Showing posts with label Forex trading. Show all posts
Showing posts with label Forex trading. Show all posts

TRADING PSYCHOLOGY PART ONE OF TWO

One of the most important components for successful trading is most definitely psychology. Psychology refers to the state of mind any salted trader should have while they are trading. 

Trader psychology deals with the following:
  • The control of a trader’s fears
  • The control of a trader’s greed
  • Trader’s discipline.
Why Do We Trade?

Trading is a very exciting activity but without the right mindset it can be extremely stressful. The problem then is that it is almost never possible to feel excited and make money at the same time! Think of a casino where amateurs celebrate over free drinks, while professional card counters coldly play game after game, folding most of the time and pressing their advantage when the card count gives them a slight edge over the house.

To be a successful trader, it is critical that you develop iron discipline.

Psychological Trading Issues and What Causes Them

Fear of being stopped out or fear of taking a loss: The most common reason for this is that traders fear losing too much and feel that they can’t take another loss. The trader’s ego is therefor at stake;

Getting out of trades too early: Anxiety plays a big role here and it is relieved by closing a position. Fear of trades turning and as a result, feeling let down. This ties in with the human need for instant gratification;

Adding on to a losing position (averaging down): Unwilling to admit that a trade is not correct and hoping that it will turn in your favor. Again, the ego is at stake here;

Wishing and hoping: Not wanting to take control or be responsible for the trade. Inability to accept the current market conditions;

Compulsive trading: Drawn to the excitement of the markets being in a favourable condition. Presence of addiction and gambling issues. Needing to feel you are in the game;

Excessive joy after a winning trade: Relating your self-worth to the markets. Feeling unrealistically “in control” of the markets;

Limiting profits: Feeling that you don’t deserve to be successful, to have money, or to make profits. Usually, psychological issues such as poor self-esteem;

Not following your proven trading system: you don’t really believe it works. You did not test it well. It doesn’t match your personality. You want more excitement in trading. You don’t trust your ability to choose a successful system;

Over-thinking your trade, second-guessing your trading signals: fear of loss or being wrong. Wanting a sure thing where sure things don’t exist. Not understanding the fact that loss is part of trading and the outcome of each trade is unknown. Not accepting the fact that trading imposes risks. Not accepting the unknown;

Not trading the correct position size: dreaming that the trade will only be profitable. Not fully recognizing the risk and not understanding the importance of money management. Refusing to take responsibility for managing your risk;

Trading in excess: need to conquer the market. Greed. Trying to get even with the market for a previous loss. The excitement of trading (similar to compulsive trading);

Being afraid to trade: no trading system in place. Not comfortable with risk and the unknown. Fear of total loss. Fear of ridicule. Need for control;

Irritable after the trading day: emotional roller coaster caused by anger, fear, and greed. Giving too much attention to trading results and not enough attention to the process itself and to learning the skills of trading. Focusing too much on money. Unrealistic trading expectations;

When trading with money you can’t afford to lose, or trading with borrowed money: last hope for success. Trying to be successful at something. Fear of losing your chance for the opportunity. No discipline. Greed. Desperation.

These are by no means all the psychological issues – but they are the most common. They usually center on the fact that, for one reason or another, the trader is not following his chosen trading approach or system but wings it, or trades his own emotions, which is a no go. As you see, psychology in trading is vital.

In terms of psychology, your goal is to be on an even keel, so to speak. Your winning and losing trades should not affect you. Of course, we all trade better when we win, but we should strive to maintain an emotional balance that is independent of any gains or losses.

In the next post, we will continue, starting with Accepting Losses

DIFFERENT TRADING STRATEGIES TO TRADE EURO

Euro:

In Forex market, all the currencies are being traded. However some currencies are traded more frequently. Euro is the second most actively traded currency in Forex market. Euro is the currency of the European Nations. The most liquid pair of currencies being traded on the Forex is EUR/USD. Euro is one half of this pair. Similarly it is also included in the most favored Minor pair of currency being traded in Forex. It is also included in G10 currencies as well. All these facts reflect the strength of Euro. The traders all over the world are trading in Euro.

