Forex Tip - Understand Leverage Or Die
Most traders, usually newbies, focus on things such as trading strategy, charts and indicators. Important elements, no doubt. But lots of forex "victims" miss a crucial point that literally kills their accounts in the first 3 months of trading - they don't understand LEVERAGE. Leverage is the ratio between the actual size of the position and the amount of money the trader needs to deposit (or set aside) in order to control the position (margin). For example, if the position size is $100,000 and the margin is $1,000, the leverage is 1:100. It means that in order to "play" with $100,000 the trader needs to set aside only $1,000 for margin. If the leverage is 1:200, the trader will be able to control $100,000 with only $500 and so on. Some forex brokers offer leverage up to 1:400. But leverage can kill you. And that will be a quick and painful death.
Let's take two typical traders for example. They both have the same amount of money in their account -- $10,000. They both use the same trading system and for the sake of illustration they even place the same orders at the same time with the same currency pair -- EUR/USD.
Andy uses 1:25 leverage and trades one regular lot ($100,000). He goes long on the EUD/USD with a 50 pips stop loss order. Andy's margin for this position is $4000. Ron, on the other hand, wants to maximize his profits. He uses the highest leverage offered by his broker -- 1:400. This leverage enables him to trade 10 regular lots ($1,000,000). That's a lot, and Ron becomes a little bit greedy. But hey, he is here to make money. And the margin is only $2,500. So he goes long on the EUR/USD with a 50 pips stop loss, like Andy.
The market goes against the poor traders and the stop loss are hit. Andy's loss is $500. He still has $9,500 in his account so he easily moves to the next trade. What about Ron? He lost in this single trade $5,000. This is half of his account! What a slap in the face, from which he might not recover mentally. If he does not change his money management and risk management, the high leverage will kill his account very shortly. Maybe even in the next trade. It does not mean that Ron cannot analyze the market or cannot spot good trading opportunity when it comes. It only means that he does not trade to survive. And in order to survive the forex market you need to fully understand the implications of high leverage.
So regardless of what your broker tries to sell you, pay close attention to your money and risk management and do not leverage too much. Because as shown in the example above, the temptation to leverage might be lethal.
Learn how to manage your positions and prepare yourself to win. CLICK HERE for more details on the real "Subtle Trap of Trading".
Article Source: http://EzineArticles.com/?expert=Ben_Lipski
Forex Trading: The Most Common Flaws
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.
Article Source: http://www.freeforallarticles.com
Lesley Lyon is an expert in dealing with finance related matters. He has written several informative articles on topics like forex trading, credit card, debt consolidation, building a good credit score, mortgage, home refinancing, loan and insurance. He regularly contributes articles to web guides on forex trading and other such finance topics - www.stockswatcher.info and www.financialdeals.info
How To Earn Serious Money With Forex
The currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover.
Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.
How does one profit in Forex?
Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.
The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general FOREX companies offer trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.
Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.
You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.
How do I trade Forex?
You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).
Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service.
When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, some companies let you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.
Good luck!
Article Source: http://www.freeforallarticles.com
Want to know more? Want to get on-line training? Click On The Link Below, we'll be glad to guide you, every step of the way. www.easy-forex.com/Gateway.aspx?gid=46603&bid=29
How To Earn Serious Money With Forex
The currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover.
Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.
How does one profit in Forex?
Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.
The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general FOREX companies offer trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.
Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.
You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.
How do I trade Forex?
You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).
Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service.
When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, some companies let you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.
Good luck!
Article Source: http://www.freeforallarticles.com
Want to know more? Want to get on-line training? Click On The Link Below, we'll be glad to guide you, every step of the way. www.easy-forex.com/Gateway.aspx?gid=46603&bid=29
Forex Trading Strategies Using Trendline Analysis
When your trading strategy involves a technical analysis you will need to chart the data, which means that you must become comfortable with using charts to determine trends and indicators. You must able to spot ongoing trends and recurring patterns that disrupt the continuity of data. Charted data may be divided into two categories, which includes reversal patterns and continuation patterns. Reversal patterns indicate a market entry point or time to liquidate an open position. Continuation patterns indicate that a trend was disrupted and then continued in the direction of the original trend.
Market trends present a pattern of the market's broad movement. Trend lines are determined by connecting two points on a linear graph of historical market data as either peaks or troughs in the data. Even though a trend may be established with only two points, more points provides a better picture of true market trend. Trends may be established for any chosen timeframe, from minutes to years. Trend lines may indicate an upward or downward pattern or they may not point in either direction. Data sometimes settles into familiar charting patterns
A common analytical technique is to analyze the intersection of trend lines with the most recent price. If a downward trend intersects with the most recent price, it indicates that you should buy. If an upward trend line intersects with the most recent prices, it indicates that you should sell.
