For a market as volatile and dynamic as the forex market you need to be well prepared with forex market knowledge before you start trading. If you are serious about making a profit from your forex trading the best step would be to get the best advise and information for forex trading before you start trading real money.

Here is a short list of some of the best practices in forex trading:

Develop your investment positions by starting trading activities with a small margin. As you become a better trader you can begin to scale up the size of your positions.

Most people agree that margin trading is one of the biggest advantages in forex trading, since it will allow an investor to trade amounts larger than the total deposits for investment. However, you must keep in mind that margin trading increases the size of losses on losing trades just as it increases the size of profits on winning trades.

It is always best to increase leverage relative to experience and success. To use too much margin leverage just starting out might seriously deplete your capital with just one or two losing trades.

Strategy is also an important factor to success. The best way to develop a strategy would be to write down exactly how you intend to trade. This would include the currencies you will be trading, the amount of leverage you will be using, and how you are going to manage your risks.

“Off peak hour trading” may sound tempting but the best advice is – don’t. This is because professional forex traders, hedge funds and option traders have a huge advantage during off-peak hours, since they can simply hedge their positions and move liquid assets and currencies easily if there is a relatively small trade volume, which means they have less risks compared to small or new forex traders.

There will always be trading systems that will attempt to analyze past forex events and trends, but none of these can actually predict the future with exact accuracy. The best thing to do in starting out trading is to carefully examine the forex charts and determine the major trend for the currencies that you will be trading. Then you establish your positions to follow the trend, ideally putting them on at better prices during reactions within the trend.

You should be aware of news releases. Many, if not most, of the really big forex market moves occur around economic data release time, like the monthly US NFP data release on the first Friday of each month. Until you get a good feel as to how the forex market reacts to these releases you may want to be out of the market at that time as the market can move quite violently if the data is a surprise as it often is in an age of dishonest governments.

Getting the best advise and information for forex trading is not just practical, it can mean your success or failure in forex trading.

Learn more about the coming energy crisis and US Dollar collapse and its consequences for the way we will live and work at Forex Trading Information

Technical analysis is price movement study. You can track the history of price movement by using price charts and try to work out which way the prices are likely to go in the future.

Online Forex brokers will give you a variety of different tools which you can use in technical analysis. Here are some of the most common ones:

Bollinger Brands

These are used to measure the volatility of the market. They comprise 3 lines:

1. A moving average in the center.

2. A lower band which shows the moving average minus 2 standard deviations.

3. An upper band which shows the moving average plus 2 standard deviations.

When the volatility of the market is low, the bands will come further together. When the volatility of the market is high, the bands will spread further apart.

The Bollinger Bounce

The middle band usually stays between the outer bands. The outer bands can be compared to border control. When the middle band gets too close, it is bounced back towards the middle. This is why it is called the Bollinger Bounce. It is helpful to be aware of this because if you see the middle band getting close to an outer band, it will probably bounce away.

This strategy works the best when there are no clear trends and prices seem to be fluctuating.

A good strategy to use to spot an early trend is called the Bollinger Squeeze. This is when the bands squeeze closely together and can often mean that a breakout is imminent. If the middle band breaks through either the lower band or the upper one, this means that the trend is likely to continue to go in that direction.

Parabolic SAR (Stop and Reversal)

This indicator is used to identify trend reversals. It is an easy indicator to read. Dots appear on the chart in positions either below or above the candles (the formula used to work out where the dogs must go is rather complicated).

Dots below the candles are an indication to buy and dots above the candles are an indication to sell.

Parabolic SAR does not work well when price movement is small but it does work well when there are clear trends, either in an upward or downward direction.

Stochastics

Stochastics has a scale from 0 to 100. It is an indicator used to measure oversold and overbought conditions in the market. When the lines are over 80, that means the market is overbought. If this happens, a downward trend might form. When the lines are below 20, this means the market is oversold and an upward trend might form.

Stochastics can be useful in working out when to issue sell or buy orders and when to lock in profits. You should never use just one indicator. It is better to combine several of them and adjust these to your own trading strategy.

