SOME TRICKS OF THE SUCCESSFUL FOREX TRADER.

For all of its numbers, charts and ratios, trading is more art than science. And just as in artistic endeavors, there is talent involved, but talent will only take you so far. The best traders hone their skills through practice and discipline. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation. We'll look at nine tricks a novice trader can use to perfect his or her craft; for the experts out there, you might just find some tips that will help you make smarter, more profitable trades, too.

1. Define Your Goals

Before you set out on any journey, it is imperative that you have some idea of where your destination is and how you will get there. Consequently, it is imperative that you have clear goals in mind as to what you would like to achieve; you then have to be sure that your trading method is capable of achieving these goals. Each type of trading style requires a different approach and each style has a different risk profile, which requires a different attitude and approach to trade successfully. A personality mismatch will lead to stress and certain losses.

2. Choose The Right Broker

It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Choosing a reputable broker is of paramount importance and spending time researching the differences between brokers will be very helpful. You must know each broker's policies and how he or she goes about making a market. For example, trading in the over-the-counter market or spot market is different from trading the exchange-driven markets. A good broker with a poor platform, or a good platform with a poor broker, can be a problem. Make sure you get the best of both.

3. Choose A Methodology And Be Consistent

Before you enter any market as a trader, you need to have some idea of how you will make decisions to execute your trades. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade. Some people choose to look at the underlying fundamentals of the company or economy, and then use a chart to determine the best time to execute the trade. Others use technical analysis; as a result they will only use charts to time a trade. Whichever methodology you choose, remember to be consistent. And be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market.

4. Keep Your Timing In Sync

Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.

5. Calculate Your Expectancy

Expectancy is the formula you use to determine how reliable your system is. You should go back in time and measure all your trades that were winners, versus all your trades that were losers. Then determine how profitable your winning trades were versus how much your losing trades lost. Take a look at your last 10 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made.

6. Focus On Your Trades

Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful. Secondly, only leverage your trades to a maximum risk of 2% of your total funds. In other words, if you have $10,000 in your trading account, never let any trade lose more than 2% of the account value, or $200. If your stops are farther away than 2% of your account, trade shorter time frames or decrease the leverage.

7. Build Positive Feedback Loops

A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence - especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop.

8. Perform Weekend Analysis

It is always good to prepare in advance. On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient. If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always be another. If you have patience and discipline you can become a good trader.

9. Keep A Printed Record

Keeping a printed record is one of the best learning tools a trader can have. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again. Note the emotional reasons for taking action. Did you panic? Were you too greedy? Were you full of anxiety? Note all these feelings on your record. It is only when you can objectify your trades that you will develop the mental control and discipline to execute according to your system instead of your habits.

HOW IS CHINA AND EUR GOING TO EFFECT GERMAN EXPORTS?

How are the other major economies doing?

"The German Ifo provided some good news. The Business Climate Index rose to 108.3 in August, up 0.3 pts from the previous month, while the market was set for a small fall. The sub-index for the current situation rose 0.9 pts to 114.8, the highest level since April 2014, whereas the expectations saw a 0.1 pt drop to 102.2."

"This was broadly in line with the increase in the flash composite PMI of last Friday and suggests that the German real economy has, so far, shrugged off the problems in China."

"Even though Germany is the largest euro area-exporter to China, the domestically added value of this equals ‘only’ 2 to 3% of GDP. However, we should also note that the survey was conducted before the euro strengthened significantly against most of Germany’s trading partners. In that sense, we’ll have to wait until next month to get a better clue of how the recent turbulence is affecting German sentiment."

TECHNICAL AND FUNDAMENTAL ANALYSIS IN FOREX

Fundamental Analysis

Fundamental analysis involves assessing the economic well being of an entity, not taking into account its price movements. For traders in the stock market, they would take a look at the company’s earnings, expenses, assets, and liabilities. Fundamental traders will use those data points to determine the health of the company. If their economic well being is trending better as their company’s earnings and balance sheet is growing, then fundamental traders may buy the firm’s stock in anticipation of demand growing for that firm’s stock.

Technical Analysis

Technical analysis involves pattern recognition on a price chart. For equity traders, they will analyze the price of volume of the shares traded on the exchange. If prices are moving higher on increasing volume, traders will see the demand for shares of that company’s stock and buy.

