Why You Should Treat Forex Trading as a Business

If you trade the forex market you will undoubtedly be aware that it is a high risk venture. Most traders who trade currencies end up losing money. Unfortunately, some traders end up losing a substantial part of their net worth. By Eric Martin

Many traders, especially new traders are attracted to forex because they see brokers offering "500 to 1 leverage" and in some cases even higher amounts. It is a common belief amongst new traders that they can use this leverage to generate a substantial amount of wealth. This belief nearly always ends in tears.

To be a successful forex trader, it is imperative that you treat trading like a business. It is unlikely that you could put $50 in to a business and turn it into $20,000 in a short frame of time. Granted, there are exceptions, but they are EXTREMELY few and far between.
You need to apply this same theory to forex trading. One of the biggest reasons traders lose money is having an account size that is too small.

One of the major advantages is forex is that you can effectively borrow as much money as you like from your broker. However, it is important to remember that borrowing money to trade will increase your profits, but it will also increase your losses.
There are no universal rules to state how much you should borrow. Many new traders should start off borrowing very little, if anything. Of course, it does depend on the type of strategy that you use.
If you have a $10,000 trading account, most brokers would allow you to open positions to the value of at least $500,000. If you bought a USD pair, this would be 50:1 leverage. The position size is 50 times the size of your account.

It would not take much of a price movement in the wrong direction to cause a significant loss to your account.
Many new traders start with a small account balance. The same principle can be applied to a $100 account trading a $5,000 position.
The smallest position allowed by many brokers is often $10,000, yet they may still allow you to open an account with $100.

The brokers don't mind, they know that 99% of the clients who do this will blow their account.
The point I am trying to get across is the one of being realistic. Treat trading as if it is a business. Aim for realistic returns. Think about the stock market or mutual funds. They often earn less than 10% per year on average. If you can make 30% per year trading forex, that is significantly higher!
Don't expect to make $1,000 a month from your $100 account. It almost certainly will NOT happen.

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How To Trade Trends With Ichimoku Clouds

The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a versatile indicator that defines support and resistance, identifies trend direction, gauges momentum and provides trading signals. Ichimoku Kinko Hyo translates into "one look equilibrium chart". With one look, chartists can identify the trend and look for potential signals within that trend. The indicator was developed by Goichi Hosoda, a journalist, and published in his 1969 book. Even though the Ichimoku Cloud may seem complicated when viewed on the price chart, it is really a straight forward indicator that is very usable. It was, after all, created by a journalist, not a rocket scientist! Moreover, the concepts are easy to understand and the signals are well-defined.

How To Calculate Ichimoku Clouds

Four of the five plots within the Ichimoku Cloud are based on the average of the high and low over a given period of time. For example, the first plot is simply an average of the 9-day high and 9-day low. Before computers were widely available, it would have been easier to calculate this high-low average rather than a 9-day moving average. The Ichimoku Cloud consists of five plots:

This tutorial will use the English equivalents when explaining the various plots. The chart below shows the Dow Industrials with the Ichimoku Cloud plots. The Conversion Line (blue) is the fastest and most sensitive line. Notice that it follows price action the closest. The Base Line (red) trails the faster Conversion Line, but follows price action pretty well. The relationship between the Conversion Line and Base Line is similar to the relationship between a 9-day moving average and 26-day moving average. The 9-day is faster and more closely follows the price plot. The 26-day is slower and lags behind the 9-day. Incidentally, notice that 9 and 26 are the same periods used to calculate MACD.

Analyzing the Cloud

The Cloud (Kumo) is the most prominent feature of the Ichimoku Cloud plots. The Leading Span A (green) and Leading Span B (red) form the Cloud. The Leading Span A is the average of the Conversion Line and the Base Line. Because the Conversion Line and Base Line are calculated with 9 and 26 periods, respectively, the green Cloud boundary moves faster than the red Cloud boundary, which is the average of the 52-day high and the 52-day low. It is the same principle with moving averages. Shorter moving averages are more sensitive and faster than longer moving averages.

