Intermarket Spread

For now I've just looked at calendar oil spreads. But after digging myself into Keith Scharp's book "The complete Guide to spread trading" I tried an intermarket spread yesterday:

1. You look at the market and decide which one is strong and which one is weak.
2. Right now the Technical's are relatively strong, while the big caps, especially the Financials are weak
3. Meaning: If it goes up you can expect the NQ to outperform the other markets, if it goes down the YM will be the heaviest hit
4. Trading an intermarket spread means: You go long one market and short another at the same time
5. But first you need to understand, that trading 1 NQ is not the same as trading 1 YM contract. They don’t move at the same speed
6. Therefore you do a little calculation:
   NQ at 1080 * 20$ (per point) is worth 21600$
   YM at 6625 * 5$ (per point) is worth 33125$
   To make them move at the same speed, your long and short positions need to have approximately the same value
   NQ: 3*21600$ = 64800$
   YM: 2*33125$ = 66250$
7. So your Spreadtrade would look like: Long 3 NQ and Short 2 YM contracts
   Most brokers will recognize that this is a Spreadtrade and give you a very low commission on the whole trade. In case of IB yesterday this trade cost me about 6500$ margin (IB gives the margin advantage for the corresponding 2 long and 2 short positions and adds to that the 1 contract long NQ margin)
8. This trade will show you a profit in rising and in falling markets as long as your assumption that Technical's will outperform the big cap Dow stocks is correct. It will show you a loss, if there is a snap back rally in the financial sector.

In spreads you need to be right about the fundamentals not about the direction of the market.

Being in a trading hole

Been there, done that, will do it again...

From time to time emails from readers reach me asking me, what to do when you are in a hole. Something which worked last year really fine, suddenly stops working and you find yourself down 50% to 70% of last years profits or worse of your account value at the start of the year.

Stupid example? I don't think so! You can do it with 1 trade, if you are careless and stubborn. (I just proved it going long 30,000 FAS last Thursday in my 125k$ IB demo account, which is now reduced in size by 65% in just 2 trading days...just to prove to myself, that taking a 2,000$ loss on a big position is the correct way to trade... but I will hold it into extinction if necessary)

Being in a real big hole is something, which seems to happen to all traders over and over again. Strategies seem to stop working for no apparent reason and when you finally realize it, you are already down big time.

Question is, how do you stop and reverse the downward slide to climb out of the hole again.

1. You need to have capital, so you have to make sure that you still have an account to trade. Which means: STOP TRADING NOW
   Stop for a day, a week, a month, as long as it takes. The market will be there waiting for you, when you are ready again.
2. Markets change and you have to adjust your strategy to compensate or you switch to a new market which fits your trading strategy better.
3. Something private: From time to time you will find articles about new markets in this blog. Most likely I'm in a hole or I'm feeling no longer sure in the market I'm trading at the moment. It might be that something changed in my trading environment, which causes me to trade at changed times, or I'm occupied with private matters which should take precedent to trading. The result is always the same: My trading system is not working the way I'm used to, I'm not getting the results I expect from trading and that causes me to look somewhere else. Usually when I do that, I write about it to get insight from you through emails or comments in the blog.
4. One thing you know, when you have fallen in enough holes is, that you will come out of them stronger, if you have discipline and persistence. Go back to the basics.
5. First answer this question:
   What has changed, the market or I?
6. If its me, then the first thing I do is: I stop trading.
   1. Maybe my environment has changed and I have to adjust my trading system to the new setup. EG: You had 2 screens and you upgraded to 4 screens. Suddenly you are flooded with information and you need time to adjust. More screen space is great, but you can't process all information presented to you, you need to learn what is important and where to find it on your bigger screen space.
   2. You have less time for trading, but your trading system requires you to be present 100% of the market hours or you will miss your chances.
   3. Something really difficult: You are suddenly dependant on the money earned through trading. It's a huge difference, if you have a regular income and your trading profits are just a nice add-on, compared to having no income other than your trading profits.
   4. Maybe you don't have enough sleep, you drink too much, you don't exercise. Trading requires you to be fit. So take care of yourself.
7. If it's the market:
   1. Question that assessment of the situation as markets usually do not fundamentally change very often. They do, but your trading system should capture quite a range of different market conditions or it would not have been profitable in the past. And that means, before you decide your trading system is not working, it's a lot more likely that something within yourself has changed causing the losses you experienced.
   2. If everything you do is the same you did in the past, then your system might no longer be working. You could try to tweak your system, but usually tweaking a profitable system leads only to an unprofitable system in the future.
   3. Try a different approach: Ask yourself, what is the basis of your system, why is it working, what are its components, what environment does your system need to work profitable.
   4. Once you have answered these questions look for a market which fits your system. No one forces you to trade ES, YM or NQ. There are a lot of markets out there and once you know, what your system needs, you can look specifically for these markets to trade.
8. Once you found your market
   1. Start demo for a week
   2. Learn the movements of the new market
   3. Start trading small
   4. Forget the notion, that you will be whole tomorrow or the day after. You are in a hole and it takes time to get out of the hole.
   5. But know, that once you found your mojo again it will go very fast and you will be stronger and better prepared the next time you fall in a hole.

