Archive for December, 2008

You’ve probably heard all of this before, and you will hear it over and over again, and not just in the arena of forex trading. How you manage your money and the level of discipline that you set for your self in money management will have the largest impact in your long-term survival in any business endeavor, weather it be your personal finances or business finances.
Trading forex is a very risky business. Basically, one truth is a total constant: you will have losing trades!
Successful forex trading is the art and skill of minimizing your loss percentages in the long term. Nobody can guess where the forex market is going. But a solid trading system and a disciplined money management and execution strategy is the key to increasing your win percentages per trade.
So what do we mean by sound money management in respect to forex trading? Well here are some simple guidelines.

A. Never leverage more than 5:1 on your trading account
This rule of thumb basically means that for every dollar that you trade, never trade more than 5 dollars per trade position. So, if you have an account size of $5,000, you should not be trading more than 5 times the account, or $25,000 per position. The leverage setting on every trade on your Metatrader software can be set per trade. A recommended leverage setting is actually along the lines of 2:1 or even 1:1.

B. Never risk more than 2% of your total account in any one trade

There is a really great formula for calculating this risk.
Stop loss times leverage divided by 100 to equal 2%
Let say you have a trade that has a stop loss of 40 pips. The leverage setting would have to be at 5 so that the risk percentage would remain at 2%:
40x 5/100=2
If you increase your stop loss, then the leverage has to be reduced.

C. And finally, always aim for a 2:1 reward to risk ratio in your trades.

Simply put, if you risk a stop loss of 40 pips in your trade, make sure you set you set your target to be of 80 pips. If you set your stop loss to 50 pips, you set your target to be 100 pips.

If you follow these guidelines consistently, you should be able to see improvement in your trading results. And remember not to succumb to fear and greed.

Check out this really nice video by Timothy Stevens on money management and forex trading:

Other related posts:

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Forex Currency Trading - The key to your future

Make tons of money with forex currency trading…

Forex Currency Trading has become one of the hottest ways to make money from home. In this market you can literally make hundreds of dollars every single day by trading currencies. Now of course the best way to go about doing this is with a forex currency trading guide to get you started.

With this guide you will learn how to start with as little as $50 and make money every single day! You can keep your job for now and learn to trade currency in your spare time. Once your trading profits are greater than your paycheck, then you can really work from home and spend more time working on your forex currency trading system.

The best part about the Forex Currency Trading business is that you won’t be needing a website, customers, a huge advertising budget, or employees. This is really one of the greatest ways to produce an income from the comfort of your own home. You can learn to trade currencies in as little as 1 hour per day. You will be set up with a practice account and support to guarantee your success.

Pick up a copy of this ebook today and start your own Forex Currency Trading business. You won’t regret this one bit. This will teach you the insider secrets to making thousands of dollars in the currency exchange market. Forex trading is on the rise, you should jump in while it is hot.

Visit Forex Currency Trading

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FOREX Trading-Not Just for the Big Boys

Forex trading is the largest financial market in the world with almost $1.5 trillion traded daily. That’s even bigger than the US Stock Market. We’ll take a look at some of the benefits of learning forex.

It seems that almost everyone is familiar with the stock market and many employees are actually invested in it because of their company’s 401k. Everyday as part of the news report, we are always given the latest report on the Dow Jones or New York Stock Exchange. Yes, it has its ups and downs and we all know someone who has made large profits as well as devastating losses. The stock market can be very volatile. If there was a market you could trade in without as much of this volatility had easy access and low cost, what would it be? FOREX.

FOREX (FOReign EXchange market) is the largest financial market in the world with almost $1.5 trillion traded daily. Compare that to $200 billion in the equity market. Basically, FOREX is the exchange where you can sell one country’s currency for another. Let’s say that you purchase British pounds and then after the pounds/dollar ratio goes up, you sell the pounds and buy more dollars. Until recently this market was only accessible by the major banks, large corporations and those with very large investments. Due to federal regulations, the Foreign Exchange market is no longer a monopoly which means you and I can also profit in this huge market. Let’s look at some of the benefits of FOREX trading.

Accessibility. 24 hours a day, 5.5 days a week. The currency exchange market is an over the counter market which means that there is not one specific location where buyers and sellers meet to exchange currencies. Transactions can be easily handled through websites designed for this purpose.

No exchange or commission fees. Unlike other markets where brokerage fees are incurred, the FOREX market is a worldwide inter-bank market. Trades can be made between the buyer and seller in an instant.

Low minimum Investment. For an initial investment of $300, you can start your FOREX account. This market requires less money to begin trading than any other market. This keeps your risk low.

