By Alwin Ng
The last two months has been amazing for me as I continue to develop myself in the areas of trading psychology as well as building new trading systems for my portfolio. The idea of continuous learning is utmost important for any trader and I definitely encourage everyone to do so if you can.
In the process of building a new trading system, I had to sit down to write a new trading plan and I had to go through various market scenarios before I could nail down a system that works. Even though I've written past articles around this subject, it still amazes me that I'm still learning and I'm able to discover new trading insights or lessons.
I would like to share this experience with you and to remind everyone the importance of creating a trading plan that works. More importantly, to creating a trading plan that works for you - yes, it must work for YOU! With that, enjoy today's article!
1. Technical Know-how is a Must
This is probably the most laborious part when creating a trading plan yet this is also the least significant of the entire plan. When writing a plan on a new trading system, you must have the technical know-how before you even consider trading it in the market.
You will also need to take time to understand how the system works. So, ask as many questions and make use of Google as much as possible because everything you ever need to know about trading systems can be found on the internet. Of course, where possible, make sure to check that it is from a reliable source.
If Google doesn't know about it, the chances are it's either something very niche or that system may not exist. While there's nothing wrong with that, it just means that you have fewer resources to use. Either way, do your homework and find out as much as you can.
It goes without saying that you need to test it out. As you test the system, you will generate even more questions. From personal experience, DO NOT ignore those questions during testing because these are the things that you won't learn on the internet. Make sure to find those answers (through coaching or more testings) because trial and errors are the best and quickest way to learn about any thing and that applies to trading the market too.
2. Risk/Money Management Trumps Technical
Risk and Money Management should be on the top of the priority list when writing a trading plan. Think about it, you cannot make money without learning how to manage money. Make sense?
To keep this simple, I'm going to summarise some rules that I frequently use.
Do not trade on money that you cannot afford to lose. And I'm not just talking about financial account - this includes your emotional account as well. For example, $1,000 might be a lot of money to a middle income trader. However, sometimes you might find that $500 means even more to a high earner because he/she gets so stress that one cannot make rational trading decisions. If you can't afford to lose (financially and emotionally), then either reduce the pot or keep it to demo trading while you continue to build your confidence.
NEVER enter the market without knowing when to exit. You make money by cashing out as well as cutting losses. You'll lose money if you don't know when to exit the market.
As a rule of thumb, beginners should position size and keep trading risk to 1% (per trade) of your account and one should not go any more than 3-5% per trade. You might wonder, why am I being so vague? Well, to be honest, there's no fix and hard rule about this. Trading is all about your own risk appetite and whether or not you can handle the emotions when things don't go your way. Do not trade what you cannot handle.
The list can go on for awhile but I think you get the point. Again, if you need to, buy books, read or get a coach to teach you about risk/money management.
3. Emotional Checker
Once you got Pt 1 and 2 sorted, here comes a trading secret/method that I use - I call this the Emotional Checker.
As you go through your trading plan, try to visualise a trade set up happening in the future. This can be any point in time in the future but visualise yourself actually taking this trade. As you see the trade (using your imagination), you place your orders and you let it run. Ask yourself - how do you feel? Comfortable? If yes, good. Now try the following:
Visualise the trade going in your favour. How do you feel?
Visualise the trade going against you. How do you feel?
Visualise the trade going in your favour and now you following your exit plan. How do you feel?
Essentially, this is what I call scenario planning but using your emotions to check that you are fine with it. When ever you feel uncomfortable or fearful, you should consider tweaking your trading plan. Then, repeat the exercise.
Think about this, if you have done your work in Pt 1, you should have a thorough understanding of how the market works. It can work in your favour as well as go against you and you should have captured this in your trading plan. If you haven't done your homework, that's the reason to you feeling uncomfortable or fearful.
Conclusion
In the end, it's all about trading a system that works for you. The key success factor of any trader is that their trading plan must work for them. Many amateur traders buy trading systems from trading schools and assume that it will work fine. Unfortunately, it might work for some but, chances are, it won't work for everyone.
These traders forget that, at one point in the future, you might not feel comfortable with the system. If you're not comfortable with it, that's when your emotions kick it and followed by a long list of negative actions (which I will not dwell into today).