TRADING FOREX NEWS

Trading Forex – Major economic events and fundamental developments are monitored by currency traders as it reflects the strength of a country’s economy, and typically spurs volatility in the exchange rate as investors weigh the outlook for the economy. Trading the news is often difficult as it producers sharp movements in the exchange rate, but at the same time, can generate a profitable opportunity. Trading event risks does not require investors to forecast the results of the event. However, taking a position based on market expectations involves a high level of risk as the release may exceed or fall short of forecasts.

TRADING FOREX OPTIONS

An in-depth view of currency market sentiment as it relates to options markets and publicly-available CFTC Commitment of Traders data. The CFTC publishes a weekly report on positioning in futures markets, giving clear and reliable information on market sentiment. Data is only available once per week and works on a four-day delay, making it less useful as a market timing tool. 

RISK WARNING

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. Seek education and gain experience before risking real money, but always remember, even then, your past performance does not guarantee future results.

WHAT IS FOREX?

The foreign exchange market – or forex for short – is the buying and selling of currencies, and it’s one of the fastest growing markets in the world. From 2007 to 2010, forex market activity increased by 20%, with average daily turnover reaching nearly $4 trillion in April of 2010.

Forex trading works much like it does with stocks, you buy low and you sell high. The benefit of trading forex is that you don’t have to choose from thousands of companies or sectors. Plus, you can make things even simpler than choosing which company to buy.

For example, most people, even those that are new to forex, have an opinion on the US dollar and the US economy. They can easily take their opinions and translate them into a forex trade. Buying or selling US Dollars as simple as they buying or selling a company’s stock.

Also, another advantage of the FX market is that it doesn’t begin at 9AM and end at 4PM. Trading takes place 24 hours a day, 5 days a week. For most people 24 hour trading means they can trade before or after work. Plus, you have the flexibility to make your trades online.

15 KEYS FACTORS OF SUCCESS IN FOREX

1. Locate the Stop Loss: Before performing any previously set the amount you are willing to lose and simply conform with this amount. Set a stop loss level before opening a position and place as soon as possible. Never modify your stop loss if your position becomes loser.

2. Let your profits run: Never let your emotions rule an operation. Keep in mind the reasons why you came to the market and comply with these reasons. The less emotional, the better it will be.

3. Do not be influenced: You must have planned their own strategy to operate and comply with it. If you are influenced by others, he will change his mind so incessant, learn to ignore external sources once they made their decision.

4. Keep their sizes and positions within acceptable limits: Operators who have a real success know that trading is a game of probabilities, and long term, if you stick to their strategies and uses healthy strategies which is formed, it is likely to succeed. To be a successful trader, you should never enter a position that could jeopardize a substantial capital. In fact, very rarely you find an operator who risk more than 10% of its capital in an operation, and 10% is already extremely high.

5. Know your risk ratio versus the benefit ratio: The ratio benefit / minimum risk you should use is 2: 1. For example, if you are long on GBP / USD and you want to gain 50 pips, should not risk more than 25 pips. Another example, you should never risk 40 pips to gain 15. If you do, you losers operations will ruin your chances for profit.

6. Have a suitable capital: You should never trade with money you can not afford to lose. Always make sure you have enough credit.

7. In Trend or Neutral: Learn to analyze the market; Is it a market trend or rather neutral? In a trending market, follow the trend in a neutral market, buy low and sell at the highs; since you are using stop loss, controls and risks.

8. Do not fight the trend: Do not try to sell at the highs on a bullish market or buy in a bear market low. Follow the good old advice: “the trend is your friend!”

9. Do not give “missteps”: One of the most common mistakes made by operators is continuously add positions on a losing position. Personally I have never seen a winning long-term operator using such techniques. For short-term trades, preserving capital is the most important, to stake too much capital jeopardize its success.

10. Understand how the market thinks: should accept that all information (except for newly released information which the market immediately reflected n) is already taken into account in the price of a currency pair. You should know the (particularly important) come indicators, and should know what is already anticipated by the market.