These are just a few of the many advantages of the FOREX trading. Are you ready to jump into an exciting new adventure that can be very profitable? Can you imagine getting into this market and having someone train you for free? There are several free courses currently being offered that will teach both beginners and experienced currency traders how to profit in this market. If any of this sounds like the opportunity that you have been waiting for, check out the main page of this web site for a listing of free forex stuff. The free ebook, Forex Freedom is an excellent start. It will guide you every step of the way.

Good luck with your currency trading.

Forex Trading Today
forex training courses and forex articles

By Karen Kelley Published: 1/5/2007

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Want A Good Forex Ebook Or Trading Course?

When you’re choosing a forex trading course, you’d want to choose a course that teaches you a system that’s profitable, that has an acceptable drawdown, and that actually fits into your daily routine as well!

When you think about it, all three of these criteria must be there, otherwise the forex system will not be tradable, and you’ll need to start over again.

If you’ve ever traded before, you may have an idea of what you’re looking for when choosing a forex course. If not, you’ll need some guidelines as to how to decide on a profitable and suitable forex course.

By the time you finish this article, you’ll know how to look at a forex course to help you choose a system that’s worth putting in the time to learn!

Let’s look at point one, first of all.

A specific system.

Yep, if you’re like most people, you’d want to learn a specific forex system, rather than a general introduction to forex.

More and more systems are becoming available on the internet now, so we all need to hone up our skills on how to assess them.

Number two: is there a money back guarantee on the course?

Most forex courses and ebooks that you order online will have money back guarantees, although if you also get a physical product with the course, the shipping cost may not be refundable.

A guarantee is helpful in case the product is not what you expected, or is not compatible with your particular daily routine.

And number three: what times of the day do you need to trade the system?

Depending on your time zone whether you’re in the US or Canada, the UK, or Australia, and the currency pairs that you’re trading, the times of peak market movements may be during the day or during the night.

So check the times that the system is traded is suitable for your time zone.

A related issue is what currency pairs do the system trade?

Is it suitable for multiple currencies such as the EURUSD, USDJPY and GBPUSD and hence different times in the day (the various currencies are active in different parts of the day)

So there you go.

Some food for thought!

Have some practice looking at and then choosing some forex training courses.

Find a good system, demo trade it to prove to yourself you can do it before going live.

By: Mark Hamburg

Article Directory: http://www.articledashboard.com

Mark Hamburg helps you to go from forex novice, to actually understanding what you need to know about forex, quickly and easily. To get more valuable tips and tricks on forex, visit his site to learn more about choosing a forex video trading course and forex ebooks, and more about forex trading education.

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Check out also the Tsunami trading System Video:

Technorati Tags: best forex trading course, best forex trading ebook, forex trading course, forex trading courses in uk

12-16-2008 

The Fed today cut the main US interest rate close to zero for the first time ever in an effort to revive the credit markets and promote more liquidity. The rate was lowered to somewhere between zero and .25%. Well which one is it? Anyway, all was done in an attempt to loosen up credit markets to give a boost to the economy as they’ve done before. And it worked, as the DOW ended trading today up 359 points from yesterday. But as you probably well know, as interest rates of a given currency go down, so does the value of said currency against all the others. And sure enough the USD went down 300 pips against the Pound, 200+ pips down against the Aussie and about 300 more pips down from the Euro. The dollar dove against every major currency, and even the recently surging Japanese Yen. And all with just Ben Bernanke’s few wrords. It didn’t even matter what the charts and indicators looked like.

What is always amazing to me about the Forex market, is how long the price trends last. The Euro against the dollar shot up for its gain for a solid two hours before hitting resistance. And it still shows no signs of slowing. With tight stop losses and careful trading anyone could have taken advantage of some portion of today’s move, even a novice trader. Today was an example of the market’s predictability. But remember, it is very seldom that it is that predictable. Remember to always stay on top of your forex indicators(stochastic, mac d, Williams)while trading, but always remember to see what’s going on in the world news before you trade.

Check out CMS’s Forex update for 12-16-2008:

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 Every time I hear the term "robot" I think of that cool robot from the 60’s TV show Lost In Space. You know, the one that used to always say "Danger Will Robinson". They just named it "Robot". So what kind of robots are we talking about in the forex market?

   The actual term as it is used in the industry is Expert Advisor or an "EA" for short. These are simple pieces of software, developed for the sole purpose of finding the most optimal time and price for any given or specified currency pair in order to either buy or sell. Some EA’s simply signal for the trader to take action. Some actually do the trading for you. Some are actually not so simple after all.  Some EA’s algorithms are set up to take into account the time of trade, volatility of market, money management, appropriate risk, and many other factors. Because of the recent popularity of the Forex Market, there are many expert advisors available on the market now.

