Forex Trading - The Biggest 6 Mistakes That See 90% Of Traders Lose

The mistakes below are common amongst novice traders and ensure 90% of them lose and lose quickly – while novice traders make these mistakes so do experienced traders.

If you make them, you will lose so avoid them and increase your chances of success dramatically.

Here they are all ways guaranteed to lose you money.

1. You Can Buy Success

Many traders think trading is easy and they can buy success in forex trading for a few hundred dollars – major mistake!

Most forex education sold on the net is sold by marketing companies or failed brokers and simply doesn’t work – if it did it would not be sold.

There is some forex education you can buy that’s good and the best way to ensure it is worthwhile is only accept the proof:

A real time track record of profits no hypothetical simulations!

To follow a trading method you will need to understand how and why the logic works – if you follow it without understanding it, you will not have the confidence to follow it with discipline.

2. Being Clever Will Make You Money

On the other hand there are people who think being clever will make them money and they have a right to win because their clever – Another major mistake.

In many industries you get paid for how much effort you put in but not in global forex – you get your reward for being right and that’s all.

Many traders devise complicated systems that are extremely clever and they lose.

It’s a fact that a simple system will beat a complicated system, as its more robust with less elements to break.

Don’t complicate your trading system or methodology, keep it nice and simple.

3. Knowledge = Power = Profits

While you need a simple trading system to succeed you also have to learn the right knowledge.

Knowledge for knowledge sake in forex trading won’t make you money.

In fact most of the accepted wisdoms of forex trading are no help at all when trying to make money and that’s why 90% of traders lose.

Lets take one example, online news sources will help you win, as your better informed.

Yes you are better informed but that won’t make you money, in fact it will help you lose!

Why?

Because those news stories are just so convincing.

Think about it, these guys are telling stories their NOT traders and most news stories are convincing but dead wrong.

This is just one example and there are many more, where traders focus on the wrong knowledge and lose.

4. Day Trading Makes Money

One of the biggest myths of all is day traders make money.

Try and find one with long term track record of profits and you will look for years and never find one!

Why?

Because it doesn’t work – great story but that’s all it is.

It doesn’t work due to the simple fact that all daily volatility is random and if the data is random, you can’t get the odds on your side – PERIOD.

5. You Can Get Rich Quick

Yes you can, but this is not the norm.

Many traders think making over 100% is easy and over leverage, trade to much and take high risk low reward trades and then lose their equity.

Be realistic about what you can earn, in your first year if you made 50 – 100% then you would be up their with the top money managers in the world.

Take it slowly and look longer term – if you compounded 50% for 10 years you would be extremely wealthy at the end of the period!

6. Discipline

You here it time and time again – discipline is the key to success, but very few forex traders actually know what it takes to be disciplined, so here is a simple explanation:

To be disciplined relies on these three personality traits:

1. You must have a desire to succeed and accept that you are on your own and learn the right knowledge by developing your own trading reality.

2. This leads to confidence that you can achieve trading success.

3. From confidence comes discipline, to follow your trading methodology through the bad times without throwing in the towel, to achieve ultimate trading success.

Final Words

Read and digest the above and don’t make the same trading mistakes in your forex trading.

If you avoid them you could soon be on the road to big profits – Good luck!

Swing Trading Systems - Buying One For Long Term Profits

Swing Trading is fun, exciting and can be very profitable and is one of the easiest forms of trading for a novice to master.

There are many swing trading systems that are sold by vendors via e-books and software, and courses or of course you can build your own.

Lets look at choosing a swing trading system that can be you some great capital gains – so what makes a successful swing trading system?

Let’s find out.

Firstly let’s give our definition of swing trading

The object of a swing trading strategy is to make money from the intermediate swings within the longer term trends and these typically last for a few days or a few weeks – this is not day trading!

You cannot make money day trading as there is no reliable data - so don’t try.

Ok let’s look at buying one from a vendor and points to consider

Here are some points to consider when buying a trading system from a vendor:

1.Understand the logic

If are swing trading forex stocks, or futures you need to understand EXACTLY how the methodology works and why it will be successful.

You must understand why the system will work because you are going to have to have the discipline to follow it through losing periods and this only comes from understanding and confidence.

So if you buy a forex swing trading system don’t follow it blindly, understand everything about it. You need the discipline to follow a trading system through losing periods, or you have no method in the first place.

Swing trading is essentially simple and the method should be easy to understand and apply.

2. Does it suit your trading personality?

Swing trading systems vary in terms of the risks they take and the drawdowns they incur - make sure that you buy a swing trading system that suits your personality and your risk tolerance.

3. The track record

While a track record does not guarantee future profitability, it does give you confidence in its ability to make money and what it is capable of.

Look for a real time track record of profits over a two year period of trading.

Don’t trust hypothetical track records these are done knowing the closing prices and really if you know the closing prices its easy to make a profit!

4. The vendor

Find out as much as possible about the vendor and their trading experience – many systems are sold by failed brokers or marketing people, who simply make up a hypothetical track record, so be wary before buying.

Look for a money back guarantee if possible. This will give you the comfort that you will get your money back if the swing trading system you are being sold does not live up to the vendors claims.

Swing trading is great for novice traders as it provides regular trades and plenty of action while hitting the high return low risk trading opportunities.

Trading opportunities also do not take long to complete and the result is quickly known – hopefully in the swing trader’s favor!

Making Money And Having Fun In The Process Is What The Trading Is All About

Choosing Reliable Forex Software On line Forex trading is here to stay. Every day, millions of persons engage in the act of buying or selling currency online.

It seems that when it comes to Forex software, just about everybody has their own set of programs they would love to have you utilize. Knowing that software is not necessarily created equally,this means you will have to make some decisions about what you expect from the trading software that you decide to go with. Here are some tips you should consider before committing to any one software package.

The first question you should ask yourself about any trading software has to do with usability. Do you find the software to be logical to your mind? Should you need assistance at any point in the process, does the software provide the ability to access a help section? Being comfortable, with the way that the software works, is a huge part of whether or not you need to consider that particular software trading package. If it seems too complicated, then pass on that selection and move on to another potential candidate.

When you have identified a software packages that you believe is for you, find out what other consumers are saying about this software and find one that would be easy for you to use and that have a proven track record of success.

By identifying potential trade software packages and performing due diligence to obtain the relevant comments that have been shared by other consumers, you'll go a long way toward finding the ideal software package. Once found you will be able to enjoy your choice of Forex software for a long time to come.