I hope these points help some of you currently in a trading hole. They helped me in the past and will help me in the future.

US Dollar, Japanese Yen End Day Lower as Bernanke Optimism, Citigroup Report Boost Risk Appetite

- British Pound Remains a Laggard as UK Industrial Output Hits 28-Year Low
- Euro Tests 1.28, Tumbles Lower as ECB’s Weber Signals Further Rate Cuts
- New Zealand Dollar Could See Heightened Volatility on Expected RBNZ Rate Cut

US Dollar, Japanese Yen End Day Lower as Bernanke Optimism, Citigroup Report Boost Risk Appetite
Risk appetite was strong for much of the day, pushing the S&P 500 up 6.37 percent by the end of the day and weighing on the US dollar and Japanese yen on word that Citigroup was having its best quarter since posting a profit in 2007 and amidst reassuring comments by Federal Reserve Chairman Ben Bernanke. During a speech to the Council on Foreign Relations, Bernanke said that the US will ensure banks have sufficient capital, and urged the overhaul of rules for the biggest financial firms in order to “make the financial system as a whole better able to withstand future shocks, but also to mitigate moral hazard and the problem of too big to fail by reducing the range of circumstances in which systemic stability concerns might prompt government intervention.” Meanwhile, wholesale inventories fell for the fifth straight month in January at a rate of 0.7 percent, as businesses try to keep up with declining demand. Indeed, wholesale sales have been consistently falling negative since July 2008, which has led the inventory/sales ratio to climb from 1.06 in June 2008 to 1.30 in January 2009, suggesting that business are burdened with additional costs as they carry excess supplies.

Looking ahead to Wednesday, there will be no key US economic indicators released, leaving the forex markets to move with risk trends during the US trading session. Something that I’ve been focusing on in particular is the status of the DXY index, which has thus far managed to hold above support from the March 6 lows and a rising trendline. If we see a break below this level, the move will likely signal an important turn for the greenback across many of the majors. However, as long as the index holds above support, bullish potential remains for the US dollar.

Forex Currency Trading Market

WHAT IS FOREX CURRENCY TRADING?

If you read about investing, you've seen the word forex trading. But because forex doesn't get much publicity in the major publications and websites, many investors don't know that forex is just short for "foreign exchange". So trading the forex market is simply trading foreign currencies.

As recently as ten years ago, currency trading had high barriers to entry, so only large banking and institutional firms had access to the tools and systems required to play in the forex trading game. Recently, however, technology has developed to the point that any individual investor can hop right in and trade with one of the many online platforms.

When buying and selling in the forex currency trading system market, you'll see that there are four "currency pairs" that dominate the percentage of trades. Those four are the Euro vs U.S. Dollar, US Dollar vs Japanese Yen, US Dollar vs Swiss Franc, and US Dollar vs British Pound.

The goal when investing in currency is to be holding a currency that appreciates in value in relation to the other currencies. To use an overly simplistic example, if you bought 50 British Pounds for 100 US Dollars, held the Pounds for 1 week, and in that period the value of Pounds increased in relation to US Dollars, you could then convert those Pounds back into dollars for, say, $120.

