When many people think about a trade log, they often think along the lines of keeping a diary... you write down your trade details in pen (or pencil) and paper, right? While this may be one way of keeping a trade log, it's actually not the best one.
One of the best (and most convenient) ways of keeping a trade log is to do it on your computer. While many traders like to use a Microsoft Word document for this purpose, I personally prefer to use Excel instead.
But although the Microsoft Excel application is great for data entry, it's perhaps not too useful for writing down paragraphs of notes. Both Word and Excel have their own pros and cons... and it's up to you to decide which is best for you.
Computer software documents are easy to store and retrieve: just click 'Save' to keep it, and it's only a "double-click" away if you need to refer to it again. However, don't forget to keep backup copies of your trade log... you'll never know when technology might break down and fail.
Another choice is to use a tape recorder. This is often preferred by traders who don't particularly like to write. They just need to press the record button, and start speaking about their trade criteria and their feelings about a trade. This is the easiest way to record your trade details, but is also unfortunately the most tedious in terms of data retrieval (if you want to pull out past records, you'll have to listen through the entire voice recording).
Whichever method you choose, just make sure that you're comfortable and consistent with it. Don't use voice recordings today and then use a Word document tomorrow to log your trades. Your notes will end up all over the place, which makes future data retrieval a nightmare. Keep things simple and neat: always use the same format to log your trades.
About the Author
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
Thursday, January 24, 2008
Forex Trading Logs: 4 Important Details To Include by Harold Hsu
Many traders know it’s a good idea to keep a trading log… but what exactly does a trader keep in his log?
While different people keep records of different details, here are 4 important points that you absolutely must include in your own log…
Detail #1: Entry/Exit setup (entry criteria)
The entry setup criteria is basically the market conditions which are required to trigger a buy or sell signal, according to your trading system (you DO have a trading system, right?)
This log serves as a reminder to yourself not to trade against the rules of your own system. Every time you’re tempted to enter into a trade that doesn’t follow your system rules, this step will hopefully remind you not to make that trade. Also, past entry setup logs help you to decide if a losing trade could have been avoided. If your log shows that you completely obeyed the rules of your system, then don’t beat yourself over a loss… you did the right thing.
Detail #2: Entry price & Lot Size
The lot size log serves to help you stick to your money management rules (you DO have a money management system, right?), and the entry/exit price helps you to calculate your pip gain or loss.
Detail #3: Time & Date
This log enables you to go back and analyze any specific trade you wish to examine. Without the time and date, you won’t know which portion of the trading charts you should be looking at.
Detail #4: Your Feelings
This is perhaps one of the most important logs to make. You’ll need to keep a record about how you feel about the trades that you took. Were you hesitant? Or were you confident? Keeping a record of your feelings helps you become aware of your psychological state when trading, and can be very helpful with identifying patterns in your trading behaviour.
About the Author
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
While different people keep records of different details, here are 4 important points that you absolutely must include in your own log…
Detail #1: Entry/Exit setup (entry criteria)
The entry setup criteria is basically the market conditions which are required to trigger a buy or sell signal, according to your trading system (you DO have a trading system, right?)
This log serves as a reminder to yourself not to trade against the rules of your own system. Every time you’re tempted to enter into a trade that doesn’t follow your system rules, this step will hopefully remind you not to make that trade. Also, past entry setup logs help you to decide if a losing trade could have been avoided. If your log shows that you completely obeyed the rules of your system, then don’t beat yourself over a loss… you did the right thing.
Detail #2: Entry price & Lot Size
The lot size log serves to help you stick to your money management rules (you DO have a money management system, right?), and the entry/exit price helps you to calculate your pip gain or loss.
Detail #3: Time & Date
This log enables you to go back and analyze any specific trade you wish to examine. Without the time and date, you won’t know which portion of the trading charts you should be looking at.
Detail #4: Your Feelings
This is perhaps one of the most important logs to make. You’ll need to keep a record about how you feel about the trades that you took. Were you hesitant? Or were you confident? Keeping a record of your feelings helps you become aware of your psychological state when trading, and can be very helpful with identifying patterns in your trading behaviour.
About the Author
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
Tuesday, January 22, 2008
Forex Market Information by T. Houser
Foreign exchange market thrives on forex information. The market is highly sensitive to all the news, which influences the price movement of currencies. It is also sensitive to the potential factors that may have a huge effect on currency pricing trends. The forex market is a great absorber of all the events and activities happening in the world economic zone and reflects that in the currency prices both spot and future.
If you want to be a consistently good performer in the forex market, you will need to keep yourself abreast of all the market movement and factors behind that. Remember that there are no easy way outs or short cuts. The only way to make a large profit is to tap the forex information and act on it fast. The market is highly profitable but it is also hugely risky. It rewards only those who are quick paced, informed and have a great sense of timing. Forex trading requires information and education. It also requires consistency and a disciplined performance. Even the greatest trading strategies can fail miserably if you fail to apply them in the most opportune manner. It is here that forex information can come to your benefit greatly.