The time is now here to decide, which one you would enjoy using as your trade software of choice.

Making money and having fun in the process is what the trading is all about. As someone that has been around for a long time in this business I know that it is truly a traders dream to find a complete trading solution that is accurate, easy to use and at the same time profitable. Designing trading systems that can full fill these three elements is hard work. I came across this system purely by luck and since then my trading has been more fun and very profitable. I passionately believe in this product and I am convinced that it’s the best Forex trading solution on the market today.

Learn Forex - Is Forex Trading The Ultimate Home Business Opportunity?

That's true, you can be a trader at home. Forex, or Foreign Exchange Market is by far the largest financial market in the world. About $2 trillion are traded EVERY DAY. The Forex market is the currency market, where a currency is traded against another. Quick example : you buy a dollar and sell euros. Not that easy to understand. But can we do this from home ? Yes, we can. About ten years ago, you would need millions of dollars to start trading. Now you can start with a few hundreds of dollars.

What you need is your computer and an internet connexion. You can trade from the comfort of your home, without having to deal with any boss or clients. You will only deal with money. Then you can start selling dollars and buying euros and make a profit.

You have to find a broker, where you will open an account and funding it. You will also have the possibility to get a demo account and practice, with fake money but in the real time market. I strongly recommend you practice a few months before thinking of "live" trading.

It is not that easy, it is extremely risky if you don't know anything about trading. First rule : don't invest what you can't afford to lose.

Forex is not a game, there is a lot of parameters to take in account, and human factor is one of the most important in this business.

You may have already understood it, currencies are traded by pairs. The european Euro versus the US Dollar, The US Dollar versus the Japan Yen, etc. When you buy a currency, you want to sell it later at a higher price. When you sell a currency, you want to buy it later at a lower price. This is how you make profit. Think like you were buying a foreign company share. You always want to buy low, and always want to sell high.

What you are looking to when trading currencies is the exchange rate. This will tell you your next move. Buy or sell. Currencies are part of the economy of each countries. When the value of a currency is increasing, this means the economy is going better as before. The exchange rate can be viewed as the country's economy compared to another economy. This is why economic factors can help you to predict your next move. If you know that a currency will increase, you will buy it and expect to sell it at a higher price, a higher rate.

You can choose the pair you want to trade, but the most people trade the main currencies, Euro, Dollar, British Pound, Japan Yen. And you can only choose to trade one pair only if you want. You are the only person that will make the decision. Hope you are making the good ones, profit can be huge, as well as losses.

Like any business, forex trading has to be taken seriously. Lots of people are trading the forex and some are earning thousands of dollars every day. But it needs a lot of training, education and analysis before reaching such results. It can be the perfect business and actually it is for advanced traders.

The Importance of Trading Psychology

Why is trading psychology so important? Trading psychology is so important because day trading can be a very emotional business. The wrong emotional state can make it difficult if not impossible to trade effectively.

Trading psychology is critical because there is so much emotion in many of us that is linked to money. We also know that many who enter into the trading arena fail. Why is that? There are numerous reasons why a large percentage of traders fail. The main reason has been cited as lack of discipline. Discipline is defined as, orderly or prescribed conduct or pattern of behavior, or, a rule or system of rules governing the conduct or activity. Discipline is necessary to accomplish any goal.

Discipline comes into play when combating fear and greed. Fear is typically based upon a fear of loss. No one really wants to lose money in the market. We've all heard the horror stories of people losing the money in their trading account or their entire trading account.

Fear of loss or fear of a further loss makes traders scared. Scared traders are very typically not profitable traders. The objective is to be a profitable trader.

Fear in many situations is triggered by not knowing what is going to happen next, basically this may be fear of the unknown. We feel much more confident when walking down a familiar street in our neighborhood than if we walked down an unfamiliar dark alley in a strange place. We can eliminate or minimize a great deal of fear by becoming more familiar with exactly what we are to expect. In other words, we need to have a trading plan, basically a trading roadmap so that we can know what we are to do each and every day. With a plan we also what the likely outcomes of those actions may be each and every day. In this way, we'll be met with far fewer surprises, and unknowns, which may trigger the fear.

The trading plan is a great way to start and maintain trading discipline. With this plan as a roadmap it will be much easier to get from point A, which is where we are now, to point B, which is where we want to be.

In your trading plan you may have notes written to yourself about what to expect. It is your expectation level that will dictate your satisfaction with your progress. Expecting a consistent return of 1000% per month will have you abandoning your trading very, very quickly. Having realistic expectations about the returns of your trading system and it's ups and downs will help you to maintain discipline in the long run.

One of the most difficult things for a trader to do is to continue to trade his trading system when it is going through a series of losses. A series of losses is a tough period of time for many, many traders, especially those who are unprepared or unwilling to accept the fact that all trading systems and methodologies have losing trades. If you do not have faith in your trading system when it does start to go through a series of losses it will make you nervous. If you had not studied the previous trades and do not have faith in your trading system fear will lead to a lack of discipline. Lack of discipline will eventually lead to not following your trading system. Not following your trading system will eventually lead to loss. This is another reason why carefully choosing a trading system is extremely important.

Conclusion

Controlling your emotions is critical to maintaining discipline while trading. Maintaining trading discipline is essential long-term trading success.

FOREX Day Trading - Brokers Love Day Traders For One Reason

FOREX Day traders are loved by brokers these are the traders they simply want more than any other type of trader.

FOREX day traders are wary of brokers, because they think they pick their stops off and that’s why they love them – but the real reason is:

Day traders are guaranteed to lose their money without any help from a broker. I used to work in the back office of a broker and we factored them in as losing straight away and a big fat profit for us.

So here are the reasons we loved them and other brokers do to:

1. Day trading by its very nature doesn’t work

Trying to trade in short time spans of a few hours or a day and to try and measure where prices are going is ridiculous.

All short term volatility is random and prices can and do, go anywhere.

We traded several thousand day traders and not one made money, they all lost.

The logic FOREX day trading is based upon is totally flawed.

Try this simple test:

Ask any vendor selling a system on the net and ask for a real time track record and see if you get one – You won’t.

Many of them are simply writers or failed brokers.

They make up track records sell them and then do a deal with a broker for a kick back commission and believe me the commission is good – we paid out tens of thousands every month!

2 Great commission

Day trading is the best commission to equity you can get and for a broker that’s great.