Pros And Cons of Expert Advisors

 Trading on the forex exchange is undoubtedly very risky. Even with a predefined system that has yielded good results in the past, the fact of the matter is that the Forex market is HIGHLY volatile and can turn on you on any given moment. So how is it really any different from gambling? Well, it comes down to this. If you found a system that you feel gives you good results, and there are many, then the only other factor is YOU. Yes, you the human you. The greatest detriments to any trader, the biggest causes for whole accounts being wiped out of existance…. you might even go as far as to say the worst aspects of human nature, are:

fear and greed

 In that light, one of the biggest "pros" if not the biggest that an EA offers is a "fearless", "greedless", perfectly disciplined, emotionless, mechanical trader. If you find the right trading robot with algorithms that can adjust to as many market conditions as possible and algorithms with conservative money management, your long term success has a very high probability. Remember that this is a game of probabilities. It’s all about getting more winners than losers, and doing that consistently month in and out.

As far as the "cons" go, whatch out for the cons. Definately shop around and try out different trading robots on demo accounts. It might cost a bit in terms of buying the EA’s but it will be obviously worth it to get the right one. Some of them even offer money back guarantees. They are even easy to set up. If you are running Meta Trader, you simply download your EA code and install it to your Meta Trader account’s Expert Advisor folder that is found on C: Program Files on most PC’s. You then activate your EA tab and adjust any settings on your robot that need to be adjusted.

Technorati Tags: best expert advisors, best forex oscillator, forex signals dashboard, forex trader machine, forex trading robot

10 GOLDEN TRADING RULES FOR SUCCESS IN FUTURES & FOREX TRADING

It is a well known fact that 90 percent of investors lose money in futures and forex trading, 5-7 percent break even and only 3-5 percent make money. Given the high casualty rate, it is all the more important for investors to approach futures and forex trading in the correct manner. Below are some of the rules that traders should consider following if he is to make money consistently in the futures and forex market:

RULE 1 : USE MONEY THAT YOU CAN AFFORD TO LOSE

Trade only with "extra" money, i.e, money that is not earmarked to pay bank loans, car installments, housing loans, telephone and electricity bills, etc. One of the major reasons for investing only with extra funds is that your trading judgment will remain objective.

RULE 2 : DON’T OVERTRADE

Inexperienced traders can easily become overconfident after a number of winning trades. This can lead to overtrading - which is dangerous. One can be right 7 times out of 10 but the three times that you are wrong can wipe you out if you had overgeared yourself because of overconfidence. Success comes from prudence in money management. Never overtrade.

RULE 3 : CUT YOUR LOSSES SHORT, LET YOUR PROFITS RUN

Learn to be very impatient with losing positions. Learn to resist the temptation of taking your profits too early. Success comes from holding on to profitable positions and riding with the trend for maximum gains while keeping losses small by getting out quickly when you are wrong. One way to protect you from suffering catastrophic losses is to place stop loss orders for every trade entered.

RULE 4 : IF YOU GET INTO A LOSING STREAK, TAKE A BREATHER

When things don’t work out right, when your best forecasts fail you - get away from the market and take a trading break. A period away from the market can be refreshing and will recharge you.

RULE 5 : BUILD A PYRAMID WHEN ADDING TO A PROFITABLE TRADE

As the market moves up and you are long much earlier, you must learn not to double up your positions. Instead, reduce your positions each time you add to a position. If at first you had 10 contracts, the second should not be more than 5-6 contracts and the third should be 50% of your second (i.e. 3 contracts). An upside down pyramid will be top heavy and could wipe out all your hard-earned profits should the market reverse.

RULE 6 : NEVER ADD TO A LOSING POSITION

Adding to a losing position by averaging is very dangerous. Remember you are investing with "margin" and did not pick up scrips. The contract is not yours; you merely paid a percentage of the total value. Averaging a losing position is equivalent to not admitting your mistakes, that you were wrong in the first place. Successful traders cut their losses short.

RULE 7 : DON’T RISK YOUR ENTIRE CAPITAL ON ONE TRADE

Divide your trading capital into 10 equal parts and never lose more than 10 percent on one trade. If you lost the first trade, you still have nine more opportunities to be right. Putting all your capital on one trade is suicidal.