Forex market is dependant upon the economic policies pursued by countries. The political and economic stability is one of the greatest factors exuding confidence in the consistent price movements. Inflationary tendencies, EXIM performance, global capital inflows, capital market performance, convertibility all have an influence on the currency prices and their trading patter in the forex market. You need to have fair amount of understanding to be a successful investor and trader.
The Forex market is huge. Much larger than the capital market and is more sophisticated and advanced. A large number of institutions like banks, investment managers and currency houses play aggressively in the market. In this scenario, your chances of beating the crowd and make good money depends upon quality of forex information available to you. Do your charting and technical analysis. Look for trends and patterns. It is always a good idea to concentrate on a few big patterns in a week and benefit from that. You can do that if you do your analysis correctly based on integration of data elements on a real time or near real time basis.
An understanding of the trading systems and its features can help you respond to events much faster. It is extremely important to be clinical in your approach rather then being emotional and attached to your investment. You have to learn not only to how to make profit but also how to limit your losses. Your forex information would help you do that with charting, technical parameters, patterns and trends, currency quotes, forex news items and brokerage recommendations forming part of your information bank. Foreign currency market is a great place for those who have an interest in making money the intelligent way. The market has been the success story of a large number of players and you can be one of them with the right forex information in your kitty.
About the Author
Are you interested in learning about the Forex Online Currency System? Our site provides plenty of useful information regarding Forex Trading. by T.D. Houser
If you want to be a consistently good performer in the forex market, you will need to keep yourself abreast of all the market movement and factors behind that. Remember that there are no easy way outs or short cuts. The only way to make a large profit is to tap the forex information and act on it fast. The market is highly profitable but it is also hugely risky. It rewards only those who are quick paced, informed and have a great sense of timing. Forex trading requires information and education. It also requires consistency and a disciplined performance. Even the greatest trading strategies can fail miserably if you fail to apply them in the most opportune manner. It is here that forex information can come to your benefit greatly.
Forex market is dependant upon the economic policies pursued by countries. The political and economic stability is one of the greatest factors exuding confidence in the consistent price movements. Inflationary tendencies, EXIM performance, global capital inflows, capital market performance, convertibility all have an influence on the currency prices and their trading patter in the forex market. You need to have fair amount of understanding to be a successful investor and trader.
The Forex market is huge. Much larger than the capital market and is more sophisticated and advanced. A large number of institutions like banks, investment managers and currency houses play aggressively in the market. In this scenario, your chances of beating the crowd and make good money depends upon quality of forex information available to you. Do your charting and technical analysis. Look for trends and patterns. It is always a good idea to concentrate on a few big patterns in a week and benefit from that. You can do that if you do your analysis correctly based on integration of data elements on a real time or near real time basis.
An understanding of the trading systems and its features can help you respond to events much faster. It is extremely important to be clinical in your approach rather then being emotional and attached to your investment. You have to learn not only to how to make profit but also how to limit your losses. Your forex information would help you do that with charting, technical parameters, patterns and trends, currency quotes, forex news items and brokerage recommendations forming part of your information bank. Foreign currency market is a great place for those who have an interest in making money the intelligent way. The market has been the success story of a large number of players and you can be one of them with the right forex information in your kitty.
About the Author
Are you interested in learning about the Forex Online Currency System? Our site provides plenty of useful information regarding Forex Trading. by T.D. Houser
Forex Trading Strategy - Managing Expectations and Finding the Strongest Trends by Tom Long
I have seen many new forex traders who while looking for at least 20 pips a day, end up losing big in an effort to reach this plateau. The problem is that the market environment changes to the point where there are many days where solid trading opportunities just cannot be found.
So the new trader puts on a trade that they normally would not even think about. If that trade becomes a loser, they now have to win that loss back and then another 20 pips before the end of the day. You can see how this can turn into a nightmare after a couple of questionable setups end up as losing trades in the same day.
I think a better goal is to strive to be profitable every month. If you end up with $1 more in your account at the end of the month from the beginning of the month, give yourself a pat on the back for being profitable. It is a series of monthly gains that can result in big returns. But you must treat trading as a business instead of a get rich quick scheme and keep your expectations realistic.
For almost all of 2007, many students in the FX Power Courses were buying pullbacks in the EUR/USD and selling rallies in the USD/CAD and doing quite well since they were trading with the trend. But trading has become more difficult lately as there has been little follow through on any move up in the EUR/USD or move down in the USD/CAD.
The difference is that they are still trading last year’s strongest trends and not taking another look at all of the pairs to judge the current trends. We have talked about the first step in finding a trade is to identify the strongest trends and to only trade in that same direction. But the strongest trends one month may not be the strongest trends in the next month.
