Forex Trading Strategyrong

If you’re looking for a surefire way to profit from the foreign exchange market, you may be disappointed because there are “None”! However, if you study and learn the forex trading strategies used by many so called brokers and gurus. You will minimize the risk when playing with your own dollars.

Not many people go into forex trading because this was once a market mainly entered by major banks and financial institutions. Think about how much money the bank gets from all their customers and investors. This is big money for the banks because the amount they trade is enormous compared to small to medium investors.

Back then, only big corporations had the tools, skills and resources to implement their forex trading strategy. This was a game that no regulars could play, unless you’re a mutli-millionaire yourself and have the money to spend on setting up your own currency trading platforms. Thanks to technology, more and more low to middle income earners are now able to grab a share on the idea of currency exchange.

Many different types of systems were developed solely for this purpose and because the internet is such a powerful and fast media, forex brokers and even learners are able to do all their currency trading in the comfort of their own home. The key to the game is to profit from buying and selling overseas currencies.

In the foreign exchange environment, your ultimate goal is to make more “Profits” than “Losses”. There is simply no room for pure profit and regardless of what you have heard…there is simply no sure way to predict one country’s exchange rate. If you have been playing this game for a while then you should know that if you ever tried to predict the dollar value of a particular currency, you’re guaranteed to lose more money than you earn.

Regardless of what you have been taught, whether through online courses or free forex tips you see on different websites, this is the principle behind many successful day trading brokers. They use advanced resources available to organize their data, and then they can analyze those figures to determine the stability of the currency. They never try to predict whether a currency will go.

Of course, there are also many traders who claim you can estimate the likely foreign exchange rates by staying close to one’s country news, economy and government policies.

However, you should also know that shifting in the currency value depends on a number of factors and can take years to build up. Through proper education, you will understand how the cycle works and through monitoring and testing, you will begin to develop your own Forex Trading Strategy that could prove profitable for many years to come.

Our last bit of advice to you is……Always test out the currency fluctuation by using a demo account that is provided by many day trading software. This will not only gain you experience in global currency trading, the best part is, you’re using virtual dollars and can trade for real once you’re familiar, educated and feel confident enough to invest real money.

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False Sense Of Security May Cost You

A trader can be in a trade that goes down but is only a little against him. He has his stop on at a comfortable level but he knows the trade is wrong but stays in because the stop has not been hit. Since he has not been stopped out he holds on thinking it is a good trade. Since he has his stop set he thinks he is on the right side of the trade. This can be dangerous thinking.

When you are in a trade and it is not going the way you thought it should and you start to feel uncomfortable about the trade get out of the trade and forget about what you thought was a good trade in the beginning. Just because you have not been stopped out does not mean you are safe. You don’t need to wait to be stopped out take a smaller loss and get on with the next move. If the trade starts to look wrong then get out no matter if you are a little positive or a little negative. This can save you a lot of money in the long run.

If you placed a trade because of a market movement and some good signals but the market fails to follow through and starts to linger exit the trade. There is no need to wait until the market hits your stop level to get out. If it isn’t working as it should, odds are that eventually it will hit your stop so why not take the small loss now and look for another trade.

Exiting trades when the reason your entered the trade has changed is good money management. It is also a sign that you are maturing as a trader. You are in tune with the market and will probably make money on another trade that is just around the corner. If you can cut your losses by 25% you are way ahead when the good moves come along for a pip saved is a pip earned.

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Forex Trading - Fundamental vs. Technical Analysis

Forex Trading- Fundamental vs. Technical Analysis

Which Forex trading strategy represents your style? While the Forex market differs from traditional stock markets, the fundamental trading strategies of fundamental and technical analysis can be applied. Understanding both styles and how to apply to the Forex market will enable you to create a strategy and a style of trading that is best suited to your risk tolerance and your financial goals.

Fundamental Analysis

When a trader utilizes fundamental analysis when executing their Forex traders, they are basing their valuation of currencies on crucial economic reports, otherwise called economic indicators. Examples of economic indicators for the Forex market can include interest rates, gross domestic product, economic news releases and unemployment rates for specific countries. For example, comparing unemployment rates of two countries can be considered as a fundamental analysis on the Forex market. News in relation to this economic indicator can be applied when making trading decisions.

Other possible economic indicators when applied to Forex trading can include Trade Balance numbers and the Consumer Price Index. When utilizing this trading strategy, traders must not only determine which economic indicators that they will be utilizing, but they must be alert to search and apply news and changes with regards to those indicators as they apply to currencies.

Technical Analysis

Technical analysis refers to utilizing a system, whether manual or automated, that looks at price movements among currencies. The systems will use technical indicators, working to provide the trader with advice on when to buy and sell pairs of currencies on the Forex market. Some traders prefer to select and monitor their own technical indicators while others prefer to rely on automated currency trading software systems.

There are a variety of benefits to utilizing technical analysis to trade Forex, including:

* Trends are easily found. When reviewing for price changes, technical analysis methods reveal the important trends necessary to make well informed trades.

* Charting is easy and inexpensive to create and utilize. Whether you are manually tracking price movements through your own spreadsheets or are using a software program, technical analysis is simple to understand.

* Patterns in price are easily noticed, easy to follow and strong predictors of future currency behaviour.

Both technical and fundamental analysis provides a wealth of information in which to trade currencies on Forex. While many traders will utilize both strategies, most experts will recommend learning and mastering one versus trying to learn and implement both simultaneously.

