Month: July 2011

By Cedric Welsch

If you are interested in joining the ranks of successful forex traders you need to get the basics right. Even though foreign currency trading (or “forex”) can be very profitable, skipping the fundamentals isn’t very smart. Part of your strategy has to include learning and researching. The truth is, even the most experienced investors do this. When it comes to money, taking calculated risks is crucial. Let’s take a look at some of the things you need to keep in mind as a beginning trader.

Practice always comes first…

Even though you may be eager to jump into action, it’s probably best that you start with a practice account. You want to be sure that you fully understand how forex trading works. There are certain technical terms that you need to get comfortable with. In particular, it’s important to grasp the concept of simultaneous buying and selling. You should also be proficient in reading charts, especially candlestick patterns. This will allow you to properly analyse trends and apply the right strategy. Finally, you can never be 100% right. Working with a practice account, however, will increase the odds of success before you take a risk with your money.

Focus on a couple of currencies first

You may find it easier to succeed if you first trade with just a couple of currencies. It’s very common to get overwhelmed with the vast amount of information available. By mastering the basics with one pair you will have an advantage over other beginning traders. Make no mistake: just as with anything else in life, forex trading is a skill that is developed over time. When you keep things simple, you will get results much faster.

Learn about risk management

Some people mistake forex to be another form of gambling. Well, it’s not. You need to have a strategy in place to maximize profits and minimize loss. Once again, making decisions based on research is necessary. Many begging traders keep throwing good money after bad when they lose. Don’t be one of them! Decide upfront how much you want to make. In the same vein, have a loss limit on each of your trades. Once you have made your decision stick to it!

As you can see preparation is vital to making a profit. Follow the fundamentals you just learnt and you can be sure you will eventually come up with your own strategy.

About the Author

What would a very effective forex trading tactic bring to your fx trading business instantly? Every type offorex trading strategy that is introduced must be scrutinized really well.

By Cedric Welsch

The Forex market is actually the largest financial market in the world. In this market, currencies from different currencies are traded. This is known as foreign exchange trading, and is done for several reasons.

To truly understand what is forex, you will need to understand these reasons. One type of trading is done simply to satisfy a need. Large corporations often need different types of currency to pay their employees in other countries. Since these employees desire, and need to be paid in their native currency, companies trade their local currency for the other currencies they need.

The largest use however, is done by traders who wish to profit from the buying and selling of currencies. The value of money fluctuates in much the same way stocks do. Buying low, and selling high is the main goal. These trades are done over-the-counter, meaning they are done via computer, and not in person. This allows virtually anyone, in any location, to participate.

There is a difference between this type of market and the stock market. That being that speculation is eliminated from the picture. This is because the value of the currency only moves based on how it is currently being traded. If one currency is stagnant, the value will not change. On the flip side, if one is being heavily purchased, it’s value will increase during this time. What this system does is eliminate any sort of insider trading. This is a huge advantage to many.

The Forex market operates twenty-four hours a day. During the course of a day, there are several peak times, and a few down times. These are easy to spot, as they usually revolve around the times in which major countries such as the United States, United Kingdom, Europe, and Australia are active. While most want to participate during the active times, many experts claim that there are deals to be found and taken advantage of while most people are not actively participating in trades.

While there is definitely money to be made trading on this market, there is a learning curve for newcomers. Those looking to jump in need to be as educated as possible as to how this system works. Those that are the most successful are those that are able to spot the trends, and capitalize on them. This will require learning as much as possible about Forex, and how it can work for you.

About the Author

Whoever said that a full time forex business is hard to turn into a profit making machine? The capacity of your foreign exchange business is all dependent upon your creativity as trader.

By David Adams

This is a very difficult question to answer properly, because the response is dependent upon an e-mini traders experience and goals. Obviously, a new trader should trade a single contract until he or she develops the competence and confidence to execute trades in a consistently profitable manner. I find, on the other hand, many experienced traders tend to over trade their futures trading account and find themselves, at times, at wits end.

I am an e-mini trader, and it is my career; so I take trading seriously. My game plan is to take 5 to 7 e-mini set-ups during the daily trading session. I feel I need this many set-ups to earn the kind of income I desire. That being said, there are days when 5 to 7 opportunities do not arise and I am forced to settle for fewer opportunities. As you might’ve guessed, there are also days when more setups occur and I take a few more setups than seven. Still, the average falls in the 5 – 7 range on a fairly consistent basis. I am comfortable with this number because it provides me ample opportunity to earn a comfortable income.