There are two ways to identify the overall trend using the Cloud. First, the trend is up when prices are above the Cloud, down when prices are below the Cloud and flat when prices are in the Cloud. Second, the uptrend is strengthened when the Leading Span A (green cloud line) is rising and above the Leading Span B (red cloud line). This situation produces a green Cloud. Conversely, a downtrend is reinforced when the Leading Span A (green cloud line) is falling and below the Leading Span B (red cloud line). This situation produces a red Cloud. Because the Cloud is shifted forward 26 days, it also provides a glimpse of future support or resistance.
Chart 2 shows IBM with a focus on the uptrend and the Cloud. First, notice that IBM was in an uptrend from June to January as it traded above the Cloud. Second, notice how the Cloud offered support in July, early October and early November. Third, notice how the Cloud provides a glimpse of future resistance. Remember, the entire Cloud is shifted forward 26 days. This means it is plotted 26 days ahead of the last price point to indicate future support or resistance.

Chart 3 shows Boeing (BA) with a focus on the downtrend and the cloud. The trend changed when Boeing broke below Cloud support in June. The Cloud changed from green to red when the Leading Span A (green) moved below the Leading Span B (red) in July. The cloud break represented the first trend change signal, while the color change represented the second trend change signal. Notice how the Cloud then acted as resistance in August and January.

Trend and Signals

Price, the Conversion Line and the Base Line are used to identify faster, and more frequent, signals. It is important to remember that bullish signals are reinforced when prices are above the cloud and the cloud is green. Bearish signals are reinforced when prices are below the cloud and the cloud is red. In other words, bullish signals are preferred when the bigger trend is up (prices above green cloud), while bearish signals are preferred when the bigger trend is down (prices are below red cloud). This is the essence of trading in the direction of the bigger trend. Signals that are counter to the existing trend are deemed weaker. Short-term bullish signals within a long-term downtrend and short-term bearish signals within a long-term uptrend are less robust.

Conversion-Base Line Signals

 Chart 4 shows Kimberly Clark (KMB) producing two bullish signals within an uptrend. First, the trend was up because the stock was trading above the Cloud and the Cloud was green. The Conversion Line dipped below the Base Line for a few days in late June to enable the setup. A bullish crossover signal was triggered when the Conversion Line moved back above the Base Line in July. The second signal occurred as the stock moved towards Cloud support. The Conversion Line moved below the Base Line in September to enable the setup. Another bullish crossover signal was triggered when the Conversion Line moved back above the Base Line in October. Sometimes it is hard to determine exact Conversion Line and Base Line levels on the price chart. For reference, these numbers are displayed in the upper left hand corner of each Sharpchart. As of the January 8 close, the Conversion Line was 62.62 (blue) and the Base Line was 63.71 (red).

Chart 5 shows AT&T (T) producing a bearish signal within a downtrend. First, the trend was down as the stock was trading below the Cloud and the Cloud was red. After a sideways bounce in August, the Conversion Line moved above the Base Line to enable the setup. This did not last long as the Conversion Line moved back below the Base Line to trigger a bearish signal on September 15th.

Price-Base Line Signals

Chart 6 shows Disney producing two bullish signals within an uptrend. With the stock trading above the green cloud, prices moved below the Base Line (red) to enable the setup. This move represented a short-term oversold situation within a bigger uptrend. The pullback ended when prices moved back above the Base Line to trigger the bullish signal.

Chart 7 shows DR Horton (DHI) producing two bearish signals within a downtrend. With the stock trading below the red cloud, prices bounced above the Base Line (red) to enable the setup. This move created a short-term overbought situation within a bigger downtrend. The bounce ended when prices moved back below the Base Line to trigger the bearish signal.

Signal Summary

This article features four bullish and four bearish signals derived from the Ichimoku Cloud plots. The trend-following signals focus on the Cloud, while the momentum signals focus on the Turning and Base Lines. In general, movements above or below the cloud define the overall trend. Within that trend, the Cloud changes color as the trend ebbs and flows. Once the trend is identified, the Conversion Line and Base Line act similar to MACD for signal generation. And finally, simple price movements above or below the Base Line can be used to generate signals.
Bullish Signals:

• Price moves above Cloud (trend)
• Cloud turns from red to green (ebb-flow within trend)
• Price Moves above the Base Line (momentum)
• Conversion Line moves above Base Line (momentum)

Bearish Signals:

• Price moves below Cloud (trend)
• Cloud turns from green to red (ebb-flow within trend)
• Price Moves below Base Line (momentum)
• Conversion Line moves below Base Line (momentum)

Conclusions

The Ichimoku Cloud is a comprehensive indicator designed to produce clear signals. Chartists can first determine the trend by using the Cloud. Once the trend is established, appropriate signals can be determined using the price plot, Conversion Line and Base Line. The classic signal is to look for the Conversion Line to cross the Base Line. While this signal can be effective, it can also be rare in a strong trend. More signals can be found by looking for price to cross the Base Line (of even the Conversion Line).
It is important to look for signals in the direction of the bigger trend. With the Cloud offering support in an uptrend, traders should also be on alert for bullish signals when prices approach the Cloud on a pullback or consolidation. Conversely, in a bigger downtrend, traders should be on alert for bearish signals when prices approach the Cloud on an oversold bounce or consolidation.
The Ichimoku Cloud can also be used in conjunction with other indicators. Traders can identify the trend using the Cloud and then use classic momentum oscillators to identify overbought or oversold conditions.