Lots of trades, eroding account equity to zero and paying commission every day.

Much better than a trader coming in and blowing his equity in a couple of trades.

Market makers are equally happy.

As they want the traders deposit lost and on their book.

They are trading against the client and don’t need to worry it will soon be in the bank. Furthermore, as day traders never make any big profits (running profits is totally alien to them)

The risk of carrying a day trader on your own book as a broker is low.

DO BROKERS HUNT STOPS?

The answer is no.

Day traders believe this, but the real reason is they set their stops to close.

Support and resistance are meaningless in day sessions and that’s why stops get hit all the time.

Its not the brokers fault, it’s the day traders for being stupid and placing his stops in meaningless time frames where volatility is random.

There you have it.

The reason brokers love day traders is their great money earners for the house and guaranteed to lose as well, which is perfect for market makers.

Technical Analysis - Using Support & Resistance Correctly

If you are trading with technical analysis one of the keys to making longer term profits is being able to use support and resistance to make profits.

Most novice traders however fail to trade with support and resistance correctly so here are some tips.

1. Support and resistance does not work in short time periods

Most novice traders try using support and resistance in daily periods – Forget it, you will lose.

Why?

Because these levels are totally meaningless.

Trillions of dollars a day are traded by millions of participants and to say that support and resistance is valid in such short time frames as a day or a few hours is laughable.

The only people who take notice of these levels are the small losing minority of day traders.

Don’t believe me?

Ask any day trader for a real time track record of profits using support and resistance and you won’t get one.

Volatility is random in short time frames and therefore any technical indicator you try to use wont work.

Novices try day trading and lose and wonder why, they need to get educated study volatility and standard deviation.

2. Support and Resistance Test and Time Span

Generally you want several tests (the more the better) and gaps between the tests.

The more tests you have the better, this means that traders will generally pay attention to them and when they hold are or broken.

However, when looking for support on resistance don’t just use the daily chart – Look at the weekly chart which will give you the bigger picture.

3. A Great Trade set up

Is when you get critical support and resistance on the longer weekly chart lining up with similar levels on the daily chart – These levels are very significant and you should look to trade them.

4. The Biggest mistake made by novice traders

The biggest mistake made by novice traders is they simply see support and resistance levels and trade into them and “hope” the market reacts in the way they want.

You will never make money this way -you must have price momentum in your favor.

Price momentum must support the way you are going to trade and we will look at this in more detail in part 2 of this article.

Canadian Dollar Performance Update - Spring 2007

During recent months, the Canadian dollar traded a tight range against Sterling between 2.2500 and 2.3000. This follows a sharp uptrend in GBP/CAD from a low around 1.9737 (02/03/06) to a recent high at 2.3567 (23/01/07) caused by expectations of higher interest rates in the UK, coupled with interest rate stagnation in Canada. At the same time, the US$ has weakened, forcing the exchange over US$2 per GBP and down to US$1.11 per CAD giving UK customers a boost while detracting the value for our southern neighbours.

In the UK, the Bank of England left interest rates on hold in April, however, expectations of higher rates in the months ahead continue to offer support to Sterling. With a buoyant housing market and strong levels of consumer spending, the market is expecting that the Monetary Policy Committee (MPC) will be forced to raise rates at least once more in an attempt to dampen down inflationary pressures. The headline Consumer Price Index (CPI – the most recognised measure of inflation in the UK) is currently running at 2.8% y/y against a target rate of 2.0% and raising interest rates is the most obvious way of combating rising prices.

Meanwhile, Canada has been faced by interest rate stagnation following the rise to 4.25% in May 2006. Risks to the Canadian economy remain finely balanced with the threat of an economic slowdown filtering across the boarder from the US. As its biggest trading partner, any signs of a struggling US economy may impact the Canadian economy although this has not really been the case so far in 2007. In similar fashion to the UK, the Canadian housing market remains robust with The Canadian Real Estate Association reporting strong sales of existing homes in February and record high average house prices. The Canadian Dollar is also likely to remain well supported against the US$ by rising oil prices given that oil exports represent a large percentage of the Canadian economy.

Looking back to March 2006 GBP/CAD traded a low of 1.9737 (02/03/06) indicating a difference of CAD 32,300 in less than twelve months when looking to transfer £100,000. Therefore, anyone looking to transfer funds between Canada and the UK should pay considerable attention to the GBP/CAD exchange rate as it can have such a dramatic impact upon their future wealth. Should you be looking to move large sums it definitely pays to monitor the markets and be aware of international factors that can affect which direction currencies will go. The debt and ongoing military interventions of the US will undoubtedly have some effect on the US$ against the CAD, though the weak US$ will most likely help boost the exports from their struggling economy. The recent trend of the Dow Jones to smash new records and factory orders starting to increase does point towards the start of a turn around for the US which, if fuelled by the exports will be another reason for the US to try to maintain a weaker dollar.

Advising migrants and businesses of currency movements and protecting them from the risks associated with fluctuating exchange rates is the speciality of currency brokers. Whilst nobody can guarantee future currency movements due to the sheer size and number of participants in the market, both personal and business accounts can increase their bottom lines in dramatic fashion by taking expert advice.

FOREX Trading - Make Money Fast a Novices Guide To Big Profits Quickly

If you want to make money fast in FOREX Trading this article is for you – Even if your novice trader you can build wealth quickly with low risk simply incorporate these simple tips in your trading plan.

Let’s look at how to make money fast in FOREX trading:

1. Follow long term trends

The big trends last for months or years and these are the best ones for making big profits – Use a simple long term trend following system.

2. Learn to buy breakouts

If you are not familiar with breakouts then you should study them and how to take advantage.

Fact:

Most major trends start from new market highs NOT market lows, so by buying breakouts, you will catch the really big trends and get low risk as well.

3. Be patient!

You don’t get rewarded for trading frequently you get rewarded with cash for being right.

The best risk reward trades don’t come around everyday, be patient and wait for them.

If you do your profitability will be considerably enhanced.

4. Don’t diversify

If you are trading a small account there is no point in diversifying.

Traders say it reduces risk that’s debatable, what’s not is:

That it restricts your profit potential.

Don’t diversify, back the trades that look good and you believe in and are confident of with as much as you can and risk 10 – 20%.

5. Don’t trail, stops to quickly

Another major error is to trail stops up to quickly.

If you are in a big move you are confident in then keep your stop back to avoid being bumped out by short term volatility.