Monday, September 23, 2013
Forex Trading - Understanding the Dangerous Schemes in Forex
By Onyebuchim C Obike
Forex Trading is one of the highest yielding financial investment in the world. According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms specializing on foreign exchange market had put the average daily turnover in excess of US$4 trillion of which $1.490 trillion us being generated from spot transactions (i.e. Forex transactions)
The above fact is the key factor that entices most people to invest in Forex. The enormous returns in Forex also gave rise to fraudulent schemes, which have been on the rise since Forex began.
Fraudulent shemes in Forex is also referred to the word "scam".
What is scam?
"Scam is a fraudulent business scheme" or "to deprive off by deceit" - (TheSage's English Dictionary and Thesaurus)
Scam is synonymous with fraud. It is deception, make belief, trickery, pretense, cheating, e.t.c.
A lot of people have fallen one time or the other to scam deals knowingly and unknowingly. Some got out with partial loss, while others lost everything without a single recovery. Scam victims usually suffer unbearable psychological pain due to the level of trust built with the scammer and the loss incurred.
Unfortunately any venture with high potential for money making is always alluring to scammers and Forex is one of those ventures.
Scamming in Forex had been in existence right from when Forex began, only that it has taken a new dynamic dimension in this current era. Forex Scam is the act of fraudulently taking money from a client or customer with the intention of providing a rewarding service for the client or customer, which is not true. In some cases the services provided by the vendor could be rewarding or true, but at the long run, when a glitch occurs due to poor design then the vendor disappears after months of negotiations without making any refunds.
Examples of Forex scams include;
Fake products
Ponzi Schemes
Fake Managed Account Schemes
Pyramid Schemes
These examples are more prevalent in Forex due to the nature of the perceived returns and high rate of unsuspecting traders who patronize them.
Understanding the true perception of Forex scam is very important in detecting and protecting yourself from fraudulent schemes in Forex. A lot of traders have a wrong perception of Forex scams due to their limited knowledge about Forex. A case scenario might look similar when it's being matched with real scam cases. But when you look deeply into such complaints, you'll find wrong perceptions and false alarms.
A lot of inexperienced Forex Traders are quick to scream "I've been scammed" due to their level of knowledge in Forex. If you fail to follow the instructions of a product, and experience loss then that is not a scam.
For example when a signal service provider says "use default settings for accounts lower than $1000, and do not adjust the Money Management Settings otherwise you will get undesired results. However you'll make little pips but on the long run your account will grow steadily".
If a user of this signal service gets impatient or greedy, and ignores the warning by tweaking the settings in order to attain short term quick gain in his account, such a trader would unfortunately experience undesired results to his/her account.
Let's assume the trader gets infuriated and sends series of complaints to the vendor about the poor performance of the product and later request for a refund. When the vendor refuses based on the trader's negligence, then a scam alarm is raised. Unfortunately this does not qualify for a scam case.
Every forex product has its threshold or required standards because they cannot be 100% perfect at all times. Most vendors usually state this caution or disclaimer notice on their website in order to protect users from unprecedented loss from market uncertainties. So it is the duty of a customer to keep to the product's limits. When you go against it and face the undesirable consequences then asking for refunds would not work, and establishing a scam case would be extremely difficult.
When a trader uses a Forex product not designed for news trading or for a particular trading session or configures the settings against the design of the Forex Product and gets losses then the trader cannot claim he/she has been scammed.
One of the best ways of understanding and protecting yourself from fraudulent schemes in Forex is to get yourself updated with the Forex regulatory agencies like CFTC, NFA and your local financial regulatory agencies. These regulatory agencies regularly publish red alerts and warnings about fraudulent schemes in Forex to protect Forex traders.
Fraudulent schemes in Forex can be very enticing, cheap, alluring, and certain. Understanding the hidden traps in any alluring offer is the first step of protecting yourself from loss.
Forex Trading is one of the highest yielding financial investment in the world. According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms specializing on foreign exchange market had put the average daily turnover in excess of US$4 trillion of which $1.490 trillion us being generated from spot transactions (i.e. Forex transactions)
The above fact is the key factor that entices most people to invest in Forex. The enormous returns in Forex also gave rise to fraudulent schemes, which have been on the rise since Forex began.
