Trading Is a Mind Game

Some of the greatest philosophers, priests, scientists and sportsman have said that winning is not an art, it all in the mind! So if you are planning to invest in Forex trading then you need to be mentally prepared. It is one of the best mind games that you will ever get to play. The first thing to do is change your mindset. Instead of thinking like any other normal person, you need to start thinking like a speculator, like a Forex trader. There many examples of Forex traders with experience and capability waste their career in the most unimaginable manner. This happens when they waste most of their time trying to perfect their knowledge of analyzing and reading Forex trading charts etc. As a result 95% of the traders have lost in the long run.

Anyone with an average intelligence can understand how the Forex trading market works although it might take a few years of following the market. But that’s about it! It doesn’t take a great IQ or knowledge to beat the odds and earn a profit in a Forex trading. The most important thing is the decision that you make. The decision making process maybe long and there might be some planning behind it but sometimes traders seem to take too long to take a decision and often that ends up being a wrong decision. This is one of the most important things behind success or failure. Some traders make quick decisions but are not able to stick by them or do a follow up and as a result they end up being on the losing side.

The reason why people avoid making a decision is because it’s painful and traders often have a ready assumption that their decision might not be the right one. So basically, the Forex trading market is playing with their mind. But they are not able to understand that if they can have some confidence in what they are doing, they will be able to sustain the pressure. There are many traders who shy away from making even short-term decisions. The pain being talked about has nothing to do with actual losses. It is from the fact that the traders are speculating already about future losses and feeling helpless that they don’t know what is going to happen tomorrow. At the end of the day everything depends on the trader’s ability to take a decision in spite of knowing that there is no guarantee to the Forex markets movement and taking a right decision. The Forex market is volatile and ups and downs are going to be there always. This is one fact every trader needs to live with. Keeping in mind the volatility, the Forex trader has to keep cool and be disciplined. It is like mentally preparing yourself in advance for what lays ahead so that you will not be caught off guard. The same mind game that most generals’ use in a war is what Forex trading offers.

Getting Started With FOREX - Selecting A Broker

You have decided that you are ready to start investing in the FOREX market. You have developed the proper mind set and even decided on the type of account that will meet your needs. So what is the next step? You need a broker; your broker is the person that will handle the actual transactions you wish to make when you trade.

Just a few minutes of research on the Internet will show you that there are a huge number of FOREX brokers out there looking for your business. Everything from large financial institutions that mainly concentrate on large managed accounts to small private companies that dedicates themselves to private investors working with mini-accounts. So how can you possibly know which broker is right for you? Which of the hundreds of available brokers will be the best one to help you realize your investing goals.

The first thing you need to do is to consider the type of account you are wanting to open and narrow your list to brokers that handle those accounts. Most people reading this are probably going to be looking at a mini or standard account. Large managed accounts are a whole different breed of animal than the investor directed accounts.

If you are interested in a managed account then your best bet is to go with a large financial institution that has a proven track record of successful investment strategies. Any brokerage that handles these types of account should be able to provide you with historical data on their trading record so you can judge their competence and success rate. Always remember though that past results can be an indicator of future results but they are not a guarantee.

When looking for a broker to open an investor directed account with there are many factors to consider. The most important criteria though are safety and reliability. Though fraudulent brokers are far less common than they were a few years ago there are still some out there. All brokers should have a relationship with a reputable financial institution and should be listed by Commodity Futures Trading Commission as a Futures Commission Merchant.

Once you are sure that you are looking at only legitimate brokers then fees and commissions would be a good factor to consider next. Most FOREX brokers do not charge any fees they make their profit from the spread. The spread should be clearly stated on their website and should also tell you if the spread is fixed or if it can vary under certain circumstances. Check to see if the spread is the same for all account types, some brokers charge higher spreads for mini-accounts.

Something else to consider is the trading software provided by the broker, most brokers will allow you to sign up for a demo account so you can test their software. Make sure that the software works well and is easy for you to use. It is very difficult to trade if you have trouble using the broker-supplied software.

Does the broker provide instant executions and what are their slippage policies? How much slippage can you expect under normal trading circumstance. Look into their margin policy and requirements. Are there different margin requirements based on the currency being traded? Make sure that they cover all the currencies that you will be interested in trading.

Selecting the right broker is vitally important. Time spent completely researching your options before you make a selection will definitely be time well spent.

Forex Day Trading Online: Top 7 Mistakes Beginners Make

Learning to master Forex day trading online for someone who has no background in the financial markets can be intimidating. Generally, much patience and time are needed.

However, by looking at the most common mistakes we can at least shorten the learning curve and get past the first few hurdles as quickly and painlessly as possible. The financial rewards once the skills are learned are certainly worth it!

Mistake #1

Thinking they can generate huge amounts of money in a short time. This is not a get-rich-quick scheme. An individual approaching day trading online with that mindset best look somewhere else.

Mistake #2

Going by gut feeling instead of calmly assessing market conditions using technical indicators and selecting high probability trades.

Mistake #3

Chasing the market.

A typical scenario: The new trader feels certain price is going up so puts in a long position. Unexpectedly price pulls back. The new trader gets nervous and doesn’t want to lose too heavily so comes out with a 15 pip loss.