In making money fast this is one of the hardest things to do, holding onto a trade when your open equity is being eaten into - sometimes by thousands of dollars a day.

Well if you want to make money fast get used to it.

Sure it takes courage and conviction, but when you eventually bank a 10 – 20,000 buck winner you will feel very good.

6. Success has you in it!

Forget trying to do this with other peoples systems it takes rock solid confidence and discipline and you need to have a system you have developed or someone else’s you know backwards.

To follow a system you must have confidence otherwise you will lack discipline and if you cant trade a method with discipline you have no method at all.

Use the above tips use a method you have confidence in and you will make money fast in online FOREX trading.

Good luck!

Can A Forex Trader Profit Greatly From The Presently Undervalued Yen

The Yen, the Japanese currency has come under scrutiny from the major developing countries for its weakness.

Its weakness should not come as a surprise since the country has kept it that way it order to encourage growth which was lacking due to the downturn that occasioned the pricking of the 1980’s bubble in the early 1990’s.

In 1995 when the yen reached the Y80 to a $1 rate, Japanese manufacturers were crying for help. Toyota estimated for every Y1 appreciation against the dollar, it lost $50million.

At that time, the hollowing out of Japanese industry to South East Asia was gathering pace and with a weak economy, the then government had no choice but to begin a weak yen policy.

To achieve the weak yen policy, government started splurging in order not only to keep the currency weak but to use demand to pull the economy out of the woods. It also slashed interest rates to zero when deflation raised its ugly head.

This policy however did not pull the economy out of the woods but it did make the currency weak. Also demand did not rise because both consumer and business confidence was low due to the weak employment market and the huge bad debts carried not only by the banking sector but by other financial and non-financial institutions.

Also the Japanese started buying dollars in large quantities to keep the yen weak. This worked spectacularly but at a huge cost.

The question now is whether the weak yen policy makes sense, its sustainability and when will the yen begin its appreciation to a more realistic level. This is of primary interest to any forex trader as any positions taken can yield enormous returns.

With the reforms carried out over the past few years by the outgoing Koizumi’s administration, the economy is now enjoying a recovery

Best of all, the first price rises in ages have now been confirmed and this has made the government judge the recovery as sustainable.

With inflation, the government policy of zero interest rates may now be over. Interest rates have now been increased for the first time in several years though - to a tiny 0.25% but it is still significant. As any trader knows, an increase in interest rates normally strengthens a currency. Interest rates will continue to edge higher as the Bank of Japan is hawkish about inflation remembering that it was cheap money that fuelled the 1980’s bubble.

Secondly, the government has since commenced a policy of mopping up excess funds in the economy and this led to a 4% plunge in the stock market in a single week in 2006. The days of both cheap money and excess funds may be over.

And to add to all this, the era of massive deficit spending to is coming to an end. This anyway is no longer needed now that the economy is recovering and inflation is in sight.

With a tight fiscal and monetary policy, the currency will definitely appreciate. The question therefore is when and by how much?

Within the next two years, I foresee the yen appreciating between 5-10% against the dollar and the euro. Such a surge will not adversely affect the manufacturing sector as consumer demand is now playing a positive role in respect of demand thereby reducing the dependency on exports.

The yen may eventually hit or perhaps surmount the Y100/$1 barrier in 4 years time if economic growth stays at 3% annually over a period of 5years and if interest rates hits the 4-5% mark.

My advice to traders- better buy yen as an appreciation of the currency will definitely occur.

Currency Trading - A Major Mistake Made By Novice Traders

There is one major error that novice traders make and continue to make.

Its not they lack a sound method, or they lack discipline, or even they can’t pick trade direction correctly it is:

They fail to deal with market volatility and the placing their stops correctly.

How often does this happen.

A trader sees a potential trade enters and then gets stopped out only to see the trade they had picked go the way they thought and pile up thousands of dollars and their not in!

It happens all the time – and the reason many novice traders lose is they have no understanding of how to correctly place and trail stops.

Let’s look at this in more detail.

We all know currencies exhibit long term trends but there are constant and frequent pullbacks within major trends and your aim is to stay with the longer term trend without being stopped out.

Let’s look at some ways to do this when engaging in online FOREX trading.

1. Forget FOREX day trading

All volatility is random in daily time frames so you have no chance of winning, so don’t try.

Ever seen a day trader with a real time track record of profits?

Neither have I and random volatility is the main cause – don’t even attempt it, unless you want to lose your money quickly.

2. Entering the trade and initial placement of stops

Quite simply the best way to enter a trader is to enter on valid breakouts and put the stop behind the breakout point.

Most major currency moves start from new market highs and buying breakouts tends to give good risk to reward and help you catch the biggest trends and profits.

3. Always look for confirmation

If you want to buy a dip don’t predict and hope - wait for confirmation if a change in momentum, this will increase your odds of success dramatically.

Use stochastics to do this – their ultimate timing indicator.

4. Don’t trail stops to quickly

Many traders try to avoid risk so much they create it.

If you start trailing your stop to quickly, you will simply be bumped out by volatility, so hold your stop back and have a target that has to be reached before you even consider trailing your stop.

5. You need courage

Many traders go on about discipline in relation to placing stops, but it’s just as important, or more important when trying to follow a profit.

It takes courage and discipline to hold a long term trend, when pullbacks eat into your open equity, sometimes by thousands of dollars.

You need the courage to take short term pullbacks in open equity in order to catch the big trends that can make you big profits.

Yes you have to be disciplined in restricting losses, but don’t forget this applies to making profits to!

Understand the following to increase profits and restrict losses

I am constantly amazed by traders who trade the market without any idea of volatility or an understanding of such concepts as standard deviation of price.

If you don’t know what standard deviation is, make sure you educate yourself.

An understanding of volatility is essential to making big profits in FX Trading

Your FOREX education should also include trading breakouts (for spotting low risk high reward trading opportunities) You also need to know about momentum indicators ( check out stochastics ) and targets ( study Bollinger bands)

If you want to trade FOREX, then you need to spend as much time on placing and moving stops as you do on getting a method that catches profitable trade direction.

You can have a great method but it will fail if you keep getting stopped out by volatility.

Deal with it, or lose at currency trading.

Contrary Trading - A Live Example and Big Potential Profit Opportunity

Contrary trading if done correctly can give you low risk and excellent profits if you know how to spot them and time your entry correctly.