Fraudulent shemes in Forex is also referred to the word "scam".
What is scam?
"Scam is a fraudulent business scheme" or "to deprive off by deceit" - (TheSage's English Dictionary and Thesaurus)
Scam is synonymous with fraud. It is deception, make belief, trickery, pretense, cheating, e.t.c.
A lot of people have fallen one time or the other to scam deals knowingly and unknowingly. Some got out with partial loss, while others lost everything without a single recovery. Scam victims usually suffer unbearable psychological pain due to the level of trust built with the scammer and the loss incurred.
Unfortunately any venture with high potential for money making is always alluring to scammers and Forex is one of those ventures.
Scamming in Forex had been in existence right from when Forex began, only that it has taken a new dynamic dimension in this current era. Forex Scam is the act of fraudulently taking money from a client or customer with the intention of providing a rewarding service for the client or customer, which is not true. In some cases the services provided by the vendor could be rewarding or true, but at the long run, when a glitch occurs due to poor design then the vendor disappears after months of negotiations without making any refunds.
Examples of Forex scams include;
Fake products
Ponzi Schemes
Fake Managed Account Schemes
Pyramid Schemes
These examples are more prevalent in Forex due to the nature of the perceived returns and high rate of unsuspecting traders who patronize them.
Understanding the true perception of Forex scam is very important in detecting and protecting yourself from fraudulent schemes in Forex. A lot of traders have a wrong perception of Forex scams due to their limited knowledge about Forex. A case scenario might look similar when it's being matched with real scam cases. But when you look deeply into such complaints, you'll find wrong perceptions and false alarms.
A lot of inexperienced Forex Traders are quick to scream "I've been scammed" due to their level of knowledge in Forex. If you fail to follow the instructions of a product, and experience loss then that is not a scam.
For example when a signal service provider says "use default settings for accounts lower than $1000, and do not adjust the Money Management Settings otherwise you will get undesired results. However you'll make little pips but on the long run your account will grow steadily".
If a user of this signal service gets impatient or greedy, and ignores the warning by tweaking the settings in order to attain short term quick gain in his account, such a trader would unfortunately experience undesired results to his/her account.
Let's assume the trader gets infuriated and sends series of complaints to the vendor about the poor performance of the product and later request for a refund. When the vendor refuses based on the trader's negligence, then a scam alarm is raised. Unfortunately this does not qualify for a scam case.
Every forex product has its threshold or required standards because they cannot be 100% perfect at all times. Most vendors usually state this caution or disclaimer notice on their website in order to protect users from unprecedented loss from market uncertainties. So it is the duty of a customer to keep to the product's limits. When you go against it and face the undesirable consequences then asking for refunds would not work, and establishing a scam case would be extremely difficult.
When a trader uses a Forex product not designed for news trading or for a particular trading session or configures the settings against the design of the Forex Product and gets losses then the trader cannot claim he/she has been scammed.
One of the best ways of understanding and protecting yourself from fraudulent schemes in Forex is to get yourself updated with the Forex regulatory agencies like CFTC, NFA and your local financial regulatory agencies. These regulatory agencies regularly publish red alerts and warnings about fraudulent schemes in Forex to protect Forex traders.
Fraudulent schemes in Forex can be very enticing, cheap, alluring, and certain. Understanding the hidden traps in any alluring offer is the first step of protecting yourself from loss.
10 Differences Between MetaTrader 4 and MetaTrader 5 Forex Platform
By Onyebuchim C Obike
10 DIFFERENCES BETWEEN MT4 AND METATRADER 5
1. Installation
MT4: Installation is simple, and straightforward.
METATRADER 5: Installation is not as simple when compared to MT4. The manufacturer's demo trading server (METAQUOTE) is a default in the opening account phase of the installation. An option to add new trading server from METATRADER 5 for a demo account is also included.
2. Charts/Timeframe
MT4: There are nine (9) timeframes. There are limitations to the number of charts that can be opened at the same time.