Strategies:

There are many strategies to earn profit in trade of EUR/USD pair. However there are three strategies that have been proven beneficial and profitable in this regard. You can use them to earn heaps of profit with the trade of this most traded pair. These strategies are risk management techniques. These strategies are:

  1. Pullback:
A brief and temporary drop in commodities chart in a continuous trend is called Pullback. It is mostly applied and used in case of pricing drops of short term. It is considered as a buying opportunity for the traders after a currency has enjoyed increasing price status. Such a pullback is a positive signal that the rate of the currency is again going to rise. The rate of EUR/USD shuffles greatly in both directions. The pullback strategy is the most applied to maintain demand and supply of EUR/USD pair.

  1. Breakout and Breakdown:
A timely decision is essential for this technique. This pair sets certain ranges for beneficial and profitable trade. Such ranges ultimately fix new trends of trade. Buy the breakout and sell the breakdown is another useful strategy to deal with EUR/USD. You should decide carefully while using this strategy. If you make a deal too early, it will result in reversal. If you wait too longer, it will be a risky investment. Thus it is profitable to minimize the timing risk. You can do it by deciding a partial position in case of break out or break down of the currency pair.

  1. Narrow Range Patterns:
It is another important strategy to deal with the EUR/USD pair. A trading range occurs if a currency is traded between too high or too low rates for a certain duration of time. The top range offers resistance against price increase while the lower range offers support for price. This strategy predicts that EUR/USD's price bars will increase for breakout or breakdown. The rate of this pair changes and shuffles into prominent barriers and then it stays still, ultimately prints narrow range pricing bars. It reduces risk in the investment.

Thus the trader can use three techniques to earn profit in the trade of EUR/USD.

Article Source: http://EzineArticles.com/10285108

WHAT IS FOREX AND HOW TO GET BETTER AT FOREX TRADING

What is Forex?

There is a lot of talk about Forex in financial circles, but it has also infiltrated into the mainstream discussion in the past few years. In simple terms, Forex is a way of referring to the foreign exchange market, where various currencies are traded.

Currencies have a huge role not only in individual economies, but in how the world economy trends in a given way. The Forex market offers an opportunity for individuals to trade currencies and take advantage of varying exchange rates.

Forex Trading

It is very tempting to get straight into the process of trading Forex. People want to make money and they believe that it can be done in a very easy way, so many computer programs are advertised as being the key to making a lot of money in the Forex market. There is no software that guarantees you making a lot of money, fast.

Instead, make sure that you learn trading Forex and understand the markets by taking an educational course, or be mentored by someone experienced, and trade a demo account until you see yourself become profitable. Once you have developed the confidence in your trading strategy, learn, start trading real money.

But remember be patience and disciplined because real money trading is totally different than Demo trading and much harder psychologically.

No Central Marketplace

Why is Forex unique when compared to other markets? Because there is no central marketplace. So long as there is a market open in some part of the world, Forex is tradable. Moreover, trades take place between individuals or entities, which means that no central marketplace is required to make a Forex trade happen.

Say you have bought a certain amount of American dollars. Now you want to trade them for Euros. The only way such a trade will happen is when you get a reasonable offer for your Dollars from someone who has Euros. Then you will exchange the currency and the trade will be complete. Such a process is typically done through computers, which is why the market is open 24 hours a day, five days of the week.

Getting Better at Forex Trading

If you are committed to making money in the Forex market, you will want to use every advantage that is available to you. The best way to improve your Forex trading is by to be mentored by a professional trader. This will cut the roads and give you a shortcut to your success. Mentoring allows the professional trader to guide your through everything and ensures your success in the shortest time possible.

Another way to make money is by subscribing to a copy trading service. You may be wondering how such a service works. It is rather simple. You will get an account with a reputable Forex broker. Once you fund your account, the trades are done on your behalf through a copy trading service or signals from an experienced Forex trader, ensuring that you always maximize the potential of the market.

People who want to trade Forex should understand that it is not some type of get rich quick scheme. It requires a lot of work if you are trading on your own. Even with a managed account, you must be prepared to wait for a long time before you make sizable profits.

