus on the two that I have identified, for the purposes of this lesson.
The first up-move that I have identified topped out at $26.90, and then retraced 61.8% before supporting at that Fib level. There was a pause at the .382 level, but it was not sufficient to hold the market. Now look at the rally from the support level near .618, it rallied but did not exceed the prior high of 26.90 … As a general rule, a retracement to .618 or below indicates that the preceding up-move is losing steam. A shallow retracement which supports at .382 is more likely to rally beyond the prior high than one which has a deep retracement beyond .50 all the way to .618 ..
The impressive thrust from 22.55 up to 26.90 was negated by a quick move back to .618 at about 24.20, so a trader should not be too optimistic about a continuation of the initial up-thrust.
Similarly, the move up in June, from 23.50 to almost 26.50 would also not inspire much optimism for a huge rally above the high of 26.50 … In general a shallow support at .382 would indicate a probable rally beyond the prior high. However, if the up-move preceding the retracement was sluggish rather than thrusting, you also should temper your enthusiasm.
If the second rally which only retraced to .382 had the thrust of the first rally, it would be a more attractive trade!
These are not firm rules, instead they are used as a guide, to help you filter for better trades. Every Fib level is not equal, some are more attractive than others.
Important notes from this lesson:
- Not all Fib levels are alike.
- No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.
- Price action just before a Fib retracement can tell you something about the future.
- Which Fib level causes the end of a retracement also can give a hint to future price action.
- No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.
Good Trading
Forex trading basics
Forex Market Basics
The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
What to trade in Forex Market?
In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.
Understanding Forex quote
- Base currency: The first currency in the pair.
- Counter Currency: The second currency in the pair. Also known as the terms currency.
The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.
BID and ASK Prices
When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).
Commission-free, but with spreads
Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.
Rollover - What happens to my open positions at the end of the trading day?
Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.
Leverage & Margin
The leverage available in forex trading is one of main attractions for many traders. Leveraged trading, or trading on margin, simply means that you are not required to put up the full value of the position. Forex brokers provide more leverage than stocks or futures. In forex trading, the amount of leverage available can be up to 400 times the value of your account.
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