Just because you made some money selling rallies in the USD/CAD all last spring, summer and fall, does not mean that this is the pair to trade in the winter. The first step is still to find the strongest trend to trade and that means be very picky each time you check the daily charts. Check out the current daily chart of the EUR/USD and compare that to the daily chart of the EUR/GBP. Which trend is stronger? That is the pair that you should be trading as the strongest trends offer the best trading opportunities.
Many times I hear from new traders who state that their goal is to make a certain number of pips every day. While it is important to establish goals in any endeavor, any benchmarks should be geared around your improvement as a trader and not about what you expect the market to give you.
Tom Long is an instructor of FXPowercourse.com, a tutorial site for forex brought to you by FXCM.com
About the Author
Tom Long is an instructor of FXPowercourse.com a forex trading course from FXCM.com.
So the new trader puts on a trade that they normally would not even think about. If that trade becomes a loser, they now have to win that loss back and then another 20 pips before the end of the day. You can see how this can turn into a nightmare after a couple of questionable setups end up as losing trades in the same day.
I think a better goal is to strive to be profitable every month. If you end up with $1 more in your account at the end of the month from the beginning of the month, give yourself a pat on the back for being profitable. It is a series of monthly gains that can result in big returns. But you must treat trading as a business instead of a get rich quick scheme and keep your expectations realistic.
For almost all of 2007, many students in the FX Power Courses were buying pullbacks in the EUR/USD and selling rallies in the USD/CAD and doing quite well since they were trading with the trend. But trading has become more difficult lately as there has been little follow through on any move up in the EUR/USD or move down in the USD/CAD.
The difference is that they are still trading last year’s strongest trends and not taking another look at all of the pairs to judge the current trends. We have talked about the first step in finding a trade is to identify the strongest trends and to only trade in that same direction. But the strongest trends one month may not be the strongest trends in the next month.
Just because you made some money selling rallies in the USD/CAD all last spring, summer and fall, does not mean that this is the pair to trade in the winter. The first step is still to find the strongest trend to trade and that means be very picky each time you check the daily charts. Check out the current daily chart of the EUR/USD and compare that to the daily chart of the EUR/GBP. Which trend is stronger? That is the pair that you should be trading as the strongest trends offer the best trading opportunities.
Many times I hear from new traders who state that their goal is to make a certain number of pips every day. While it is important to establish goals in any endeavor, any benchmarks should be geared around your improvement as a trader and not about what you expect the market to give you.
Tom Long is an instructor of FXPowercourse.com, a tutorial site for forex brought to you by FXCM.com
About the Author
Tom Long is an instructor of FXPowercourse.com a forex trading course from FXCM.com.
Saturday, January 19, 2008
Forex Trading - Breakout Systems
While there are many different varieties of Forex trading systems, one of the most reliable types are those that involve breakouts.
What is a breakout?
They are basically price movements that shoot out of a price consolidation range. Breakouts can occur either above resistance or below support levels.
What is the significance of it?
A breakout from a recent price consolidation typically indicates that prices are likely to keep moving in the same direction. If the breakout occurs above resistance levels, prices are likely to keep going up. If the it occurs below support levels, prices are likely to keep going down.
Why are breakouts good predictors of future price movement?
When the market price moves below support levels for example, it means that the buyers that were supporting the price have "run out of steam", resulting in the sellers pushing price down. And because the buyers have no more "strength", the remaining sellers are expected to further push the market price even lower.
The opposite is true for prices that breakout above resistance levels.
Are they 100% accurate in predicting future price movements?
Unfortunately, the answer is no. There is actually no single method that can predict future price movements with a 100% certainty. Price breakouts are only one of the many indicators you should include in your trading system and strategies.
I have entered into many trades where price breakouts reversed almost immediately after I placed my trade, so please be aware that prices may not always keep moving in the same direction.
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of ForexSystemProfits.com where he provides premium Forex trading information and resources.
Article Source: http://EzineArticles.com/?expert=Harold_Hsu
What is a breakout?
They are basically price movements that shoot out of a price consolidation range. Breakouts can occur either above resistance or below support levels.
What is the significance of it?
A breakout from a recent price consolidation typically indicates that prices are likely to keep moving in the same direction. If the breakout occurs above resistance levels, prices are likely to keep going up. If the it occurs below support levels, prices are likely to keep going down.
Why are breakouts good predictors of future price movement?
When the market price moves below support levels for example, it means that the buyers that were supporting the price have "run out of steam", resulting in the sellers pushing price down. And because the buyers have no more "strength", the remaining sellers are expected to further push the market price even lower.
The opposite is true for prices that breakout above resistance levels.
Are they 100% accurate in predicting future price movements?