Trend lines are controversial because many traders become confused as to where to actually draw the lines. Since trends are defined by price actions, trend lines are intended to be a tool for determining the direction of a trend. Upward trends represent higher lows and indicate that prices are going up while downward trends represent lower highs and indicate that prices are going down. With an upward trend, you should draw a straight line that connects the lowest low to the highest high and in a downward trend; you should connect the highest low to the lowest high. Prices are then expected to fall within these boundaries. Many traders are confused as to whether they should draw the lines at closing price highs and lows or the highs and lows of a particular period. They are confused as to whether the lines should be adjusted to account for spikes in the data, whether spikes in the data should be ignored or whether trend lines should be adjusted to the scale of the chart.
Advocates of trend lines use more sophisticated trend line channels. These channels connect the lows of price actions on one side and the highs of price actions on the other side and a purchase is made at or near the support trend line and a sale at the line of resistance. The objective is to buy cheap and sell at profit several times over the length of a price action. This can very profitable so long as price remains within the chosen channel. Should the price break out of the channel, traders need to make consideration for several factors and establish parameters for their measurements.
Article Source: http://www.freeforallarticles.com
Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and a Free Forex Training blog for keeping online Forex trading records.
Beginners are Finding Excellent Profits From Forex Trading
Many beginning traders have found much success when trading their forex accounts. Calculated risks can and do lead to substantial rewards and you will need to evaluate for yourself the kind of risk you are willing to take for the kinds of gain you are trying to achieve. (You didn't buy into the hype that it's all risk free did you?) Careful management of your risk is necessary, but a little knowledge can prove to be be very profitable. The returns you can get from forex trading, even as a beginner, will often beat any returns you can get from mutual funds, managed funds or hedge funds.
Forex is currently the world's largest market with trading volumes of approximately two trillion dollars per day changing hands. No one can corner this market! With a trading volume of around two trillion dollars a day, no single entity can control the market for an extended period of time.
When you compare forex trading with day trading in stocks or futures, you will be pleasantly surprised to find that startup costs are substantially lower. This is beneficial in that it doesn't tie up a substantial amount of your funds when you are just beginning.
You can work as much or as little as you want - from a few hours per day - and still have the opportunity of making big money. It provides the perfect vehicle for getting in charge of your own financial investments. Once you know what you are doing you will be able to turn a profit when the market is going up or down. Technical analysis works very well and is helpful in evaluating market trends and helps you establish your position in any market condition.
Forex can offer up to 100 to 1 leverage, but it is best to avoid this high of a leverage when trading in your real account. But 15 to 1 leverage is not uncommon for many traders. And since the forex market is one of the most liquid of markets, traders can practically open or close a position at a fair price whenever they want. And you can trade from anywhere in the world with a simple connection to the internet.
One of the best ways to trade in forex as a beginner is to open one of the many free demo accounts. You will be able to get up to speed fast without risking your own hard earned money.
Article Source: http://www.freeforallarticles.com
Article by: Tony Buel Forex Trading for the Beginner For Complete List of Forex Trading Articles: www.forextrading-101.com
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Less Risk With A Forex Mini
For beginners in the Foreign Exchange market, many analysts and investors recommend that they obtain a Forex mini account; it is because like most things they should start from small beginnings.
Ideally, the mini account is designed for those peeps who intend to set off with a reasonably small investment. Mini accounts won't entail you to shed out to much account for your first experience with Forex because it would only cost you $250 whereas if you decide to start with the regular account you would have to pay an amount of $2.500.
The alternative presented to you by the account is certainly a more practical choice for the small firms who would want to venture to the world market without investing too much cash due to less accessible capital or something else.
Disadvantages of the mini account
When you think that something is charging you less, one of the first things that comes into your mind would be the consequences or the possible disadvantage that it might cause you for settling for something less. Fore mini account holders testified that they are not experiencing any form of drawbacks because it won't compel them to invest with sky-high capitals.
Most mini account holders consider their case as the safest spot especially with the reality that they are competing with larger companies in the foreign market. Their account allows them not to be taken advantage by the large firms, though their investment isn't that substantial. What's important is that they are able to participate in the trading system with just giving out small shares for those are the only things that are immediately accessible for the holders of the mini account.
For some, the fact that they can only trade small shares is an evident disadvantage, for it won't be able to help them gain a larger profit. Well the rationale behind that scenario is that, if they plan to get large profit then they shouldn't have applied for a mini account in the first place. By the fact that they applied for one, they have involuntarily waived their right to gain hefty profit.
