Forex Trading: The Most Common Flaws

Flaws due to multi indicators and due to the principle of confluence:

Many traders are very much attracted to the sophistication offered by the multi indicators and use them in their forex trading systems. Many of the confluence system indicators show the price movement and in no way adds any value to the trade. Due to this, the traders either end up over bought or over sold technical indicators like the stochastic, momentum indicators, candle stick chart pattern recognition, Bollinger band breaks out even neural networks which are supposed to be artificial intelligent systems. The technical indicators just show signals which are similar to buy or sell or hold, making the signal generated to be correct. Theoretically it sounds good but in reality to arrive at a conclusion might be difficult. As a result the traders are confused in making a right decision. They either enter too late or too early or remain still without being able to make a decision to enter the market. The major flaw is due to the use of useless trading system which does not serve the purpose to make profits, but confuses the traders and complicates the forex trading until the trader loses.

Another dangerous flaw found in forex trading is of an emotional nature interwoven into the process. It is fear and greed of the trader. A profitable forex trade can lead to exuberance and over joy, but this is the time when greed comes in and crosses the aspects of risk management. When a trader is hooked to winning, out of greed he over-rides all aspects to see more and more profits, only to see them crash to earth. They wait for the prices to regain, but in dismay may some time and with worst possible losses. This is the time when fear crops up and paralyses the trader not making him to open up any position. Hence while trading, the trader should not override the emotional side of trading, stick to discipline of the trade which can prevent them from committing the flaw of forex trading.

Another kind of flaw can happen when the trader is an unconcerned person or the one who is lazy, or with no drive to gain profits or feels the need to be profitable. These people would have entered into forex trading due to hearing it as an easy game. For them it is not a trade which involves skill, trade management, preparation and re-investment. It is a fun game for them, where loses do not make any difference to them. Such persons make a wrong footing, with a wrong objective.

Flaws in forex trading due to the inadequate knowledge of the trader:

Some of the losers start with good purpose in the trade. Even though they had gained some knowledge from here and there they might find it difficult to apply them practically in the trade. Inadequate knowledge might be the major flaw which stops them from achieving success.

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Forex Profits by buying and selling at the same time?

This article is one of a series which looks at the advantages and weaknesses of trading using the hedged, grid trading system to trade volatile markets.

We will look at how money can be made by breaking a number of trading truths or principles; * cut your losses and let your profit run and * there is nothing to gained by entering into buy and sell deals at the same time.

The hedged grid trading system uses the principle that one should be able to cash in at a gain no matter which way the market moves. No stops are therefore required at all. The only way this is logically possible is that one would have a buy and sell active at the same time. Most traders will say that that is trading suicide but let’s take some to look at this more closely.

Let’s say that a trader enters the market with a buy and sell active when a currency is at a level of say 100. The price then moves to 200. The buy will then be positive by 100 and the sell will be negative by 100. At this point we start breaking trading rules. We cash in our positive buy and the gain of 100 goes to our account. The sell is now carrying a loss of -100.

The grid system requires one to make sure that cash in on any movement in the market. To do this one would again enter into a buy and a sell transaction. Now, for convenience, let’s assume that the price moves back to level 100.

The second sell has now gone positive by 100 and the second buy is carrying a loss of -100. According to the rules one would cash the sell in and another 100 will be added to your account. That brings the total cashed in at this point to 200.

Now the first sell that remained active has moved from level 200 where it was -100 to level 100 where it is now breaking even.

The 4 transactions added together now magically show a gain:- 1st buy cashed in +100, 2nd sell cashed in +100, 1st sell now breaking even and the 2nd buy is -100. This gives an overall a gain of 100 in total. We can liquidate all the transactions and have some champagne.

There are many, many other market movements that turn this strange “buy and sell at the same time” activity into gains. These will be covered in future articles and are covered in a free grid trading course which is available at the expert-4x.com website for those traders whose curiosity has been aroused.

There will be more on the hedged grid trading articles to be issued regularly. Please watch this site.

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How to choose smart Stop Loss in Forex Trading

Here is step by step guide:

1. If price is close to recent high or low then place SL 5-10 pips above or below that point. This is very important. Prices do go back to test recent highs and lows and we need to set SL as per the recent price action. Trading on daily chart is bit tricky where such SL can be even 30-40 pips more on top of your static 100 pip SL.

2. Another point to take care is that don’t place SL on important boundary numbers such as 00 or 50 mark. These points are tested often and you can easily be stopped out.

