Sunday, August 31, 2008
Be a Trend Trader, Don’t Pick Tops & Bottoms
Find some indicators that give you signals when the market is starting to move. When it does move, get in and then add on to your position as the trend gets underway.
I think it is best to start out small with (one lot) and a stop loss. Once the market tells you that it is really moving then add on to your position. Once the market tells you that the trend is over,close all of your positions at one time when the trend has ended. Exercising a little patience and waiting for a proven direction to take, can increase your odds of profiting and somewhat reduce your risk.
Once you are out of the trade then start looking for another entry point. There is always another trade just around the corner in either the same pair or another currency pair.
Should You Trade The News?
Many times the big pip movements take place when news is released … 30-50-100 pip movements in minutes are common. It is a natural reaction to want to get in on some of that. It looks easy but it may or may not be easy. The price moves up and down, the spreads are wide and you can’t get filled. What looks easy is also frustrating.
At news times the market does make big moves. There are a lot of news announcements each week creating many chances for pips to be made. News release times can be found on the Forex Factory website. The main things to look for would be which country is having a news announcement and what time the news is being announced. This will give heads up as to which currency pairs to trade.
Every news announcement does not have to be traded. Here is a list of some of the better U.S. Market news announcement topics.
• Employment Growth
• Interest Rate decisions
• Trade Balance
• Gross Domestic Product
• Retail Sales
• Durable Goods
• Inflation reports (Consumer Price Index and Producer Price Index)
• Foreign Purchases report
Also look for similar reports from other countries that will give good moves.
Trading news announcements can be the riskiest type of trading that one can do. Many traders loose more money trying to trade the news than at any other time.
The most profitable way I have found to take advantage of the news announcement is to wait for trading signals to give you the best entry point. You should not just enter with a guess of which way you think the move will go. You may have to wait from 5 to 30 minutes before you see a proper entry signal. Another way to get a feel as to when the market is tradable is to wait until the spreads come back to normal. This way the market is letting you know that a direction may be forming.
Good trades may be found on many different time frames. The 5-minute time frame seems to be good when the market is moving fast. Good signals can be seen and acted upon with the 5 minute when the market is moving fast. The one-minute time frame has too much noise for most traders (up and down movement).
During the first 5 to approximately 30 minutes the market moves up or down and may not give a good signal. But once there is a proper signal, based on indicators then it can be a good move. Also one of the great things about focusing on news releases is that they are scheduled in advance. A trading schedule can be planned around the news announcements.
Many people put on pending orders with tight stop losses. Then they find themselves in and out of the market in a few short minutes, or seconds, with big losses. This may happen because of the spreads widening. With a 10 pip stop loss and the spread widening to 12, for example, a trade would be open and closed as soon as the trade was placed. The best way is to trade with the direction of the trade, the way the market decides to go, and not try to guess which way it will go. The market moves not so much by what the news says but by the reaction of the traders to the news.
One thing to look for is when the market is quiet for a few hours before a news announcement. In other words it is moving sideways. When this happens, the market is waiting for the news announcement then it will start to move in the direction the traders trade it.
Another observation that happens often enough to be of some value is to check the direction of the trend on the currency pair you are going to trade. Once the direction of the trend is determined only place trades going in that direction. After the impact of a news announcement is over the market tends to move in the direction of the overall trend. To check the directions of the trend use the 4 hour chart. There are a couple of things that can be done to determine the direction of the trend. The easiest, and my favorite strategy is to place two moving averages on a chart, 3 period shift 0 simple at the close, color yellow and 5 period 3 shift simple at the close color, purple, as shown below. When the Yellow crosses the purple line going down it is a downtrend and when the yellow crosses the purple going up it is an up trend.

Another way to get a general direction of the trend is to look at a 4 hour chart and draw a line from the point where your price bars start on the screen on the left hand side, to where they end on the screen, right hand side. This will give an indication of the direction of the trend also. (see below)

Trend lines may also be drawn. Once the direction of the trend is determined the news may be traded in the direction of the trend for a less risky trade.

When the trend is UP, on the 4 HR chart, and the news drives the market DOWN, after a drop in the price, watch for a turn in the price to the up side with a continuation of the direction of the trend.

When the trend is down, on the 4 HR chart, and the news drives the market up. Watch for a turn to the down side with a continuation of the trend.

When the trend is up, on the 4 HR chart, and the news drives the market up, you can see a sharp move up with a period of rest then a then a resuming of the trend.

When the trend is down, on the 4 HR chart, and the news drives the market down, you can see a sharp move down with a period of rest then a continuation down then a resuming of the trend.

Below is an example of a good trend and some of the areas where news went against the trend then came back. You will also see places where the news went with the trend.