Here we are going to look at a contrary trade that looks a great opportunity which we looked at a few days ago.

Lets see how things are shaping up.

The US v Canadian dollar has given us some great profits from the downtrend now we have that banked profit and we are now long as per our articles realized at the weekend.

Right, let’s take a look at this trade.

Pull up a free chart service such as futuresource.com and let’s get started.

Key Support

Is 1.10 – This is key support on the daily charts.

Momentum is still down in the dollar longer term, but the Relative Strength Index (RSI) has turned up from oversold levels and is moving up. Yesterday’s we have a double bottom which is near term support and then key support at 1.10.

Stochastics have crossed and turned to the upside with bullish divergence and short term we are looking for strength.

We may now get a good bounce to correct the technically oversold position.

Target would be the middle of the Bollinger band at around 113.00, if prices can punch through this level look for higher prices to unfold

The key ( as we said at the weekend) is to always wait for confirmation before jumping in.

We have done this and are now long.

You ALWAYS need confirmation of a near term bottom and change in price momentum before trying the long side if you are trading against a strong down trend, you should never guess or predict if support will hold.

Stop levels at below 1.10 on a close basis.

When the majority think one way then:

A move in the opposite direction is likely! This is the art of contrary trading.

The dollar has had a lot of bearish news recently and in the short term prices should at least bounce - this is the opportunity outlined above.

Contrary trading is all about trading against the consensus and this trade is definitely that!

My in box is full of lots of reports telling me the dollar is in free fall and has no chance of recovery – but in the short term there is:

As all the bearish fundamentals are discounted and a bounce should therefore occur.

This is what contrary trading is all about – low risk high reward and trading against the majority.

Forex Traders - Speculating on The Presently Undervalued Chinese Yuan

The Yuan can yield tremendous profits to investors if it rises against the dollar. The article below will discuss fully about the subject.

China’s trade surplus has been a sore thumb with the American government over the past few years. The Americans believe that their massive trade deficit with China is fuelled by a cheap Yuan policy which the Chinese government is determined to pursue in order to keep its economy humming at break neck speeds.

In order to keep the Yuan weak, the government has been mopping up dollars at a frantic pace. This has made China the country with the most foreign reserves, now topping over $1.2trillion. This is equivalent to half it’s GDP and will easily accommodate over one year of imports- which is far higher than the acceptable four months.

The question is- can the Chinese accept a revaluation of the Yuan to more acceptable levels?

The communist government is terrified of social disorder. Its only claim to legitimacy is the fast economic growth that has lifted hundreds of millions out poverty over the past two decades especially in the last six years.

One of its primary tools of achieving fast growth is the weak Yuan policy which has created and sustained a manufacturing and export boom which in turn as lifted growth to dizzying levels.

Unfortunately for the government however, there is still discontent. There are over a 100million surplus farm hands seeking work and unemployment still exist in the cities.

Also large parts of China still remain very poor especially the hinterland.

To add to this, many farmers in the rural areas where most of them are based complain about official neglect and corruption.

China thus believes it still needs years of fast economic growth to arrest the above mentioned problems.

However, things are not as simple as they seem.

First and foremost, the weak Yuan which is tied to the dollar is causing liquidity to rise to dangerous levels within the economy. This is in turn swelling demand to horrendous levels. And deflation has now been replaced by inflation. Too high a level of inflation may bring- wait a minute- social disorder. Many analysts speculate that high inflation was perhaps the true trigger for the Tiananmen tragedy.

From high inflation perspective alone, the Yuan needs to strengthen

Anyway, the government has begun tightening credit, always preferring to use crude monetary instruments such as restricting the quantity of loans flowing to some certain sectors especially real estate and steel which are poster children of the boom.

This is working to slow down growth both only slightly.

Growth can only be moderated if the Yuan rises. And the truth is that a rise will not lead to a downturn, but at most – a very soft landing. Growth may slow to 8% which is not bad but less than the double digit figures it has been enjoying of late.

The government has since 2005 permitted the Yuan to appreciate and it has consequent gone from Y8.28/$1 TO 7.71/$1. And interestingly enough, this did not cool the economy.

This indicates that further strengthening of the currency may not in reality have a dampening effect on growth.

The question now is- to what level must the Yuan rise before it reaches its real value?

Tying it with a basket of other currencies, the value will need to rise to between 6.50 and 7Yuan to the U.S currency. Whether the government will have the stomach for it is another matter.

The economy can still grow at 8% annually.

The probability of such a rate appreciation taking place may be plausible bearing in mind that the government has allowed the currency to appreciate slowly against the dollar in particular.

For the time being, however, I foresee the currency hitting 7.40Yuan to a $1 within the year or at the least 7.50.

This portends a fat profit for any trader that decides to make a move now. It may be one of the best pickings for the year.

Forex Trading Training- Rules For Placing Orders

If you have started your Forex trading training you may initially have a challenge with understanding how orders are placed. I remember when I first started reading about the Forex and practicing in a demo account, it took me a while to understand how stops and limits worked in relation to price.

This article sets out the main rules governing the placement of orders with a free graphic download in the resource box at the end which you can keep on your desktop and refer to at anytime until the rules have 'sunk in'. You will find this lesson extremely important if you are in the early stages of your forex trading training.

Here are the basics:

1. In each currency pair, the first currency is the base currency which you either buy or sell. For example, in the case of EUR/USD, if you believe the euro is going to strengthen against the US dollar you would place a BUY order (go long). If you believe the dollar will strengthen against the euro, you would place a SELL order (go short) for the EUR/USD currency pair.

2. In your dealing station you will notice two prices quoted for each currency pair, a BID price and an ASK price. The difference in the two prices is known as the pip spread the dealer takes from every trade. For the major currency pairs this can be between 3-5 pips. NOTE: When you place a BUY order you will enter the trade at the ASK price. When you place a SELL order you will enter the trade at the BID price.

3. There are two types of orders you can use to enter a trade:

* Market Order

* Entry Order

A market order is an order to buy or sell at the market price the moment you enter the trade by clicking your mouse button.

An entry order is an order to buy or sell when the market price reaches a certain target or level you anticipate from your technical analysis.

Note: Avoid market orders as they seldom give you the best entry point unless you really understand the market. An entry order allows you time to analyze key price levels and set the order to be executed only if price pulls back or reaches that level. This way you enter the trade at an optimum level.