The Ichimoku Cloud indicator is available on SharpCharts by selecting it as an indicator in the "Overlay" drop-down box. Default settings are 9 for the Conversion Line, 26 for the Base Line and 52 for the Leading Span B. The Leading Span A is based on the Conversion Line and Base Line. The number for the Base Line (26) is also used to move the Cloud forward (26 days). These numbers can be adjusted to suit individual trading and investing styles. Sometimes it is necessary to add extra bars to the chart when increasing the Base Line, which also increases the forward movement of the Cloud.

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Forexpathfinder indicator - After Government Shutdown USA Nonfarm Payroll and Other To Be Release Today (Friday, October 18)

Canada Core CPI    -    8:30am NY time   (Friday, October 18)

Change in the price of goods and services purchased by consumers also called Bank of Canada Core CPI, CPI Ex Volatile Items, excluding the 8 most volatile items is usually released monthly, about 20 days after the month ends; When Actual greater-than Forecast is Good for currency; Volatile items account for about a quarter of CPI but they tend to be very volatile and distort the underlying trend. The Bank of Canada pays most attention to the Core data - so do traders. This is among the few non-seasonally adjusted numbers reported on the calendar, as it's the calculation most commonly reported.













Important of It.
Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate;

	Traded pair	Expected figure	Deviation trigger
	USDCAD	0.2 (%)	±0.3 (%)

	Buy	USDCAD	if actual figure is or is below	-0.1 (%)
	Sell	USDCAD	if actual figure is or is above	0.5 (%)

Expected move during first 20 minutes after the release is 20 pips or more.


  Forexpathfinder Signals Trade Plan
 

	Traded currency pair	:	USDCAD
	Initial spike duration limit	:	15 seconds
	Initial spike price action threshold	:	10 pips
	Triggering retracement percentage	:	40 %
	Retracement duration limit	:	40 seconds
	Maximum trade hold time after release	:	15 minutes
	Stop loss	:	10 pips
	Take profit	:	10 pips
	Maximum spread	:	2 pips

1. If between 08:30:00am and 08:30:15am, so during the first 15 seconds you see USDCAD move up or down by 10 pips or more, then enter in the direction of the initial spike at the very first 40% retracement if it doesn't take more than 40 seconds (till 08:30:40am) – and if spread is at 2 pips or less. Set stop/loss at 10 pips, and set take/profit at 10 pips immediately.
2. If the move either up or down was less than 10 pips during the first 15 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade.
3. If by 08:45:00am, so 15 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.

Forexpathfinder Trade Plan

USA Nonfarm Payroll    -    8:30am NY time   (Friday, October 18)

PLEASE MIND GOVERNMENT SHUTDOWN! THIS EVENT CAN BE DELAYED!

	Traded pair	Expected figure	Deviation trigger
	USDJPY	179 (k)	±75 (k)

	Buy	USDJPY	if actual figure is or is above	254 (k)
	Sell	USDJPY	if actual figure is or is below	104 (k)

Expected move during first 15 minutes after the release is 50 pips or more.

Details:

 USA Nonfarm Payroll    -    8:30am NY time   (Friday, October 18)

--–––––————————————————————–––––--

	Traded currency pair	:	USDJPY
	Initial spike duration limit	:	30 seconds
	Initial spike price action threshold	:	25 pips
	Triggering retracement percentage	:	30 %
	Retracement duration limit	:	90 seconds
	Maximum trade hold time after release	:	15 minutes
	Stop loss	:	15 pips
	Take profit	:	15 pips
	Maximum spread	:	3 pips

1. If between 08:30:00am and 08:30:30am, so during the first 30 seconds you see USDJPY move up or down by 25 pips or more, then enter in the direction of the initial spike at the very first 30% retracement if it doesn't take more than 90 seconds (till 08:31:30am) – and if spread is at 3 pips or less. Set stop/loss at 15 pips, and set take/profit at 15 pips immediately.
2. If the move either up or down was less than 25 pips during the first 30 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade.
3. If by 08:45:00am, so 15 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.