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Fibonacci Ratios - The Secret To Forex Trading Success

Leonardo of Pisa, aka the mathematician “Fibonacci”, published his Fibonacci sequence in 1202. Fibonacci came upon his now very famous sequence of numbers when he was trying to breed rabbits and figure out how many pairs of rabbits he would have at the end of one year based upon their breeding behavior. This is just the kind of no-nonsense approach that Forex traders are into.

Mistakenly many individuals consider mathematical abstraction as frivolous; however it is rooted into real world mathematical applications. The Fibonacci sequence is useful for making us aware of and then explaining those hidden patterns around us daily.

How can this be applied to investing? Very astute investors understand that there are hidden patterns in the stock market–based on the mass of investors’ behavior. “Buy low and sell high” and “The best time to buy is when there’s blood in the streets” are but two investment aphorisms that not only work, but also come from understanding hidden patterns of the investment markets.

The reason that investment market patterns are so well hidden is because “up close” they cannot be seen. Day to day, hour to hour fluctuations in the investment markets cannot be predicted with any accuracy. But certain overall trends that extend over longer periods of time definitely can be. And savvy investors, including Forex traders, have successfully been using Fibonacci’s number sequence to take advantage and make big profits.

Using the Fibonacci sequence involves a series of numbers. Each following number is the sum of the two numbers before it. It progresses like this 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and into infinity. There are numeral interrelationships within these numerals. For example, take any number; it is roughly 1.618 times the number before it. Anciently the Greeks found number 1.618 reprehensive of the golden ratio which is the supreme essence of balance. This balance is the fundamental strategy of profitable investing

The most common applications of the Fibonacci sequence for investment purposes are retracements and arcs.

Fibonacci charts are created through a technique comprising three curved lines that are drawn for the purpose of anticipating key resistance and support levels as well as areas of ranging. First, an invisible trendline is drawn between two points (typically these are the high and low for a given time period). Then, three curves are drawn so as to intersect this trendline at the key Fibonacci levels of 38.2%, 50%, and 61.8%. Transaction decisions are made at the point where the price of the asset crosses through these key levels.

Next is the retracement - this is when the movement of a stock or other traded commodity reverses direction; this is a reversal which is stronger than the prevailing trend of the stock’s movement. Retracement patterns are looked at closely by investors; a Fibonacci retracement can be used to analyze the odds of a commodity’s price having a larger than average retracement before continuing back on the direction it had before reversal. The trendline is typically drawn between two extremes and is divided vertically by the Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.

The Fibonacci retracement is widely used by sophisticated traders to find: strategic places for transactions to be placed; target prices; and stop-losses. Other technical tools including Tirone levels, Gartley patterns, and Elliott Wave theory all make use of retracement.

The reason that the Fibonacci sequence is used in investing is simple: it works! Forex traders in particular in particular seem to find it useful in making profitable trades.

Read more...

Fibonacci Ratios - The Secret To Forex Trading Success

Leonardo of Pisa, aka the mathematician “Fibonacci”, published his Fibonacci sequence in 1202. Fibonacci came upon his now very famous sequence of numbers when he was trying to breed rabbits and figure out how many pairs of rabbits he would have at the end of one year based upon their breeding behavior. This is just the kind of no-nonsense approach that Forex traders are into.

Mistakenly many individuals consider mathematical abstraction as frivolous; however it is rooted into real world mathematical applications. The Fibonacci sequence is useful for making us aware of and then explaining those hidden patterns around us daily.

How can this be applied to investing? Very astute investors understand that there are hidden patterns in the stock market–based on the mass of investors’ behavior. “Buy low and sell high” and “The best time to buy is when there’s blood in the streets” are but two investment aphorisms that not only work, but also come from understanding hidden patterns of the investment markets.

The reason that investment market patterns are so well hidden is because “up close” they cannot be seen. Day to day, hour to hour fluctuations in the investment markets cannot be predicted with any accuracy. But certain overall trends that extend over longer periods of time definitely can be. And savvy investors, including Forex traders, have successfully been using Fibonacci’s number sequence to take advantage and make big profits.

Using the Fibonacci sequence involves a series of numbers. Each following number is the sum of the two numbers before it. It progresses like this 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and into infinity. There are numeral interrelationships within these numerals. For example, take any number; it is roughly 1.618 times the number before it. Anciently the Greeks found number 1.618 reprehensive of the golden ratio which is the supreme essence of balance. This balance is the fundamental strategy of profitable investing

The most common applications of the Fibonacci sequence for investment purposes are retracements and arcs.

Fibonacci charts are created through a technique comprising three curved lines that are drawn for the purpose of anticipating key resistance and support levels as well as areas of ranging. First, an invisible trendline is drawn between two points (typically these are the high and low for a given time period). Then, three curves are drawn so as to intersect this trendline at the key Fibonacci levels of 38.2%, 50%, and 61.8%. Transaction decisions are made at the point where the price of the asset crosses through these key levels.

Next is the retracement - this is when the movement of a stock or other traded commodity reverses direction; this is a reversal which is stronger than the prevailing trend of the stock’s movement. Retracement patterns are looked at closely by investors; a Fibonacci retracement can be used to analyze the odds of a commodity’s price having a larger than average retracement before continuing back on the direction it had before reversal. The trendline is typically drawn between two extremes and is divided vertically by the Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.

The Fibonacci retracement is widely used by sophisticated traders to find: strategic places for transactions to be placed; target prices; and stop-losses. Other technical tools including Tirone levels, Gartley patterns, and Elliott Wave theory all make use of retracement.

The reason that the Fibonacci sequence is used in investing is simple: it works! Forex traders in particular in particular seem to find it useful in making profitable trades.

Read more...