Advantages of the mini account
Many investors believe that the mini provides them with numerous benefits more than its set backs. The ones who are holding mini accounts are only imposed with $50 as a margin deposit, the moment that they have planned to make a ten thousand dollar trade. They are the ones who are able to exhaust the benefits vouched by the leverage system in the Forex.
The plus that the leverage is offering its users is that it presents a certain ratio wherein one of two hundred is equivalent to one, which could only be enjoyed by the ones enrolled in a mini account. What that pertains is that the investor was given the capacity to trade more in a particular good than the actual money that they have at hand.
Another benefit that the Forex mini account is offering its client is an additional feature that addresses losses and even lessens them. This certain account is only 1/10 of the standard accounts in the Forex, and with that reality the account holder himself is saved from probable losses that he may incur if he has a regular account. These mini heaps are first-rate means for saving money from potential losses, subject to the preparation the account holder made for his stop loss.
Moreover, these mini accounts offer their clients more suppleness with regard to their ability to customize their trades and minimize their risks. Meaning, if you are the type who has less money in your savings account then this might be the perfect solution for you to increase your savings.
Alongside that is the fact that the account holder having the capability to refuse to go along with the other traders who want to close a certain share, the act could be attributed to the account holder's mere hope that the situation would turn around and the share would eventually gain profit.
The convenience that it offers its account holders is incomparable; especially when they are rest assured that they are entitled to enjoy the forex mini's benefits together with the low risks that they may incur.
Article Source: http://www.freeforallarticles.com
Get ready to pick up what you need to know to learn forex the way the biggest forex traders do. I try to help people understand at www.forexlearnguard.com that to succeed in any business you need something else as knowledge that makes creating wealth much easier. Visit www.forexlearnguard.com and enjoy our beware center
Mini Forex - Forex - Forex Brokerage 190
Forex Trading is the greatest home-based business possible on hand today, and perchance even in olden times. Let me show you why.
We just want to be unambiguous about who this editorial is mortal in print for. Anyone looking to jerk a home based business, or calling, without a lot of riches, but who is agreeable to put in the time vital to attain his or her goals.
Forex Trading vs. Real Estate
One of the more trendy home business opportunities is real wealth.
Let's take a look at some of the more unappetizing parts of the real plantation business.
Real Estate:
Amount of Money Needed to Begin:
Regardless of what the have to say, it budget a talented deal of earnings to get into the real housing estate business. Even the "No Money Down" systems open up you to an amazing expanse of risk.
Whether you put dosh down or not, you are reliable to pay for the "product" you are .
If you are incompetent to find a way to yield revenue from your capital spending quickly, you will be paying a mortgage sum. It only takes a few of mortgage to turn "No Money Down", to "Some Money Down", to "No Money Left".
Amount of Time Needed to Begin:
Another lie repeated on infomercial after infomercial is that it only takes a few hours a week to commence making cash in the real assets business.
We don't want to give a talk for somebody else, but whom do they mull over they are kidding. So, let me get this aboveboard...
? looking for a home online
? discourse to a realtor
? dynamic around your region
? speaking to a mortgage specialist
? and all of the other things you have to do on EACH AND EVERY HOUSE
All of these, combined, will only take me a few a week?
We suppose we are starting to see why such a huge majority of home based businesses fail. It's misleading to believe a halfhearted attempt will lead to success.
Amount of Knowledge Needed to Begin:
In symmetry to succeed in the real country estate business you have to obtain a prosperity of familiarity. How do you properly value a home? How long will it take to fix, and sell, a home? How much should boards cost? How long does it take to induct a sink?
Those are the modest . Zoning laws, deal laws, and tax laws are just some of the more complicated topics that you'll need to work out.
The fact is, we can restart writing about the awareness you need for days. Obviously, in directive for you to succeed in real parkland you need a abundance of gen.
Amount of People Needed to Begin:
Unless you are completely used to with all aspects of the real worth business already, you will run into one of a few glitches:
1. The total of time it would take you to become relaxed with all sides of real development.
2. The amount of money it would cost you to FAIL at the real lands business.
3. Most likely, the aggregate of equities it would cost you to build a team of people who are alacritous to "share" their information with you.
Experts don't come cheap, and without them you are powerless. In our attitude, this is one of the greatest shortcomings of the real land business.
Your hit, ultimately, lies in the of others. We can't weight this enough...you monetarist future is dependant on the performance of a complete alien.
Forex Trading;
Amount of Money Needed to Begin:
Nothing. Zero. Zilch. Nada. $0.
If done right, you have a duty to not risk any bucks when knowledge to line of work the Forex. Again, we guesstimate it's only fair for us to account for. Without too technical, we want you to absorb one very vital juncture.
Whether you are substitution with $1,000,000 or $0, the communication and technology available to you is identical. You can procure the skills and learning indispensable free.