3. Place your stop loss on odd numbers excluding 1 and 9. Never place SL on even numbers.


Believe It or Not!!!

Let me surprise some of you by saying that Brokers HUNT for your SL. That’s true. Forex is unlike Dow where everything is run by one organization and prices don’t vary from broker to broker (those broker makes money by giving you a worse fill than you would expect + commissions). Brokers in Forex can manipulate prices as they like and hence they go after your SL.

Now why brokers will want to you to loose?? Well every time you open a position, a broker opens an opposite position. So when you loose they win. They also want you trade more often, since they make money either in commission or spreads (or both). The only way they can force you to trade again is to stop you out.

Why you think brokers give out free market research and trading ideas?? If all of their traders are trading the same way then it is easier for them to take them out.

I am sure that some people would disagree (the ones working for broker J ) but it is something to think about.

So How To Beat The Brokers:

Simple, don’t place any Stop Loss. That’s right. It is not a typo. What you need is a Mental SL. You should know at price you will take your losses and set up alarms on your trading station when the price reach close to the mental SL you had in place. This can be challenging for some people but if you are lucky enough to get this working then there is nothing like it.

Hope this helps you in placing better SL from now on.

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Learning the Ropes of Forex trading and Getting Ahead of the Game Early On

In the world of cut-throat business, it pays to know your way around. And in the world of forex trading it pays to know the market, the players and the stakes. In forex trading, you need to know what you’re looking at – the value of the currency you’re trading, the factors that affect the value of your currency, the trading strategies and the market trends.

Fundamental to forex trading is research. But as we are talking about big bucks here, a good forex trading course would be helpful.

Why Go for a Trading Course

A Forex trading course teaches you how to predict or chart the movements of the market as well as the perfect time to buy and sell a commodity. It familiarizes you with the basic terminologies and the process of trading.

Because forex trading is done in real time and decisions are done on the spot, a trader should be emotionally equipped and prepared to handle the demands, challenges and the stress of the market. And these, one can learn in a forex trading education.

What To Look For in Forex Trading Courses

The Basics. A god forex trading education should include in its program the basics on margins, types of orders and leveraging as these are essential in the forex market transactions. It should teach the basic terminologies, the types of analyses being used, the software and tools and other such important things as charting and leverage. These are essential as the trader learns when to cut back and minimize his losses as well as gain profit.

Analysis. It should also teach you how to analyze common mistakes and at the same time, the ways to avoid such mistakes. Basic to a forex trading course is a detailed discussion on doing technical and fundamental analysis and tools.

Values. More than the theories and the basics involved, a good forex trading education should teach you proper money management and the development of a proper trading disposition and psychology. As the stakes are upped, a trader may become too emotionally involved. It is important that a forex trading course develops the appropriate values needed in money trading, such as discipline, patience and commitment.

Experience. A good forex trading course should provide real life experience through apprenticeship. There is no better teacher than experience, they say, and as forex trading is as real as it can get, forex courses should offer avenues where the student can practice trading. Some courses have live conference rooms or boards where the trader can learn to trade in real time or, in some cases, in a simulated environment. These experiences should also have a one-on-one feedback and forums for discussion and exchange of information and lessons.

For those who’d like to get a good grasp of the market and the rules of the game, there are online sites offering courses and workshops on forex trading. These sites offer courses on risk and money management, trading strategies, technical analysis, market trends and networking. There are also tutorials on the latest softwares and tools being used. There are also online sites that offer lifetime membership and support. Some online schools allow their students to retake the course for updates on the newest trends and strategies. You can try www.trainingacademy.com, www.realtimeforex.com, www.go-forex.net, www.forexmentor.com and www.fxcm.com.

Innovations

With the advent of the Internet, there’s already online forex trading, a system that allows corporations and players in the game to do business virtually. With online forex trading, one can check and monitor the value of the currencies, and even trade directly on the internet. It offers trading of almost 15 currencies, and with the growing number of online traders, it spells more possibilities and more earnings.

Of course, nothing beats the real thing. And a successful forex trader’s skill and knowledge is developed with continued experience. A forex trading education may or may benefit you, but it sure can spell a difference. With the forex market’s volatile environment and fast-paced transactions, one must be fully-equipped with the appropriate tools, knowledge, skill and disposition. The key here is to know the market. Of course, don’t forget to read up on the market, learn how to compare the currency values and generally become a better money manager.