Unlike the domestic stock markets, the forex currency trading is open for trades 24 hours a day. Much like the phrase "it's always noon somewhere," it's always business hours at some region of the globe. Since every country trades on the FX market, and it's open all day, the daily volume is roughly $1.2 trillion, which dwarfs that of the NYSE. Another comparison to make in order to truly realize the magnitude of the forex market is with the currency futures market (which has around 1% of the daily volume).

One other important distinction to make is that forex currency trading is not centered on an exchange like the NYSE or NASDAQ. There is no central body or organization required to act as middleman. Trading circulates between major banking centers around the world.

Until recently, there were strict financial requirements and massive minimum transaction sizes which prevented individual investors from trading. But with the advent of the internet came the FX brokers. A forex currency broker is similar to an online stock trading account such as etrade.

Anybody can open an account and buy and sell in any quantity. Because the brokers have thousands of investors placing orders through them, they are able to meet the large minimum transaction size by purchasing in large blocks and distributing currency amongst the purchasing investors.

Although it is now easy to start trading forex, it is a complicated and complex market. While it offers fantastic opportunity for wealth, it is also very easy to lose your shirt in a hurry. Before trading forex, do your homework and read as much as you can find before investing your hard earned money.

GBP/USD Closes Below 1.3845 - Is 1.30 Now Possible?

You may recall that I mentioned in one of last week's posts that 1.3845 is the critical level to watch out for on the GBP/USD pair because if it closed below this level on any one day, then this would signal the start of a new down trend. Well this is exactly what has happened because it closed below this level yesterday.

I think this is significant because this is the key Supertrend level on the daily charts. To put it into context the Supertrend was red from October 1 2008 until February 8 2009. It was then bullish for about a month or so until yesterday, when it turned red once again.

Also if you want further confirmation of possible weakness in this pair, the latest signals on Marketclub have all been sell signals. This includes the daily, weekly, monthly and quarterly charts, with the latest signal coming on the daily charts yesterday with a sell signal at 1.4035.

Anyway the negative Supertrend means that I will automatically be looking for short positions on the 4 hour chart for this pair, but on a longer term basis I wouldn't be at all surprised to see a sustained fall from now on to around the 1.30 level. It's bounced back a little bit today but this rise is far from convincing and I personally think that further falls are inevitable.

Forex Profit Farm Review

I was kindly sent a review copy of Forex Profit Farm a few weeks ago but haven't really had the time to read through this system and give it the attention it deserves up to now. However I have spent several hours in the last few days analyzing and back-testing the system and can now give you my full review of Forex Profit Farm.

An Introduction

Forex Profit Farm is basically a forex day trading system that you can use to capture many of the big intraday moves that occur on a daily basis.

What Pairs Does It Trade?

The system works on any currency pairs but it is recommended that you stick to either the EUR/USD pair (where it seems to be most effective) or the major currency pairs that have the tightest spreads.

What Time Frames Is The System Most Effective On?

The creator of the system recommends you use the 15 minute time frame, and my own research backs this up. Any less than this and you will be the subject of too many whipsaws, and any longer than this and you risk entering a trade after a large gap up or down, meaning you could be stopped out if the gap is filled.

What Indicators Does The System Use?

I obviously can't tell you the exact indicators that are used but they are nothing revolutionary. The handful of indicators that are used are very common and are found in all charting software.

What Are The Stop Loss And Profit Targets?

The stop loss is set at 35 points (or less) which I've found to be just about perfect because it gives the pair plenty of time to breathe and will keep in you a trade long enough to capture the big price move when it occurs. There is no target price as such but for maximum profits there are instructions on how you can use a trailing stop loss so that you can bank as many points as possible when the price moves in your favour.

So Finally Is The Forex Profit Farm System Actually Profitable?

Well from testing this system out on various different currency pairs, I honestly believe this system is profitable overall. The stop loss of 35 points hardly ever gets hit and yet it captures many of the big intraday swings that occur every day.

I would only recommend you use this system between 08.00 and 16.00 (GMT), because this is when you get the biggest price swings. Plus if you really want to maximize your profits, I would recommend you trade the set-ups that occur just after the UK and US markets open as this is the time when you get substantial price moves.