Ian Armstrong is an avid Forex enthusiast.

Ian recommends Avi Frister’s “Forex Trading Machine”, which uses only price and time as trading indicators. Full details at Frister’s FX Trading Machine

Forex Trading involves buying one currency in a currency pair, by selling the other. So if one is trading in EUR/USD, the trade may involve buying EUR by selling USD at the current market rate or vice-versa. Similarly buying EUR in EUR/GBP would require GBP to be sold.

Unlike options or stocks which have lots of companies that can be traded on, the forex market has got limited currency combinations which can be used to place the trades.

Despite this, often people wonder which currency pairs should be chosen for trading? Should it be USD based or should it be the one that is heavily volatile or should it be some other?

Lets look at few parameters which can be used to decide -

1. What is the pip spread involved – The biggest factor to be considered is the spread between the currencies. In layman’s terms, Spread is a difference between the sell price and the ask price of forex currency pairs as given by the forex broker. In other words, it is a commission of the broker or agent through which the trades are made. The lower the spread, the better it is for the forex trader. The lowest spread I have seen is in EUR/USD, which has the average spread is 2 pips to 3 pips. Typically a spread of upto 5-6 pips is good enough to trade.

2. What is the liquidity? – The more the liquidity, that means the higher is the amount of money being traded on that currency pair. So, this eventually means that that particular currency pair moves a lot in a the trading sessions. Its better to trade on such from a day trading perspective as the trades don’t need to be kept open for a longer time. I have seen that the GBP/USD is heavily liquidated. On average it moves about 100-150 pips everyday. This is followed by EUR/USD and USD/CHF.

3. How does the currency pair behaves? – Does it move technically or is it primarily fundamental driven? The one that is primarily fundamental driven doesn’t has much regard for technical analysis. I have seen JPY (Yen) as one such currency which is heavily fundamental analysis driven.

So, these are the some factors that can be used in identifying the currency pairs to be traded on. Though these factors are not an exhaustive list, they can be used as minimum basic rules. The pip spread is one important criteria. The lower, the better it is. However the currency pair should also be sufficiently liquidated as this means that there will be significant pips movement during a trading day.

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The most fundamentally important part of making this method work is self discipline. To be consistently profitable you need to be disciplined every trade, every day. The one time when you relax your rules, you can be sure will be the time it will come back and bite you! Having said that, the beauty of this method is that its rules are very clear, so there is no need to second guess.

On average this method provides two or three entries every day, trading the emini S&P 500 or the emini Dow. However it can be used in any market. Your only job, is to wait patiently until the set up arises and execute it precisely. Quite frankly this is the easy part. The hardest part will be overcoming the natural tendency to get caught up in price action and make trades that have nothing to do with the system!

This won’t happen to me you say! Let me tell you it probably will, its very tempting, so be prepared. You have to become as adept at seeing when the indicators are telling you not to trade (and respecting that) as you are at recognising the entries and executing them. Remember a lot of price movement is going to be passing you by, and that’s what makes it hard. Having the discipline to let moves pass you by and not jump in on a half baked signal, or enter prematurely is the real skill that needs to be mastered. If you can do that you’ll make a lot of money.

Chart Set Up

Open up new charts in 1 min, 3 min, 13 min, & 30 min time frames. On all charts place a 23 ema (exponential moving average) and a 50 ema. On all charts but the one minute place the Bressert Double Smoothed Stochastic indicator (or the Roy Kelly Two Smooth which is the same).

The Method in detail:

Step 1 – Identify trend direction

Identify the trend direction – if the 23 ema is above the 50 ema, we say the trend is long, if below it is short. We need the 3 min and the 13 minute to be in the same direction i.e. both long or both short. If they are not stop there. We don’t need to think about anything else until they are in the same direction.

Step 2 – Identify cycle direction

Suppose both 3 min and 13 min trend is in the same direction and for the sake of example suppose that they are both short.

Our next task is to identify the cycle direction which we can do using the Bressert double stochastic indicator or the Kelly Two Smooth.