Not only is this uncommon in relationship to other home business, it's also exclusive in next of kin to other tradeoff (There will be an perfect commentary explaining the dole of the Forex markets vs. any of the other ).
Amount of Time Needed to Begin:
Before diving into the answer, specifically, we deem it's main that you empathize another concept inimitable to the Forex. Twenty-four a day swapping. That's right, Forex markets are interchange 24 hours a day, from Sunday afternoon to Friday night.
How does this help in answering the subject at hand, how much time is to create Forex trading?
As we've previous, in association to chance into the real property business requires a chief commitment of time. Most of which has to chance between 9 AM and 5 PM. The fact is, you can't preach to a at 3 AM. Everything you do has to be around big shot else's schedule. That process that 40 hours of work take you 4 weeks.
Those same 40 , while education Forex Trading, force only take you 2 . All you need is a computer and an internet union. In adjunct, since there is greatly less needed to come to know in imperative to succeed at Forex Trading, 40 hours of work will put you much to sensation then it would in real business park.
Amount of Knowledge Needed to Begin:
As a Forex trader you only need to get the knowledge that will be necessary for you to make wealth exchange.
Why does this matter?
Let me answer this with an exemplar. Why do my flowers need aquatic? Actually, we don't know. To be more fastidious, none of us truly cares. However, we do know that if we don't sea them, they die. That fact forlorn gives me enough thought to river my vegetation.
This concept true in the Forex . With all of the info accessible universal, it's easy to get caught up in the non-weighty factors. Like, why do my plant life need water? However, all you need to know are the thorough steps to take in regularity to succeed. Like, marine your foliage.
This harshly boundaries the sum of time you must invest in culture to patrons the Forex.
Amount of People Needed to Begin:
Well, to attempt Forex transaction takes only you. To succeed at Forex swap takes you and an lecturer. Combining two smithereens creates one of the simplest puzzles around.
Imagine vexing to study 2 + 2 = 4 without the guidance of a tutor. None of us would ever perception this green vassal if left deserted. In fact, we wouldn't be able to communicate at all without the examples set forward to us by our parents.
Our total are molded by the superiority of the education and guidance we are provided. This holds true in Forex Trading.
With an choice Forex Trading Course, you are on the path to productive Forex tradeoff.
Ultimately, YOU ascertain your accomplishment. However, getting the right foundation and in progress support will put all the odds in your disfavor.
Article Source: http://www.freeforallarticles.com
http://money-maker2008.blogspot.com/2008/05/stock-picks-day-trading-or-swing.html
Trading stock picks is a great way to make a lucrative living, but trading is never a no-brainer. In the trading fast lane there are always trade-offs. In particular, there are trade-offs between day trading and swing trading. Each has pros and cons.
How do you decide whether to day trade or swing trade? When day trading, your position will always close, no matter how high or low it is, when the stock market closes at the end of the day. This means there's a greater potential for profit, you can use higher leverage, and you can make your money work harder. Your finger had better always be on the pulse of the market with day trading.
In a swing trading situation, your trade won't be completed the same day. It will probably close over the course of a few days. In other words, your trading finger doesn't have to stay quite as close to the market as it would in day trading. You can think of the swing trade as having a much broader scope than the day trade.
Day traders spend a lot of time very close to their stock. They have to pay unflagging attention to their positions, staying focused, and keeping their minds alert and plastered to the stock chart. If the position starts to fall rapidly, day traders must be ready to react in time.
This means you can't manage lots of positions at once. Do you have the margin to hold a position overnight? This margin can be as much as four to one in one day, but it can only be two to one overnight.
In addition, if the trade goes against you, the brokerage may force you to sell your position or even give you a margin call if you go right up against your margin limit. So, day traders can make a larger profit, which is incentive enough for most. Swing traders don't have to glue their eyes to the position. They have a larger time frame in which to sell their stocks if they should happen to lose value. And, of course, they can handle more positions due to not having to pay such close attention to each.
The most important thing to watch out for if you opt for swing trading is the threat of the "position trade". If it does come to a "position trade", you should realize you're eating up your margins. As mentioned before, in swing trades, overnight margin requirements don't allow you to work your money as hard.
Your choice about whether to day trade or swing trade will depend on where you find the most success. You will naturally lean toward one or the other. Just remember to minimize the risk and maximize the profit. Happy trading!
Article written by Douglas Newberry
Article Source: http://www.freeforallarticles.com
Stock Picks - Day Trade - stock picks - 1dayhold
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How To Accurately Calculate Your Profits (And Losses) In Your Forex Trades by Justen Robert Cas
Posted by suvarna lathaMost forex brokers that you will use online have developed their trading platforms so that they calculate your profits/losses for you. So why am I writing this article?
