Swing Trading - A Simple 4 Point Method For Big Profits

Swing trading within the primary trend can be highly profitable and offer low risk. Here we are going to look at a simple 4 point system for swing trading that any forex trader can use novice or pro. Its simple effective and can be highly profitable. You can look and test this method on any free chart service on the web and a good one is futuresource.com

You need to know the logic of support, resistance, Bollinger bands and stochastics and that’s it. If you don’t simply check our other articles. Most swing trades done using this method last just a few days, but you will find you can bank some fantastic profits.

Step 1

Look for important points of resistance within the trend. This can be done by simply looking at support or resistance points on both the daily and weekly charts.

Step 2

Look for a sharp move toward these levels, with price volatility high and with the top of the Bollinger band near the highs or lows. Now you have spotted the opportunity, it’s time to look for entry levels.

You Need Confirmation

As we all know trading into support or resistance can be successful. Of course in many instances support and resistance give way, so you need a method to time your entry. Look for price momentum that is carrying price action toward to support and resistance to falter or reverse

Step 3

There is no better timing indicator than the stochastic – which measures short-term price strength or weakness. When prices approach support or resistance the stochastic lines should be pointing in up (into resistance) or (down into support) wait until you see the following: The stochastic lines to cross and show short-term momentum has changed. With a test of resistance they will cross with bearish divergence and with a test of support they will cross to upside with bullish divergence. This is the key to take your position confirming that price momentum has run out of steam and that resistance or support will hold.

Step 4

You need a target to take profits and this can be provided by the middle of the Bollinger band and or support or resistance levels.

Note

1. Only trade this method into significant support or resistance.

2. Look for a quick high volatility move

3. Never trade without getting the confirmation of the stochastic

4. Target – Your better to liquidate your trade as soon as target is hit, do not trail stops.

That’s it.

It sounds simple but I have been using this method for 25 years and it is one of the most effective ways of isolating high return and low risk trades.

Foreign Exchange Swaps - Calculating Interest On Forex Trades

One of the beauties of Forex trading lies in the ability to trade using leverage, which is often as high as 1,000 times your capital. In other words, you can effectively borrow up to 1,000 times your capital in order to trade. But borrowing money to trade is no different to borrowing money for any other purpose and you will be charged interest.

However, because every transaction involves both buying and selling currency, interest payments payable on money borrowed to fund a transaction can be offset by interest earned on the currency held. If this seems a little confusing we'll look at an example in a moment, but first it is worth just taking a moment to examine the subject of interest rates in general to see the wider picture as it affects the Forex market.

Interest rates are established by central banks and are used to regulate a currency in order to meet a country's monetary policy. Interest rates directly affect the cost of a currency with high interest rates making it expensive to buy a currency and low interest rates making a currency more affordable.

As a tool of monetary policy the government of a country facing high inflation, with the price of goods and services rising rapidly, might choose to raise interest rates. This would have the effect of raising the cost of currency so that borrowing becomes more expensive and both demand and consumption fall. Following the normal laws of supply and demand, as demand falls, so the rate at which prices rise will also fall and inflation will come down.

By the same token, a country facing recession might well choose to lower interest rates in an effort to stimulate the economy into growth. As the cost of the currency falls, so too will the cost of borrowing and investors, companies and individuals will be encouraged to borrow and thus spend more, so increasing demand and stimulating supply to meet that demand.

Interest rates established by central banks determine the rate at which commercial banks can borrow from the government and thus the rate at which they will lend to their customers, including Forex traders.

So just how do interest rates impact individual Forex trades?

Suppose a trader buys GBP/USD at 1.9430. In this case he is borrowing US Dollars to buy UK Pounds and is thus paying interest on the US Dollars he has borrowed and is earning interest on the UK Pounds which he holds.

If the Bank of England has set a higher rate of interest for the UK Pound than the Federal Reserve has set for the US Dollar then the trader has the opportunity to earn more in interest on the UK Pounds that he is holding than on the US Dollars he had borrowed.

However, unless interest rates are particularly high on one currency and the differential between the two interest rates is significant, any net gain or loss is likely to be small. It should also be borne in mind that interest rates are set at an annual rate and that most currency trades are conducted over short, or extremely short, timeframes. This again will reduce any interest gained or paid considerably.

Forex Trading - Getting Rich Trading Forex (part 2)

In the first part of this report we looked the first way to get rich trading forex. That involved spending five years becoming a winning trader and then starting a hedge fund.

Funny thing, several people voted on that article and gave me a very low rating on the article. Where you people looking for some way to get rich quick? Guess what, it doesn't exist!

Stop living in fairy land. Yes, I'm going to tell you the other way to get rich in forex trading. This way is even slower than the first . . .

. . . but it works!

Here's the thing. If you learn to trade successfully, you've mastered step one. If you take more money out of the market than you put in, then you have gotten passed the first hurdle.

Now educate yourself about system design. You want to learn all about building trading systems. You see, you're going to go on a quest for a great system. You're going to work on building a system that has low draw-downs, and makes bunches of money!

So, why not just start with step 2 in the first place? Let me ask you a question. Why not put the cart in front of the horse?

Because it doesn't work.

First learn to trade profitably, then build a system that really rakes it in, then add as much money as you can to that. And continually add to it. Of course it will keep growing on it's own as well.

Don't skimp on the tools to build you're killer system. You will need to purchase some several thousand dollar testing engine. Use some of the profits from your current trading to fund it.

This is the second way to get rich trading forex.