While trading the foreign currency market don’t think of it as an ATM machine were the market owes you something. Especially when trading the market around news time. If 20 people show up to buy and there are only 10 lots for sell then someone will not be filled until some more lots become available. When the price gets good enough for the seller then you may buy but it may not be at the price you would like. This all happens very quickly at the time news is being announced.
There are traders that do make money trading the news. It is a more common reality that more traders will lose their money while trying to trade the news. Trading any strategy takes time and practice. Skills need to be developed to become good with the use of any indicator. Trust also needs to be developed as to what the indicators are saying. If the news is traded right with solid trading principle where a bit of the trade is taken out of the middle and not going for the tops and bottoms of the movement then there is a chance of having success trading the news.
Why You Need a Trading Plan
Your trading plan will continually move you in the correct direction to make money trading the currency market. If you can make a living without a plan, you must be a market genius.
Let us give you some good reasons why you should have a trading plan.
Why Do You Need a Trading Plan?
First of all, it moves you down the right path.
It is imperative that you develop consistency in your trading. We all have our daily routines, which help us make each day a success. As a trader, a routine is vital to your success. Not only does a routine improve your chances for success, but you are able to measure your success and change something in your routine if you are not getting your desired results. Make a plan, and stay with it. If you don’t, it will be hard to consistently make money and you’ll never know if your routine is worth keeping. Read your plan daily, follow it and you will stay on track with your goals.
Secondly, successful trading is not just a hobby.
I say this because successful trading requires that you have a business mindset. All successful businesses have a plan. By sticking to a plan a business will be successful. If it stops following the plan, it will become weak in its industry and fall by the wayside. Don’t think that your plan is set in stone and can’t be altered. Many times it may be necessary to update it, but the important issue is that you always have a plan.
The difference between the winning traders and losing traders is a plan. If you have a good plan (developed over time) and you stick to it, you will become successful!
Don’t get tied down trying to make some complex business plan. Make a simple plan and add to it as you learn. Whether it is simple or complex, I can’t stress to you enough that you FOLLOW YOUR PLAN.
Basics for Your Plan
1. What Are My Goals
Take some time and think about what you want to accomplish as a trader.
Do you plan on making currency trading your main source of income?
Make a realistic goal on how much return you would expect with your current trading skill and experience.
Remember, all your goals don’t have to deal directly with making money. They can be oriented around learning specific details in the forex market, or they can even be personal.
Ask yourself what you would like to accomplish through this experience, and remember why you are doing it if times get rough. Hopefully you will have worthy enough goals that they will constantly motivate you.
A goal to make a lot of money is not really a goal. It will be the end result of accomplishing the goals you have set.
2. Trading Routine
As discussed previously, a trading routine is an important part of your trading plan. By having one, you will already know:
At what times you analyze the market and plan your trades
The best time for you to place trades and watch the market.
At what specific times throughout the day that you will check the market.
Example: I will analyze the market each evening when I get home from work and just before I go to bed. I will watch the market for an hour in the morning before I go to work. I will check the market when each new 4 hour bar is formed when I am awake.
3. Trading System
The trading system is the foundation of your trading plan. At least a month before you start trading real money, test your system out using your Pre-Launch Trading and Demo Trading.
Some of the most essential things you should include in your system are:
• The maximum percentage you will risk on each trade.
• How many lots you will trade.
• Which time frames you will look at.
• The entry and exit signals you will use.
Example: I trade the US market. I trade in the direction of the trend on the 4 hour chart. I trade when I get at least two confirmation signals (on the time frame that is easiest to read at the time I am trading). I will always start each trade with only one lot. I will add on to the trade as new signals present themselves. I will exit all positions when my manual trailing stop is hit or when two price bars close below the purple line.
4. What is My State Of Mind?
Being calm and relaxed is an important part of trading. By following your routine you can be in a better state of mind than if you run in and look at the market to try and get a few pips while checking the price randomly through out the day. Your routine will help keep your emotions in check.
Example:
• I will look for signals-not guess which way the market is going.
• I will only trade in the direction of the trend.
• When I lose on a trade I will see what I can learn and move onto the next trade.
• I will not try and get even with the market.
• I will not be hard on myself for losing on a trade.
• I will use each trade as a learning experience.
5. Your Trading Journal