RULE 8 : NEVER MEET MARGIN CALLS

When you are wrong about the market, get out. Once you start procrastinating, very often prices will go against your position, further triggering a margin call from your broker. A margin call simply means that you are wrong in the market and your position should be closed out. Margin calls are made because people do not want to admit being wrong and take a loss; they hope the market will eventually go in their direction. To avoid this mistake, you should never meet margin calls. Just cut your losses and "get the hell out".

RULE 9 : REMOVE PROFITS FROM YOUR ACCOUNT

Probably no more than 1% of traders have a rule to take profits out of their trading account. The few wise investors I know have bought a house, a car or simply put part of their winnings into a fixed deposit account, otherwise the chances are high that they may lose them all back.

RULE 10 : HAVE A GAME PLAN

Lack of a game plan is not knowing what to do when you are wrong - and not knowing what to do even when you are right.

Here are a few guidelines:

1.Know when and at what price you are going to enter the market.
2.Know how much money you are going to risk on each and every trade.
3.Know when and at what price you are going to get out when you are wrong.
4.Know when and at what price you are going to take your profits if you are right.
5.Know how much money you are going to make if you are right.
6.Have a safety stop in case the market does the unexpected.
7.Have an approximate idea of when the market should meet your objectives or when it should begin to make a move; and if it has not done so, get out.

SUMMARY:

You will note that none out of the ten rules of trading mentioned above are on money management. Only Rule 10 describes the importance of having a trading system to determine "when to enter and exit". This just goes to show that good money management is the key to your success in making money in the stocks, futures and currency markets. A good trading system comes second. Nick Leeson, the rogue trader for Barings in Singapore, got into trouble because he did not respect some of the 10 golden trading rules.

SUMMARY

You will note that none out of the ten rules of trading mentioned above are on money management. Only Rule 10 describes the importance of having a trading system to determine "when to enter and exit". This just goes to show that good money management is the key to your success in making money in the stocks, futures and currency markets. A good trading system comes second. Nick Leeson, the rogue trader for Barings in Singapore, got into trouble because he did not respect some of the 10 golden trading rules.

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Managed Forex with Performance Records - Past Performance Is Not Indicative of Future Results

An introduction into managed Forex with performance records and in what ways this option can work for some people. Read on to learn more.

For anybody that is intrigued with a highly liquid as well as highly profitable foreign exchange market, managed Forex with performance records is one option that you can take since although you do not need to educate yourself about terms, charts, indicators as well as other types of technicalities before you actually taste success in this kind of speculation, the historical data can give you some idea as to what you might expect.

Moreover, managed Forex with performance records is much simpler and also can be a more sound investment because it means holding accounts in foreign exchange market that will be managed by other traders. These traders are then paid by the investors which hopefully results in growth in their their account. Also, bearing in mind the past performance; you might hope to achieve the same type of results in the future.

Keep Your Expectations Realistic

The benefit in selecting managed Forex with performance records is that you are in a better position than if you trade in a casual manner on your own because Forex market trading demands quite a bit of hard work and not everyone can succeed at it. Also it should not raise your hopes too much in an unrealistic fashion.

With greater than 2 trillion dollars in value of trade being executed on a day-to-day basis in a gigantic market, some individuals might actually end up losing some of their money, which according to various statistics means 90 to 95% of those who lose money are the new traders.

What It Takes

You need to properly learn as much can for managed Forex with performance records or else you stand a chance to lose your shirt, so to speak, quite easily and to become properly educated in this type of field requires spending some money.

Hence, it might be better to just let the experts handle the trading for you and because you are engaging them on the grounds of managed Forex with performance records you will have the ability to see some of their past history and their historical performance and also be in an ideal position to make a judgment to their level of performance.

Past Performance and Future Results

Nevertheless, with regard to managed Forex with performance records, the US federal government has specific rules in place that are less than encouraging towards the account managers when they are revealing the historical performance records with various disclaimers for instance "past performance of any trading system or methodology is not necessarily indicative of future results."

Therefore, though you might consider managed Forex with performance records as being an ideal course of action, you still have to have somewhat of a skeptical mindset of those types of traders that make the claim that there products and services will furnish you with the gigantic returns with a minimum amount of risk.

These types of disclaimers in regards to managed Forex with performance records are in place to protect you and to stop you from getting any unreasonable hopes of receiving assaults results that have been achieved prior to the present since trading is basically speculative.

Forex Predictability

Also, any type of performance results are basically unpredictable which is why the majority of traders, when offering to use their various services will be pretty less than enthusiastic in providing you with prior results, so in that way you will not have excessive expectations from them.