Unfortunately, the answer is no. There is actually no single method that can predict future price movements with a 100% certainty. Price breakouts are only one of the many indicators you should include in your trading system and strategies.
I have entered into many trades where price breakouts reversed almost immediately after I placed my trade, so please be aware that prices may not always keep moving in the same direction.
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of ForexSystemProfits.com where he provides premium Forex trading information and resources.
Article Source: http://EzineArticles.com/?expert=Harold_Hsu
How Many Kinds Of Main Strategies Are There In Forex Trading?
There may be dozens of strategies in Forex trading. Let's just talk about the roots.
Nature Of Market:
Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.
Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.
Fundamental Trading:
In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.
If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.
Hedge:
In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.
In FOREX, there are two kinds of similar "hedging" strategies:
1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.
For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.
Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.
This kind of "Yo-Yo Hedge" can work at any currencies pair.
2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.
Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.
There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.
Let's take the EUR/USD and the CHF/USD pairs.
These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.
And, this return does not include the buy low/sell high profits.
But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.
Arbitrage:
Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:
1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, then profit opportunity comes.
In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.
More pairs:
AUD/CAD CAD/JPY AUD/JPY
AUD/CAD GBP/CAD GBP/AUD
AUD/CAD USD/CAD AUD/USD
AUD/CHF CHF/JPY AUD/JPY
AUD/CHF GBP/CHF GBP/AUD
AUD/CHF USD/CHF AUD/USD
AUD/JPY EUR/JPY EUR/AUD
AUD/JPY GBP/JPY GBP/AUD
AUD/JPY USD/JPY AUD/USD
AUD/USD GBP/USD GBP/AUD
AUD/USD USD/CAD AUD/CAD
AUD/USD USD/CHF AUD/CHF
AUD/USD USD/JPY AUD/JPY
CAD/JPY EUR/JPY EUR/CAD
CAD/JPY GBP/JPY GBP/CAD
CAD/JPY USD/JPY USD/CAD
CHF/JPY EUR/JPY EUR/CHF
CHF/JPY GBP/JPY GBP/CHF
EUR/AUD AUD/CHF EUR/CHF
EUR/AUD AUD/JPY EUR/JPY
EUR/AUD AUD/USD EUR/USD
EUR/AUD GBP/AUD EUR/GBP
EUR/CAD AUD/CAD EUR/AUD
EUR/CAD GBP/CAD EUR/CAD
EUR/CAD USD/CAD EUR/USD
EUR/CHF AUD/CHF EUR/AUD
EUR/CHF GBP/CHF EUR/GBP
EUR/CHF USD/CHF EUR/USD
EUR/GBP GBP/AUD EUR/AUD
EUR/GBP GBP/CAD EUR/CAD
EUR/GBP GBP/CHF EUR/CHF
EUR/GBP GBP/JPY EUR/JPY
EUR/GBP GBP/USD EUR/USD
EUR/JPY GBP/JPY EUR/GBP
EUR/JPY USD/JPY EUR/USD
EUR/USD GBP/USD EUR/GBP
EUR/USD USD/JPY EUR/JPY
GBP/JPY USD/JPY GBP/USD
2, Hedging Arbitrage:
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.
One broker which pays or charges roll over interest at end of day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea about this type of Hedge Arbitrage is to open a position of currency (Fore example, the highest SWAP GBP/JPY) at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency with the broker that does not charge interest for carrying the trade. This way you will gain the interest or SWAP that is credited to your account, risk-free.
3, Netting Arbitrage:
The main idea behind the strategy is, using differences between cross rates (such as EUR/USD, GBP/USD, and EUR/GBP) at different markets.
For example, suppose you had opened the following positions:
buy 1 lot EUR/USD at 1.4867;
sell 1 lot EUR/GBP at 0.7600;
and sell 0.76 lot GBP/USD at 1.9586.
The netting/clearing gives the following results:Long EUR from the first pair and short EUR from the second pair gives zero exposure in EUR.Long position in GBP from the second pair and short position from the third pair gives zero exposure in GBP.Short position from the first pair ($148,670.00) in USD and long position from the third pair ($195,860.00*0.76) in USD gives you $183.60 profit without open positions and exposures. Simple? Not really for small traders, may be for those "big brothers" only. Because it is really hard to play spread, slippage, stop loss hunting or so on games against brokers.
Carry Trading:
Carry trading is a well known trading strategy which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. Then this investor can make profit from the difference of these two interest rates.
JPY is currently considered to be the most popular currency to use as the low interest yielding currency in the carry trade, because its interest rate is the lowest of the world almost at 0. And GBP is currently considered to be the high yielding currency. So are NZD and AUD.