No trader should risk more than 2 – 3% of his or her e-mini futures account balance on a single set up. In fact, less is better. Generally speaking, I trade more like 1.5% of my account balance, which is usually 5 to 10 YM contracts. It is not uncommon for me to observe traders, especially newer ones, trade five or 10 YM contracts on a $7500 account. This is a recipe for disaster, as trading at this level falls into the range of over trading. Of course, the amount you risk is in a direct relationship with the stop/loss levels a trader chooses. Since the YM can range quite a bit I tend to trade wider stops than most people, though I have mental stops in mind that are nowhere near the stop/loss I set on my DOM. I consider my stop/loss to be an emergency stop/loss, and tend to trade my mental stop losses with discipline and accuracy.

I generally start with a smaller number of e-mini contracts and tried to gauge the mood of the market; if it is trending consistently I am more comfortable with a larger contract number than trading a choppy market. In a previous article, I mentioned I enjoyed channel trading and have some success with channel trading technique under certain circumstances, and will trade slightly higher contract numbers if they channel is consistently moving off from the high point of the channel to the low point of the channel.

I suppose the most important aspect of this article is relatively simple; most people tend to over trade and trade too many contracts. It is far easier to trade a lesser number of contracts in a more expeditious fashion, as opposed to taking low probability trades and hoping for the best. I currently have one student who averages 26 trades per day; this boggles my mind, as I don’t generally see 26 potential setups, good or bad, during an average trading session. He would be far better served by limiting his trading numbers and being more selective in the setups he chooses to initiate trades.

In summary, I have stated that many traders tend to over trade their accounts by trading too often and with too many contracts. I have given some parameters for wise money management; never risk more than 2 – 3% of your futures account balance on a given trade, even less is better. Finally, for most people I believe that 5 to 7 trades is an adequate number of trades on a given day. There may be days when you do not have enough high probability setups to make 5 to 7 e-mini trades, and there may be days when you have the opportunity to trade several more times than 5 – 7 times per day. The important thing is to have a plan for trading and money management and stick with it. If you’re trading for a living you need to make enough trades to give yourself a chance to earn a living. On the other hand, trading too much, or over trading, will limit your ability to earn a good living; but your broker will certainly love you as you pad his account with your over trading.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By Forex Mansion

If you want to trade forex you need a broker. In the modern world of trading, we’re talking about online trading brokers. Online trading brokers are websites that allow you to open accounts and trade via the internet. It is important to investigate a number of factors before opening an account with just any online trading broker.

Prior to picking an online broker it is necessary to determine what type of trader you intend to be. There are certain website that are fitting for day traders, and other websites that are better for the casual investor. The more frequently you intend on trading, the less you can bear per-trade commissions. Additionally, if you’d like to trade on a frequent basis, you’ll probably need mobile access via a smartphone. So the first step to take is actually to look in the mirror and ask yourself, What type of trader will I be?

Watch Out For Unnecessary Fees!!

The next step is to save your money from unnecessary fees. Commissions and fees are understandably unavoidable; the online trading brokers are proving a service that you have to pay for. However, it is important to read about all the commissions and fees carefully to see which website will be cheapest best on your trading needs. Some fees to look out for include:

Account-opening fee

Minimum account-size fee
Account transfer fee
Inactivity fee
Per-trade commission
Personal assistance fee
Paper statements fee
Account closing fee

Although some websites will let you open an account of any size (and might charge you a minimum-account-size fee), others will only let you open an account with a certain amount of money. The larger your account, the nicer they will be to you. Some websites will even give you free money for opening a large account.

Where to Find Free Tools – Don’t Pass These Up!

Speaking of free stuff, who doesn’t love free stuff? Look for free stuff. Lots of websites offer free training tutorials, financial education literature, quotes, analysis tools, and software. Free trading tools are not just a fringe benefit. These tools can mean the difference between knowing what’s happening in the market and not, and can be the difference between making money and losing it.

It also pays to look at the interest offered on the cash in your account. Also, if you plan on extending the horizon of your investments to include commodities, stocks, or other arteries of profit, it may make sense to locate an online broker the will provide for those financial needs.

Security – What to Look Out For

Lastly, but also possibly the most important factor to look into, is security. The security of your personal account information is exceedingly important. Therefore, it is crucial to read the security policy of any online broker and to check to make sure they match the security indicator of your browser. Only open an account with a legitimate online broker in order to make sure that your sensitive information is not obtainable by third party sources.