Stops and Limits

Once you have calculated your trade and anticipated how far you think price will go, you need to enter a limit order so the trade will automatically exit at that profit level. In the case of a buy order, your limit will be set above the entry price. In the case of a sell order, your limit will be set below the entry price.

For your protection you then need to set a stop order. If price goes against you your trade will exit at a loss according to the number of pips you have calculated that you can afford to lose taking into account your equity. In the case of a buy order, your stop would be below the entry price. If the case of a sell order, your stop would be above the entry price.

As part of your Forex trading training, it is important to get very familiar with the software you are provided with from your online broker. Practice, practice, practice, making entry orders, and setting the entry price and the stop and limit levels.

It is easy in the early days of Forex trading training to get mixed up with direction. You may wish to place an entry order to sell (go short) and inadvertently put a buy order in instead only to get a shock when you see a minus figure under the pip column steadily growing.

The details explained above are available in a graphic you can keep on your desktop and refer to at any time you are trading. Just go to the link in the resource box below and get a copy.

Then as part of your daily Forex trading training, refer to it each time you place a trade in your demo account until your understanding of the rules of order entry, bid and ask price, stops and limits, come automatically without thinking.

You will be laying a solid foundation for more advanced Forex trading training steps so you can concentrate your mental energies on price and chart analysis rather than being sidetracked by confusion over basic order rules.

Forex Trading Signals - General Criteria To Assess Usefulness Of Forex Trading Signals

Depending on the type of forex trader you are, forex trading signals can form a part of your trading arsenal.

Forex Trading Signals Defined

Forex trading signals comprise forex information on buy and sell orders or entry and exit signals sent by forex brokers or forex analysts to their subscribers either for a fee or for free.

Time Validity Of Trading Signals

Obviously, forex signals are basically forex trading opinions and are not embedded in stone. At best, they are educated opinions formed after analysis by brokers or analysts who study price trends, make economic assessments and form their opinions on the state of the currencies that their trading clients hold, or are transacting. Such signals are valid for certain periods of times and often carry short term specific value and are worthless with the passage of time.

Assessing The Forex Trading Signals

If you are a forex trader who would like to benefit from trading signals issued by any forex broker or analyst, it is important to assess the methodology the forex broker uses to issue these signals. More importantly, how reliable are their signals? Does the broker or analyst has a good record of being accurate in his signals? How detail are those signals issued? Are they issued with clear cut trading recommendations or are they couched in uncertain terms? Are the signals just a representation of pivot prices or price projections without giving basis or the explanatory notes on how to derive and use them?

Big Brokers versus Small Advisory Trading Signals

This aspect of checking the background of brokers and analysts issuing these trading signals is an important activity because of the speculative nature of forex trading. As forex trading is a large market, as in any other financial trading market, and owing to the speculative nature of the market, you must subscribe only to signals that are proven to be reliable. The larger brokerage firms are able to afford more analysts or cover more ground before they release their trading signals in comparison to an individual analyst operating from a small advisory company.

Forex Trading Signals As A Timing Device

There are trading signals that are issued based on methods that are novel and developing in contrast to those that are known for their performance. For example, pivot trading signals is a common trading signal system that is followed by many forex brokers and you can get these pivot trading signals as timing signals.

Dissemination of Trading Signals

With the advent of high technology and fast communication via the internet, trading signals can be routed to your email box as an email, or they can be delivered via sms ( short messaging system) or by fax. All this helps in ensuring you get the signals in a timely manner.

Recommended Use Of Trading Signals

Is it good to use these signals outright?

Generally, unless the issuer of the signals has a proven track record, it may be easier for your peace of mind to use these trading signals as a basis to research further. You may want to check these signals in your favorite charting program or to run further technical or fundamental analysis on any aspect of the trading signals that you receive to test their reliability.

The next time you receive any invitation to subscribe for what is claimed to be an "accurate, reliable and timely" trading signal service for forex trading, remember to check and assess their claims, or even rank them.

Considering the fact that you will soon be very familiar with certain currency-pairs that you are trading frequently, you may not be interested in accepting the broker's trading signals outright. Where you have an accurate trading system that is capable of identifying and generating accurate and timely signals, you can be in control of all your trades, and especially the entry and exit trading signals.

Forex Trading Strategy - 3 Major Ways To Improve Your Trading Skills In Forex Trading

If you are trading forex as a beginner, or if you have been trading for some period of time but have not been a consistent profitable trader, then it may be necessary for you to take a pause in trading and to reconsider and review your forex trading strategy with the primary objective to improve your trading skills. Here are three factors you need to look into.

Develop and "over-study" your trading system

Your trading strategy should involve the use of a defined trading system. The first step in a practical trading strategy is to develop or adopt a proven trading system that will incorporate generating signals for entry and exit positions with the relevant risk management controls such as initial stop loss, trailing stop losses , risk-reward ratio requirement. There are many trading systems but generally they can be classified into systems that are capable of, from a functional purpose, trading the bottoms and the tops, trading at the outbreaks, and trading the pullbacks. But among all these trading systems, I would like to single out time-price trading or price action analysis which can be very powerful effective trading systems that you can use. Once you have developed or adopt these trading systems, over-study them. In other words, you must keep on studying how to use these trading systems and use the trading systems in a disciplined way. This is important because any deviation from following the trading signals from the system is going to work against you. The sure way to ruin is to over-ride well planned and well thought out trading action from a proven trading system.

Understand the nature of trading

In forex trading, like in any other business, there are losses and gains. Being consistently profitable does not mean there are no losses. There are times when your trades may not pan out, but once they hit your stop losses, take the trading signals and cut your losses. Understanding this is important because it keeps you level-headed so that you are able to handle losses and continue to take the trades as they come. In trading, the pressure may gets heated up especially when you are faced with a series of losing trades. But if you keep to your trading strategy, those losses will be small. When the signal works, and moves into a sustained trend, it is very usual to make a lot more profits that will cover the series of small losses which you may have sustained in following strictly to your trading system.

Have an Overall Wealth Creation Plan

Your forex trading activities should only form part of an overall wealth creation plan. In your forex trading strategy, you may use part of your trading profits to add on to your capital monthly, and also withdraw some profits for savings or as an income to "pay yourself to trade". In other words, you pay yourself as a forex trader with your profits, creating an income source as an incentive for performance. As part of your wealth creation plan, you may like to pay yourself up to 20% of the profits montly as your income or allowance. At the same time, allocate 10% fo the profits into a miscellaneous account that will pay for trading related literature, courses, seminars or software that will add on new skills to help you to trade better. The balance of 70% of the profits can be ploughed back into your trading account as additional capital.