Make sure you log the details of each trade and record the reasons for the trade in your Trade Tracker sheet. This will be a constant progress report and allow you to evaluate yourself from time to time. You will learn from your mistakes, and realize how much of a better trader you’ve become. This will give you the confidence to be even more successful later on. It will better help you keep track of your goals and remind you what you need to do to accomplish them. It doesn’t take long to write down your trades, and will be well worth your time.
Summary
Your trading plan will be just like a flight plan; it will keep you on target toward your goals.
Review your trading plan every time you trade and stick to the plan.
You may have all the knowledge out there and be able to talk the talk, but if you do not put that knowledge into a trading plan it will be much harder to apply it in your trades and be successful.
Keep in mind when you start to trade with real money you are actually creating a business, and any business needs a plan to succeed. If you do not want to start a business then stick to Pre-Launch and Demo trading and treat it as a game until you have the confidence to do so.
Below you will find an example of a trading plan.
You should make up your own trading plan from the suggested outline above.
You will be amazed that by following the trading plan you will stay in trades longer and reduce the amount of poor trades you make.
TRADING PLAN
(Example)
I never trade when I am tired, upset or rushed. I check the markets when I get home from work.I set up signals just before I go to bed.When an alert sounds I check the market and place my trades based on entry signals.I never anticipate what the market will do I trade only with signals.I always trade with a stop loss.
I check the market when I get out of bed.
I always trade in the direction of the trend on the 4-hour chart.
I enter the market on the time frame that is easiest to read.
I always use signals to enter and exit a trade.
I always make my own decisions to enter/exit a trade.
I always start a trade with one lot.
I only add to a trade when there are signals.
I never trade with more than 10% of my trading account.
I record my trades in my trading journal.
I accept losses and move on to the next trade.
(Losing is part of trading)
I take responsibility for my successes and failures in the market.
(I do not blame others)
I practice trade daily ___ weekly ___ for 15 minutes.
I want what the market is willing to give.
(No greed or fear)
The Smart Way to Lose a Forex Trade
We all have to realize that a loss in trading is part of trading. We need to put the advantage in our favor so we will win more than we lose and not fall in love with a trade that is losing and let it run. When we take a trade we need to know where our stop loss is going to be then let the market tell us when to get out.
Once we have profit in a trade we need to concentrate on protecting the profit. So it is best to protect profit rather than hope a loss will get smaller. The first loss is always the smallest and will give you better vision for the next trade.
Sunday, June 8, 2008
DAPATKAN PENGHASILAN $500/Bln DENGAN MUDAH dan GRATIS !!
Wednesday, May 21, 2008
Forex Trading - Anyone Can Learn the Skills to Win, But 95 Percent of Traders Lose, Why?
It's a fact anyone can learn the skills needed to win at forex trading - but they don't and the reason why is, they neglect the major factor they need to learn to achieve forex success. Understand this factor and how important it is and you can win.
This is a simple equation for forex market success:
Correct Knowledge = Understanding = Confidence = Discipline = Forex Success
What's obvious about the above?
That your forex trading system or the system you use is not important, providing it's logical and based on trading the odds - but your understanding, confidence and the way you apply it is. You can have a good forex trading strategy and fail here's why:
How do most forex traders learn to trade?
They day trade, or they trade mechanical systems sold by vendors, with simulated track records and we have two problems here that are the route cause of trader losses:
1. Day trading is not the correct knowledge to learn - it doesn't work!
It's based on ridiculous assumptions i.e. you can predict what millions of traders will do in a day!
2. If you use a mechanical system you cannot follow it unless you understand how and why it works (ok most the forex trading systems sold on the net are junk) but even if you do find a successful one, you still have to follow it with discipline through periods of losses. You won't follow it, if you don't understand it or have confidence in it!
Learning the correct forex knowledge and getting a robust forex strategy together is easy - the hard part is applying it. Understand this - success rests with you, not your broker, friends, vendors or anyone else - YOU.
Many forex traders hate taking responsibility and cry like babies when they lose, its everyone's fault but theirs - but it isn't.
If they lose it's their fault.
Successful forex trading involves you getting and applying the right knowledge and applying it is the hard part. All forex trading systems lose, for sometimes weeks on end (and that includes the best) so you have to accept responsibility and have the confidence and discipline to follow your plan.
Why Its Forex Trading is so Hard and The Rewards so High?
You are trading against the market and it is always right and only you can be wrong. Your success is down to your market timing and how accurate you're trading signals are and that's it. Sure, the market will prove you wrong and sure the market will make you look stupid - but that's trading.
So if you understand the above, then your forex education is all about:
Getting a logical method that puts the odds on your side, having confidence in it and trading it with discipline, through good times and bad times.
It's easy to learn currency trading - but it's harder to get discipline however, if you accept this and want success, forex trading can reward you with a fantastic and sometimes even life changing income. Currency trading success is in your hands - are you up for the challenge?
If the answer is yes - welcome to the exciting and lucrative world of global FX trading.