After making sure you are learning from the best forex brokers or online forex brokers, you’re ready to start trading! If you are interested in stocks day trading, you can also check http://www.forexmansion.com .

About the Author

Think you’re ready to start trading forex online? This article will give you the key points to examine when deciding which of the online trading brokers to open an account with for forex trading.

It was not that long ago those forex traders who wanted to stay ahead of the game had to spend their days on the floors of the big exchanges. The emergence of online trading completely changed that. Nowadays, anyone who wants to take part of the largest financial market just needs a computer any time of day anywhere in the world. Today, technology has taken this competition one step further with forex mobile. Internet enabled smart phones are everyday technology for most people. Just as easily as trading had become on computers, it is now that easy on cellphones. The question is how to take advantage of this all-day accessibility for profit.

Since many online traders do it as a part time gig, and not as a full time job, the emergence of forex mobile should come as a breath of fresh air. Now, on the way to work you can buy, and on the way home sell. However, a trader who didn’t have 24-hour access to market information and is only now exposed should be careful about how he or she reacts to the market. By only checking the market at well-spaced intervals throughout the day, a trader has an advantage of seeing the broader trends of that day’s activity. On the other hand, a trader who is only peeking now and again might miss an important economic event that translates to big loss or big gain. Therefore, a trader who has constant access to market information via the mobile phone certainly stands at an advantage; however, discipline is certainly required in order to know when to refrain from taking action.

It general, it has been said by many forex experts that one of the key skills in forex trading is knowing how to loose money. This is especially the case for a trader who is connected all day via a smartphone. One who wasn’t constantly exposed and is now regularly tracking will become suddenly aware of potentially unsettling activity in his or her account that was not readily available to be responded to before. Therefore, the ability to watch a currency devaluate while not necessarily responding becomes that much more important.

Additionally, it is quite common that people go to sleep with their cellphone at their bedside. With the ability to know if one is loosing or gaining money now readily available at the push of a button, it may become increasingly difficult to go to sleep without taking a peek; a peek turns into a little more research which turns into staying up all night. Any good trader knows how to set limits. The market will always go up and down, and a good trader knows that not every up was a missed buy and not every down was a missed sell. Even a day trader will not respond to every twitch. It may be difficult, but a trader has to know how to go to sleep to the ebb and flow of the economic tides as if it were the soothing sound of the beach. A trader who lacks a good night’s sleep is liable to make unwise decisions.

In conclusion, using forex mobile to stay at the top of the game is highly recommended; however, with the technological advancements the core skills of the best forex brokers , not excluding stocks day trading, only become that much more important.
About the Author

About the Author

This article at forexmobile.org will give helpful advice on how to utilize the latest Forex mobile technology to stay ahead and stay on top.

By David Adams

It is generally considered unwise to dabble with trading e-mini contracts when they are in a consolidation channel. I think, by and large, that this is some good advice because trading in channels can be treacherous and result in substantial losses. As a longtime trader though I relish the opportunity to channel trade e-mini contracts. Early in my career, nearly 25 years ago, I had an unusual mentor who lived to trade in the channels and was kind enough to share his technique with me.

First and foremost, it is essential to evaluate the type of channel that has formed and you are considering trading. Some channels are very tight and have extended wicks in their candlestick formation. This type of channel is called “barbed wire” and should be avoided at all costs. Further, channels that are less than 8 ticks in any contract are usually impossible to trade effectively. However, a 12 tick channel will make my heart beat fast as I see potential trade set ups in these types of channels. There is one caveat, though; the price movement in the 12 tick channel must not be roaming along the center line. I generally put up some Bollinger Bands and watch the price action ricochet from the top line of the Bollinger Bands to the mid-line or bottom line. Now, you have your potential set-up in place.

The technique is relatively simple; when the price action pierces, or better yet, breaks out of a Bollinger band, look to take a trade in the opposite direction. This trade is a leap of faith based on several assumptions:

Breakouts from channel consolidations notoriously fail. The beauty of this trade is that many small investors set-up for a channel breakout 4 or 5 ticks above the top or bottom channel line. Generally speaking, the small investors are picked up in the trade and then it begins to slide back into the channel. Most smaller traders set their stops at 10 or 12 ticks so when the price action gets 5 or 6 ticks back in the channel….the bottom drops out. This trade is very effective. After the trade entry, I set my stop loss at 5 ticks. I want to protect against a real breakout or breakdown should it occur. As I said, breakouts or breakdowns from channel consolidations generally fail, but I still want to protect myself if an unlikely breakout or breakdown should materialize.

