Any trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.
Sunday, September 27, 2009
Forex Software - Choosing the Best
Posted by FOREX NEWS
When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what ot
Forex Technical Analysis
The difference between forex technical and forex fundamental analysis is that forex technical analysis ignores fundamental factors and is applied only to the price action of the market. Forex technical analysis primarily consists of a variety of forex technical studies, each of which can be interpreted to predict market direction or to generate buy and sell signals. The technical analysis works by correlating the results and moves of current markets to create a short-term outlook for currencies. The rolling data that is produced throughout the trading day creates the interest in the markets and informs traders of the strong markets to back.
Stock Market Leadership
Stocks that act well while the Market is selling off may give you a clue to new Leadership
Over the past few years many investors have given up on the market especially when another round of selling has occurred. However this is exactly the wrong time to give up on the market because when the market reverses to the upside those stocks which had been acting well during the sell off may become the next big winners.
Here are a few examples of what I’m talking about. Let us compare the charts of HITK and USNA with the chart of the S&P 500 this past Summer and Fall when the market was selling off.
Looking at HITK first shows that this past Summer and Fall while the S&P 500 was dropping (points A to B) HITK was actually rising (points C to D) while completing the right side of a 1 1/2 year Cup. HITK then traded sideways for 4 weeks while developing a Handle (point E) and then broke out in late October. After breaking out HITK nearly doubled in price over the next few months before topping out in early January.
When Investors should Short a Stock
Shorting a stock is the exact opposite of buying a stock. When you short a stock you are hedging your bets that the stock will go down in price unlike when you buy a stock and believe the price will go up.
Many investors try and short a stock way to early as they believe the stock price is way overvalued. However many times a stock that is overvalued in price may become even more overvalued especially when the stock market is in an extended upward move. The proper time to short a stock is after it has encountered its first major sell off and bounced which sets the stage for a second stronger move to the downside.
Let’s look a specific example form the Spring of 2003. COKE made a strong run from July of 2002 until January of 2003 and gained nearly 75% over a 6 month period.
Industry Group Relative Strength
Posted by FOREX NEWS
The Importance of Industry Group Relative Strength
Knowing which Industry Groups the Institutional Money is flowing into and out of is very important to recognize. If your invested in Stocks that reside in low Relative Strength Industry Groups then they may remain poor performers until that Industry Group shows signs of increasing Relative Strength. Sometimes it can take many months or even a few years before an Industry Group will finally begin to show signs of life.
Lets look at a couple of Industry Groups over the past few years and see how they compare based on Relative Strength and Price Performance. The Gold and Silver Sector has been very strong since the first of the year which has been reflected in its Industry Group Relative Strength and Year to Date price Performance.
Notice how this Industry Group was strong in the Fall of 2001 but gradually became out of favor in November and December of 2001 as the Groups Relative Strength dropped to 8 (highlighted in blue). However things began to change by January as the Group’s Relative Strength began to increase and has been very strong since February with values consistently in the 90’s (highlighted in red).
Monday, September 21, 2009
What is Forex
Posted by FOREX NEWS
FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
A Short Introduction To FOREX
Posted by FOREX NEWS
Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of Forex trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.
FOREX: Starting your own trading
Posted by FOREX NEWS
The presented article is intended for those who just turned their eyes toward
Basically there are 4 steps which can be defined as "must do" for those who wish to start trading Forex. Though, their order is not particularly important, the more important part is their content, to which the great attention and responsibility must be paid.
First step is finding a right Forex broker which will be your main tool in trading. You can have a great strategy, good technical analysis skills or an outstanding intuition but you will eventually fail if you choose a bad broker. A good Forex broker is one that will not still your money, will be doing real trading with your positions, supports your preferred deposit/withdraw methods and has fast and helpful user support service. It is nice if a broker is registered with some sort of governmental financial commission. One of the most important aspects of the broker is it's trading platform — but for a new trader this part is not so important as for expert traders. Still you'll probably want to trade with some powerful and informative platform as a MetaTrader or its analogs. For new traders the more important is a demo account which can be used to trade virtual money while you are training your Forex skills. If you are new trader, start only with the demo account! Don't lose your money on your first mistakes!