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Forexpathfinder News Trade Plan (Thursday, October 17)

What is news trading? How does forex news trading work?

Forexpathfinder News Trading can be extremely profitable if you have an understanding of fundamental analysis and have access to low latency forex trading software. Sounds too complex or expensive? Do not worry, Forexpathfinder analyst will help you to identify high-probability tradable economic news reports and advise on the trading strategy. You find all details on Here and if you want make pips easier you can find additional tools at Forexpathfinder Tactical Squad.

                                UK Retail Sales - 4:30am NY time (Thursday, October 17)

	Traded pair	Expected figure	Deviation trigger
	GBPUSD	0.5 (%)	±0.4 (%)

	Buy	GBPUSD	if actual figure is or is above	0.9 (%)
	Sell	GBPUSD	if actual figure is or is below	0.1 (%)

Expected move during first 20 minutes after the release is 20 pips or more.

 Note

	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

1. If between 04:30:00am and 04:30:15am, so during the first 15 seconds you see GBPUSD move up or down by 12 pips or more, then enter in the direction of the initial spike at the very first 35% retracement if it doesn't take more than 40 seconds (till 04:30:40am) – and if spread is at 2 pips or less. Set stop/loss at 10 pips, and set take/profit at 10 pips immediately.
2. If the move either up or down was less than 12 pips during the first 15 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade.
3. If by 04:40:00am, so 10 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.

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High Forex Leverage Can Make Or Mar Your Profitability

Article Summary: Many Forex strategies focus on entry and exit signals of a trade. This article illustrates how traders can take the same signals, yet arrive at different profit amounts. Therefore, determining an appropriate amount of effective leverage is crucial to a comprehensive Forex trading plan.

Many traders focus all of their energy on finding the right entry and exit signal but still end up losing in the end. Today, I want to illustrate how two traders (Bob and Ed) place the same trading signals in their Forex account, yet end up with different equity amounts.

To keep the illustration simple, let’s look at a two trade series. Each trade has a 100 pip stop loss and a 150 pip profit target. The traders will lose on the first trade and win on the second trade. When you see the results on a score card, it would look something similar to this:

Trade results in pips

At the surface level, it looks like this trader is doing well. They are maintaining a positive risk to reward ratio, they have a good win ratio, and the number of pips collected on this series of two trades are positive 50 pips.

Now look at what happens to the account’s equity when Bob aggressively over leverages his account while Ed uses more conservative amounts of leverage.

Trader Bob

Starting Capital - $10,000

Account is set to 50:1 leverage. He thinks he is conservative and implements 40 times effective leverage.

	Trade #	Trade Size	Value per Pip	Trade Result	Profit/Loss	Acct Equity
	Trade 1	400,000	40	-100	-4000	6,000
	Trade 2	240,000	24	150	3600	9,600

Hypothetical results for illustrative purposes only.

Notice how Bob’s two trade sequence netted him +50 pips yet he lost $400 in his account. Obviously, the second trade had a much smaller trade size than the first, but when you over-leverage your Forex account, any losing trade damages your capital base to the point where you need to change your trade size or deposit more funds.

Trader Ed

Starting Capital - $10,000

Account is set to 50:1 leverage. Ed has gone through our Forexpathfinder EDU training materials and wanted to trade conservatively. He determined the appropriate amount of effective leverage for him was 5 times.

	Trade #	Trade Size	Value per Pip	Trade Result	Profit/Loss	Acct Equity
	Trade 1	50,000	5	-100	-500	9,500
	Trade 2	47,000	4.7	150	705	10,205

Hypothetical results for illustrative purposes only.

Ed placed the same trades as Bob and had the same starting account balance as Bob, but Ed implemented a more conservative amount of leverage. His trade sizes were 1/8 the size of Bob’s yet:

• Ed ended up with higher equity relative to Bob
• Ed’s net profit/loss (P/L) was positive while Bob’s P/L was negative

Two points to take away from this illustration.

1. When faced with a losing trade, high degrees of leverage destroy your capital base forcing you to change your future trade sizes or deposit more funds.
2. When using conservative amounts of leverage, your equity P/L tracks your net pips P/L

Though we place trades in hopes of it working out in our favor, we must also be prepared if it doesn’t. Part of that preparedness is a result of determining an appropriate amount of effective leverage. At DailyFX, we talk about using less than 10 times effective leverage. That way, when you are wrong on a trade, you still have the majority of your account capital remaining.

Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education.

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This Week Major Tradable Indicators - Online Forex Trading.

1. UK Claimant Count Change and Unemployment rate: Wednesday, 8:30. Britain’s unemployment rate narrowed unexpectedly in July to 7.7% from 7.8% in the preceding month, as the number of jobless citizens dropped by 24,000 to 2.487 million, the lowest jobless rate since September-November 2012. This was another indicator of the renewed strength in UK’s job market. Investors project that the job market improvement will continue and that the BOE will raise rates in December 2014. Bank of England Governor Mark Carney estimated that about 750,000 jobs would need to be added over the next three years for unemployment to fall to 7%. The number of jobless Britons is expected to decline by 24,300, while unemployment rate is predicted to remain unchanged at 7.7%.

2. UK Claimant Count Change and Unemployment rate: Wednesday, 8:30. Britain’s unemployment rate narrowed unexpectedly in July to 7.7% from 7.8% in the preceding month, as the number of jobless citizens dropped by 24,000 to 2.487 million, the lowest jobless rate since September-November 2012. This was another indicator of the renewed strength in UK’s job market. Investors project that the job market improvement will continue and that the BOE will raise rates in December 2014. Bank of England Governor Mark Carney estimated that about 750,000 jobs would need to be added over the next three years for unemployment to fall to 7%. The number of jobless Britons is expected to decline by 24,300, while unemployment rate is predicted to remain unchanged at 7.7%.


3.  US Unemployment Claims: Thursday, 12:30. The number of people applying for U.S. unemployment benefits soared by 66,000 last week to a seasonally adjusted 374,000. But the reading was skewed due to corrections in California and job cuts resulting from the government shutdown. However all in all the US labor market conditions are improving, despite recent volatility. A decline to 357,000 is expected now.

4. US Philly Fed Manufacturing Index: Thursday, 14:00. Factory activity in the U.S. mid-Atlantic region edged up to a 2-1/2-year high in September, reaching 22.3 from 9.3 in August. The reading was well above the 10.2 points anticipated by analysts. The gain occurred due to increase optimism about the near future. Respondents were also unusually optimistic, with the six-month business conditions index jumping to 58.2, the highest since September 2003, from 38.9 in August. A prior release from the Institute for Supply Management was also positive, showing the national factory sector grew at its fastest clip in more than two years in August. Philadelphia area manufacturing index is expected to decline to 15.4.

5.  Chinese GDP: Friday, 2:00. The world’s no. 2 economy is expected to show stronger growth in Q3: 7.8%. Growth stood on 7.5% in Q2. While many have doubts about the quality of Chinese data, this figure is closely watched.

6.  Haruhiko Kuroda speaks: Friday, 6:35. BOE Governor Haruhiko Kuroda will speak in Tokyo. He will probably address the US shutdown and its possible effects on the Japanese economy. His words will cause volatility in the markets.




*All times are GMT.

Trade Forex Like a Pro Make $1500 Monthly

Trade Forex Like a Pro- Revealed the secret of the floor traders, How you will be successful trading forex using price. This is proven method tested that is making over $1,250 Monthly. No sorry, no complicated calculation. This is as simple as "ABC" B

New Zealand CPI q/q - Tradable Indicator.

New Zealand CPI q/q is Change in the price of goods and services purchased by consumers;
 Released quarterly about 18 days after the about 18 days after the quarter ends;
 This is extremely late relative to inflation data from other countries, but it's the primary gauge of consumer prices and tends to create hefty market impacts.

 Why Traders Care
Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate; The average price of various goods and services are sampled and then compared to the previous sampling nevertheless it is coming up 5:45pm NY time  (Tuesday, October).

How To Trade New Zealand CPI q/q

Traded pair	Expected figure	Deviation trigger
	NZDUSD	0.9 (%)	±0.4 (%)

	Buy	NZDUSD	if actual figure is or is above	1.3 (%)
	Sell	NZDUSD	if actual figure is or is below	0.5 (%)

Expected move during first 30 minutes after the release is 40 pips or more.


 New Zealand CPI q/q  will be next release on Jan 20, 2014

Enjoy your pips.


Trade Forex Like a Pro Make $1500 Monthly
Trade Forex Like a Pro- Revealed the secret of the floor traders, How you will be successful trading forex using price. This is proven method tested that is making over $1,250 Monthly. No sorry, no complicated calculation. This is as simple as "ABC"D