Article Source: https://EzineArticles.com/expert/Edmund_Brunetti/456890

BEST TIPS TO MAKE MONEY IN FOREX TRADING

Focus, discipline and practice are the main factors that are essential to earn heaps of profit in Forex Trading. Emotions play a vital role in the life of humans and these emotions can lead traders to huge losses. Emotions like anxiety, fear or greed can easily divert the attention, so the traders need to learn to deal with the emotions calmly and casually. Handling their own emotions in pressurized situations makes them "Ace" in Forex Trading. There are some main points which every Forex trader should exercise to become profitable.

Trading Styles and strategies
When you enter the world of Forex Trading, you should choose wisely the trading strategies and style and stick with it. Traders can choose from a wide range of strategies and styles. Every trader has different goals and aims. So each trader should select the trading style according to his own goals. For example, some traders can only indulge in day trading if they do not want to be a position trader for long term investments.

Trading platform and Brokers
You should wisely choose a trustworthy broker to invest your capital and do proper research before selecting the broker. A huge number of brokers are there to help the traders, you need to decide which broker will provide best services to achieve your goals. Same is the case with trading Platform. A trustworthy broker with a reliable platform leads to profit in Forex Trading.

Decision Making
After selecting the broker and the platform for trade, you need to decide how and when you will buy or sell currencies. You need to have the basic knowledge of entering and exiting trade. Similarly you need to research to decide which currencies pair to deal and which analysis type you are going to use. Some traders rely only on Technical Analysis and some purely on Fundamental. Which every method of analysis you choose you must be consistent with it. Experiment with different pairs of currencies can grow your exposure as well. A consistent methodology of trade can support the traders to keep up and handle the constantly transforming dynamics of financial market.

Entry and Exit points
Traders can be stressed about when to enter or exit. Sometimes the conflicting ideas on weekly chart and intraday chart make them anxious. Similarly a minor mistake or an untimely decision regarding the buying or selling can result in huge loss. So before trade, You need to observe and analyze both the weekly chart and the daily chart. Decision making on the basis of only one of them cannot do any good to you.

Capital at Hand
Mostly traders incur losses because they did not have sufficient capital at the moment of grabbing the profitable opportunity. They miss the chance and then regret afterwards. Therefore you should always have sufficient capital at hand.

Losses

Lastly you need to keep in mind that humans are bound to commit mistakes and mistake in Forex trading means loss. So you should be well prepared for the chance of loss as well.

The factors mentioned above can guide you but only disciple and practice can make you a refined trader. Article Source: http://EzineArticles.com/10281841

5 FOREX TRADING HABITS THAT LOWER YOUR RISK EXPOSURE

In trading, it is very easy to get lost in the game. You get on your trading platform, try to get some pips, and in the process, you usually forget the most basic risk management practices.

Here are five common habits that might help in limiting your risk exposure.

1. Double, triple, even quadruple-check your orders
Electronic trading has made it very easy for traders to execute trades. However, because of the ease and simplicity of electronic online trading, the chances of erroneous commands also rise significantly.

Having a well-thought-out trading plan would be useless if you do not correctly input your orders.
In May 2010, the financial market experienced a huge crash due to a “fat finger” event.

A trader in a large trading firm mistakenly sold $16 billion worth of future contracts instead of just $16 million.
Other traders who saw the order thought that something big was about to happen, so they sold too.

This resulted in a collective intra-day drop of $1 trillion in the U.S. equity market. Needless to say, the trading firm, as well as those holding on to stocks, lost a lot of money.

Double, triple, even quadruple-checking your order is very important in avoiding costly and unnecessary blunders.
Make reviewing your commands part of your routine. It will just take a couple of seconds of your time!

2. Always have a trading plan
You’d think that all traders would have a trading plan by now. I have talked about having a trade plan many times in my previous blog posts. Unfortunately, a lot of traders still trade impulsively. There are traders who trade completely on emotion and irrationally get into trades without thinking it through. At the very least, you should have a plan on where to enter or exit your positions. By doing so, you limit disastrous emotional reactions to adverse price movements.

3. Take profit on your winning trades
Another commonly overlooked risk management practice is taking some of your profits off the table while the price action is still in your favor. I know it’s tempting to ride a trend with a full position all the way to your profit target, but taking off a part of your position limits your exposure to potential volatility. After all, the saying “The trend is your friend… until it ends” didn’t come from nothing, did it? Let’s take the STA strategy or any other scaling technique for example. Let’s say your trading plan calls for adding to your original position and moving your stop loss after a certain number of pips. If you take some off of your position midway, you may at least end up with a small win even if that trend suddenly reverses on you.