METATRADER 5: There are 21 timeframes ranging from 1 minute to 1 month, and unlimited number of charts. One hundred charts can be opened at the same time without limitations.
3. Fundamental Analysis (news trading)
MT4: Forex Economic Calendar is not included in the news tab.
METATRADER 5: The platform has an inbuilt Forex economic calendar tab with features like news event, schedule, impact, forecast, earlier events, e.t.c.
4. Commerce/Market
MT4: The market utility tab is not integrated into the platform. You have to visit MQL4.com in order to buy any of its product in their market place.
METATRADER 5: The market utility tab is built inside the platform. You can directly buy Forex products through the market tab.
5. Indicators & Analytical Objects
MT4: There are 30 inbuilt indicators pre-installed on MT4 platform.
METATRADER 5: There are 38 inbuilt indicators pre-installed on METATRADER 5 platform. There are 22 analytical objects, and 46 graphical objects added to the platform.
6. Orders
MT4: It has only two (2) market orders, and four (4) pending orders.
METATRADER 5: More order types are included in the platform. There are two (2) market orders, six (6) pending orders, and two (2) stop orders.
7. Expert Advisor
MT4: The MQL code editor and strategy tester are the main utilities used for expert advisor design. Expert advisors are programmed with MQL programming language, and they are faster to compile. It is not possible to transfer expert advisor codes from MT4 to METATRADER 5. Therefore expert advisors designed in MT4 would not work on METATRADER 5.
METATRADER 5: It comes with more utilities for expert advisor design. The strategy tester utility has been upgraded, and a strategy tester agent manager for remote optimization of expert advisors was also added. Expert advisors are designed with C++, and they are slower to compile due to the dynamics of C++ programming language.
8. Interface
MT4: The interface is easier to navigate when compared to METATRADER 5. The one click trading feature, and the drag and drop functionality is included in build 500 version only.
METATRADER 5: There are slight differences on the platform's interface. A search box has been included on the platform as well as a details tab on the market watch window.
9. Trading (Hedging, FIFO, e.t.c.)
MT4: There are no restrictions on any trading method. However broker regulations is implemented on their proprietary MT4 platforms.
METATRADER 5: It does not support hedging of trades, and it also implements the FIFO policy by default.
10. Brokers
MT4: Most brokers deliver their services on MT4.
METATRADER 5: Fewer brokers deliver their services through METATRADER 5 when compared to brokers who deliver their services on MT4.
It is quite obvious that METATRADER 5 has more features when compared to MT4. But why do most Forex traders use MT4 in trading the Forex despite the improved features in METATRADER 5? Here are the reasons.
1. Expert advisors designed with MQL programming language cannot work on METATRADER 5. They cannot also be transferred to METATRADER 5. The only way out is to rewrite the codes in C++.
2. Hedging, and closing of orders irrespective of their positions is not allowed in METATRADER 5 platform. The platform automatically implements NFA rules
These two reasons are the main discouraging facts of METATRADER 5. This is the reason most Forex traders still prefer to trade the Forex with MT4 rather than trading with METATRADER 5.
Forex Trading has great potentials for success and at the same time high possibilities of loosing funds. Success in Forex requires the best resources and skills, which F provides. Keep in touch with our product updates page where we keep you informed of FREE Offers & New Products.
10 DIFFERENCES BETWEEN MT4 AND METATRADER 5
1. Installation
MT4: Installation is simple, and straightforward.
METATRADER 5: Installation is not as simple when compared to MT4. The manufacturer's demo trading server (METAQUOTE) is a default in the opening account phase of the installation. An option to add new trading server from METATRADER 5 for a demo account is also included.
2. Charts/Timeframe
MT4: There are nine (9) timeframes. There are limitations to the number of charts that can be opened at the same time.
METATRADER 5: There are 21 timeframes ranging from 1 minute to 1 month, and unlimited number of charts. One hundred charts can be opened at the same time without limitations.
3. Fundamental Analysis (news trading)
MT4: Forex Economic Calendar is not included in the news tab.
METATRADER 5: The platform has an inbuilt Forex economic calendar tab with features like news event, schedule, impact, forecast, earlier events, e.t.c.