Mo Christiensen is one of the editors of the successful trading blog tradingadviceblog.com. The site specializes in trading advice and profitable trading systems for new and struggling traders. View the original article in context at http://tradingadviceblog.com/trading_methods/profitable-cycle-trading-method-part-ii

Forex trading has become big business these days with many people being lured to this profession by the potential riches you can make if successful. Many people who have become successful forex traders have usually gone through a steep learning curve over several years, but there are ways in which you can learn how to become a profitable trader a lot quicker.

The first way is to look for profitable forex signal providers. This appears to be very easy because there are so many services online that claim to be making their subscribers vast profits every month, however most of them are nowhere near as profitable as they claim. You should be looking out for forex signal companies where the signals are both profitable in the long run and created by an experience forex trader who actually trades their own signals with real money.

This way by following the signals of a top trader you can not only make some money from following their signals, but you can also learn about the methods and tactics used to consistently make profits from forex trading. In addition with many good forex signal providers there will also be a live chat room where you can interact with both the signal provider and the other subscribers, many of whom will be decent traders themselves, so you can pick up plenty of helpful tips and advice.

The second shortcut to becoming a successful forex trader is through using an existing tried and tested system. So rather than spending months or even years trying to construct your own profitable system, why not just use a profitable system used by other traders?

This saves a lot of time and effort and is not that hard to do. Simply visit some of the top forex forums and you will find many top traders who are prepared to share their system with the other members of the forum. After all it makes no difference to their profits how many other people trade their system so why keep it a secret?

Finally if you really want to be a top trader, your best bet is to find someone who has been making money from trading for several years and get them to mentor or coach you. It may come at a cost, but will be well worth it. If you don’t know any successful traders in real-life, then just go to some of the top trading forums and get in touch with some of the most respected traders and ask them if you can pay for one-on-one coaching.

You don’t necessarily have to spend years learning about the markets. Simply do some searching online, find the most successful traders, and find a way of emulating them or their systems yourself. Even if it costs money to do so, the profits you will make from forex trading could well exceed any costs you may incur in the process.

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If you have heard of forex and trading the foreign exchange market, you might be interested in pursuing this type of career. Trading the forex can be very risky without the proper education and training. Before you begin, it is important to learn all that you can about the art of trading and to practice with a demo account and fake money. This will help you get ready for the real things, when the time comes for you to start using your own money.

If you didn’t know, the forex market is the largest financial market in the entire world. The market is open 24 hours a day and operates seven days a week. This makes the fore market the most liquid market in the world.

The forex market is much different from other financial markets simply because of how liquid the currency is. Also, because the market is open 24 hours a day, trading does not take place in one location, it happens all over the world. Trading starts in Sydney, Australia and ends in New York. Because of this, you can trade the market whenever and wherever you wish, regardless of what time it is.

In the past, forex trading was only available to the largest financial institutions. It was also offered to large, multi-national corporations and established currency dealers. For the most part, this existed because of the strict financial requirements imposed by the market. Because of this single individuals and small businesses were not able to participate.

In the late 1990′s this changed for everyone. For the very first time, the forex market became open to both individuals and small companies. This happened because of advances in communication and technology. High-speed internet access is one of the biggest reason this became available to everyone. Because of this, trading the forex financial market is one of the best ways to make money from the comfort of your own home.

You should understand that the forex market is like no other. It is very important for you, as a beginner, to have the proper knowledge on how to trade in this market. There are thousands of courses out there on the internet today that teach you about the subject and help you develop a trading strategy. There are also numerous sites that allow you to open a demo account and practice before you start putting your hard earned money into play. If you do these things, you will be ok and see success in the forex market.

Bart Icles is an expert Forex trader. He has developed a strong Forex strategy that he uses to successfully trade the forex market on a regular basis. Visit our blog to learn about a great Forex trading course and check out this Forex trading strategy hub page for more information.

One of the most common questions asked by struggling traders is “where am I going wrong?”. There can often appear to be such a mind boggling array of variables in trading, that it seems impossible to unravel the primary issues.