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Learn How You can Make Gains from Using the Forex trading Grid Technique

The most important part of how to make money using the no stop, hedged, Forex trading strategy will now be covered. In the preceding articles in this series we reviewed trading without stops, not being concerned about which way the price moves and places to cash in on profitable transactions. We are now going to show how you would make money buying and selling simultaneously using the grid strategy.

The no stop, hedged currency trading grid system uses the rule that one should be able to close a transaction at a gain no matter which way the market moves. The only way this is logically possible is that one would have a buy and a sell transaction active simultaneously. Most traders will say that doing this is not recommended but let’s look at this in more detail.

Assuming a grid with grid gaps of 100 pips. We are going to use the simplest formation to show the principles involved. This formation is the 100% retractment formation where the price goes up to a grid level and then returns back to the starting grid level. Regrettably things become quite mathematical from here. We are also ignoring broker spreads to keep things simple.

Let us say that a trader enters the market with a buy (buy 1) and sell (sell 1) deal active when a currency is at a level of say 1.0100. The price then goes to level 1.0200. The buy will then be positive by 100 pips. The sell will be negative by 100 pips. Now we would cash in our positive deal and bank our 100 pips. The sell is now however is carrying a loss of -100 pips. The grid system requires one to ensure that the trader can cash in on any movement in the Forex market. To do this one would again enter into a buy (buy 2) and a sell (sell 2) deal at this level (level 1.0200).

Now, for convenience let us say that the price moves back to level 1.0100 (the starting point).

The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is making a loss of -100 pips. According to the grid trading rules you would cash the sell (sell 2) in and another 100 pips will be added to your account. That brings the grand total cashed in at this point to 200 pips (buy 1 and sell 2). At this stage the first sell that is active has moved from level 1.0200 where it was -100 to level 1.0100 where it is now breaking even.

The 4 transactions added together now incredibly show a gain:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. This gives an overall a gain of 100 pips in total. We can liquidate all the deals and have some champagne as we have made a profit of 100 pips.

Please make sure you understand the mathematics behind the activities discussed above. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept.

This formation is the 100% retracement formation where the price goes up to a grid level and then returns back to the starting grid level and results in a nice profit for the forex trader. There are many other market movements that turn this strange Buy and Sell at the same time activity into profits. The next article will cover the 50% retractment formation which produces the same amount of profit.

There will be much more on the no stop, hedged grid trading system in future articles in this directory. Do not miss them, whatever you do.

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Trading Forex Right in the Comforts of Your Own Home

Trading in financial institutions is one of the best ways to earn money. It is also one of the most promising career choices that people make today. With the opportunity to earn a lot of money, more and more people who are interested in trading in the financial institution have left their jobs to get a piece of the action in the financial market.

Today, the Forex market is the best choice for people who are considering making a career out of trading in the financial market. Besides, who wouldn’t want to trade in the largest and the most liquid market in the planet which involves all the countries in the world?

The Forex market operates 24 hours a day with currency exchanges that can go as high as 2 trillion dollars each trading day. Also, it is the most liquid market in the world which also means that traders can enter the market anytime they want and get their profits easily.

In the past, Forex was limited to large financial institutions and multinational companies. Only banks, central banks and large companies were allowed to participate in the Forex market. However, thanks to modern communications technology and high speed internet and decreased sanctions in the Forex market, ordinary people can now trade and participate in the world’s largest financial market.

Because the Forex market is now open to everyone and because it is a very profitable industry, online Forex brokerage firms began improving their services and accessibility. They now also designed different trading platforms suitable for different Forex traders. Not only has online Forex brokerage firms made their trading platforms accessible, they also began and still continuing to improve their software.

They also allow people to register with a Mini Forex account that can let them trade with a minimum margin of 100 dollars only or even less.

If you are interested in joining the Forex market, you only have to have a few things to get you started.

First, you need a computer with a high-speed internet connection. The high-speed internet connection is very important for an effective trade to work. It will also minimize the risk of slippages that can cause you to lose money. So, if your area doesn’t have any high-speed internet connection available, you should forget about trading in the Forex market online. This will only make you lose a lot of money.

Second, you need to choose which Forex brokerage company you should hire. These companies will provide you with the Forex trading platform that you can easily download and install in your computer. The Forex trading platform is simply a software program that is essential for an online Forex trader.

It is important for you to choose a trading platform that you are comfortable using. You should also make sure that the trading platform you choose provides accurate and up to date real time information, security, and stability.

