Thursday, October 22, 2009

TIPS FOR SUCCESSFUL SWING TRADING

Swing trading is a method of trading which aims to take advantage of the swings that price makes as it moves from level to level. Unlike other styles of trading, swing traders usually aim to open and hold a trade for several days to a week. Because of this, there are certain tips or strategies that a trader should implement to take advantage of the movements that price makes.

1. Trade for the long term - Swing trading is a medium long style of trading. Unlike day trading which opens and closes trades within a single day period, swing traders are holding trades for several days. This is necessary to catch and ride the swings as price moves up and down in the market. Holding trades for too short a period of time may result in you getting out too soon before price begins its next swing.

2. Plan your trade and trade your plan - It can't be said enough. Any trader needs to make sure that they have a solid trading plan or strategy before opening any trade. If you don't have a plan then don't trade, at least not live. Spend your time demo trading and developing your own style of trading before you go live.

The best tips for swing trading are to be patient so you can catch the next big price swing and follow a plan. To swing trade effectively, you must be patient and have a proven system that allows you to take advantage of the swings that price makes as it moves along through the market.

HOW TO IDENTIFY A PROFITABLE FX TRADING SYSTEM

Traders are always on the look out for that "best" trading system irrespective of their years of experience in the Forex trading. There are certain things that you should be sure of before investing in a trading system.

Of the market being flooded with information regarding various trading systems with reviews and guides each one explaining how perfect they are it is certainly a tough choice for the traders to choose a system that suits their needs. Whatever your need may be there are three special aspects that you have to look out for in any system or strategy to determine whether it is profitable.
These include identifying a market trend through higher time frame like 4hr chart, daily chart, weekly chart. So following these trends is one of the simple ways to make money. Although this is not the ultimate way to make money this is one profitable method for the newcomers. It requires only about 30 minutes of your daily schedule unlike other strategies where you have to spend hours on trading. Therefore you can utilize your free time by learning about the forex trading.

The simplicity of the system also plays a key role in determining success. If the trader is a beginner he has to understand the system and follow the instructions as his knowledge of the Forex trading is limited. A system with no more than three indicators is best to begin with for those who are new to the trading arena. This in a way minimizes confusion and eliminates potential losses as a result of misinformed trading session. So a simpler system is more profitable for a beginner than overloading yourself with a complex one.

The system should be clear of any error or doubts when using an indicator. If only all the conditions are satisfied a trade should be placed. The guidelines also should be clearly mentioned regarding the position size, amount, the stops that should be made and the time to take profit on a trade. It is very important to have a well devised trading plan to avoid time losses.

Winning with a 100% profit should not be criteria but to minimize the loss percentage and to maximize the overall profit is what you should watch out for. Only way to determine a profitable system is to test over a period of time in the live market and determine the kind of profit and loss from the trading system. Although you may lose few trades in the beginning but its part of a trading strategy to increase your profits in the long run.

WAYS TO BUILD YOUR FOREX TRADING STRATEGIES

Every Forex trader knows that to maintain their Forex strategy plain can merely keep the level of their stress at check. There are really many strategies and indicators that can be found everywhere, no doubt why most of the novel Forex dealers leave at about a few months after making their accounts into $0. To select and maintain the simplicity of your Forex trading strategy is just an essential way to become successful on the Forex world. For you to become successful also, you have to know the seven simple and easy strategies on Forex trading.

• The first strategy you have to know is to deal only during market periods. The 80% traded main currency including the period is the United States dollar. You must know the opening and closing time of US market, which is from 8:00 A.M (EST) to 4:00 P.M (EST). If you plan to deal some currencies, you must research what time it opens and closes. The accuracy and activeness of currencies occurs during the market period of it.

• It is best to utilize simple Japanese bar charts or candle sticks on resistance lines. For you to understand you must try to know the psychology of these candlesticks and you'll see that you're giving a great opportunity of success. Learn candlestick reversal patterns.

• To successfully proceed and avoid depending on indicators consider the price-action analysis. This is live, easy, and lucrative. Forex price-action trading lets you to achieve a great feeling when your way in and way out have to be.

• Select a currency pair that you feel at ease with and check its monthly, day-by-day, and hourly progress. Concentrate on single currency pair until you become well experienced.