Overall though I have to say I'm very impressed by the Forex Profit Farm system. It generates at least two or three strong trading set-ups per pair per day, and some of these resulting price moves are in the region of 60-100 points so the risk reward ratio is very much in your favour.

I've been testing it out on lots of different pairs to see if this system has any weaknesses but I just couldn't spot any. It does appear to have a very high success ratio, and I think you can probably increase this further by only trading those high probability set-ups that occur at the busiest times of the day, as I've just mentioned.

To be honest my expectations on receiving a review copy of this system were very low, but after doing extensive back-tests on this system, I honestly think Forex Profit Farm could be a winner.

Essential Elements of a Successful Forex Trader

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery �You gotta be in it to win it�, trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue � you�re overconfident and not focused enough on the risk you're taking.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who is overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

The difficulty doesn�t end with �pulling the trigger�. In fact what comes next is equally or perhaps more difficult. Once you are in the trade, the next hurdle is staying in the trade. When trading foreign exchange, you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like �what if news comes out and you wind up with a loss�. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don�t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld, �Live in the now man�. Worrying about "what could be" is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it - its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he re-enters the game, he is a serious threat to gain more yards � this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains � so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you�re a natural gunslinger and reckless, you will need to tone your act down a notch or two. If putting your money at risk makes you a nervous wreck, its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months. Some are initially successful, and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

Forex Broker Scams

The small, beginner forex trader often finds it difficult to trade profitably through inexperience, or using flaky commercial systems, but some forex brokers make it even harder by helping themselves to your money, often staying within the letter of the law. This posting is to highlight some of their nefarious tricks.

Beware the bucket shops

A bucket shop does not put orders into the interbank forex market. They simply rely on most traders losing, so take the opposite position to your trade, but only on their own systems. This means that it is in the broker’s interest for you to lose. As well as making money from the spread, they also get to keep your losing trades. In my experience, many brokers simply see beginning traders as people to take money off.

Since the trade is only on their systems, the bucket broker can distort the market, or widen spreads (the difference between the bid and offer price). I have seen situations where market news came out and the position went massively into credit, and then they deliberately widened the bid offer spread from 3 pips to 35 pips, and also prevented the trade from being closed.

One other trick is to deliberately hit stops. If you put the stop on their system, they can move the quoted price to trigger the stop, then it will immediately move to where it previously was. This is a way that they rob the small trader.

There is no real way to work around a dishonest or unscrupulous broker, especially if you trade news driven markets. All you can do is to read the experiences of other people and be careful when selecting a broker.

Forex(FX) Trading Strategy

A forex trading strategy can provide profit for a skilled speculator. A FX trading strategy is, simply put, a method for using foreign exchange rates of currency from various countries to buy one country’s currency when it is undervalued, and exchange it for another country’s currency with it is of normal or higher value, with the difference being profit.

A common forex trading strategy could involve US dollars and the Euro, the official currency of most European countries. To use a simple example of a forex trading strategy, a speculator would buy Euros when they were undervalued; let’s say two Euros equaled one US dollar. This would be unusual because normally the two currencies are almost equal.

By spending one hundred US dollars to buy two hundred Euros a speculator would be able to buy more goods in Germany, France or other European countries. When the market changed and became more even, the speculator would have twice as many goods as he normally would have, and would be able to exchange those goods for US dollars once again.

The difference would be profit. This is a very simple explanation of a forex trading strategy, but gives the basics to the new speculator.Of course, when coming up with a forex trading strategy the trader should only use money that he or she can afford to loose. This is speculation, as opposed to investment. The chances for profit are real, and could come quick but if the market turns the opposite way than expected the trader could actually loose money.

A forex trading strategy can reap large profits, but if anyone tells you that all trades will result in profit, they haven’t studied the market as well as they should have and they are not correct. Still having a sound forex trading strategy for a competent businessman can be a profitable venture. It requires study of the markets, which takes time and is usually best accomplished by reading financial newsletters and using tools available on the Internet.