4. Commerce/Market
MT4: The market utility tab is not integrated into the platform. You have to visit MQL4.com in order to buy any of its product in their market place.
METATRADER 5: The market utility tab is built inside the platform. You can directly buy Forex products through the market tab.
5. Indicators & Analytical Objects
MT4: There are 30 inbuilt indicators pre-installed on MT4 platform.
METATRADER 5: There are 38 inbuilt indicators pre-installed on METATRADER 5 platform. There are 22 analytical objects, and 46 graphical objects added to the platform.
6. Orders
MT4: It has only two (2) market orders, and four (4) pending orders.
METATRADER 5: More order types are included in the platform. There are two (2) market orders, six (6) pending orders, and two (2) stop orders.
7. Expert Advisor
MT4: The MQL code editor and strategy tester are the main utilities used for expert advisor design. Expert advisors are programmed with MQL programming language, and they are faster to compile. It is not possible to transfer expert advisor codes from MT4 to METATRADER 5. Therefore expert advisors designed in MT4 would not work on METATRADER 5.
METATRADER 5: It comes with more utilities for expert advisor design. The strategy tester utility has been upgraded, and a strategy tester agent manager for remote optimization of expert advisors was also added. Expert advisors are designed with C++, and they are slower to compile due to the dynamics of C++ programming language.
8. Interface
MT4: The interface is easier to navigate when compared to METATRADER 5. The one click trading feature, and the drag and drop functionality is included in build 500 version only.
METATRADER 5: There are slight differences on the platform's interface. A search box has been included on the platform as well as a details tab on the market watch window.
9. Trading (Hedging, FIFO, e.t.c.)
MT4: There are no restrictions on any trading method. However broker regulations is implemented on their proprietary MT4 platforms.
METATRADER 5: It does not support hedging of trades, and it also implements the FIFO policy by default.
10. Brokers
MT4: Most brokers deliver their services on MT4.
METATRADER 5: Fewer brokers deliver their services through METATRADER 5 when compared to brokers who deliver their services on MT4.
It is quite obvious that METATRADER 5 has more features when compared to MT4. But why do most Forex traders use MT4 in trading the Forex despite the improved features in METATRADER 5? Here are the reasons.
1. Expert advisors designed with MQL programming language cannot work on METATRADER 5. They cannot also be transferred to METATRADER 5. The only way out is to rewrite the codes in C++.
2. Hedging, and closing of orders irrespective of their positions is not allowed in METATRADER 5 platform. The platform automatically implements NFA rules
These two reasons are the main discouraging facts of METATRADER 5. This is the reason most Forex traders still prefer to trade the Forex with MT4 rather than trading with METATRADER 5.
Forex Trading has great potentials for success and at the same time high possibilities of loosing funds. Success in Forex requires the best resources and skills, which F provides. Keep in touch with our product updates page where we keep you informed of FREE Offers & New Products.
Saturday, September 21, 2013
Online forex trading: Of drawdown and recovery
by ’Kunle Adeyer
There is always downtime in all
ramifications of life. It is always a crucial period when survival instincts and strategies come alive to those who want to overcome. My
previous articles have been serially written involving education, live
trading and discipline. But there comes a time when one goes overboard
or something goes wrong. This is the acid test of a forex trader.
Every trader must be in this ‘mess’ once
or many times. Drawdown is simply when your equity or trading fund
falls short of the initial value. It is psychologically disturbing. It
literarily is as if one’s business is sinking. It could still be
tolerated if it is just the trader’s account but when it comes to funds
or client’s account being managed; it is not a funny story or smiling
time for traders.
I can guarantee you as a prospective
trader that you will find yourself or your account in this situation, at
least once, as compared to the late Tai Solarin’s ‘May your road be
rough’. It will definitely be in forex to climb to the top. But for
every problem there is a solution. I once wrote in this column about
recovery plans and management. Recovery of drawdown to equity level or
breakeven point and later profitability is the focus of such trader.
The very first thing is the belief that
you can do it. If the courage or confidence is not there, then there is
no way you can deploy the techniques even in the face of a sure trend.