When you strip away your emotions on the subject and look at your situation with cold hard analysis, there are really only two main variables:

1. Are you using a profitable trading system?

In other words is your trading method giving you entry and exit signals which if executed correctly lead to profit, in the balance of trades. Do you know your trading system’s expectancy?

You would be amazed at how many traders can’t answer this question. For many traders in their first few years of trading, the market has such an aura of mystery about it, and there are so many details in terms of charting, order entry, brokers etc. that they forget to ask the most obvious of questions. Don’t be one of these traders! Don’t be willing to go out and risk your hard earned money on hope. You wouldn’t drive your car somewhere unless you had a reasonable certainty that it was going to get you where you wanted to go. You wouldn’t eat food unless you were reasonably certain that it wouldn’t make you sick. So why trade without knowing what to expect from your trading system?

If you want to gamble, surely it would be more fun to go and bet on a sports game? Despite what some may say, serious trading is not gambling. The profitable trader knows exactly what to expect from his system over time. He won’t be able to tell you if his next trade will be profitable, but over a week or month he should be able to tell you with reasonable accuracy his trading system’s expectancy.

So test your system, either using the back testing functionality of your charting package, or by paper trading it over an extended period. Knowing the expectancy of your trading system is your foundation, without it you have NOTHING! Really, NOTHING! Without knowing your trading method’s expectancy you are building a house on sand.

This first step is really a gate keeper. If your trading method is not profitable there is no point in going any further.

2. Execution

Once you know for certain that your trading method has is (or has the expectancy to be) profitable, the only other variable is executing it correctly. Yes, you may be saying “duh!”, that’s really obvious. But when you boil your trading down to these two simple variables – when you know what to expect from your system – then you can place 100% undivided focus on mastering your ability to execute your trading system.

The mistake that many traders make is focusing on the wrong thing. Your job isn’t being the trading system! Its not to decide which trades look promising. That’s the job of your system or method. You should have a set of rules which tell you this, which you follow. Unless you are incredibly experienced or have psychic powers, don’t do discretionary trading. Don’t get lost in price movement and make up the rules as you go along.

Your job, your only job, is to sit patiently and wait for your system or method to indicate that its time to enter – and then with great focus, you execute the trade as planned, and you get out again either at the predetermined profit targets, or when your stop loss gets triggered.

I know this seems really basic, but remember that 99% of traders fail because they either don’t have a profitable system, or because even with a profitable system they don’t follow it. Taking trades not indicated by the system, second guessing the system and not taking trades given, hesitating and getting in late, anticipating and getting in early – these are all commonplace. They all boil down to a lack of faith in the system, and not having a burning focus on accurate execution.

Where does mindset fit in here? Focus on staying focused – on execution. Make it a meditation. The more you develop the ability to step back from price movement and watch the market dispassionately – waiting for a signal to trade, the easier it will be to master your emotions. The easier it will be to witness the fluctuations of your emotions without getting sucked in to them – and allowing them to throw you off your game.

Mo Christiensen is one of the editors of the successful tradingadviceblog.com. The site specializes in high quality trading advice and profitable trading systems for new and struggling traders. See the original article in context at http://tradingadviceblog.com/intro/losing-how-to-figure-out-where-you-are-going-wrong/

If you’re new to the world of trading Forex, the quotes can be confusing to you. However, they’re actually pretty simple to read once you know how to approach them.

Let’s take a look at an example of what a Forex rate quote looks like:

EUR/USD = 1.2526

Can you tell what this means? This shows the current foreign exchange rate between the euro and the US dollar.

With any Forex quote, remember that two currencies are going to be quoted. This is because when you trade in Forex, in effect you’re buying one currency and selling a second currency at the same time, or trading them.

Therefore, when you read Forex quotes, the second currency listed is going to be your quote currency, and the first currency listed is going to be your base currency. Forex quotes show us what the relationship in price is between these two currencies.

The exchange rate says how many units of the quote currency you have to pay to get one unit of the base currency.

With the above example, the quote currency is the US dollar; the base currency is the euro. This price quote illustrates how each currency is trading in relation to the other. To buy one unit of a euro, then, you’ll have to sell 1.2526 units of the US dollar.