When we buy these currencies pairs: GBP/JPY, AUD/JPY, GBP/CHF, USD/JPY, or EUR/CHF; Or sell: EUR/AUD, EUR/GBP, AUD/NZD; Both actions can yield positive SWAP roll over interest. If combining with some kinds of hedge trading, we can make as high as 100% profit annually and keep the risk low.
The big risk in a carry trading is the uncertainty of exchange rates. Also, these transactions are generally done with a high leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
Martingale:
Originally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double his/her order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment. In the example below, you bought 1 lot EUR/USD at 1.4650. Unfortunately, the rate drops. You play it in martingale way, "double down", buy two lots, you need the EUR/USD to rally from 1.4630 to 1.4640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.4625 instead of 1.4640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.4550, you only need the currencies pair to rally to 1.4569 to break even on your entire holdings. Once the rate goes up one more pip, you will win a lot.
EUR/USD Lots Average or Breakeven Price
1.4650 1 1.4650
1.4630 2 1.4640
1.4610 4 1.4625
1.4590 8 1.4605
1.4570 16 1.4588
1.4550 32 1.4569
The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.
Anti-Martingale:
The anti-martingale strategy is the opposite of the better known martingale approach. This approach instead increases order lots after wins, while reducing them after a loss. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
Grid:
Basically the trader sets a series of entry limit orders X pips from the current price, for example 15 pips. Some experienced traders like to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or Golden Section Numbers to make this grid. Once price hits the level the limit order is executed. Then every 15 pips there is another order at limit price executed. And so on. In a yo-yo market, while the price moves up or down, there always be some limit orders executed. Once the order is taken profit, and the price moves to its original level again, a new limit order shall be executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It is simple and easy, but hard to deal with when and how to close all orders, especially the Stop Loss. Some experts say we do not need stop loss, but will you take the chance to hold your all positions till "Margin Call?"
Day trading:
This refers to the practice of buying and selling currencies pairs such that all positions will usually be closed within the same Forex the trading day. The day trading idea comes from stock market. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Under the rules of NYSE and NASD, customers who are deemed "pattern day traders" must have at least $25,000 in their accounts and can only trade in margin accounts.
But in Forex market, every one can be a day trader to do day trading. Actually, more than day trading, they can do "scalping".
Scalping:
Scalping is a trading style where small price gaps created by the bid-ask spreads are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get a few points (1~3 pips only, no greed, no long term) off the market every time. This strategy is based on a fact: approximately 70 to 80% of the time, the market is in a consolidation pattern. What this means is that for the majority of time the market is not making significant moves. For example, after the USA market is closed and before the Europe market is open, the Forex market tends to range in a consolidation channel for hours at a time before making another significant move in one direction. This kind of market behavior pattern is ideal for Forex scalping. Every time you enter the market, wait 10 or 20 minutes, once you have several pips gain then cash it and go.
Scalping has some features:
1, Lower exposure, lower risks. Scalpers are only exposed in a relatively short period.
2, Smaller moves, easier to obtain. The normal wave of the market will give you several pips easily.
3, Large volume, adding profits up. Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for small-capital traders.
But be careful, not every broker welcomes this kind of scalping strategy. If you scalp it too quick and thin, let's say you just hit 1 pip every 2 or 3 minutes then run, and repeat it again and again within a day, every day, you must feel high, eh? But the broker may be not happy and bans you. You will be kicked out because of your successful scalping!
Break-Out:
Using the Bollinger Bands indicator on a chart, we will find every Forex currencies pair is waving in a "band", or a channel. By finding major support and resistance levels with technical analysis, a Break-Out strategy trader will buy this pair at the lower level of support (bottom of the band/channel) and sell them near resistance (top of the band/channel). Till now there is not a Break-Out yet.
Once the price breaks the upper range line with larger-than-average volume, or the opposite: the price breaks the lower range line with larger-than-average volume, the chance is coming. The idea of this strategy is that when a currencies pair breaks out of the channel, it usually experiences a large price movement in the direction of the breakout. So buy it at the price breaks the upper range line and continue to hold it until the rate has risen a distance comparable to the height of the range. If it goes down instead, stop losses as it penetrates the upper range line. Or, sell it at the price breaks the lower range line, and continue to hold it until the rate has fallen a distance comparable to the height of the range. If it goes up instead, stop losses as it penetrates the lower range line.
Pivot:
Besides Support and Resistance levels, many foreign exchange traders like to use another indicator to analyze and predict currency pairs' price changes, it is so-called: the Pivot Point. To calculate and analyze pivot is a subset of technical analysis, with this bench mark, traders can locate the rotation point of the trend, and this is very helpful for deciding when and where to buy or sell.
Classical Pivot Point, Support and Resistance Formulas are as follows:
Look at any one chart, the pivot is an average of the previous bar's high, low, and closing prices. In the following formula, "H" represents the previous bar's high, "L" represents the previous bar's low, and "C" represents the previous bar's closing price.