That is the reason why I proposed that one should start live trading
early after training provided good training has been obtained. This
refines you as a trader. I always tell my trainees that the difference
between me and them is that I have somehow overcome fear and that they
will go places if they surmount the market without fear.
In this quagmire, a trader should deploy
the following. First, is profit management. I have used this weapon a
lot of times to get positive results during drawdown.
A trader who lacks this technique may
not have a backup to rely on. Profit management account gives me the
psychological boost that something is in the kitty and I can always
access, if need be.
The second thing is to adhere strictly
to discipline. With discipline you can ride to the top again. Never be
too much in a hurry to recover. Rely on the adage that a damaged/wounded
skin takes time to heal.
Reduce your lot size in comparison to
earlier ones. In addition, if your stop loss is not in place, never find
it difficult to close your orders at losses to have fund to trade. It
is better than you having a margin call or burn out.
Thirdly, let your
technical skills come alive and be bold to go for your ‘sure’ trade
orders. You may also trade economic news to boost your account. Scalping – that is profiting on short
trades – can help but never scalp too much not to incur the wrath of
your broker if your broker discourages much scalping.
Hedging is another method as proposed in my article dated February 15 in this column.
Thursday, September 19, 2013
Best Forex Trading Indicators - 4 Simple Effective Ones For Bigger Profits
By
Samuel Leslie Berkovits
Here we will look at some of the best Forex Trading indicators
and how you can combine them into a simple robust Forex trading strategy
for long term gains.
No single Forex trading indicator works all the time by itself and the way you combine them is essential. Many traders make the mistake of the thinking the more indicators they combine the better - Wrong!
If you do this the system has too many elements to break; you only need a few and your Forex trading system will be simple and robust in the face of ever changing prices.
Right lets build our Forex trading system and look at some of the best Forex trading indicators to help you build a trend following Forex trading system. First Identify the Trend.
This is obvious by looking at a bar chart but you also want to use moving averages as well. Simple moving averages are great in terms of smoothing out the fluctuations and two great periods to use are first, the 40 day MA to identify the long term trend. Secondly, use the 20 day MA to buy and sell back to in a strong trend and you will find this moving average is excellent for getting in on a trend in motion, with optimium risk / reward. Spotting the Set Ups
We don't have time to cover this in detail here but there are a couple of points that are the key to maximizing profits. Firstly, be patient and only trade high odds set ups and secondly, make sure you trade breaks to new highs and lows all the big trends start and continue from them so you need to trade them.
Bollinger Bands - Check Volatility and Standard Deviation
Ask most traders what standard deviation of price is and you will probably get a blank look but an understanding of standard deviation of price and volatility is something that all forex traders need to know about and if you don't, make part of your forex education and learn about Bollinger Bands.
Bollinger Bands are not used to for market timing - but give you an all round view of volatility price and when you understand this concept, Bollinger Bands can help you in 3 ways:
They can alert you to potential big moves, help set targets and spot market value and entry levels.
Best Forex Trading Indicators for Confirming
When you spot a potential opportunity, you need to confirm the move and make sure price momentum is going the way you wish to trade. There are plenty of momentum indicators but for the last 25 Years I have found the following two the best. There easy to learn and apply, lets take a quick look at them.
The Relative Strength Index (RSI)
A great leading indicator to time your trading signals with. If the RSI supports your view of the market you can use it in strong trends - or when it diverges from the prevailing trend ( from over bought or over sold) to enter trades against the prevailing trend.
The Stochastic Indicator
The best Forex trading indicator of all for better market timing and when combined with the RSI you have a dynamite combination. The stochastic is a simple indicator but is the ultimate timing tool for timing trading signals in my view. If you use stochastic crossovers to confirm your move, you will get the odds on your side.
It's also very effective for timing contrary positions. A stochastic cross, from over bought or oversold levels, against the trend is a highly effective way of getting in on the big contrary trades.
Simple and Effective
There are other great indicators around such as the ADX indicator, MACD and many others but as a blend the above 4 indicators with a bar chart are my best forex trading indicators for profit and they have served me well over the last 25 years.
The indicators are easy to learn, apply and if blended correctly, can add a new dimension to your forex trading strategy.