Is that clear enough? One more thing we need to add to our example is called the “bid/ask spread.”

In Forex trading, no commissions are charged on any trades placed. However, brokers get paid for their work through what’s called the “bid/ask spread.”

So if we add our bid/ask spread to the example given above, it looks like this:

EUR/USD = 1.2526/1.2528

Or, its “shorthand” simplification looks like this:

EUR/USD = 1.2526/8

In the above example, you can see on the right that the last digit is two points higher than the last digit on the left. This is the broker’s “commission.” In other words, brokers make their money by buying currencies for slightly less than they sell them at. Every broker does it; it’s fully legal to work this way. However, the amount of the spread can be different from broker to broker.

Therefore, as a trader, you buy at the bid price, or the first price quoted. You’ll then sell at the ask price, which is the second price quoted. The difference between the prices is called the “spread;” the broker keeps this amount as their profit on the trade.

So for instance, with the above example, you buy at 1.2526 and sell at 1.2528. Two pips, or 0.0002, go to the broker to pay them for executing the trade.

Therefore, the bid/ask spread is simple and straightforward, and easily calculates fees and expenses incurred in trading.

Ian Armstrong is an avid Forex enthusiast.

Ian strongly suggests that beginners to forex trading equip themselves with expert knowledge as soon as possible to avoid losing money. He recommends downloading This Free Beginner’s Guide to Forex Trading

Forex auto trading systems have become very popular for both beginners and intermediate traders. Many claim auto trading systems will produce better results than any sole human can achieve.

Let’s address four key critical areas where a Forex auto trading system helps a trader to better profits.

1. Complex technical analysis is handled by software.

2. Human emotions are removed from the equation.

3. Can trade anytime.

4. One can back test, and forward test on a free account.

1. Technical analysis is used extensively for forex trading. There are a vast number of indicators, many of them involving complex mathematical calculations. More importantly a good system never relies on a single technical indicator but involves several and how they relate to one another. A good Forex trading system uses a computer to analyze these different technical indicators and issue buy and sell signals based on probability of past correlation of these indicators. This is critical as experienced traders often spend hundreds of hours and thousands of dollars learning different technical indicators and how they relate to one another. We all know computers are great at number crunching and detecting patterns. A good Forex auto trading system uses this huge advantage to benefit the trader.

2. Any experienced trader will tell you the biggest obstacle any trader will have regards successful trading is their emotions. A good trader must master their emotions and this can take several years. An automated system removes the element of emotions, all one does is let the system do the trades. Fear has prevented many traders from entering a position when the technical indicators are positive. More importantly greed has often turned huge gains into losses, just ask any trader. I can’t stress enough that human emotions are a Forex trader’s worst enemy. When you have a trading system that you know works over time you just let it run its course.

3. Forex trading occurs around the clock Monday to Friday. There are systems that run on autopilot, they attach to your trading software and execute trades without your intervention. Institutions, banks, and large broker houses have done this for years. The main reason are for the two items listed above. Now, consider if you live in New York and you are trading the US/EURO. A very active timeframe for trading is during the European business hours, that would be 1AM to 4AM your time. So why not sleep and let an automated forex trading system do the trades for you. And let’s not forget when the Japanese traders are active during their normal business hours.

4. I mentioned being able to do back testing and forward free testing on a forex trading system. If I am to purchase a trading system I want to be able to do a risk-free test of the system. Some systems will give you the exact details of their signals and you can then actually go back in time to the charts and see how effective they were. Also many forex trading systems will provide you with historical records, but keep in mind there are other factors involved and you may be observing ideal situations. As almost every forex broker will provide a demo account you can actually test a system for free using a demo account. This is a MUST. I would never test a trading system with real money.

Forex trading, and Forex trading systems are becoming very popular today mainly because you no longer need $100,000 to open account, in fact you can open account with some brokers with with as little as $100. Also in the past the systems have been cost prohibitive so only large institutions used them. Forex has always offered huge leverage like 200:1 and for this reason has been very popular. You are hearing more about it today because almost anyone can get started for the very little money.

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