11. Trading – a game of probabilities: You will never have reason in 100% of cases, you should accept it. Trading is a numbers game, wins sometimes and loses other times; the idea is simply to win more than you lose. Trading is an odds game and if you act properly in the long term, will benefit. Learn from your mistakes, when you start having more chances of losing at first, analyzing what went wrong, try not to fall into the emotions if it conforms with its strategy and learn from your mistakes, you should see your profits exceed your losses.

12. If the logic disappears, exit: If the reason why you entered a transaction disappears, then the reason to stay in this operation also disappears. If you think you are on a low and the same is crossed, exit the operation and then review the situation and take a new decision.

13. Establish a maximum below: If you chain 3 or 4 losing positions, pause! There is certainly something wrong, get out, go for a coffee, focus … Do not be afraid to take a break.

14. Study: Learn new ideas, take a day and do not operate on the ideas of others, you should always know why you are and an operation.

15. Have fun!: Appreciate what you do, have fun! However, keep calm, stay as unemotional as possible – you will have more success

FEATURES OF THE CURRENCY MARKET OR FOREX

The factors influencing exchange rates are very numerous, making this market is very volatile. This volatility allows forex traders to profit from the upward or downward movements of currency pairs presented.

What makes the Forex market different?

A 24-hour market: Unlike other markets, Forex is open 24 hours a day. This is because it is a global market where participants can invest from different parts of the world.

Purchase money with money: Unlike other markets where money is exchanged for physical goods (example gold) or a financial instrument in the Forex market is money that is exchanged for money. Currencies are traded against each other, thus transactions are always based on currency pairs.

No physical headquarters: In this market there is no physical headquarters of exchange as the Madrid Stock Exchange or New York. This means that there is no center where price data can be obtained or where commercial activity is concentrated. The largest volume of transactions taking place in the interbank market, where banks trade with each other on behalf of individual customers. However, individual investors can also operate here with ease through intermediary companies, suppliers.

One of the biggest attractions of investing in currencies is that individual investors can make huge profits in this market (thanks to the leverage effect) without leaving home. Investors today just participating in the market from home using their accounts to buy or sell currencies. Besides now many brokers are now offering trading accounts compatible with mobile devices, allowing investors to remain active in this market at any time.

WHAT IS FOREX CURRENCY PAIRS MOST LIQUID

Although the foreign exchange market or FOREX is the largest trading market in the world, their existence or operation torque retail or individual investors are largely unknown compared to bond markets and equity. 

This is in large part due to a general lack of knowledge of FOREX in the investment community, along with a lack of understanding of how and why the movement of exchange can be in one of the best investments. Adding to the mystique of this market is the lack of a center similar to the NYSE or the CME physical exchange. It is this very lack of structure that enables the Forex trade 24 hours a day, beginning the trading day in New Zealand and continuing through the time zones five days and a half per week worldwide.

Traditionally, access to the FX market was limited to the bank community where traded large blocks of currencies for commercial, hedging, or speculative purposes. Then with the advent of Brokers they have opened the doors of the trading institutions such as investment funds and money managers, as well as the merchant or retailer or private investor.

The currency pairs most liquid

Currencies, like stocks and bonds, have pairs that are very liquid currencies and others are not. The liquidity of the currencies can be characterized as those pairs that involve both economically and politically more stable economies. They include the countries that form the G7 – the United States, Japan, England, France, Germany, Italy and Canada.

The most liquid currencies including the US Dollar (USD), the Japanese Yen, the British Pound, the Euro and the Canadian Dollar. It is estimated that activities in these currencies comprise more than 80% of the daily volume of foreign exchange transactions.

Symbols of currency pairs

Currencies, like equities, have their own symbols that distinguish one from another. Since currencies are quoted in terms of the value of one against the value of another, a currency pair includes the “name” for both currencies, separated by a slash “/”. The “name” is a three-letter acronym. The first two letters are reserved in most cases to identify the country. 

The last letter is usually the first letter of the name of the currency of that country.

For example:

USD = United States Dollar

GBP = Great Britain Pound, British Pound

JPY = Japan, Yen, Japanese Yen

CAD = Canada Dollar, Canadian Dollar

CHF = Confederatio Helvetica (in Latin Swiss Confederation) Franco

NZD = New Zealand, New Zealand Dollar

AUD = Australia Dollar, Australian Dollar

NOK = Norway Krona, Norwegian Krone

Krona SEK = Sweden, Swedish Krona

The Euro is not in a particular country, you simply attributed the acronym EUR. By combining one currency with another eg EUR, with USD, we have the EUR / USD.