Second step is learning the basics of Forex trading. If you already found your Forex broker, you will easily get all information from its website or user support. There are many articles and websites dedicated to Forex basics in the World Wide Web. All you need to do is just google for "forex trading basics" and you'll find everything you wanted and even more. This step shouldn't be underestimated, because trying to trade without even understanding how the market works is not only very risky, it will also become boring very soon.
Third step is about education. Forex trading education is not similar to any other education you probably have got in your life. Forex market is very chaotic, so is the education — there are no fixed rules and all time laws, it is unstable and dynamical. So, to be on the top you must learn new things about Forex regularly and constantly. Try to read as many books, articles other traders' opinions as you can. The more you learn, the more educated you will be. And with good Forex education you will be able to create very sophisticated and effective trading strategies.
The Foreign Exchange Market Differs From The Stock Market
The alien interchange market is likewise known as the FX market, and the forex market. Syndication that takes place amongst two regions with dissimilar currencies is the basis for the fx market and the background of the Syndication in this market. The forex market is over thirty years old, traditionalistic in the early 1970's. The forex market is one that is not grounded on any one business or laying out money in any one business, but the retail and retail of currencies.
The divergence amongst the stock market and the forex market is the tremendous retail that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. There is is much higher than the cash traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial foundations and those similar types of foundations from other countries. The
What is traded, purchased and sold on the forex market is a thing that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is really going to be cash. From one currency to another, the accessibility of cash in the forex market is a thing that can take place fast for any investor from any country.
Techniques for Advanced Forex Trading
Forex is a potential platform for earning substantial profit. In fact it is one of the largest trading markets of the world. Featuring an average daily trade of US$ 2 trillion and above, this market is best known for its high scale trading volume and intense liquidity. Adding to this, today with the advancement of technology it can be done from anywhere of the world. Backed up by world-wide web, you can easily trade in the forex market at the comfort of your own home. However, it is important to understand that fx trading is based hugely on speculation. You must be smart enough to guess exactly when the rate of a certain currency pair will rise and go down, and then buy or sell based on that. Indeed it is said that if you learn to study the speculation of this market, you will have a better chance of getting profit.
Today, it is more advanced and turned into an active investment arena, where only a factual understanding of the intricacies and complexities can make your capital grow every day. Moreover, like any other business, it also involves some amount of risks. There is no shot fx trading technique for success in the currency trading market, but there are some well-known techniques that can assist you formulate a good advanced foreign exchange trading strategy. Here are few essential techniques that can help you cut your losses and increases profits:
Forex Scalping: It is a latest technique of trading where profits are taken after relatively small moves in the forex market. It is a technique where trading is done over small time frames, and smaller profits are taken more frequently. As the position exposed to the market is shorter, it automatically reduces the risk of adverse market events causing the price to go against the trade. It is a different approach to most other forex strategies, but still requires you to analyze the market to ensure that the set up for a trade is present. This type of trading greatly appeals to day traders and those who look to reduce the risk involved in trading currencies.
Forex Hedging: It is a technique that helps in reducing some of the risk involved in holding an open forex position. It decreases the risk by taking both sides of a trade at once. If your broker allows it, a simple way to hedge is just to initiate a long and a short position on the same pair. Advanced traders sometimes use two different pairs to make one hedge, but that can get very complicated.
It is important to understand that much of the risk involved in holding any forex position is market risk; i.e. if the market falls sharply, your losses may escalate dramatically. So if you have an open Forex position with fine projection but you think the currency pair may reverse against you, it is advised to hedge your position.
Forex Position Trading: Forex position trading approach is yet another trouble-free technique to boost your position size without increasing your risk. This trading tactic is very effective with mini lots. The major highlight with this technique is that - with forex position trading your exposure to the market is less and so therefore is no need to monitor the market continuously. Moreover, you may even earn profit with negligible loss that can further boost your trading confidence. For Example- you might make a short trade on EUR/USD at 1.40. If the pair is ultimately trending lower, but happens to retrace up, and you take another short at say 1.42, your average position would be 1.41. Once the EUR/USD drops back below 1.41, you will be back in overall profit.
Today forex trading is all about watching your options when you make a trade. Aside from using effective risk management and extreme vigilance, advanced trading can be an alternate way to make profits and control losses. Nevertheless, these above mentioned advanced trading techniques are more about using the market behavior to your advantage. Utilizing these advanced techniques can give you the edge from other average trader.