Getting the advice of a professional forex trading strategy specialist can also be a sound choice. Professionals have the time, education and skills and can generally help a trader come up with a forex trading strategy that will result in profit more often than one could do without their help.The most sound forex trading strategy options are generally used by large multinational corporations who are often able to make steady profits.

Watching what large corporations do who are involved in forex trading, looking for patterns they may have set, can help a trader to get the benefit of the very expensive expertise used by these large companies. Making watching of the large traders a part of a person’s education is definitely a good place to start a forex trading education. Identifying the state of the market, determining the time frame you are working in, and the currencies that have fluctuation and getting the advice of professionals through self study can be the wisest forex trading strategy option available.

The Key To Automatic Forex Trading System

Automatic forex system trading is a really sophisticated and complicated piece of software. It is a simple, yet effect system used to trade foreign currency. What it does is it trades the spot foreign currency market with a computerized automated trading system that enters orders for you. Forex trader’s now have a lot of different automated trading programs to put this attitude to work for them.

Automatic forex system trading is good for those who have the patience and perseverance to work it out on their own. Sometimes you just need a forex trading mentor to help you improve the “soft skills” of trading. There are a lot of skeptics out there who believe that forex trading is too big of a risk. It just so happens that with automatic forex system trading, the risk is cut down. I also believe that investing in any other way besides using an automatic forex system trading involves a lot of risk. You simply set up your preferences in the system’s settings and put it on auto-pilot.

Forex Trading is one of the easiest ways of earning money. If you are not willing to see small periods of loss, then automatic forex system trading is not for you. Software can be a valuable resource if the right one is selected. You only feed the data to this software, and it gives you the signals to trade. If you decide automatic forex system trading is for you, just have some patients and trust your software for the long term, which is the key.

The short answer is absolutely. In fact, many top forex traders use a forex trading system, whether they invented it themselves, or care to admit it. This article will talk about how can a forex trading system work.

Trading on the forex market is done strictly by the numbers. History has proven that like anything, currencies rise and fall based on certain statistical data, and trends can be calculated to when and how much these changes will occur.

In the past, financial institutions spent a lot of money developing these systems for their own use, and was often the backbone behind their investment strategies. These days, many of these programs are available to use for the general public. Simple software solutions can be downloaded and run on personal computers.

For the beginning, intermediate, and advanced forex trader, these programs can be a godsend because they do all the technical analysis for you and provide crystal clear buying and selling signals that take the guesswork out of making trades.

If you look at it, trading on the forex is a primarily statistic process, and using a forex trading system can not only eliminate mistakes and inaccuracies, but also provide the discipline of the program to your trading.

The benefit here is that your forex trading can be run on autopilot, where you set up your trading parameters, the money you are willing to invest, and let the program run, just checking up its progress.

Not only can a forex trading system work, it is perhaps the best method to either enter the forex market to to supplement your existing trading practices.

Free Forex Trading Tips

As the Forex global currency trading system has the highest volatility of any investment market today, it’s absolutely vital that you get access to as many Forex global trading tips to fast track your Forex education and to lock in faster Forex profits. This article will reveal free Forex global trading tips for the volatile Forex currency trading market.

The beauty of the internet is that Forex global traders can now go online pretty much anywhere in the world at any time of day or night and get access to free Forex trading tips. With the right Forex currency trading system, Forex traders can reap large profits with Forex global trading.

There are some qualities that a Forex trader should have to become the best Forex trader he or she can be and to lock in faster Forex profits.

It is absolutely vital that you use proven strategies when buying or selling in the Forex global currency trading system. The best way of achieving this is by consulting reputable Forex charts and graphs that are known to be proven indicators and pivot points to follow when investing in Forex global trading.

Contrary to stock trading, as the global Forex market trades in every currency there is never a threat of insider trading. What separates a successful Forex trader and a consistent Forex loser is the level of their Forex trading education and the fundamentals that they follow in their individual Forex currency trading system.

The more that you can educate yourself about the currencies you are trading in the global Forex market the more accurately you will be able to predict the way these currencies will move and the more profits you will be able to reap.

The most savvy Forex traders understand that the best Forex currency trading system is the one that they have perfected and stuck to, with no exceptions. By creating your very own individual Forex currency trading system and sticking to it you will be virtually able to put your Forex global trades on autopilot as you simply follow the Forex currency trading system that you have already created and that has been proven to work.