This trade is especially effective on the YM contract from 11:30 AM CST to 1:30 PM CST when the smaller traders are dominating the market and the larger traders are in the stand down period.

This is a trade where you are competing for capital against the small traders not the large traders, which is much more difficult. Working on the assumption that breakouts from the consolidated channel generally fail, it is the small traders who are preparing for a breakout that generally end up on the losing side of the trade.

While this training technique is not for the faint of heart, I have used it successfully for many years and continue to do so. I will admit that taking a trade in the opposite direction of the price movement can seem a dangerous tactic, but experience has shown me that breakouts from consolidation channels are infrequent. I should also point out that it is not unusual to get a little upside down, say two or three ticks, before the price action begins to move back into the channel.

In summary, I have stated that trading in consolidation channels can be treacherous and risky business. That being said, I delight in trading in these channels, despite some of the obvious risk. Over the years, I have an enviable success record in channel trading. In short, it is possible to trade channels with proper technique and tight diligence.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By David Adams

From the onset, I must state that there are no e-mini contracts that are “easy” to trade. Some contracts have distinct advantages and disadvantages that make them attractive to each unique and individual e-mini trader. Some contracts are particularly difficult for new traders, especially the ES contract. The ES contract is the largest traded futures contract on the Chicago Mercantile exchange and is populated by professional traders, automated trading, and skilled individual traders. These factors can combine to make the ES (S & P e-mini) contract unpredictable and full of retracements, surprise moves in the opposite direction, and general erratic behavior. I adamantly advise new traders to avoid the ES contract until they have gained a good deal of experience trading in chaotic market conditions.

On the other hand, the YM (Dow E-mini) contract can be a bit more mundane and the dollar amount per tick is only five dollars. This makes the YM contract a particularly attractive contract for new traders to hone their e-mini trading skills and not blow up their accounts. I also feel the YM contract trends more reliably than the ES contract, which makes it a bit easier to trade. I should also point out that as a long-time investor I personally trade the YM contract instead of the ES contract. Why? Quite simply, it’s easier for me to trade and I am comfortable with the price movement.

Is the YM contract for everybody?

No, I suppose there are other contracts that are attractive to e-mini traders. Starting at 6 AM CST I trade the 6E (Euro) contract. This particular contract can be trickier than the YM, but also tends to produce some very impressive trending patterns. The most active movement in the contract starts at approximately 3 AM CST and ends at 10:30 AM CST, so you have to be an early riser to take advantage of the benefits this particular contract offers. It is especially active at the open of European trading and then again at the open of US trading. While I have traded the contract at 3 AM CST, it is not something I do with any regularity as I value my sleep. But I do start trading at 6 AM CST and generally find several excellent trades until switching over to the YM at 8:30 AM CST. This particular contract takes a bit of adjustment and I highly recommend a bit of simulated trading before actually tackling the contract with live money as it moves in slightly different patterns than the typical US index futures contract.

In summary, I have recommended avoiding the ES contract unless you have a high level of proficiency in that particular contract and instead focus on contracts that offer better opportunities for profitability. I am aware that many e-mini traders are highly proficient on the ES contract, but for new traders I feel strongly that the YM and 6E offer better chances for success. As a footnote, the NQ (NASDAQ e-mini) and several other contracts offer new traders excellent opportunities; I just happen to prefer the YM and the 6E for my personal trading and as vehicles to train new traders.
About the Author

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By James Woolley

Betting exchanges have been around for several years now, and whilst you can use them to place simple bets, you can also use them to trade various different sports markets. In fact in many ways they are similar to the financial markets, so let me explain how betting exchange trading is similar to forex trading.

Forex trading is basically where you take a position on a particular currency pair in the expectation that the price will either rise or fall. The more correct you are, the more money you make, and betting exchange trading is very similar to this as well.

When you trade you are not looking to bet on the outcome of a particular event. You simply want the price to move in your favour so you can close out the trade for a guaranteed profit. For example you may look to back a horse at 4-1 in the expectation that it will shorten to 7-2 or 3-1, and lay it back for a guaranteed profit if this turns out to be the case.

This kind of trading is often done before the event actually starts, but it is also done during the actual event itself via in-play markets. If you are skilful at reading the markets and anticipating future price moves, then it can be very profitable.