Current Bar's Pivot Point (P)=Previous Bar's (H+L+C)/3
First level of support and resistance can be calculated as follows:
First Resistance Level (R1)=(2*P)-L
First Support Level (S1)=(2*P)-H
Likewise, the second level of support and resistance:
Second Resistance Level (R2)=P+(R1-S1)
Second Support Level (S2)=P-(R1-S1)
Since many currency pairs tend to fluctuate between Support and Resistance levels, and these levels are calculated based on Pivot points, so when a trend or breakout trader knows where the pivot point is, it will enable him/her to find out key levels that need to be broken for a move to qualify as a breakout.
News Trading:
The system is developed based on economic news events from around the world. Nearly half of those announcements have moved the market significantly. Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the news is released, especially for the big one, both sides of buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the Stop Loss, just let it be. The winner's gain minus the loser's loss, it is your news trading profit. For example, Non-Farm Payrolls/Employment Report - The NFP is the most influential news release of every month. It's announced on the first Friday of the month at 8:30am EST for the prior month. We can put a buy order and a sell order at market prices for GBP/USD, at 8:29 am EST. Don't forget, set 30 pips Stop Loss level for them. Wait 2 minutes only, the news is announced, it is a big one! Then the sell order jumps over 100 pips, and the buy order drops like a brick. The brick hits the Stop Loss and the pain is over. Totally, your gain could be 100-30=70 pips. Quick and easy, cool enough?
Trend Following:
It is so simple, just follow the trend. Buy it is the most difficult strategy because no one can tell you 100% for sure what is the right TREND. Go to look at a weekly chat of USD/CAD, if you had shorted this pair in September 2001 and held it till September 2007, you know what the trend means.
The most famous trend analysis tool seems the Wave Principle. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. Elliott isolated five such patterns, or "waves," that recur in market price data.
Another trend analysis guru should be W. D. Gann. In 1908, Gann discovered what he called the "market time factor", which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Back to the chat of USD/CAD, now, please tell me, how to follow the trend? Will USD/CAD continue the trend which is going south further to 0.6000, or, another trend going north reversely back to 1.6000?
If you would like to find out more about Forex trading, come and visit us at http://www.vdux.com
If you want to download our Raingull Automated Trading Software EA, please come to http://www.raingull.com
Article Source: http://EzineArticles.com/?expert=Victor_Mars
Nature Of Market:
Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.
Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.
Fundamental Trading:
In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.
If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.
Hedge:
In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.
In FOREX, there are two kinds of similar "hedging" strategies:
1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.
For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.
Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.
This kind of "Yo-Yo Hedge" can work at any currencies pair.
2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.
Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.
There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.
Let's take the EUR/USD and the CHF/USD pairs.
These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.
And, this return does not include the buy low/sell high profits.
But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.
Arbitrage:
Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:
1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, then profit opportunity comes.
In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.
More pairs:
AUD/CAD CAD/JPY AUD/JPY
AUD/CAD GBP/CAD GBP/AUD
AUD/CAD USD/CAD AUD/USD
AUD/CHF CHF/JPY AUD/JPY
AUD/CHF GBP/CHF GBP/AUD
AUD/CHF USD/CHF AUD/USD
AUD/JPY EUR/JPY EUR/AUD
AUD/JPY GBP/JPY GBP/AUD
AUD/JPY USD/JPY AUD/USD
AUD/USD GBP/USD GBP/AUD
AUD/USD USD/CAD AUD/CAD
AUD/USD USD/CHF AUD/CHF
AUD/USD USD/JPY AUD/JPY
CAD/JPY EUR/JPY EUR/CAD
CAD/JPY GBP/JPY GBP/CAD
CAD/JPY USD/JPY USD/CAD
CHF/JPY EUR/JPY EUR/CHF
CHF/JPY GBP/JPY GBP/CHF
EUR/AUD AUD/CHF EUR/CHF
EUR/AUD AUD/JPY EUR/JPY
EUR/AUD AUD/USD EUR/USD
EUR/AUD GBP/AUD EUR/GBP
EUR/CAD AUD/CAD EUR/AUD
EUR/CAD GBP/CAD EUR/CAD
EUR/CAD USD/CAD EUR/USD
EUR/CHF AUD/CHF EUR/AUD
EUR/CHF GBP/CHF EUR/GBP
EUR/CHF USD/CHF EUR/USD
EUR/GBP GBP/AUD EUR/AUD
EUR/GBP GBP/CAD EUR/CAD
EUR/GBP GBP/CHF EUR/CHF
EUR/GBP GBP/JPY EUR/JPY
EUR/GBP GBP/USD EUR/USD
EUR/JPY GBP/JPY EUR/GBP
EUR/JPY USD/JPY EUR/USD
EUR/USD GBP/USD EUR/GBP
EUR/USD USD/JPY EUR/JPY
GBP/JPY USD/JPY GBP/USD
2, Hedging Arbitrage:
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.