Having a forex trading strategy allows you to have an overall perspective of whatever you are doing as a forex trader. The forex trading strategy acts as a simple guide that will allow you to grow as a trader and yet maintain a way to tap the profits from your trading in a sensible way as you develop your career as a professional trader.

Forex Trading Software - 3 Most Important Criteria In Selecting The Best Forex Trading Software

Forex trading has developed to the extent that a forex trading software is an indispensible tool to the forex trader. The forex trader will need a forex trading software almost daily in accessing market information in real time. This information stream should be received without unnecessary delays, so that he is provided with non-stop and instantaneous information to help him conduct his trades.

So what are the criteria to follow in choosing a forex trading software?

There are three main criteria you will look out for in selecting a forex trading software, namely:

1. Type of forex trading software

2. Reliability

3. Specific personal needs

Let use look into the details of each criteria.

Type of Forex Trading Software

When looking at forex trading software, you can select between web based trading software and server based trading software.

For server based trading software, data servers are used to store website content and transactions of the users and traders. The main consideration for server based software is that of data transmission delays with currency trading software because of the Internet connection speed and the physical distance between the main server and the machine of the trader. At the same time, you need a physically well equipped computer to act as a data server. This means a one-off installation cost if you are not doing it yourself and also maintenance and upgrading costs.

In contrast, web based forex trading software, does not involve any installation in a specific server but resides on the broker's website. As a trader you merely need to log in to the website and use it. That is why the web based trading software is more popular.

Reliability

The second criteria is that of reliability.

When you select a forex trading software, pay attention to the reliability of the trading software. Reliability refers to the performance of the system to provide you instant access to the forex trading market, to check prices and movement. Check in the forums and trading chat rooms or perform due diligence on claims of the broker providing the trading software. If there are frequent complaints of trading downtime, stay away from these trading software. Another aspect of reliability is that of data delivery. Is there any undue time delays for the dissemination of both data prices and also results of fulfilment orders? Again, check this out by talking with other traders.

Specific Personal Needs

You should also assess the forex trading software based on specific personal needs.

Most forex trading software allow you to have a charting interface and to maintain trade records. However, if there are specific trading methods or strategies that involve that ability to manipulate or input specific trading indicators that is part of your trading style, then you will need to see whether the trading software can allow you to do that. For example, trading methods that uses a system of moving averages can easily be set up in most of the forex trading software available. However, if you require specific moving average indicators such as triangular moving averages or some new variations, then it is important for you to check whether such indicators are available in your forex trading software. Most forex trading software would not incorporate artificial intelligence projections, and if you are into such trading strategies, then you may need specific adds-on that must be compatible with your software.

Apply these general criteria to assess and select the forex trading software of your choice, and you will find the trading software to be a most valuable tool to assist you in earning consistent profits. In many cases, sophistication is not necessary the preferred choice, as long as the major 3 practical considerations or criteria mentioned above are met.

Practise Forex Trading Online - How To Identify and Rectify Flaws In Forex Trading

I am hardly surprised when friends and clients tell me that they are not consistent in their winning trades in trading forex. Many times, friends relate their stories of making a giant win in the markets at one time, and then will continue to tell a sad story of losing it all in the next few trades. Worst, some have even lost their capital. It is when they are at the verge of abandoning the entire idea of making a career of being a professional trader and when their financial losses are really hurting them, that they seek for help.

I have identified 5 of the most common flaws of forex traders, and have helped many of them to rectify their trading problems. Let me share them with you.

1. The Most Common Flaw

I have often been presented with rather sophisticated trading systems by traders who come to seek help. Most of them have been attracted by the promise of multi indicators and sophistication in the use of these trading systems. Many of them appear to be a rehash of the principle of confluence. What this simply means is that if a multitude of technical indicators show the same signal to buy, sell or hold, then the pure sense of synergy occurring suggests that the signal generated is correct. This sounds good in theory, but in practise, not all the indicators agree at the same time.

For example, a trading system might have a moving average indicator with a positive crossover occuring when its Relative Strength Index or RSI is at the lower boundary or is oversold at the 30% band. These two indicators occurring together at the same time is a good enough indication that the correct signal is to buy. But what happens in real life is that the deriving the decision is not that simple.

Why is that so?

Many of these "confluence" systems throw in other indicators that depict the price movement and do not add any value in helping you to trade. As a result, you get a pot-purri of technical indicators comprising oversold and overbought indicators such as stochastics, stochastics-RSI, momentum indicators, bollinger band breakouts and candlestick chart pattern recognition, and even artificial intelligence systems such as neural networks.

The end result is that many of these losing traders are unable to make a decision as to the true direction of the market and either get into the market too late or too early or just remained paralysed from making a decision at all. It is therefore no wonder that they are losing money by the buckets.

So the most common flaw among forex traders is the use of an unsuitable trading system which does not serve its purpose as a tool to help them trade profitably but rather confusing and complicating forex trading until they become perpetual losers.

2. The Most Dangerous Flaw

An other flaw that I would classify as the most dangerous flaw of them all is that of greed and fear.

This is an emotional issue interwoven into the entire process of trading.

Giving friends and clients a listening ear, I have often heard how a profitable trade can lead to euphoria, and exuberance, and greed comes in and over-ride all aspects of risk management. The trader who is profitable at that stage will over-ride all his stop loss positions when prices fall back, believing without substance that the price will continue to go up many pips for a longer period of time. Risk-reward ratios are thrown to the wind. These traders see their winning trades ride up into huge profits, only to see them correct, pullback and crash down to earth. Worst, they are then paralysed by greed which tells them to wait a little longer for prices to recover, which they normally don't, but continue to pullback and consolidate and they have to take a loss at the worst possible time.

The trader is then struck by fear as he realises his position. When the next buying signal comes, he is paralysed by fear and unable to open any position. That is why when you override the emotional side of trading, the psychology of trading and the discipline of trading, you commit the most dangerous flaw in forex trading, with financial ruin facing the door.