It is also recommended that the trading platform you choose should provide information on at least 16 currency pairs, execute orders with just a click of the mouse, have charting tools to perform technical analysis, and should also have a recording feature that will store your trading history.

With all these features, you can really improve the way you trade in the Forex market and also minimize the risk of losing money.

Look for a Forex trading platform that is simple to use and easy to understand. If you wish to know more about the Forex trading platform that a Forex trading brokerage firm offers, you can consider opening a dummy or practice account. By doing this, you will never risk real money on trades while learning the ropes.

You will also get hands on experience on the Forex trading platform and really determine if the platform is for you or not.

Risk management is also a very important feature that you should look for. If it takes too long to select a risk management order, you should consider looking for another Forex trading platform.

These are some of the things you should look for in a Forex trading platform. With a little practice in the dummy account, you can be sure that you can get the hang of it in no time at all and start making money through online Forex trading with a reliable Forex trading platform.

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Information that You Should Always Watch Out For

Getting the necessary and the right information is one of the most important things in order to be successful.

In a company, in the military, in the government, and virtually in any kind of organization, getting the right information is necessary to make the right decision. This is where all decisions are based from. Information plays a vital role in the society.

For example, in the military, making the right decisions during war or even during peacetime is necessary to save and protect lives. In the business world, it is also necessary to get the right information to make the right decision in order for a company to grow and profit.

Most wrong decisions are usually made because of lack of information or because of getting the wrong information.

Here’s another example on what happens when decision makers get the wrong information. Countless leaders of countries have been ousted because of one minor glitch in the information that their advisers gave them.

It cannot be stressed enough that it is necessary for everyone to get the right information. After getting the information, you should study it, and formulate a decision that you think is right for the current situation.

This is also true in the financial market, such as the Forex market.

The Forex market is the largest and the most liquid market in the world which operates 24 hours a day and generates currency exchanges up to two trillion dollars each day. This market has no centralized location as trades are open 24 hours a day in different parts of the world.

It is a fact that the Forex market made lots of people rich and also taken a lot of people in the brink of financial collapse. The Forex market can really be a difficult market for you, as an investor. It can only mean two things, either you make it big by getting lots of money or you can really lose big time.

With the constant oscillation of currency value in this market, it is necessary for you, as an investor to obtain the right information to base your decisions from. The right and wrong information or late information can mean the difference of you hitting the jackpot by earning lots of money or you losing a lot of money.

Having the necessary skills and knowledge about the Forex market is simply not enough for an investor to be successful. It is a known fact that there are lots of seasoned Forex investors or traders who have lost a lot of money in this financial market. Some even got into debt or bankruptcy.

This is why you should first consider your options whether you should join the Forex market or not. However, the fact that you can make lots of money in this market can really attract you. Besides, the Forex market can offer you a chance to make the big bucks.

So, if you want to join the Forex market or if you already have an active, funded account, you should make sure that you have access to the right kind of information.

It is recommended that you should hire technical and/or fundamental analysts or brokers if you don’t know a thing about Forex charts and graphs. The news also plays an important role in the Forex market.

These people can help you make the right kind of decision by informing you with all the necessary information on what currency you should buy and sell.

Although they will charge you a fee for their services, you can be sure that you will be getting the right information on time that will help you in your decision-making. So, to make it short, you should hire these people’s services.

Even if you know how to read the charts, there are simply too many things that you have to consider; there are just simply so many indicators about the different aspects in the Forex market that you should keep an eye on. Simply reading one kind of chart can be very difficult. Try combining it with another chart, and not to mention that you still have to make decisions.

Always remember, if you want to be successful in the world’s largest financial market in the world, you should get informed with the right information on time. You should always keep in mind that the information that analysts and brokers provide you is the key to success.

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What is a Forex technical indicator?

As you would know, foreign exchange is the largest market in the world, and the amount traded between the different currencies each day exceeds by far the largest stock market exchanges put together!
Though the concept of forex trading was developed unofficially hundreds of years ago, it is only with the advent of technology that the real forex trade began in the world.
To aid people to trade between currencies, there are several forex theories in existence. For instance,
· Technical Analysis
· Indicators like Relative strength index
· Elliott wave theory
· Numbers sequences like Fibonacci
· Gaps – High-Low and Open-Closing
· Following moving average trends
· Japanese Candlesticks, Triangles, and other chart formations
· And so on…
Depending on your forex broker (or if you learn on your own, depending on your own study), you will use one of these forex theories to trade; and the mistake that a lot of novice traders do is that they use multiple forex theories simultaneously without proper knowledge.
When you are trading online, you need a lot of patience and need a lot of time to learn the ropes. Unless you do that, none of these forex theories can help you make a steady source of income. Or what you can do is you can shift to an online platform to trade. With an online platform or well known software like Fapturbo, you are assured of these forex theories being put into real use by your computer. That is the right decision for a newcomer into the markets to take, as you practically cannot use all these theories in conjunction at the same time. If you try to do that, you will only create frustration for yourself, and lose a bunch of money!