Well, it's pretty simple really.
If you are serious about being a successful forex trader you need to understand the mathematics behind your trades. Plus it makes sure that you can keep tabs on your forex broker, so you can make sure they are not 'cooking the books'.
As a forex trader, I'd expect you to be numerate, so it should be pretty easy for you to calculate your profits and losses. But I can understand if you are new to forex trading it might not be initially self-explanatory.
The 2 formulae you need to commit to memory.
(In this calculation I'm assuming you are trading in USD.)
When the US Dollar is the second currency (the quote currency), the formula to use is:
1 - Profit is equal to: the price change in PIPs multiplied by the units traded. (e.g. profit = pips price change x traded units)
Secondly if the US Dollar is the first currency in the pair (base currency), the formula to use is:
2 - Profit is equal to: the change in price in PIPs multiplied by the units traded divided by the exit price. e.g. profit = price change in pips x units traded / exit price
So to 'hammer this home' and make sure you really understand this process I want to give you a few examples.
To start with we'll use an example where the US dollar is the second currency, the quote currency, and to make things easy we're going to use a 1% broker margin. So you can trade up to 100,000 USD with only 1000 USD.
OK?
Great. We'll take the EUR/USD which for example is trading at 1.5618/9. Your analysis has led you to predict that the Euro is going to rise in value against the dollar so you start a trade to buy more Euros and sell US Dollars.
So you end up buying $100,000 worth of units at a price of 1.5619 - remembering that you are buying so you have to buy at the ask price - this is the last/second number in the quote (so you buy at the ask price of 1.5619 not 1.5618).
Your predictions turn out to be correct. Congratulations, the price rise to 1.5635/6. So you start another trade to sell the Euros and buy USDs. For this trade you use the bid price as you are selling, which is 1.5635.
So here's where your maths comes in.
As you purchased the Euros at 1.5619 and then sold at 1.5635 your profit is 16 pips, or 0.0016. So before that makes any sense we need to convert that into proper money. So this is where we use our formulae.
Profits = 0.0016 (price change in pips) x 100,000 (units traded) = $160.00
If you are trading standard sized lots of a currency pair as we did above of 100,000, in which you use the USD as the quote currency, a quick rule to remember is that a pip is equal to c.$10. Hence 16 pips = $160.
So let's take another quick example, but this time we'll use the USD as the base currency.
You place a buy order for 100,000 units of USD/JPY at 103.20. The price increases and you sell at 103.33. You just made a quick 13 pips. So to calculate your profit in your second formula:
Profit = .13 (pips) x 100,000 (units traded) / 103.33 (exit price) = $110.78
Easy huh?
Forex Trading Holy Grail, Learn The Secrets Today
This is a very special message to everyone searching for the forex trading Holy Grail system. I intend to reveal it in this article. Before I begin, I would like to say that anything worthwhile in life takes time and effort to master. Trying to learn forex is no different
Sometimes I have members to my service, who can't seem to make any money. I am always surprised at this. But I do understand how it happens. A typical situation is they will have a few losses, and become afraid to trade. Then they will watch me have a few wins and jump back into trading again. Then I may have a loss, and that usually destroys what confidence they had left.
Can you see how the only difference between the winning trader, and the losing trader, is they think differently? One trader learned to not allow the stress of the forex market to control them, the other has not.
For the most part our emotions are truly illogical, when they override reason. So it is therefore very important to get to grips with what is happening in our own minds.
Too many traders become obsessed with indicators. Without realizing what an indicator really is. An indicator is just a way of smoothing price action. Because it has to use historical data, it will always report a lagging view of the market. You should see indicators as an aid to help you, not as the complete guiding factor. Remember the market moves through the sum total of all the actions (trades) of the market.
So learn to not only read the market, but the mass mentality of the traders driving it. Also understand that there are two groups of traders in the market, the big players and the small players. The big traders know how to play the small players, just like an experienced poker player can outplay a rookie. Everyone thinks the USD is going up? Now watch the big players push it the other way, and take out small trader's stops. Start to think outside the box. Learn to think "what will hurt the most Forex traders right now?" don't trade with the herd.
"Price action is the most important indicator to master, combined with an understanding of what drives it."
So now you understand your aim, you just need a good system to help you pull the trigger and take action. Whatever system you choose, it needs to be closely related to price action.
It is very important to look at the market overall. You should be aware of upcoming news and recently released news. You should be aware of key levels of support, and resistance. You should also take account of different timeframes, and support levels on those too. When you learn Forex trading, you need to learn how to read the whole picture.
It is very easy to miss something really obvious when you are too close to the market and not standing back, observing everything.