3. The Flaw of The "Unconcerned Man"

The third important flaw I often encounter in my business of coaching and consulting with traders is what I call the flaw of the "Unconcerned Man." I know the term of being called unconcerned, or even lazy is anathema to many traders, but the truth is that many traders enter into trading without a driving need to become successful and profitable. They are into trading just because they have heard it is easy game - that making a killing from the markets is easy. They do not treat trading as a business that involves skill, preparation, trade management and re-investment. To them, it is a trading game of fun, where they can afford to lose. They become unconcerned about their trades which are still in an open position. They start off with the wrong footing or with the wrong purpose, and do not have that burning desire to be successful.

4. The Flaw of the "Inadequate Man"

Now, some of them start off with the best of purposes. Some of these losing traders were all fired up from the start. They did put some effort to learn to trade. Many of them do go for free introductory courses to learn "here a little, there a little", picking out some trading tips from chat rooms or forums. But the measly tips they obtain from these sites are insufficient to see them through the practical difficulties of trading the markets. Their knowledge could not see them through their desires, their direction, and they failed to attract the wealth that was possible through their trades. Inadequacies become their most potent flaw.

5. The Dogmatic Man and His Fatal Flaw

Trading signals you obtain are not engraved in stone. Trading is dynamic, as prices move and are affected by circumstances. The inability to accept losses, and profits as they present themselves have led to many a ruin in forex traders. When a trader becomes dogmatic, and inflexible, sticking to his own personal perception of a trading signal, despite all the factors telling him that the trade has gone wrong, he is going to lose more. This is particularly so in forex trading. In stocks, the buy and hold policy is more relevant if the stocks are fundamentally sound, as they can be cyclical and can rebound in prices. But in forex where the leverage is very high, your capital can be wiped off if you do not react to your signals promptly, and stubbornly maintain an unchanging personal opinion of "correctness".

In trading, you can be wrong in the market and still emerge a winner if you take prompt action to correct your position, but the dogmatic man continues in defiance of the true factors affecting his trade, and then loses a big part of his capital. When he loses all his capital, he is unable to trade another day and that is the fatal flaw.

Understanding these flaws, we will continue to discuss effective ways of overcoming them in Part #2 of this Article series, so that you can become a profitable and successful forex trader quickly.

Best Forex Trading Tips

We cannot say that it is very easy to make money in forex trading, but it isn’t really difficult also. It is the smart work that matters than hard work in trading currency market. Following are the essential tips on how to avoid usual pitfalls and start making more money in forex trading.

Trade in pairs not in currency- Like any relationship; you need to know both the sides. Success or failure in forex currency trading relies upon being right about both foreign currencies and how they contact each other, not just one.

Understand the basics - When you start to trading currency online, it is indispensable that you understand the basics of this particular market if you desire to make the most of your investments. The chief forex influencer is worldwide news and other related events. Most newcomers respond aggressively to news like this and close their positions and next miss out on some of the most excellent trading chances by waiting until the market goes down. The latent in the forex market is in the instability, not when it is clam.

Self-government - If in case you are fresher to forex, you would either choose to trade your own money or to have a forex broker trading it for you. It is good but your risk of losing augments tremendously if you either of these two things: you also need to interfere with what your forex broker do on your behalf; seek counsel from too many other sources - many input would only result in multiple losses. Take a location, ride with it and then analyze the result - by yourself, for yourself.

Small margins – Small margin trading is one of the leading benefits in trading forex as it permits you to do trading in the amounts far bigger than the total of your deposits. However, it could as well be risky to beginner traders as it could demand to the voracity factor, which wipes out many forex traders. The best guideline is to boost your leverage in line with your skill and success.

Trade during Off-Peak Hours - Professional FX traders, option traders, and other hedge funds mobs a wide benefit over small retail traders in off-peak hours (usually between 2200 CET and 1000 CET) as they could hedge their place and move them around when there is far tiny trade volume is going through (that simply means that their risk is smaller).

Trade on the news - Most of the actually big trade market moves arise around news time. Trading volume is lofty and the moves are very important; this means there is no superior time to trade than when news is actually released. This is when the big players alter their places and prices alter resulting in a somber currency flow.

Confidence - Confidence comes from winning forex trading. If you lose money early in your trading career it's extremely hard to gain it back; the ploy is not to go off half-cocked; study the forex business before you start to trade. Keep in mind, knowledge is power.

FOREX Trading 101 – Novice to Professional Trader in Just 14 Days

Is it really possible to become a professional FOREX trader and make money in just 14 days?

The answer is yes, and here we are going to show you how to do this in simple steps.

One of the most inspiring stories I ever read was when veteran trader Richard Dennis took a group of people with no trading experience and taught them to trade in just 2 weeks.

The result was a group of trader nicknamed “the turtles” who went on to become some of the most successful traders of all time.

Richard Dennis taught 3 key principles to his students:

1. A simple technical method, they could easily understand and therefore have confidence in to trade.

2. Rigid money management techniques to preserve equity.

3. The mindset to follow the method through losing periods with total discipline.

Working smart

The emphasis was on working smart not hard, to achieve trading success with no filler.

So lets look at how you can do the same taking the above 3 points and look at what you have to learn.

1. Method

Just like “the turtles” you should learn a simple trading method and it should be technically based.

While there are many ways of making money, you should start with a similar method to the turtles.

Learn about technical analysis and how to use support and resistance in relation to breakouts.

Trading breakouts is simple to understand, simple to apply and it works as well today as it ever has.

You then need to add in some momentum indicators to indicate price strength or weakness.

Look up stochastics and use them.

There is no better momentum indicator to start with.

2. Preserving equity

You need to play great defense and preserve equity.

Trading breakouts sets your stops for you (behind the breakout point) if you only trade valid breakouts you will have the odds on your side for big gains and small losses should the trade go wrong.

3. Trading with discipline

This comes from having a simple method you understand.

If you understand why it works and why it will continue to work, you will have the confidence to trade it through losing periods.

Discipline comes from confidence and that’s why using a simple technical breakout method is best.

Many traders think they should use more complicated methods, but the fact is there is no correlation between how complicated a method is and how successful it is, in fact the opposite is true:

Complicated methods tend to break easier than simple ones in the face of brutal ever changing market conditions.

If you learn a breakout system and acquire mental discipline you can make money and all the information you need is freely available on the net.

You can do it!

Most novice traders don’t believe they can learn to trade on their own, but it really is the best way to do it as you are the only person who can give yourself success no one else can.

Forget the gurus trying to sell you $100 e-book and promising you instant riches – you wont make money that way, Take responsibility for your destiny.

So put in some effort and you will be richly rewarded for your work.