Shortly after that price resumes the uptrend. The new trader thinks, “I was right in the first place” and puts in a second long position to try and make up for the 15 pip loss and make a profit on top.

Low and behold, price doesn’t go where the new trader was expecting, pulls back, and takes out the position at a 25 pip loss. Score for the day: -40 pips.

Chasing the market is one of the surest ways to blow your account.

Mistake #4

Lack of thorough preparation before the start of a new trading session.

It is crucial a trader examines the charts from a higher time frame down to a small time frame (e.g. weekly, daily, 4 hour, 1 hour) to pick up significant candle or chart patterns and understand the direction of the overall trend.

Additionally, consulting the daily calendar for Fundamental Announcements will ensure the trader is not caught off-guard by sudden market moves at news time.

Mistake #5

Poor or non-existent equity management.

New traders often fail to educate themselves on how much they can risk on any one trade according to how much capital they have in their account. Many are tempted to trade multiple lots far too early only to get wiped out.

Multiple lots can result in big profits. They can also eat you alive when a trade goes against you. Only strict, almost paranoid, tight equity management will ensure the account survives and grows.

Mistake #6

Floating from one system to the next, trying indicator after indicator, becoming a ‘jack of all trades, but master of none.’

Find a proven system that fits with your trading personality and style and stick with it until you make it work for you.

Mistake #7

Thinking they can learn by themselves, find the secret code and ‘crack the system.’

Most successful traders learned from someone who is already a professional successful trader, preferably with years of experience. It is so important to have a mentor or tutoring program to get up to speed more quickly. (See resource box)

Learn FOREX: How to interpret Support and Resistance levels

When you reach a certain level of understanding about how the FOREX market works, you become conscious of the huge significance support and resistance levels have.

Although the internet is populated with a large collection of strategies and rules on this subject, I always found it difficult to understand what lies beneath and how to reliably pinpoint the exact inflexion level on a chart.

This article addresses the subject in my unique and well-known style. I will share with you my findings as well as the optimum approach to them, trying to extract the essential and propose a simple, yet effective way to show a constant profit.

The S/R levels are the product of the battle between the sellers and buyers, on their perpetual attempt to turn a profit from their market expectations.

This is always dictated by the big players and smaller hands only come to add momentum to any change in direction.

This observation becomes more significant for larger time frames on the chart, given the colossal size of this market (more than 1.5 trillion USD a day).

That is why all technical analysts advise you to wait for the change in direction to occur, and avoid initiating positions in the anticipation of a support or resistance level. This is precisely because no one knows if the big guys are still willing to defend that level.

Of course, they will pack their analysis in vibrant colours and fashionable expressions, but the naked truth is the above-mentioned one.

The advent of so-called “digital options” brought major players at the table. These are the “casino-style” bets, using terms like “one touch” barrier, “double no touch” barrier and similar others. Simply put, you bet that if the rate behaves in a certain fashion, over a specified time frame, you will be paid a certain amount of money, in line with “odds” similar with horse race betting. For instance, you can bet that EUR/USD, currently trading at 1.2300, will not go above 1.2400 for the next seven trading days. If this scenario plays out well for you, the broker pays you in line with the odds of the bet.

This “digital options”, together with their “classic options” relatives, are a major supplier of S/R levels in the FOREX market, as players select very specific levels for their bets.

As it is the case with all humans, we tend to simplify things, this approach resulting in “round numbers” for our bets. It is unlikely that we will go for a 1.2328 level and more likely that 1.2350 or 1.2300 will be our choice.

This mechanism initiates the structure of rather predictable S/R levels on any FOREX chart and the most important ones are the clear, full, round numbers as 1.2000, 1.2100 or 1.2200, if we are to take EUR/USD pair as an example.

Free Forex Trading, The Best Way To Start A Successful Trading Career

The Forex market is known around the world by its high liquidity and high volume of transactions occurring during most of its long trading week. This makes the transactions conducted in this market highly profitable. But before anyone can enter the forex market and make some money he has to learn the ropes of the trade. But how do you do that? The answer is. By trading the forex for free.

Yes, it’s true, you can trade the forex markets for free and using the same state-of-the-art software packages that professional Forex traders use to help them make real-time, live currency trades. You will also experience the same dynamic market action and the same process of making decisions, reacting to charting patterns, and tracking the performance of your forex trading system the same way professional traders do. All this can be done even if you don't put any real money into your account. All this means that in the beginning every new forex trader needs to start Demo-Trading.

This will be of great help when you are new to forex trading. By placing demo trades, you will learn a lot about how Forex transactions work. This is a very important step for you in order to be able to learn how to become a trader. A demo account allows one to become familiar with trading procedures, such as placing Market, Limit, Stop, Orders without any risk. Of course all dollar losses or gains using a demo account are imaginary but, as mentioned above, the trading experience you acquire is not.

Making big gains in a demo-account does not guarantee profits in live trading; however, those who are not successful trading on paper rarely are successful when money is on the line.

Once you sign up for a demo account, you will need to try one of the charting packages from the broker you will be using. Any demo software you choose will do because they all have the necessary indicator tools you need. Once you have downloaded the software you can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. Once you have a real trading system, you will already know how to place orders properly