"Learn how to take a holistic view of the Forex market, and keep track of the bigger picture"
Conclusion: If you feel like I have not told you anything new and are still wondering where the holy grail secret is, I suggest that you trade very small until what I have written fully make sense to you. I have told you the secret of successful trading. It's not exciting but when you master it, it can make you a lot of money.
It's time to get to grips with your Forex
http://www.forex-ratings.com/
http://www.fxclub.com/
Dukascopy
The broker house of Dukascopy Suisse is a Swiss on-line broker operating on the Forex market, with an office in Geneva.
Residence, Regulation, and Company Management Structure
Dukascopy Suisse is a company resident of Switzerland. The company is incorporated in the national regulative organisation – ARIF, reference to the license is mentioned. The address of the office is stated, there is even a map. Managers of the company on the site are not, however, mentioned
Company’s Market Position
The company obviously names itself an ECN broker; on the site it is possible to find mentions of banking-partners.
The company offers basic brokerage services – of trading accounts, and managed accounts. There are the also well-developed partner programmes. For example, granting a trading platform, with the right to create one’s own structure of spreads and commissions.
Types Services Offered
The company trades 10th basic currencies and their cross-courses.
Information about terms of trades is presented on one branch of the site. The company positions itself as a large broker Therefore, the minimum deposit of trading accounts is $25 thousand, the size of a lot is made up as an equivalent of $1000000. Limitations on volume of transactions are not present.
Credit leverage is specified by the client, while opening an account, and can be varied; depending on trading instruments and trade volume. The maximum size of credit leverage is: 100:1.
The company requires the absolute observance of the required margin rules; positions without which, such means are immediately closed. A minimum spread (EUR/USD 1 pt.) is promised on the site, but information about the sizes of spreads and overnights is not mentioned.
Information about the auction parameters (special purpose spreads, commissions), and also about overnights is possible to find in the menu "Spreads & Commissions” in DDS trade station. Except for spreads and overnights, Dukascopy Suisse takes a commission $30 after $1, 000, 000 circulation – depending on the monthly circulation of client the commission drops down (up to $10).
On the site there is a well-developed service for VIP of clients, which is mentioned: individual bank servicing, acceptance of bank guarantees, possibility of a mortgage and (or) using the credit line, exclusive analytical support, development of the special applications, individual adaptation of trading platform etc.
Deposit\withdrawal of money on an account / from account is only possible through a standard bank order, though.
The relationship of the client and the company are verified as an agreement which can be sent in to the company by mail.
Traders Support
Dukascopy Suisse is oriented towards the more financially, competent, type of client. Therefore, information for novices is not given.
A demo-version of trading platform is present, but is limited to only one week – in order to become acquainted with the site’s platform only. Support of users is various: via telephone, chat, separate e-mail addresses for different thematic sections.
Eight languages are supported, and the site automatically, if possible, determines the language of client and switches to it. The site, therefore, is not simply translated thus, but it is created on different language foundations.
Free, fundamental, support, is presented by an automatically renewed table of quotations of basic currencies, world indexes, basic commodities, American and European events, by the tunable window of the chart, tunable text reviews of world markets. Tunable news, plus a very detailed economic calendar and a lot of other useful information is given.
The Trading platform
Dukascopy Suisse offers two variants of trading platform: installed JAVA and web-based. According to their description, the platforms can execute basic informative services
As well as adapt to flexible tuning. There is an export of quotations in client applications.
The Site
Done neatly, the design is accurate and restrained. Information is structured carefully and reasonably, and the necessary information can be found easily. All of the materials placed are very detailed; a lot of interesting additional services (for example, calculators) are present.
Advantages
The company is resident in Switzerland and ARIF is regulated. There is front-office, address is indicated.
Dukascopy Suisse is a broker for the wealthier and financially competent type of client and offers a wide set of services, including different partner programmes.
Many various and high-quality fundamental support is provided.
A perfectly done site with detailed information all at hand.
Disadvantages
A surprising absence of information about key term-of-trades on the site – spreads, overnights, commissions.
4 Hour MACD Forex Strategy
Welcome to the 4 Hour MACD Forex Strategy. This strategy is aimed at
simplicity as well as high probability trades. I have been in the equity market for
almost ten years now and in the forex market for two years. I learned very early that
forex trading is not for the shaky ones. One must have a tested and definite trading
strategy as well as well organized discipline to follow the strategy and execute the
plan as to the letter. One must be exact and precise.
Therefore I paper traded for almost two years and read everything I could lay
my hands on. I bought books and courses. I attend a 5 day live web seminar. All this
did not help me at all as it did not fit my style of personality and I just did not seem to
connect with all this different strategies. Over two years of watching the graphs with
different indicators, moving averages etc. I started to get a feeling for the movement
and motion of the market especially the EurUsd around certain moving averages.