Margin trading is a very easy way for Forex beginners to lose their money fast. Don’t even venture into this Forex currency trading system until you have perfected your own strategies and know exactly what you are doing.

Forex currency trading is not risk free. It is critical that you bear in mind the volatility of the Forex global currency market in combination with what is going on politically and economically in many countries around the world

Ten Tips on How to Lose Nothing in Forex

Many thing has been said about Forex but one thing that relatively comes to mind when we talk of Forex is how risky it is? Can one trade Forex without any loss? this is a million dollar question. Although one will say it is not possible to trade Forex without losing. Easy Forex trading can be achieved by Forex made easy tips. This article will show you how to trade Forex without losing.

Though as weird as it may sound it is possible to trade Forex without losing a dime. How is it true? You may ask, Lets calculate it. Assuming you invested $1000 and at end of the day you have $1500 your total gain might have been $550 but the actual gain is $500 because you lost $50. But looking at it in the real terms you have lost nothing. This is what I am going to show you how to do. Just follow the steps below.

1) Always watch the market before entering. Though Forex is usually unpredictable this will help you know the market trend and be able to place the right trade.

2) Never Enter a high Impact until you see clearly the direction

3) Make Forex Trading a Fun, Never fidget when you are trading Forex. Have confidence!!! Lack of confidence and fear has been the major cause of people losing in Forex

4) Never Trade Forex under stress. This will jeopardise your sensitivity if you do so

5) Make research; Make research, study predictions before going into any trade.

6) Go it Big!!! I always advice my students to trade Forex only during a good market that will fetch you about 20 pips and above instead of going into a bad market that will be changing between 1 pip - 5pips and down to negative and up again. You can only achieve this if you follow the above tips and others below.

Reasons Why Forex Trading Courses Are So Important

From ancient times, people have been engaged in different types of businesses. Buying, and selling of commodities, is still the backbone of any business. Businesses have not only provided bread and butter to generations but have also helped build many great nations.

Trading is also one of the very old ways of doing business. Long ago, people traded goods for other goods. Later on, goods were traded for services and services were traded for money.

Forex trading is just one of the many forms of trading business. Simply put, forex trading is the trading of different currencies in the world. Known as the largest financial market in the world, forex trading is the least regulated market which provides absolute liquidity to most investors.

In the beginning forex trading seems very easy. But in reality, it's quite difficult. To make money in forex trading, you should be able to buy currencies at a cheaper rate and sell them later at a higher rate. If you don’t have proper knowledge about it, you will lose a whole lot of money.

To become a pro in forex trading, you will need to learn the basics and then practice with some advanced learning tools. If you do it right, it won't be long when you will become a master.

There are many forex trading courses that you can choose from. They vary not only by the content but also by the audience type. For example, you can choose to attend a forex trading class traditionally (inside the classroom) or online over Internet. There are courses designed for beginners, intermediate level and even for professional traders.

Whichever course you choose, you will definitely learn more and benefit from it. Practicing what you learn is also important. Although the actual trading requires additional expenses on your part, the amount that you'll be spending will be doubled or even tripled once you do your actual forex trade.

Trading courses offered to the new forex traders teaches all the basic principles and aspects of forex trading. There are many institutions which offer the latest software and tools used in forex trading. Apart from detail on forex trading, many institutions educate the first time traders about the difference between equities and forex trading. They show how the pros make use of different instruments when doing the actual trade, which helps the beginner to choose the best possible instrument.

Since trading in forex goes on across the world, you can actually engage in forex trading twenty four hours a day and six days a week. You can just imagine how much money you can make in very little time; but this can only be realized if you attend forex trading courses.

Some new traders initially enjoy and benefit from forex trading even without attending any proper course. But in due time, they realize that they can lose a lot of money if they don’t seek professional help. As you can guess, a little help from outside can prove to be very useful.

Forex trading requires a lot of knowledge about the market itself, and if you hardly have any knowledge about it, you're in big trouble. People who want to engage in business naturally want to make money, and to achieve that in forex trading, you must have a good grip of the different aspects of the trade.