Intro To Forex Options
Forex options trading can be a great alternative to trading in the spot fx market. It is often used to head physical currency positions. We have created a comprehensive guide to forex options in addition to the basic information listed below.
Types of Forex Options
1. Traditional American Option: It can be used at any point until the expiration date
2. Traditional European Option: It can only be used at the point of expiration
3. Forex Spot Option: SPOT options are very similar to traditional options. The main difference is that the forex trader will first give a scenario (UER/USD will break 1.4000 in 2 weeks). The trader pays a premium, and then receives cash if his scenario occurs. SPOT trading also converts the option to cash automatically if your trade is successful.
Determining an Options Price
8 FOREX TRADING MISTAKES THAT COULD RESULT TO MARGIN CALL
Posted by FOREX NEWS
1 IGNORANT OF NEWS EVENTS
Most ignorant technical traders often have there trading account badly damaged if not wiped out during news event releases. I therefore recommend that you get familiar with economic calendars even if you do not like trading them.
2 OVER TRADING.
Most ignorant traders often over trade in any of the following ways: opening more positions than they should, not knowing when they have exceeded there trading limits. I recommend trading only one position at a time as a beginner.
3 NO TRADING SYSTEM
One of the worst things that can happen to a trader is to chase after pips or dollars without a proven system. To succeed in trading you need a proven and tested decent trading system.
4 NO TRADING PLAN
A plan gives you the road map to your destination. When you have no plan, you will surely not know when you miss the way.
5 NOT KNOWING WHERE TO PLACE STOP LOSS ORDER And have high probability for profits
It is one thing to place stop loss orders, it is another thing to know where to place them in order to avoid being stopped out before price resumes in your analyzed irend and entry direction.
6 NOT KNOWING HOW TO MONITOR MARGIN ACCOUNT.
If you do not know when your account is running into margin call, certainly you will not know when to cut your losses..
7 NOT KNOWING HOW TO IDENTIFY A TREND AND RIDE WITH IT.
You trading system should be able to identify new market trends and , trend corrections and trend reversal.
8 ALLOWING MAXIMUM DRAW DOWN ON AN ACCOUNT
When your account is drawn down by say 50% in one trade, you should know that it will not take you a profit of 50% to return to your previous balance. It will rather take you 100% profit in your remaining balance before the account was drawn down.
The above 8 mistakes put together can result in a margin cal.
Forex Signal Providers, Who Really Need Them?
He apply his technical analysis experience in analyzing the price action on the charts to determine the proper entry price, stop loss price and the take profit price, in order to generate a winning trade with high probability.
What a signal provider do for you?
Most of forex signal providers works mostly on EUR/USD currency pair, this is may because it's the pair which constitutes about 40% of the entire forex market movement alone. Also this pair has the less spread among the other currency pairs, so it's very suitable for scalpers and short term traders (intraday traders).
When a Forex signal provider generates an entry signal and send it to his subscribers, he only send the prices' numbers for entry/stop loss/take profit values. He does not tell any information about his analytical methods which led to these values. So, His service does not add any experience to his subscribers at all, the subscriber trader only have the option to open a trading position based upon this signal or not.
That means that the trader should at least has a reasonable level of experience about technical analysis in order to have the ability to evaluate the provided entry signals himself and take the proper decision, so he uses the provided signal just as complementary information which assist his trading decision.
The common mistake which many novice traders fall in is blindly following the provided entry forex signal without even trying to evaluate it themselves. This make them can't take his responsibility for his trading decision, thus when the trade become a loser he blame the signal provider.
However, the signal provider services are very suitable for those traders who work part time, and do not have the advantage of monitoring the market all the day in order to generate their own signals. In such a case, they utilizes these services just as a timing for entering the market, these signals providers give them the exact time to enter and exit the market without the need to send a lot of time waiting these times in front of the screen.
Final note:
As a trader, you should not relay completely on signal provider service. When you generate your own signals, you combine several trading indicators like trend lines, moving average, stochastic, in order to get a high probable trade signal. Meanwhile, providers might choose to employ just one indicator in order to generate their signals, which may not be 100% accurate. This justifies why you should compare and contrast signals between one another and for the movement of the currency price.
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