4. Take a step back from trading
Do you feel like you’re in a trading rut? Are your fundamental and technical analyses off more often that you’d like to admit? If you said “yes” to these questions, then you probably just need to take a little time off from trading.
What’s good about staying away from the markets completely is that you’re not emotionally invested in any position.
This usually allows you to reset and see market themes and chart patterns from a renewed point of view. And sometimes, a break will help you realize what you did wrong in your last couple of trades. So take a step back, try to resist the lure of pip-making for a while, and you’ll most likely come back with a refreshed mind and a new and improved trading plan.

5. Withdraw your money regularly
While turning a couple of thousand bucks to a multi-gazillion trading account is a big confidence booster in trading, it’s still advisable to withdraw some of your money regularly. For one, additional capital usually exposes you to impulsive decisions like trading with larger positions or over-trading. Unless your trading goal calls for increasing your position sizes or your number of trades, withdrawing some of your money is one of your best bets at limiting risk. Besides, haven’t I told you often enough that being consistently profitable requires your focus on the process and not on profits? Take some of your moolah from time to time; take a vacation with your partner or your friends; buy something fancy for yourself, and enjoy the hard-earned fruits of your labor.



HOW TO GET STARTED WITH FOREX THE REAL WAY

If you ever wanted to trade Forex, you may have read up and gained an understanding on how it works but not how to get started. Reading books can give you the knowledge of what Forex trading is but not necessarily what it takes to become a Forex trader.

Here you will find five helpful points to consider and become familiar with to get you started trading Forex.

1. Understanding Forex Trading
You obviously must understand what Forex trading is and how it works. In the least, you need a basic understanding of what is going on, when to buy and sell, what the terms mean, and the various trading strategies available to you. You can get started trading Forex in under a day, but without a plan or knowledge on how it works, you set yourself up to fail.

There are numerous methods to learning Forex trading; you can read books, take online courses, or join a membership community of experts to get real-time answers. But pay attention to the information you consume:

· Be wary of sources that make income claims or say you can quit your day job and never have to work again due to the miracles of Forex. You don't want a gimmick education. Fads don't last as long as real preparedness and strategy.
· Book sources should be recognized authors and experts in the field of Forex. There are plenty of reliable sources; do your research to vet which authors are worth reading.

Online courses offer another avenue for learning Forex trading, but nothing beats experience and the ability to speak with like-minded traders who started out just like you. You can't ask questions or throw ideas at books and online courses hoping for answers or feedback like you can in a global community of Forex traders.

What if there was a place that can help accelerate your learning with its suite of community-backed questions and forum posts, daily live streams where you can get real-time answers, strategies, indicators and trade signals. We have a global community of Forex traders and other learners who have started trading that can give you insight and answers to many Forex questions you might have. Real life people giving hands-on advice can be helpful when you want to find answers right away. We also have a Trade Academy where you can access hundreds of educational Forex videos anytime you want.

2. Strategy Development
You should never start a new financial adventure without a plan. Once you understand the basics and terminologies of Forex, you should make a strategy. A Forex trading strategy outlines what your intents are with your trades: when you will buy or sell and trigger points, for example.

When you first enter Forex trading, you should use the K.I.S.S. (Keep It Simple Stupid) system; do not get overly complex right away. Experience is the best education; get some trading under your belt first. Your strategy should be basic to begin with and can develop into something more complex over time.

There is no perfect strategy; when you develop yours, you must consider this fact and expect some losses but be prepared for them. With experience you will be able to evaluate your strategy and know what has worked in the past in order to adjust it.

The best practice you can learn is back-testing your strategy. Back-testing will not only help you confirm your strategy is worth implementing, but it can also give you the confidence to start with live money sooner.

Demo accounts you can do back-tests on, but to get the best use, you must not waiver from your strategy outlines. A demo account is a great place to start because you don't have to risk your own money right away. The downside is people lose interest too quickly because the perceived return is not available; but part of learning is hands-on training. You need to pay attention to price movements and how they play against your strategy. Once you have proven to yourself that your strategy is viable, you can transition into real trading.