One of the very important traits in doing forex trading is discipline. It’s not enough to have your own plan; you also need to stick to it at all times. With the help of adequate technical tools, you can go a very long way.

It would be wise to find a course in physical offices so that you can get the most professional and comprehensive learning experience. Check if they also offer study materials to be used at home. The opportunity brought about by the different courses offered in the market is infinite, and any trader can highly benefit from it.

Many forex trading courses allow you to have training with real quotes and data. You can learn the proper skills in risk management, and how you to preserve your capital. You will know how to make your very own business plan, and you will be able to improve on you plan as per your instructor's comments.

Instructors of such courses are among the best; they have all the experience and knowledge about the trade. Almost any physical office which offers forex trading courses allows their students to do networking, which means they can have alliances and collaborations outside the four walls of the classroom.

To enroll yourself into any trading course requires background study and careful evaluation of the trading institution that provides the course. You can always ask your friends and colleagues who are already into forex trading about good forex trading course institutions. Or you can do some research online in case you want to attend classes on the Internet.

Remember, learning will always make the difference if you want to succeed in forex trading. So make a right decision when you choose right trading institute.

Forex Day Trading - When To Stay Out Of The Markets

A lot of forex traders like to trade the shorter time frames such as the 1 and 5 minute charts, but it is very difficult to make consistent profits this way. This is because you have to contend with all the noise on these charts where the price just seems to drift aimlessly in a seemingly random fashion. Therefore there is one golden rule which you should stick to when trading these short time frames.

Basically you should always stay out of the markets when the ADX technical indicator is below 20. This indicator tells you whether or not a clear trend is in place and the general rule is that if it's below 20 then there is no trend.

So therefore you can instantly tell whether you should be trading the markets or not. Of course when the ADX is below 20 it's still worth keeping an eye on this particular currency pair because a rise above 20 could signal the start of a new trend, particularly if the directional movement indicators cross at the same time.

The ADX indicator is a very useful indicator because not only does it keep you out of flat trendless markets, but it can also help you exit your positions at the optimum point. The key here is to exit your position as soon as the ADX starts to turn down, particularly if it is above 40 or 50 for example, because this indicates that a trend is running out of momentum.

Here's A Simple Way To Increase Your Forex Trading Profits…

Many people spend years looking for a trading system that will make them consistent profits but the fact is that most people ultimately fail to do so. However the truth is that even the most basic of trading systems can be made into a money-making machine if you follow this one simple strategy.

Successful forex trading is all about probabilities, and finding high probability set-ups is the key to making winning trades on a consistent basis. Indeed this is why technical analysis is so popular because it's basically a tool that enables you to find instances where several key indicators correspond to give a clear buy or sell signal.

So how do you increase your overall profits?

Well assuming you are currently using some kind of trading system, take a few minutes to look through some of the positions you've taken in recent weeks. You should find some trades that you took that turned out to be winners and you remember being extremely confident about when you opened the trade. You should also find some losing trades which you didn't really have any confidence in before placing the trade.

Now to increase your profits you should only be trading these high probability set-ups that you are extremely confident in, based on past performance and experience. Therefore before each trade what you want to do is to give each potential trade a ranking out of 10 based on how confident you are that a position will turn out to be a winning one.

It's unlikely that you will ever give a trade a 10 rating because no-one can be 100% sure about a trade, but you should get plenty of 8s and 9s. Now you should concentrate on only trading these high ranking positions, ie 8 and above, and ignore the rest.

This simple strategy can potentially have a dramatic effect on your overall profitability and can even turn an unprofitable trading system into a profitable one so it's well worth doing if you want to increase your success rate.

The 3 Shortcuts To Becoming A Profitable Forex Trader

If you want to become a profitable forex trader, then there are various ways you can go about this. The most obvious way is to develop your own profitable trading system(s), which is what I did, but this can take several years and can turn out to be a very expensive learning curve. So with that in mind, here's 3 shortcuts that will help you to become a profitable trader a lot quicker:

1. Subscribe to a forex signals service.

Forex signals are extremely popular amongst forex traders because they allow you to profit from the forex markets without having to actually come up with your own profitable trading system. All you do is subscribe to a reputable signal provider and trade the signals provided. The only problem is that I would say the majority of signal providers are not actually that profitable, and the ones that are are few and far between.