One broker which pays or charges roll over interest at end of day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea about this type of Hedge Arbitrage is to open a position of currency (Fore example, the highest SWAP GBP/JPY) at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency with the broker that does not charge interest for carrying the trade. This way you will gain the interest or SWAP that is credited to your account, risk-free.
3, Netting Arbitrage:
The main idea behind the strategy is, using differences between cross rates (such as EUR/USD, GBP/USD, and EUR/GBP) at different markets.
For example, suppose you had opened the following positions:
buy 1 lot EUR/USD at 1.4867;
sell 1 lot EUR/GBP at 0.7600;
and sell 0.76 lot GBP/USD at 1.9586.
The netting/clearing gives the following results:Long EUR from the first pair and short EUR from the second pair gives zero exposure in EUR.Long position in GBP from the second pair and short position from the third pair gives zero exposure in GBP.Short position from the first pair ($148,670.00) in USD and long position from the third pair ($195,860.00*0.76) in USD gives you $183.60 profit without open positions and exposures. Simple? Not really for small traders, may be for those "big brothers" only. Because it is really hard to play spread, slippage, stop loss hunting or so on games against brokers.
Carry Trading:
Carry trading is a well known trading strategy which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. Then this investor can make profit from the difference of these two interest rates.
JPY is currently considered to be the most popular currency to use as the low interest yielding currency in the carry trade, because its interest rate is the lowest of the world almost at 0. And GBP is currently considered to be the high yielding currency. So are NZD and AUD.
When we buy these currencies pairs: GBP/JPY, AUD/JPY, GBP/CHF, USD/JPY, or EUR/CHF; Or sell: EUR/AUD, EUR/GBP, AUD/NZD; Both actions can yield positive SWAP roll over interest. If combining with some kinds of hedge trading, we can make as high as 100% profit annually and keep the risk low.
The big risk in a carry trading is the uncertainty of exchange rates. Also, these transactions are generally done with a high leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
Martingale:
Originally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double his/her order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment. In the example below, you bought 1 lot EUR/USD at 1.4650. Unfortunately, the rate drops. You play it in martingale way, "double down", buy two lots, you need the EUR/USD to rally from 1.4630 to 1.4640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.4625 instead of 1.4640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.4550, you only need the currencies pair to rally to 1.4569 to break even on your entire holdings. Once the rate goes up one more pip, you will win a lot.
EUR/USD Lots Average or Breakeven Price
1.4650 1 1.4650
1.4630 2 1.4640
1.4610 4 1.4625
1.4590 8 1.4605
1.4570 16 1.4588
1.4550 32 1.4569
The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.
Anti-Martingale:
The anti-martingale strategy is the opposite of the better known martingale approach. This approach instead increases order lots after wins, while reducing them after a loss. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
Grid:
Basically the trader sets a series of entry limit orders X pips from the current price, for example 15 pips. Some experienced traders like to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or Golden Section Numbers to make this grid. Once price hits the level the limit order is executed. Then every 15 pips there is another order at limit price executed. And so on. In a yo-yo market, while the price moves up or down, there always be some limit orders executed. Once the order is taken profit, and the price moves to its original level again, a new limit order shall be executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It is simple and easy, but hard to deal with when and how to close all orders, especially the Stop Loss. Some experts say we do not need stop loss, but will you take the chance to hold your all positions till "Margin Call?"
Day trading:
This refers to the practice of buying and selling currencies pairs such that all positions will usually be closed within the same Forex the trading day. The day trading idea comes from stock market. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Under the rules of NYSE and NASD, customers who are deemed "pattern day traders" must have at least $25,000 in their accounts and can only trade in margin accounts.
But in Forex market, every one can be a day trader to do day trading. Actually, more than day trading, they can do "scalping".
Scalping:
Scalping is a trading style where small price gaps created by the bid-ask spreads are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get a few points (1~3 pips only, no greed, no long term) off the market every time. This strategy is based on a fact: approximately 70 to 80% of the time, the market is in a consolidation pattern. What this means is that for the majority of time the market is not making significant moves. For example, after the USA market is closed and before the Europe market is open, the Forex market tends to range in a consolidation channel for hours at a time before making another significant move in one direction. This kind of market behavior pattern is ideal for Forex scalping. Every time you enter the market, wait 10 or 20 minutes, once you have several pips gain then cash it and go.
Scalping has some features:
1, Lower exposure, lower risks. Scalpers are only exposed in a relatively short period.
2, Smaller moves, easier to obtain. The normal wave of the market will give you several pips easily.
3, Large volume, adding profits up. Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for small-capital traders.