3. Get a Broker
When you start trading Forex for real, you need someone to execute the trades on your behalf, or what is known as a broker. There are countless brokers to choose from so you will want to do your research and confirm some information before starting with the first result that appears in your search engine results. Some things to consider:

· Extreme Leverage: Avoid brokers who will offer large percentages of profit returns for your investment; they know the higher margin prospects are more likely to draw you in, but they never tell you how unlikely it is you will ever see those margins. The broker gets his pay, but you end up losing money.
· Commissions: Always know what commission your potential broker expects; some will charge extreme amounts.
· Spread: A decent broker will offer a tight spread; this means the difference between the buying and selling price is low which makes the cost to trade low.
· Location: Depending on location, verify the broker you like is regulated by a certain jurisdiction.
· Customer Service: Your broker is going to be handling large amounts of your money and making trades on your behalf; it is important that they are relatable, available, and reliable. A good broker will provide a speedy deposit and withdrawal when you need it.

4. Low Leverage
Leverage is money you borrow from your broker to increase your trading position. As a beginner, you should start out with a low leverage so you get the experience of a live trade with wins and losses without having to consider what you made overall. It helps you get your feet wet and avoid unnecessarily high risks.

5. Write a Plan
Your work and experience are a waste of time if you don't have a written plan to track, replicate, and alter based on your results. Your plan should include a list of all your trades. You can keep a physical plan or a digital one, but it should be handy.

One challenge I like to encourage beginners to try is the 25 trade challenge. You take your simple strategy and apply it to 25 trades without faltering from your plan. Your strategy should be one that you think is ready to go live; it should include when you are going to buy and sell, when to take profit, when you are stopped, and how to manage risk. Win or lose, you should execute your strategy the same way for 25 trades. Many fail because they deviate from their plan.

One important fact to remember is we all make a losing trade, but it isn't a waste of time or money; the knowledge you gain is worth the loss if you keep your loss prospects low. You should have an understanding as to why it lost so you can adjust for it in later trades. If you quit prematurely or ignore your losses' learning opportunities, you could lose more than you wanted or even should have.

If you struggle with getting started, take each point a step at a time; don't move to the next point until you have built a foundation from the previous step. These are sound strategies that will help you get started with Forex trading.

Article Source: http://EzineArticles.com/10274593

8 MISTAKES TO AVOID IN FOREX TRADING

It's exciting to trade in the FX market, especially if you have access to the Internet. All you need to do is open your trading account to get started in the biggest financial market of the globe. However, if you commit the following common mistakes, you may find it difficult to achieve success. Read on to find out about some common mistakes that you may want to avoid.

Extreme Leverage

In the FX market, leverage may be as high as 1:500. While it allows you to trade a lot of money with the hope of huge profits, it also comes with a risk of huge losses. Therefore, it's not a good idea to use extreme leverage or you may end up suffering from huge losses.

Over Trading

If you want to grab a lot of opportunities with extreme leverage, you will be more likely to make mistakes. This may cause loss in the end. In fact, over trading may cause improperly executed trades. You don't have much time to react when the trade losses continue to go up.

No Trading Plan

It's important to have a trading plan for success in the world of Forex trading. If you follow the plan, it can help you control the risk.

Relying on Automated Trading Apps

Often, beginners look for software to predict future trends. You can find a lot of software that claim to make predictions for you. The fact of the matter is that this software can hardly help you predict the future.

Not Following the Trend

It's important to keep in mind that short-term movements are random by nature. Therefore, they are the indication of the overall trend. Therefore, attempting to follow a short-term movement for a long-term is not a good idea. So, what you need to do is allow momentum to be your guide in Forex trading.

Trading with Zero Experience

If you want to be a successful trader, you may want to improve your trading skills. To get started, you can use a demo account practice. This practice account will help you get familiar with the world of Forex trading.

Emotional Trading

Another common mistake is called emotional trading. If you trade emotionally, you can end up making wrong decisions. This is one of the many reasons why people lose money while trading currencies. If you have a plan in place, you can control your emotions and focus on your goals.