2. Find a mentor.

This is arguably the best shortcut because finding a professional trader who can teach you how to trade profitably could set you up for life. It will cut years of your road to success and you will learn how to trade like a professional. Of course it's not always easy finding a mentor who lives in your area but you can always go online and seek out the real pros and either ask for advice or offer them money to mentor you.

3. Buy a profitable trading system or robot.

Finally the other option is to simply buy a profitable trading system or robot, or copy a system used by other pro traders. For example, you could use my trading system if you so wish (see right for more details) or you could visit some of the forex forums and chatrooms to find out which systems people are using. Alternatively you could buy one of the many systems that are currently being sold online. For example, two excellent products I've recently purchased from Dean Saunders, 10 Minute Forex Wealth Builder and Blade Forex Strategies reveal some excellent trading methods you can use to trade the markets.

1 Minute And 5 Minute Charts - How Useful Are They?

1 minute and 5 minute charts appeal to so many traders because they can signal lots of short-term trades. Therefore they are ideally suited to traders who like to scalp the markets, but are they very profitable?

Well I've been trading forex for a good few years now and despite coming up with numerous short-term strategies that initially appeared profitable, ultimately they have all failed. This is why I still predominantly trade off 4 hour charts, using the daily charts for guidance.

I haven't once come across a consistently profitable system that uses 1 minute and/or 5 minute charts. I'm sure there are traders out there who are raking in lots of cash by taking multiple positions every day based on these charts, but I've yet to meet any of them.

The major problem with them is that so much of the data from them is just noise, and you get so many false signals during the average day that it is very difficult to make any real money. Even the very best technical indicators are often rendered meaningless when used over such a short timescale, and even if correct signals are given the subsequent move may only turn out to be just 5-10 points.

Plus you've got the spread to contend with because you will often need 3 or 4 points just to break even with a lot of forex brokers. Furthermore if you trade a lot of in-and-out positions, then it's usually only a matter of time before your broker will be on to you because most forex brokers don't like their customers making lots of very short-term trades.

I personally prefer my style of trading which involves 4 hour charts and generally will only consider adding a new system to my armoury if it uses 30 minute or 1 hour charts and above. This way technical indicators are generally a lot more dependable, and therefore profitable. Plus you can still be a daytrader if you so wish even using 1 hour charts You don't need to use the whipsawing 1 minute or 5 minute charts.

If you know of a trading system that is consistently profitable using these charts, I'd love to hear from you. In the meantime if you would like to read about my 4 hour trading strategy please subscribe to my newsletter above for instant access.

Becoming A Successful Forex Trader Requires Money And Motivation

If you want to become a top forex trader then you will find that there is a lot to learn. Making consistent profits from forex trading is not easy by any means, but as with anything the more experience you have, the easier it becomes.

That is why two of the most important things you need if you want to become a successful forex trader is money and motivation.

Let's start with money first of all. You obviously need a little bit of capital to start off with but you also need to have some money in reserve if needed. This is because almost everybody blows their initial bankroll learning to trade the markets.

That's not necessarily a bad thing because it's a great learning experience. Losing money is not a nice feeling and so it motivates you not to lose any more money in the future. Therefore you start to use tight stop losses and adopt good money management techniques.

Also because few people start making profits straight away, you also need a lot of motivation and determination to succeed. You have to accept that the most successful traders probably spent hours on end testing out different strategies before they found one which made them profits, and probably lost a lot of money in the process. I know I certainly did.

So don't be put off if you initially lose money because as long as you can stay in the game long enough to refine your trading strategy, and have a willingness to succeed, then there's no reason why you can't become a top forex trader and make substantial profits.

Forex Trading Tips - The Advantages of Trading Forex - Part 1

There are many different advantages to trading forex instead of futures or stocks, such as:

1. Lower Margin

Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000.

What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's.

When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well.

You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.

The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount.

You may not actually get a margin call before your positions are liquidated.
Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.

Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures.

For example, if you are trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though.

You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle.

The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.