No single Forex trading indicator works all the time by itself and the way you combine them is essential. Many traders make the mistake of the thinking the more indicators they combine the better - Wrong!
If you do this the system has too many elements to break; you only need a few and your Forex trading system will be simple and robust in the face of ever changing prices.
Right lets build our Forex trading system and look at some of the best Forex trading indicators to help you build a trend following Forex trading system. First Identify the Trend.
This is obvious by looking at a bar chart but you also want to use moving averages as well. Simple moving averages are great in terms of smoothing out the fluctuations and two great periods to use are first, the 40 day MA to identify the long term trend. Secondly, use the 20 day MA to buy and sell back to in a strong trend and you will find this moving average is excellent for getting in on a trend in motion, with optimium risk / reward. Spotting the Set Ups
We don't have time to cover this in detail here but there are a couple of points that are the key to maximizing profits. Firstly, be patient and only trade high odds set ups and secondly, make sure you trade breaks to new highs and lows all the big trends start and continue from them so you need to trade them.
Bollinger Bands - Check Volatility and Standard Deviation
Ask most traders what standard deviation of price is and you will probably get a blank look but an understanding of standard deviation of price and volatility is something that all forex traders need to know about and if you don't, make part of your forex education and learn about Bollinger Bands.
Bollinger Bands are not used to for market timing - but give you an all round view of volatility price and when you understand this concept, Bollinger Bands can help you in 3 ways:
They can alert you to potential big moves, help set targets and spot market value and entry levels.
Best Forex Trading Indicators for Confirming
When you spot a potential opportunity, you need to confirm the move and make sure price momentum is going the way you wish to trade. There are plenty of momentum indicators but for the last 25 Years I have found the following two the best. There easy to learn and apply, lets take a quick look at them.
The Relative Strength Index (RSI)
A great leading indicator to time your trading signals with. If the RSI supports your view of the market you can use it in strong trends - or when it diverges from the prevailing trend ( from over bought or over sold) to enter trades against the prevailing trend.
The Stochastic Indicator
The best Forex trading indicator of all for better market timing and when combined with the RSI you have a dynamite combination. The stochastic is a simple indicator but is the ultimate timing tool for timing trading signals in my view. If you use stochastic crossovers to confirm your move, you will get the odds on your side.
It's also very effective for timing contrary positions. A stochastic cross, from over bought or oversold levels, against the trend is a highly effective way of getting in on the big contrary trades.
Simple and Effective
There are other great indicators around such as the ADX indicator, MACD and many others but as a blend the above 4 indicators with a bar chart are my best forex trading indicators for profit and they have served me well over the last 25 years.
The indicators are easy to learn, apply and if blended correctly, can add a new dimension to your forex trading strategy.
Proper Forex Risk Management
By
Amanda L Stucky
For those involve in foreign exchange, it is important that you
know proper Forex risk management so you can sustain the pressure and
for you to succeed in the long run. When you know what the risk
involved, you will also be able to find ways on how to lower these
risks.
Everyday there are numerous companies and sole traders who exchange currencies on the Forex or foreign exchange. If you are involve in the buying and selling of foreign currencies then you are already participating in spot market. Buying and selling simply means exchanging your currency for another.
To manage the Forex risk, you should know how to use responsibly factors such as leverage, stop loss, lot size and risk reward ratio.
Leverage enables you to use small amount o money to control larger ones. Although this can bring increase your wins, it can also accumulate your losses. So if you're new with Forex exchange, it is best if you work with lower leverage first.
As with stop loss, it serves as your insurance when you are trading. A stop loss can prevent too much loss when exchanging rates.
The risk reward ratio would help you determine whether it is good to trade or if it's better to wait until the next trade. When you know how to work with reward risk ratio, you will still get profits even if there are only 50% chances that you win with the trade.
If you are new to Forex trade there are still things that you should get to know first. You should understand what the difference is with spot market vs. future Forex trading. Although there are risk involve with Forex management, there are several strategies you can use in order to lessen the danger involve. The more you know about these strategies, the more advantageous it is for you.
Everyday there are numerous companies and sole traders who exchange currencies on the Forex or foreign exchange. If you are involve in the buying and selling of foreign currencies then you are already participating in spot market. Buying and selling simply means exchanging your currency for another.