Base currency and counter currency

One currency in a currency pair is always more dominant than the other, and you call this currency as base currency. The base currency is identified as the first currency in a currency pair. It is also the currency that remains constant to determine the price of the currency pair. The Euro is the dominant currency basis against all world currencies. As a result, currency pairs against the EUR will be identified as EUR / USD, EUR / GBP, EUR / CHF, EUR / JPY, EUR / CAD, etc., all pairs have the EUR acronym as the first in the sequence.

The British Pound is next in the domain hierarchy currencies. The major currency pairs versus the GBP can be identified as GBP / USD, GBP / CHF, GBP / JPY, GBP / CAD, etc. 

With the exception of the EUR / GBP, GBP usually is the first currency in a currency pair.

The USD is the next dominant base currency forex. The USD / CAD, USD / JPY, USD / CHF would be the normal major currency pairs. Since the EUR and the GBP are more dominant in terms of base currencies, the dollar is quoted as EUR / USD and GBP / USD

MEMBERS OF THE FOREX MARKET

The forex market is made up of different members, with varied needs and interests, which operate directly. 

These participants can be divided into two groups, the interbank market and the retail market.

The interbank market

Interbank Forex trading involves that occur between central banks, commercial banks and financial institutions.

Central banks: the national central banks (such as the US Federal Reserve or the European Central Bank) play an important role in the Forex market. As monetary authority, their role is to achieve price stability and economic growth. To achieve this, these entities regulate the money supply in the economy through the imposition of interest rates and bank reserve requirements or lace. They also manage foreign currency reserves that can be used to influence the market conditions and the price of currencies.

Commercial banks: Commercial banks (such as Deutsche Bank and Barclays) provide liquidity to the Forex market due to the volume of commercial transactions handled daily. These operations include the translation of foreign currencies according to the needs of customers while some are held for speculative purposes by negotiating table ownership of banks.

Financial Institutions: Financial institutions, such as mutual funds, pension funds and brokerage firms operating with foreign currencies as part of their obligations in order to find the best investment opportunities for its clients.

The retail market

The retail market transactions involving small speculators and investors. These transactions are executed through Forex brokers or agents who act as intermediaries between the retail market and the interbank market. The members of the retail market are hedge funds, corporations and individuals.

Hedge Funds: Hedge funds are private investment funds that speculate in various assets classes using leverage. Hedge funds aim to seek business opportunities in the Forex market and design and execute operations after making a macroeconomic analysis that reviews the challenges affecting a country and its currency. Because of their high liquidity and their aggressive strategies, they are considered a major contributor to the dynamic Forex market.

Companies: These represent companies engaged in the import and export activities with their counterparts in foreign currencies. Its core business requires the purchase and sale of foreign currency in exchange for goods, exposing them to risks. Through the Forex market, they convert currencies and are covered against future fluctuations.

Individuals: Individuals operators or investors operate Forex with its own capital to profit from speculation on future exchange rates. 

FOREX GRAPHICS

The graphics are the technical tools used most frequently by analysts.

The most important “technical analyst” element is the definition of the trend in the market. The trend lines are determined by joining the other ends price graph.

In the case of uptrend, we identify with the union of rising lows. An upstream channel is a graphic pattern formed by two parallel and slope upwardly containing price action lines. It is also known as bullish price channel or just bullish channel. Although the price is not always perfectly fits into the channel, the lines that form said major areas of support and resistance.

Price channels graphically show the trend and are a useful tool for their ability to predict changes in the overall market trend. While the price remains within the bullish channel trend will continue, much more if you register a maximum above the top line. By contrast, breaking the bottom line is sell signal and turnaround. When there is a series of increasing minimum and maximum increasingly also higher there will be an upward trend.

In the case of downtrend, we identify with the union descend.Un maximum downstream channel is a graphic pattern formed by two parallel downward sloping containing price action lines. It is also known as bearish price channel or simply bearish channel. Although the price is not always perfectly fits into the channel, the lines that form said major areas of support and resistance.