Therefore it is similar to forex trading, and this is particularly true at the moment because advanced charting facilities mean that you can predict price moves using the type of analysis that is generally used in financial trading.

The betting exchanges provide you with basic charts on all the different markets, but there is now software available that offers live streaming charts and advanced technical indicators that you can use. So you can use candlestick charts and common technical indicators to help determine when the price is overbought and oversold, just like forex traders do when they trade currencies.

Another example of how the betting exchange markets are similar to the forex markets is that prices can move as a result of certain news events. So for example if Man Utd announce a weakened team, then their price would suddenly drift outwards, creating a possible trading opportunity. Similarly if Nadal mentioned he was carrying a serious injury going into his next match, then his price would also drift outwards, and it is the same with forex markets because the major economic data releases can move the markets in an instant.

So the trick is to try and anticipate these events and make money from any subsequent price moves. It is not easy to do, but there are plenty of people who make money from both betting exchange trading and forex trading, and it is easy to see why because they are both very similar in many respects.

About the Author

Click here to read a review of Bet Angel and to read all about the most popular Betfair trading software.

By Nicholas Dockerty

The writing on the wall was there for all to see. The monthly US non-farm payroll data had analysts pointing to a 160,000 gain but the actual number of only 54,000 jobs gained surprised many market analysts who saw it as further evidence of the US economy struggling to grow.

We’ve had some more lacklustre economic indicators since then. The Federal Reserve Bank of New York’s manufacturing index fell to a negative 7.8 in June from a positive 11.9 in May with notable contractions in both shipments and new orders visible. US Retail sales decreased in May too, down 0.2% from the previous month.

Factor in rising prices – inflation hit an annualized 3.6% in May – and suddenly you’ve got near perfect conditions for economic stagnation.

But, it’s worth remembering that financial markets are said to climb a wall of worry and that means the negatives tend to be magnified and the positives sometimes brushed aside as just the way things should be. So we should also record, that US producer prices increased at the slowest rate for ten months in May and that the recent tragic events in Japan has had a major affect on supply chains across the US.

A point that was re-iterated by the recent release of the Fed’s latest anecdotal Beige Book which revealed more details about the widespread disruption to US supply chains after the devastating tsunami in Japan.

And the US trade gap narrowed to $43.7 billion from $46.8 billion in April after a reduction in Japanese imports.

However, with the second quantitative easing programme finishing at the end of June and an election to win next year, will President Obama change his demand-side-based policies and move toward the supply-side favoured by the Republicans?

These are uncertain times in Europe too. As eurozone finance ministers continue to fail to come to an agreement concerning Greece’s new financial aid package, a fresh round of protests is taking place on the streets of Athens fuelled by the austerity measures already implemented by the Greek government.

What the future holds for a eurozone that’s becoming increasingly politically and economically fractured is still not certain. Could the same be asked about the US and its economy?

With the Dow Jones index being in a steady decline for the last month and with triple-digit intra-day falls becoming more and more common, there’s no need to question what financial investors and traders think.

About the Author

One way of keeping right up-to-date with what is happening in forex the financial markets is via the YouTube channel of financial spread betting company IG Index.

Index titling is a strategy that can be applied when a trader has a bias towards a particular market sector.

There are a number of ways to determine the value of various stock indices – one of these is through capitalisation weighting, which factors in the size of each of the companies in the index as well along with their share prices. This results in the impact of a company’s price change on the index being proportional to its overall market value.

If a trader chose to invest in the S&P/ASX 200 Index, BHP Billiton, the largest company in the index, would have the largest impact on the index’s value. Next would come the big four banks – the Commonwealth Banks, Westpac, ANZ and NAB.

So if a trader believed that Australian financials were overbought, he could take a short position on the entire market by selling an index CFD. In the case of the ASX 200, this any movements in the financial industry would significantly impact the index as a whole because four of the five largest companies in the index are banks.

However, if the trader thought the utilities sector was going to be dragging the market down, the natural weighting of the index wouldn’t be very beneficial – the largest utilities company on the index is AGL Energy, and it only has a 0.55% weighting on the index as a whole; this is very small compared to BHPs 13.11%, or the combined 22.91% of the big four banks.

Instead of just taking a short position on the entire index, a trader could sell additional utilities contracts. By holding relatively few financial and materials contracts, and more stocks in utilities, a trader could tilt the index away from materials and financials towards utilities.

This strategy is how managed funds are able to outperform various stock indices.