Lack of Discipline and Patience

Sometimes, traders follow impulse trade and don't allow the setup to establish. If you predict trades like this, your attention will be diverted from a set trading plan or strategy. No matter how profitable your strategy may be, you can't earn a profit unless you follow discipline. If you be patient and follow discipline, you can enjoy lucrative trades.

Conclusion

Apart from these factors, there can be a lot of other factors that may prevent you from gaining success as a trader. Therefore, it's important that you avoid these common mistakes and get more knowledge.

If you want to achieve success in the world of Forex trading, we suggest that you check out SA Shares for more information.

Article Source: http://EzineArticles.com/10296010

Getting Started In Forex - The Secret Of The Profitable 5%

Introduction
Ask any Forex trader how to trade Forex if you're just getting started in Forex and most of them will tell you: Learn how to trade on your own, go through the school of hard knocks and find your way eventually. Heard that before? The sad fact is, 95% of traders don't make money in Forex, so why take advice that will lead you down that same old path filled with frustration and disappointment? The truth is, anyone can learn a repeatable process for making a Forex passive income... and all it takes is 30 minutes of your time. By the end of this article, you will know the secret of the 5% who do make money, and how you can join them.

What Stops 95% Of Traders From Making Money In Forex?
I can tell you with absolute certainty right now that 95% of Forex traders don't know how to trade Forex profitably. That's right, 95% of everyone that you've ever encountered in a Forex forum, discussion board or chat room is bleeding money from their trading account right now. And yet the prevailing wisdom that you hear in these circles is still that you've got to learn how to trade Forex from scratch, paying your dues like everyone else until one day you magically "get it". The next time you hear someone tell you that, do yourself a favor by asking them if they are actually making money in Forex.

Talk is cheap, but free advice from someone who doesn't know what they are talking about can be very expensive to you if you choose to follow it. The truth is, most Forex "traders" don't know what they are doing at all! They jump from indicator to indicator, from system to system, looking for the magic pill that will cure all of their problems. Who can blame them? After all, these are good, honest people who work hard at their jobs, and want to do their best to provide for their family. They just don't have the time or energy left over after work to achieve the level of skill that it takes to make a consistent Forex income!

The Secret Of The 5% And How You Can Join Them
Learning how to trade Forex on your own is not the only way that you can start making money in Forex. Anyone who tells you otherwise is either lying or doesn't know any better. The truth is that all you need to create a passive income from Forex is a proven, profitable Forex trading system. The secret of the 5% of Forex traders who make a consistent Forex passive income is that they have a systematic process in place to earn profits from the Forex markets day in and day out. They know that if they apply the profitable process over and over again, then they'll achieve the same expected result!

When you're just getting started in Forex, there's really no way that you can come up with a proven, profitable Forex trading system on your own. If you choose to follow the "learn how to trade Forex on your own" path, then it will most likely take you 3-5 years to develop a proven, profitable Forex trading system of your own. I don't know about you, but I don't go out and take a medical degree if I have a cold. It's the same thing when it comes to trading Forex profitably: Not every one of us can become a skilled Forex trader earning millions in a year, but we can all leverage on someone else's skill and experience to profit from the Forex markets.

If only we could hire a professional Forex trader to do all our trading for us while we eat, sleep, play and work. Well, we can! There are Forex trading robots that have been developed based on the skill and experience of Forex traders who have survived the school of hard knocks, and we can literally achieve the same results by getting one of these Forex trading robots to do the trading for us. In fact, thousands of people are already quietly making a Forex passive income simply by running their Forex trading robots while they free themselves to do the things they really enjoy. So what are you waiting for, it's time to join the lucky 5% and start making some serious Forex passive income of your own!

I've been a full time Professional Forex Systems Developer since 2007. Forex trading is my passion, which is why I really love helping anyone to overcome their challenges and become profitable in their own Forex trading. If you're just getting started in trading Forex, or if you'd like to take your trading to the next level, I'd love to help!

If you're new to Forex trading and frustrated because what you're doing right now isn't working, I can show you how you can make a Forex Passive Income [http://www.forexsystemstrader.com] in just 30 minutes!

Everything you need to know is in my free report: Winning With Forex Trading Systems [http://www.forexsystemstrader.com].

Article Source: https://EzineArticles.com/expert/Thad_B/948497
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