Trading Psychology - Emotions and Behaviors

Emotions and behaviors must be owned and controlled by a disciplined trader. Otherwise, trading may very well take on a life of its own. Trading taking on a life of its own is not necessarily a good thing, primarily due to the highly likely outcomes of financial disaster for the trader. At its best, each trade should be methodical, systematic, organized, and strategic per the trader’s carefully planned execution of the trade. In addition, the trader should know and be comfortable with the potential outcomes of each and every trade.

Successful trading requires the individual to have more than a certain amount of control over emotions and behaviors. Emotions may include, but not be limited to, the following items: 1. Anger, anxiety, confusion, depression, disappointment, exhilaration, frustration, insecurity, passion, satisfaction, etc. Behaviors may include, but not be limited to, the following items: 2. Arrogant, consistent, controlling, denial, following through, [im]patient, [ir]rational, letting go, perseverance, stubbornness, tenacity, etc. Having control over these and other emotions and behaviors will allow for the trader to execute trades objectively, and more importantly, according to a strategic plan.

Sounds easy enough, does it not? “Execute trades objectively, and more importantly, according to a strategic plan.” Being that traders are human, it is not such an easy task to accomplish. It is not easy to be objective and diligent about sticking to a strategic plan day after day after day – especially with the constant volatility and erratic dynamics of the market tempting and enticing you at every turn to take actions that are NOT necessarily objective and NOT necessarily part of the strategic plan.

In the coming weeks, the ways in which various emotions and behaviors may help or hinder your trading success will be discussed. While there is a plethora of information available to address this topic, Trading Everyday will address it from the perspective of basic, fundamental, human nature relevant to attitudes (emotions) and habits (behaviors).

The question to be mindful of throughout your trading days is, “Do I own the trade or does the trade own me?”

Good vs. Bad Behaviors Let’s start with behaviors. Obviously, there are both good behaviors that add value and bad ones that don’t.

Who among us has identified good habits that already exist in your life? For example, do you have the perseverance to finish everything you start (e.g., a book, a garden, a DIY home project, etc.), or do you start something and get bored after a few days or weeks and move on to something else?

It is important to recognize that you have good habits that are already in place, but it is just as important to know that you can always improve on them. Initially, Trading EveryDay will focus on bad habits that need to be identified and then addressed.

Who among us does not have bad habits that need changing? For example, do you focus on the past and/or hang on to things in your life for too long, things that you should let go of (e.g., bad relationship, an addiction, unsatisfying job, etc.) and impact your ability to move forward?

Analogy - Letting Go and Moving On A great tennis player doesn’t become great without training and practicing to develop the technical skills and fitness (both physically and mentally) necessary to play at the world class level. Additionally, the player must make sure that his tools and equipment (rackets, strings, towels, extra shirts, water, tape, etc.) are available and in good working order to be in the best possible position to win.

As soon as the ball is in play, the player will focus and strategize on only that rally, one point at a time. Sometimes he will win the point, other times he will lose it. Whatever the case, as soon as the next rally is in play, the player has to let go and move on to focus on the next point. He cannot dwell on what just happened, good or bad, because that is in the past and the point at hand – the present - is what is important.

The opponent is hitting the balls back, moving the player all over the court. The player remains in the moment, strategizing each return shot. The tennis player is using all the experience, knowledge, and tools to hit it back or – even better – hit a winner and win the point, and perhaps the game, set, and match.

Applying Analogy to Trading The same is true in trading. The trader must train and practice to develop the technical skills and physical and mental fitness to perform well. He will also need to make sure that the necessary tools and equipment are available and in proper working order to be in the best possible position to perform well and win.

No matter what the circumstances – good, bad, profit, loss, – a great trader will adopt the behavior of letting go and moving on to the next trade. A good trader will not allow himself to hold on to the lingering effects of any trade knowing that once it’s done, it’s done. The intention and desirable behavior should always be to move on and do better next time, even if it was a good, profitable trade because the game is never really over for a trader.

By establishing and sticking to a strategy, making the trade, letting it go, and moving on to the next trade, the trader remains in control of his behavior and owns the trade rather than the trade owning him.

Day Trading Systems – Spotting Price Direction and Daily Ranges

The aim of day trading systems is to spot price movements within a short time frame normally by using support and resistance and pivot points.

There are numerous e-books, gurus and systems that tell you this can be done and you can make big profits with low risk but can you? Lets find out.

The Market

In any single daily trading session trillions of dollars are traded by millions of participants all with different aims and objectives.

To calculate what will happen in a few hours or a day is literally impossible.

No one can accurately predict what will happen, so while support resistance and pivot points can be drawn and used they are of no use to you in making money.

Ever seen a real time day trading track record?

I haven’t and neither will you find one.

The logic day trading is based upon simply doesn’t work.

Vendors of day trading systems always use hypothetical track records that make great gains but there done in hindsight knowing the prices!

Anyone can do that.

Fact is, day trading is one of the dumbest ways of trading forex.

Volatility is random

Volatility is random in a day session and day traders constantly get stopped out, as support, resistance and pivot points they feel are important give way and hand them losses.

Who pays attention to daily support and resistance apart from day traders?

Any trader who is trying to make money from forex trading knows that you need to have accurate data to get the odds in your favour and daily data is of no use.

The bulk of people trading forex pay no attention to daily levels as they know there not important.

The reality is day trading systems dont make money

So next time you see a vendor trying to sell you a system that can accurately predict daily support resistance and pivot points ask them for:

A real time long term track record to support their claims.

Odds are you simply wont get one.

Vendors selling day trading systems are not stupid enough to trade their own system!

They will leave that to you and make money selling you the system.

They win, you lose its as simple as that.