• Avoid Forex news trading, particularly if there are large quantity of traders that shift the market, for it can be very inconsistent. Price tend to move in the trend direction of the longer time frame after experiencing dips during news releases.

• The last Forex trading strategy is to get up at least half hour prior on starting your Forex trading. See your Forex calendar and the progress of your currency pairs to get upcoming news happenings. Prepare for the trad before trading.

These are just the Forex strategies that you must know to become successful. Through this you can make your Forex trading strategy more efficient.

WHY YOU SHOULD TRADE LESS TO WIN MORE

The fact remains that there are some people who love to trade 10, 15, 20 ,40 rounds of trades per day. After all anyone who is really honest with themselves will admit that we trade most often times not only for money, but for excitement of being traders. As a trader you will always want the market go your predicted way. Its our drug of choice and we are all junkies to one degree or another.

Trading is first and foremost a passion. How many jobs do you know where people can't wait for Monday (or in our case Sunday night)? We are all fortunate to be involved in an enterprise that we care so much about and enjoy. But trading is also a business. And the cold hard, truth of the business of trading is that the more you trade the more you lose.

Of course there are exceptions to this rule. Some traders are extremely adept at high frequency trading and can churn out profits doing excessive round turns per day. Those traders, however, are few and far between. Doing this, you are really busy enriching the forex brokers. I call them the idiot savants of trading because they tend to have a supernatural feel for price action. See this scenario: "many times have I booked hundreds of pips of profit in Europe only to give them all back during North America trade". Who is fooling who?

The reason why frequent trading is so hard is because most of the time price action is random. The more often you enter the market the more likely you are to step in front of some monster order on the other side and get rolled over by the flow. Again, trading so much makes it easy to loose focus and thereby fail to apply the rules of our trading system.

While it is all good and well to pontificate about discipline and patience it is also utterly unrealistic to expect us flawed human beings to follow such advice. That is why it is crucial to have a garbage account in which we unleash all of our gambling instincts without doing any serious harm to our net worth/real capital.

With so many brokers now offering micro lots, the creation of a garbage/gambling account couldn't be easier. They key is to make sure your well reasoned disciplined trades go into you real account, and all your impulse trades go into the garbage account. If we can't realistically follow the dictum of Trade Less Win More, we should at least attempt to minimize the damage of our cravings.

Tuesday, October 13, 2009

5 TIPS FOR TRADING DURING VOLATILE MARKET

Volatility is a measurement of the speed of change of the value of a forex pair. A highly volatile time means that the price shifts up and down more rapidly and by larger amounts than during times of low volatility.Volatility occurs in the forex market especially when a very important news is released, like non-farm payroll, interest rate and so on. These periods of volatility provides traders the best opportunities to make real money from the market and at the same time it is the most risky time to trade forex. Especially to the newbies in forex, making money during news releases is more like a game of chance, because everything happens in a twinkle of an eye. This post is designed to help traders by giving them the necessary tips to maximize their positions during market volatile periods.

The key thing here is that one need to plan his/her trade before time, but how do you make those plans?

  • Select your trades before the news releases. Forex market presents plenty of opportunities during these periods, so you need to be selective of the currency pairs you will be trading. Don't try to over trade i.e. placing so many trades across different currencies but select one or two currency pairs you will be trading. This will help you to be more focused in your trade. Personally, during important news releases on the US currency, i prefer trading only one currency pair; EUR/USD or GBP/USD depending on the economic state of the pairing country.

  • Reduce your leverage. Volatility period is most the risky period to trade because your stoploss can be reached in a twinkle of an eye without giving you time to make changes. You have to reduce your leverage in trading in such times.

  • Be more disciplined in placing your trades. I will say this over and over out of an experience. The trade you placed may be going your direction but don't be beclouded by the emotions of greed. Don't place more excessive trades without checking properly the technicalities involved. Follow the rules of your trade and trade more cautiously.

  • Make use of tight stops. In a volatile period, it is possible for a trade to move 70 pips against you and still reverse to 100 pips in your direction. It is better to use tighter stops to cut out trades that are not in your favour and look out for another opportunity to enter your trade.

  • Always be prepared to take the bull by the horn. How much is your target? How much can you afford to loose in that trade? You need to get organise and put thesefigures in paper and pen before entering a trade. Be prepared physically, mentally and psychologically.

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