It wasn’t till late last year that I discover a setting with the MACD that gives
easy to read signals on a regular basis on a 4 hour timeframe. I like the 4 hour
timeframe as one are not glued to the screen full time.
If you look at FIG 1 below you will see that there were 14 signals over a
period of 5 weeks. Within that period of FIG 1 the signals given were pretty good.
There are times when some signals does not produce positive results. I then had to
work on a filter system to only let me take the best ones. I found that the MACD
when moving in a certain way produces a 95% accuracy. I will show you later how
the high probability trades look like.
In FIG 1 the signals are shown and FIG 2 shows that an entry is made after
the 4 hour bar has closed and at the opening of the next bar.
In FIG 3 another 19 deals were shown of which the last one was not finished
yet so out of a total of 18 trades 5 were wrong and 13 were right.
As it is a 4 hour strategy it means sometimes setting the alarm clock to catch
an entry in the early morning hours. What makes it nice is that one will know after the
close of a 4 hour bar whether the next 4 hour bar might close as a signal by just
following the MACD. Therefore one can set an alarm at that time.
Have a look at FIG 1 to 3.
Disclaimer:
As trading in the Forex market is very risky, the reader if going beyond this
point and applying the concepts and methods describing in this document do so on
his or her own will and risk. The writer and or anyone involved in the compiling of
this document will not be held responsible for any losses incurred by using the
methods described in this document as no money management nor stoploss levels are
discussed as it vary from trader to trader according to there own risk and capital
profiles.
FIGURE 1
FIGURE 3
This was just to see and get a feeling for the graphs. Let us start to set-up our charts.
You will see later on when dealing with the different MACD signals that in the
examples used I did not marked every signal. There are signals not marked and the
reason being that the intention was to let you see the different type of signals and not
to indicate everyone.
THE MACD ON ITS OWN IS NOT ENOUGH OF A TRADING SYSTEM AND
OR INDICATOR TO BE SUCCESSFUL USING IT ON ITS OWN.
Therefore to understand the system as a whole you need to go to Page289 from Post
4335 and study the 13 Lessons given. Study the Lessons on Market Rhythm by heart
as that is the heart of this system. It will let you filter the trades that can hurt you.
Moving Averages:
First of all are the moving Averages that we are going to use.
1. 365 Exponential Moving Average (365EMA)
2. 200 Simple Moving Average (200SMA)
3. 89 Simple Moving Average (89SMA)
4. 21 Exponential Moving Average (21EMA)
5. 8 Exponential Moving Average (8EMA)
MACD:
MACD settings at
1. Fast EMA 5
2. Slow EMA 13
3. MACD EMA 1
Horizontal Lines:
Three sets of horizontal lines above and below zero should be drawn on the MACD
window at levels as well as one on zero
1. Level +0.0015
2. Level +0.0030
3. Level +0.0045
4. Level –0.0015
5. Level –0.0030
6. Level –0.0045
Your Graph should look like this: (Choose your own colour and styles)
The MACD moves in certain patterns that when recognized can be very profitable
trades. Let me show you the very important ones first. By not following every signal
but only the ones that gives high probability trades through certain MACD patterns
serves as a filter. The ones not familiar are not taken. This is the filter.
Countertrend trades can be dangerous as it involves going against the trend. When
going countertrend determine the resistance
This pattern comes very regular especially A and D as the MACD has moved beyond
the 0.0045 level and are due for a correction and or trend reversal. B and C are trend
continuing patterns and are entered in the direction of the trend. Red circles indicates
entry signal and entry is made on the opening of the next bar.
The head and shoulder is another definite.
Double top and bottom does not need any
introduction as it speaks in any timeframe.
When the MACD comes down towards the
Zero line and turn back up just above the
Zero line it is normally a trend continuing
and should be taken and are normally a
strong move.
Round tops and bottoms are for sure. Just
be careful when within the first zone
0.0000 to 0.0015 above or below the zero.
I like the rounding to be formed over at
least 5 bars.
This was a difficult month (Jan 2007)up to now but already 190 Pips up and a great
move is coming as the price is within a range for almost 8 days. Lets see if that will
happen.
Up to now I have only concentrated to give the signal on the MACD window so that
you will be able to recognize it. It is easy to see the formation after it has formed. It
takes a bit of practice to recognize it while it is forming. Lets look at a couple just to
see how they look when the trade is entered.
Let us look at the graph above. See how price levels play a roll in the support and
resistance of the price movement. Say we entered the trade at Entry above. Our first
profit target will be around our fast moving averages (8EMA and 21EMA). Our
second profit target will be around the slow moving averages(89SMA and365EMA).