To manage the Forex risk, you should know how to use responsibly factors such as leverage, stop loss, lot size and risk reward ratio.
Leverage enables you to use small amount o money to control larger ones. Although this can bring increase your wins, it can also accumulate your losses. So if you're new with Forex exchange, it is best if you work with lower leverage first.
As with stop loss, it serves as your insurance when you are trading. A stop loss can prevent too much loss when exchanging rates.
The risk reward ratio would help you determine whether it is good to trade or if it's better to wait until the next trade. When you know how to work with reward risk ratio, you will still get profits even if there are only 50% chances that you win with the trade.
If you are new to Forex trade there are still things that you should get to know first. You should understand what the difference is with spot market vs. future Forex trading. Although there are risk involve with Forex management, there are several strategies you can use in order to lessen the danger involve. The more you know about these strategies, the more advantageous it is for you.
Forex pathfinder Thursday, September 19 Tradable News.
UK Retail Sales - 9:30am Paris time (Thursday, September 19)
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| Traded pair | Expected figure | Deviation trigger | ||
| GBPUSD | 0.4 (%) | ±0.4 (%) |
| Buy | GBPUSD | if actual figure is or is above | 0.8 (%) | ||
| Sell | GBPUSD | if actual figure is or is below | 0.0 (%) |
Expected move during first 20 minutes after the release is 20 pips or more.
Review historical charts where the same deviation of at least 0.4 (%) occurred:
UK Retail Sales history of charts.
Once there, set filter to Difference Actual-Forecast >= 0.4 and click "Filter" to see list of charts.
UK Retail Sales - 9:30am Paris time (Thursday, September 19)
--–––––————————————————————–––––--
Review historical charts where the same deviation of at least 0.4 (%) occurred:
UK Retail Sales history of charts.
Once there, set filter to Difference Actual-Forecast >= 0.4 and click "Filter" to see list of charts.
UK Retail Sales - 9:30am Paris time (Thursday, September 19)
--–––––————————————————————–––––--
| Traded currency pair | : | GBPUSD | ||
| Initial spike duration limit | : | 15 seconds | ||
| Initial spike price action threshold | : | 12 pips | ||
| Triggering retracement percentage | : | 35 % | ||
| Retracement duration limit | : | 40 seconds | ||
| Maximum trade hold time after release | : | 10 minutes | ||
| Stop loss | : | 10 pips | ||
| Take profit | : | 10 pips | ||
| Maximum spread | : | 2 pips |
USA Existing Home Sales - 3:00pm Paris time (Thursday, September 19)
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--–––––————————————————————–––––--
| Traded pair | Expected figure | Deviation trigger | ||
| USDJPY | 5.25 (M) | ±0.40 (M) |
| Buy | USDJPY | if actual figure is or is above | 5.65 (M) | ||
| Sell | USDJPY | if actual figure is or is below | 4.85 (M) |
Expected move during first 30 minutes after the release is 30 pips or more.
Review historical charts where the same deviation of at least 0.40 (M) occurred:
USA Existing Home Sales history of charts.
Once there, set filter to Difference Actual-Forecast >= 0.40 and click "Filter" to see list of charts.
USA Existing Home Sales - 3:00pm Paris time (Thursday, September 19)
--–––––————————————————————–––––--
Review historical charts where the same deviation of at least 0.40 (M) occurred:
USA Existing Home Sales history of charts.
Once there, set filter to Difference Actual-Forecast >= 0.40 and click "Filter" to see list of charts.
USA Existing Home Sales - 3:00pm Paris time (Thursday, September 19)
--–––––————————————————————–––––--
| Traded currency pair | : | USDJPY | ||
| Initial spike duration limit | : | 30 seconds | ||
| Initial spike price action threshold | : | 12 pips | ||
| Triggering retracement percentage | : | 40 % | ||
| Retracement duration limit | : | 80 seconds | ||
| Maximum trade hold time after release | : | 15 minutes | ||
| Stop loss | : | 10 pips | ||
| Take profit | : | 10 pips | ||
| Maximum spread | : | 2 pips |
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