But be careful, not every broker welcomes this kind of scalping strategy. If you scalp it too quick and thin, let's say you just hit 1 pip every 2 or 3 minutes then run, and repeat it again and again within a day, every day, you must feel high, eh? But the broker may be not happy and bans you. You will be kicked out because of your successful scalping!
Break-Out:
Using the Bollinger Bands indicator on a chart, we will find every Forex currencies pair is waving in a "band", or a channel. By finding major support and resistance levels with technical analysis, a Break-Out strategy trader will buy this pair at the lower level of support (bottom of the band/channel) and sell them near resistance (top of the band/channel). Till now there is not a Break-Out yet.
Once the price breaks the upper range line with larger-than-average volume, or the opposite: the price breaks the lower range line with larger-than-average volume, the chance is coming. The idea of this strategy is that when a currencies pair breaks out of the channel, it usually experiences a large price movement in the direction of the breakout. So buy it at the price breaks the upper range line and continue to hold it until the rate has risen a distance comparable to the height of the range. If it goes down instead, stop losses as it penetrates the upper range line. Or, sell it at the price breaks the lower range line, and continue to hold it until the rate has fallen a distance comparable to the height of the range. If it goes up instead, stop losses as it penetrates the lower range line.
Pivot:
Besides Support and Resistance levels, many foreign exchange traders like to use another indicator to analyze and predict currency pairs' price changes, it is so-called: the Pivot Point. To calculate and analyze pivot is a subset of technical analysis, with this bench mark, traders can locate the rotation point of the trend, and this is very helpful for deciding when and where to buy or sell.
Classical Pivot Point, Support and Resistance Formulas are as follows:
Look at any one chart, the pivot is an average of the previous bar's high, low, and closing prices. In the following formula, "H" represents the previous bar's high, "L" represents the previous bar's low, and "C" represents the previous bar's closing price.
Current Bar's Pivot Point (P)=Previous Bar's (H+L+C)/3
First level of support and resistance can be calculated as follows:
First Resistance Level (R1)=(2*P)-L
First Support Level (S1)=(2*P)-H
Likewise, the second level of support and resistance:
Second Resistance Level (R2)=P+(R1-S1)
Second Support Level (S2)=P-(R1-S1)
Since many currency pairs tend to fluctuate between Support and Resistance levels, and these levels are calculated based on Pivot points, so when a trend or breakout trader knows where the pivot point is, it will enable him/her to find out key levels that need to be broken for a move to qualify as a breakout.
News Trading:
The system is developed based on economic news events from around the world. Nearly half of those announcements have moved the market significantly. Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the news is released, especially for the big one, both sides of buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the Stop Loss, just let it be. The winner's gain minus the loser's loss, it is your news trading profit. For example, Non-Farm Payrolls/Employment Report - The NFP is the most influential news release of every month. It's announced on the first Friday of the month at 8:30am EST for the prior month. We can put a buy order and a sell order at market prices for GBP/USD, at 8:29 am EST. Don't forget, set 30 pips Stop Loss level for them. Wait 2 minutes only, the news is announced, it is a big one! Then the sell order jumps over 100 pips, and the buy order drops like a brick. The brick hits the Stop Loss and the pain is over. Totally, your gain could be 100-30=70 pips. Quick and easy, cool enough?
Trend Following:
It is so simple, just follow the trend. Buy it is the most difficult strategy because no one can tell you 100% for sure what is the right TREND. Go to look at a weekly chat of USD/CAD, if you had shorted this pair in September 2001 and held it till September 2007, you know what the trend means.
The most famous trend analysis tool seems the Wave Principle. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. Elliott isolated five such patterns, or "waves," that recur in market price data.
Another trend analysis guru should be W. D. Gann. In 1908, Gann discovered what he called the "market time factor", which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Back to the chat of USD/CAD, now, please tell me, how to follow the trend? Will USD/CAD continue the trend which is going south further to 0.6000, or, another trend going north reversely back to 1.6000?
If you would like to find out more about Forex trading, come and visit us at http://www.vdux.com
If you want to download our Raingull Automated Trading Software EA, please come to http://www.raingull.com
Article Source: http://EzineArticles.com/?expert=Victor_Mars
Friday, January 18, 2008
Online Forex Trading Strategies
Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.
Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.
This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex trading
The leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.
Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.
An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.
All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading.
We have made the most comprehensive research on Forex trading. Check it out on Online Forex System – Secrets Revealed. All about Forex on http://www.leandernet.com/Forex/Online_forex_trading.php
Article Source: http://EzineArticles.com/?expert=Oliver_Turner
Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.
This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex trading
The leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.
Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.
An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.
All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading.
We have made the most comprehensive research on Forex trading. Check it out on Online Forex System – Secrets Revealed. All about Forex on http://www.leandernet.com/Forex/Online_forex_trading.php
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