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What’s Fibonacci Forex Trading?

Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques.

Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence, the definition of this sequence is that it’s formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ...But in the case of currency trading what is more important for the forex trader is the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc.

These ratios are mathematical proportions prevalent in many places and structures in nature, as well as in many man made creations.  

Forex trading can greatly benefit from this mathematical proportions due to the fact that the oscillations observed in forex charts, where prices are visibly changing in an oscillatory pattern, follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent, but so close as to be really amazing.

Fibonacci price points, or levels, for any forex currency pair can be calculated in advance so that the trader will know when to enter or exit the market if the prediction given by the Fibonacci forex day trading system he uses fulfills its predictions.

Many people tries to make this analysis overly complicated scaring away many new forex traders that are just beginning to understand how the forex market works and how to make a profit in it. But this is not how it has to be. I can’t say it’s a simple concept but it is quite understandable for any trader once he or she has grasped the basics and has had some practice trading using Fibonacci levels along with other secondary indicators that will help to improve the accuracy of the entry and exit point for every particular trade.

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Elliott Wave Theory – The Myth and Reality

Elliot wave theory enjoys massive popularity - being described as advanced technical analysis, by many brokers and publishers.

Elliot wave theory has a huge and devoted following - shame the theory has no basis of sound logic that can help you make money!

Let’s look at Elliott wave theory in more detail and then look at sensible market analysis.

The theory was named after Ralph Nelson Elliott, who concluded in his book “natures law” that the movement of financial markets could be predicted by observing, and identifying a repetitive pattern of waves.

Elliott’s Profound Observation

Elliott came to the stunning conclusion that all natural phenomena are cyclical - and this includes the financial markets. This is true, but we know that anyway - we know that at some time in our lives, we will feel rain when we venture outside, the question is when exactly?

So, markets are cyclical - big deal! What we want from an investment theory, is the probability of the event - i.e. when is it most likely to occur.

Elliott wave theory is an objective investment theory - but there isn't any objectivity in it at all!

It's all a subjective interpretation of peaks and troughs, in any time frame you like!

Does this sound a logical predictive theory to you?

The Theory

Based on rhythms found in nature, the theory suggests that the market moves up in a series of five waves and down in a series of three waves.

The difference between the Elliott wave principle and other cyclical theories is that the theory suggests no absolute time requirements for a cycle to complete - well that’s a lot of help!

The subjectivity is so great in Elliott wave, that like most theories, everything is explainable in hindsight - but the difficulty is actually predicting the future.

There are so many interpretations of the actual peaks and troughs in various time frames, that everyone will see them differently, this is hardly the basis of a predictive theory.

Elliott wave theory claims to be able to predict the market - but gives no objective way of doing it in practice.

Who uses Elliott Wave Theory?

1. Investors who want an easy way to make money, and are attracted to the mysticism of such tools as the Fibonacci number sequence, to predict market retracements.

2. Investors who believe in the false assumption that you can predict market behavior in advance - and want an easy way to make money.

How Markets Really Move

Market prices are a reflection of the following:

Supply and demand fundamentals + human psychology = price action

This looks simple, but is in reality, complicated equation - which is impossible to predict in advance.

Trading markets via technical analysis is all about putting the odds and probability in your favor, and no more than that. It is NOT a way of predicting the future.

Are there better theories than Elliott wave around, for making money from the markets? - A good exercise would be to poll the entire top performing fund managers in the world and see how many of them take the theory seriously.

Predictive and subjectivity don’t mix!

The Elliott wave theory is a predictive theory that leaves everything to subjective analysis.

If Elliott had worked out a predictive theory, why didn’t he give an objective way to make money from it? - Like most predictive theories it doesn’t work.

If all investors could predict the market in advance, we would all know what was going to happen - and there would actually be no market at all, as we would all know the market price in advance!

Elliott wave theory is supposed to be a predictive theory, but the only thing you can predict with it, is you will lose your money.

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