The bottom line is that managed Forex with performance records will only help potential customers recognize what the possibilities are when pursuing this type of Forex trading, although they’re typically are disclaimers provided that will assist in protecting the Forex managers from any type of legal liability should their future performance not match their past achievements.

Listen to Korbin Newlyn as he shares his insights as an expert author and an avid writer in the field of finance and investment. If you would like to learn more go to Forex Trading System advice and at Forex Signal Software tips.

Technorati Tags: forex managed account low investment, forex managed accounts, forex managed accounts investing systems

FOREX Trading With Managed Accounts

FOREX is seen in more and more portfolios’s since the currency exchange realm has opened up to the small investor. However, working 9 to 5 doesn’t always leave room to trade the market on a consistent basis. Aspiring traders who still work day jobs are looking for ways to enter into the foreign exchange market without having to invest hours in front of the computer. Many brokers have found this as a great opportunity to offer automated systems and managed accounts to those looking for a more passive income.

Typically the minimum investment for a Managed FOREX account ranges anywhere from $5,000 to $10,000 leaving the very small investors out of the loop. Managed accounts can either earn money or lose money, there are no guarantee’s that opening a managed account will be a profitable venture.

A modest managed account whether it is traded by another person or an automated robot can earn up to 20% per month or more depending on how good the system is. There have been stories of managed accounts earning 20 times the amount they started with in a year’s time. However, finding an automated system that is consistently profitable is a difficult challenge and most accounts are on the slower side of about 5% to 10% per month.

Managed accounts may be a good way to leap into the FOREX while receiving professional training and learning how to trade for yourself. Ultimately, a good trader fine tunes their own trading system and learns how the market reacts to specific news and patterns.

Searching for a good managed FOREX account is not an easy task. Some trading systems take too many trades causing the trader to margin out too soon or give poor signals all together. Be sure that a trading system is able to back up its data with proven results and back tests their system in real-time.

Choosing an automated trading system with the highest monthly returns isn’t always the best choice. Depending on the broker that is managing your account and their ability to pay out is what counts the most. There are hundreds of FOREX brokers and not every broker is able to fill positions on trades. Brokers come and go everyday, make sure the broker you chose is established, registered and has credibility within the market.

Educating oneself on the FOREX market can help enhances chances of making money in the FOREX. After all 95% of FOREX traders go home broke everyday. Use a managed account while learning how to trade. Once the fundamentals of the market are established begin executing small trades in a demo account to obtain a better understating of the FOREX beast.

Forex Managed Accounts
Information on forex managed accounts

Technorati Tags: forex managed accounts investing system, forex managed accounts low investment, forex managed accounts performance records

Automated forex trading systems operate on what’s known as a forex robot, or also known as a expert advisor. An expert adivisor is a simple tool that triggers a trade based on a mathmatical forumla.

The truth is most automated forex trading systems use an expert advisor when certain parameters are met, however the truth is not all are created equal. The job of the autoamted system is to monitor the forex market around the clock placing trades and appropriate stops so that in the end the system is turning a profit. The reason they work so well is due to the fact that they remove all human emotion from trading and make decision based on a mathematical formula rather than gut instinct or greed.

One of the main reasons many trades fail in their attempt to become a successful trader is when their emotions overcome their trading decisions. Traders tend to become impatient which leads hasty decision making and bad trades. Some even trade on greed and have the need to always be in a live trade simply because they like the thrill or the potential of making thousands of dollars. Other’s overlarge themselves trying to hit a home run on the first trade and in the end lose their entire account. Some traders even do what’s called, revenge trading where they cannot handle the loss emotionally and tend to increase their risk on each trade hoping they will recover their losses.

There’s no secret on how to achieve massive success in the forex market. Automated forex robots are simple to setup while using the MetaTrader4 platform, a free platform that anyone can download. Most automated trading systems come with a simple instructional guide that shows one how to install the software and how to optimize the settings.

When looking for automated trading systems, be sure to look for testimonials from other traders who might have already used the software. One thing to watch for are actual video testimonials, this way you can not only read about their results but you can hear from them their live experiences. Just because a system is the most expensive doesn’t always mean it’s the best either, some of the best expert advisors out there are actually the cheapest ones. Lastly, use solid money management with any forex robot and be sure to manage your trade properly. Even with a risk to reward ratio of 4:1 or where we win 4x the amount we lose, we only have to be right 30% of the time to profit.

There are many forex systems online today. Be sure to find the one that meets the qualifications discussed earlier and you will be sure to find a system that can yield the best possible results.

By: Tim Rohrer

Article Directory: http://www.articledashboard.com

Tim Rorher is an established writer and forex trader. For more information on automated forex system, visit forex systems

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