Our third profit target will be at price level 1.2100 etc etc etc.
This is how you plan your trade in advance to take partial profits till you complete the
trade. Should there be a moving average or price level nearby and below your entry
level you must take note that the price might go and test them. So your stoploss must
be aware of that.
Again I ask you to study the movement of the price around the moving averages.
When the price are above the 89SMA the trend is normally up and visa versa. After
the price crosses the 89SMA it tends to pullback to the 21EMA before it carry on its
direction if it is a trend direction change otherwise it tend to test the 89SMA again and
then it runs over and across the 89SMA till it finds direction and then it pulls back to
the 21EMA before proceeding on its path.
This is Market Rythm
Here are a live trade I did for someone in explaining how I trade. This is actual
e-mails that I did send. 25 January 2007 21:00 (GMT+2)
Hi
I took it with 30 pip stoploss and hope I can add to the Gbp
one earlier this week.
Greetings
The MACD pulled back to the Zero line and then closes lower which indicate a down
move.
“Got entry at 1.2955 and has set stoploss at breakeven at 1.2955 when
price did hit 1.2935. I am scared for a false breakout below support
but now the price can turnaround as I have a free ride.”
“Took 50% profit at 1.2920 and set other half stoploss at 1.2935”
“Hi
Amazing how it found support with Fibonacci. I wanted to do
this trade with you as it developed so that you can see how I go
about. I just had a feeling that the price is not going to go down to
1.2900 straight away so I applied fibonacci as there was no other
indicator between the entry price and 1.2900. One has to listen to
that little voice inside as well. I was stopped out on the other have
at 1.2935 so the total gain was 35 pips on 50% and 20 pips on the
other 50% for a total of 27.5 pips on full lot.
Not bad for an hour work.
Greetings”
This trade however was a bit risky as it was a breakout trade after ten days
consolidation testing a trendline angling upwards. One has to evaluate the risk not
only in terms of pips but also in terms of strategy and chart pattern. After a breakout
the price very often turns back to test the breakout level and then that level becomes
either support or resistance in this case it becomes Eur resistance.
Stoploss have to be inside the breakout otherwise it can be triggered and then
sometimes it can be very big before entry signal is given by the MACD.
Here is what I normally do when the MACD shows a signal but the stoploss are to big
in relation to my capital or what I am comfortable with. I enter the trade in three
stages with my stoploss set at the same level.
You will notice that not all signals was taken. Sometimes I were already in a trade. I
did not actually trade all these trades live. This was done on a backtesting scenario.
I stopped counting the pips for the April 2006 testing as it completely
convinced me of the success of this method. I randomly tested it using previous years
and the results were amazing. Average of 300+ pips per month and then I only trade
the trades that gives signals at these times 17:00, 21:00 and 01:00 (GMT +2). It gives
between 8-10 deals per month using the mentioned timeframes.. (I use Metatrader and
data supply by MIG.). Due to working hours and the fact that that I don’t have
internet access during working hours I can only trade those hours.
If you use patterns in the MACD that occur regular that gives results and use
them every time they occur you will most definitely make money.
For newcomers I suggest that you trade only Trend Continuous signals as well
as RT and RB that occur above the 45Level Hor lines as that will give you a positive
start. Less pips but mostly successful trades.
I haven’t discuss nor used trendlines so far in this document and when you add
them it will most definitely helps you in defining your exit levels. The entry level are
determine by the MACD but the exit or profit levels is determine by support and
resistance levels. I use the moving averages as described earlier as well as Fibonacci
levels and then most definitely trendlines and price levels. I normally take the daily
graph and draw the trendlines according to it and then go to the 4 hour graph. I make
them nice and thick so that I can see them. Then I draw the different price levels such
as 1.2900, 1.3000, 1.3100 etc. It is amazing to see how the price find support and or
resistance at these levels.
I hope that this document will help you on your way to financial independents.
YOU MUST STUDY THE MARKET RHYTHM LESSONS AS THAT WILL
PROVIDE YOU WITH THE RIGHT KNOWLEDGE.
Edited 2007/08/05
You also must read through the whole thread to obtain the right mindset. This is not a
easy 1+2+3=4 type of system as it takes the Market rhythm into account and a study
of these rhythm are essential to survive.
I could not post it all at once due to size limitations and the fact that
everything was not documented when this document was placed. As the thread
developed a lot of questions was asked and answered so it is of importance to go
through the whole thread.
Don’t trade very MACD signal. Make sure it is in harmony with market rhythm and
Risk to reward Ratio is bigger than one (R:R>1). Trade only 2-3 pairs at a time. I
focus on EurUsd, GbpUsd and EurJpy(risky) and lately I added the UsdChf.