Price channels graphically show the trend and are a useful tool for their ability to predict changes in the overall market trend in the short term. While the price remains within the bearish channel the trend will continue, much more if a minimum is recorded below the bottom line. By contrast, breaking the top line is buy signal and turnaround. When there is a series of highs and lows shrinking ever smaller also will be a downtrend.

Trend line simultaneously determines the level of support or resistance. We call support the downstream stop points while resistance points are points rise stopper. The trendline support is a potential falls. If this line is exceeded (top), it automatically changes the resistance level rise. The trendline is a resistance to the growth of the price level, however if exceeded (bottom) makes it turn into support line falls. The lines of support and resistance can also be created based on other points.

Support for falls may be the level at which the price reached a record (or local) minimum, and similar resistance to growth may be the (or local) historical high price.

STRATEGIES SWING TRADING IN FOREX

The swing transactions involve identifying opportunities for big profits in a short period of time. It is to identify chart patterns, and then wait for the right time and precise to operate. Swing traders are investors who transact swing and seek turning points in the graphs: levels and events that make a currency accelerated its pace or change of trend.

Technical analysis is an important part of the tools used in transactions swing. The key is to study a variety of short term charts and technicians to understand the position of market indicators.

Identify a range

In the main there are two types of moves in the market: within range, and within a trend. An indecisive market will remain within a range until enough buyers or sellers to force a break of the range or breakout.

There are two ways a swing trader to benefit from a market that moves within ranges. The first is to sell whenever the currency approaches the maximum value of the range and buy when approaching the minimum value of the range. The second way is to place a buy order above the maximum value of the range and a sell order below the minimum value. In the second scenario, the trader is anticipating that the range is broken.

Identify a trend

In a trending market, the strategy is simple: a trader must identify the parameters of the trend, and then get the best possible entry point. Sometimes, you see that the market goes up more and more; you knew but did not intervene and the opportunity was lost; then the temptation is to chase the market by buying at a higher level. The best practice in this case would have been to seek another trend that newly begins.

To consider

Since then, trends do not last forever. Eventually the momentum dissipates and market trends becomes a market range, or even can be reversed completely. Trade called swing trading requires you to identify changes in trend as these they occur. This means you should stay focused on patterns in the graphs. Good technical analysis and swing trading go hand in hand, so if you are interested in this kind of trading we recommend learn more about technical analysis.

FOREX RISK

The forex trading should be simple say several scholars. Undoubtedly those who are complicated because they can not operate or have not learned well. Many when introduced into the trading first thing they do is play with your demo account by operations meaningless and worse thinking that an account is like going to the casino and gamble to gamble becomes his emblem. 

They start risking amounts that have nothing to do with the reality of a real account and live a constant deception.

When many begin to trade Forex the first thing they do is open demo accounts of $ 100,000 or $ 500,000 to “practice”. Practice has nothing wrong, wrong to think that the novice trader is doing the right things. By having such a large initial amount rookie trader also makes “big” operations and there begins the great fallacy. Win or lose (that’s right) capital mismanagement eventually destroy it.

Whether abusing the number of lots or operating many pairs both novice trader this end risking more than necessary. The grand finale is that one way or another to end the trader making this a “habit” and repeats the same bad habits when trading a live account. It is a fact that many of the large losses that traders have is in large part because repeated bad habits from the time operating with demos the truth is that the trader falls back into a vicious circle. Do not forget that human beings act many times but this habit is fatal in trading. As the Master in Management Stephen Covey in his book The Seven Habits of Highly Effective says, “habits are like chains loosen difficult and sometimes we can never our little willpower”. This applies to all friends, work, family and even the forex.

When you. forex trading begins first thing to do is learn to respect the market and not letting it fulmine (as the vast majority of inexperienced happens). A trader can not risk more than 2% of the total amount of your account. Simply a matter of survival. Eye, and talk about any type of account and it is a standard, mini or microbead. Regardless of the maximum capital amount risked must not exceed 2%.

A trader who risks only 2% of the total capital held by each operation interruption could lose up to 30 times and still hold almost 55% of their money. That’s survival and that is to manage the money wisely. Now if someone loses continuously for 30 times the minimum you should do it is check your strategy or study from the base (but not explain to me how you can lose many times) but hey that’s another matter. The truth is that this trader may still participate in the mark.