Forex Pip Machine

Posts Tagged ‘systems’

If I had a nickel for every forex trading course out on the web now, I would have quite a nice mountain of nickels!

There are so many places to find forex trading education. If you have already embarked on the forex trading journey, you probably have already opened a demo account with one of the most popular brokers such as FXCM, Forex.Com, Alpari, Interbank FX, or FXDD. These are only a small handful of the available brokers. Most if not all of them provide their own in-house forex trading education and training.

Most forex courses involve using the standard indicators that can be found in most online trading platforms. By far the most popular of these trading software platforms is the reliable Metatrader 4 trading platform. This charting and trading software is provided by most but not all of the top forex brokers and is very stable and user friendly. Many of the popular indicators that are used by most trading systems include Bollinger bands, the Stochastic Oscillator, the Mac D, the Williams range, and Moving Average lines.

Bollinger bands are graphic representations of areas on a chart where the price of a specific currency pair would have the most probability to “change”. This change is often in the form of a reversal of price movement. The Bollinger bands are represented as lines on the chart.

The MACD is short for Moving Average Convergence Divergence. This indicator is often found at the bottom of your MT4 screen. It is based on the relationship between two different moving averages. This is plotted as a graph and then it is further related to another exponential moving average line that acts as the buy or sell signal indicator. In short, the MACD is very effective in ascertaining a currency pair’s momentum.

The Williams percentage range is an indicator similar to the stochastic oscillator in that it monitors momentum. It responds a bit quicker to a currency pair’s volatility and also indicates when a pair is either overbought or oversold.

Now most trading systems adhere to some form of strategy in terms of the market’s tendency to either breakout, trend, or stay in a zone. Most of these systems rely on candle stick interpretation  as well as indicators to determine direction and entry point. They also establish conditions for possible trade “set ups” and “signals” for entry.

One can really get caught up in a sea of indicators and complicated systems. Usually the best systems are the ones that are elegant and in essence simple. Remember that these systems have success percentages. Try to look for the ones that have at least a 60% success rate. Also remember that the system determines only part of your trading outcome. The rest is determined by how well you trade the system, how disciplined you are with money management and risk, and how well you can control your emotions of greed and fear.

For a very effective forex trading course, take a look at James De Wet’s E75 Club!

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courtesy of pcremix.com

About 97% of all forex traders fail to grow their accounts over time, let alone make a living from trading. Even if the trader applies a very effective system in their trading, the key reason most traders fail is because of their trading attitude and mindset.

This is an obvious but important nugget of forex wisdom: You can’t predict where the price will go! Most traders trade with the attitude of trying to predict the direction of a trade. They will have that idea in mind and they will act according to what they think the price will move to. They then get prejudiced about the trade. Even if the trader claims to be trading their “system”, the action of trading now has a subconscious expectation.

A great piece of advice for trading is: Have faith on your forex trading system, and set your stop losses so that no more than 2% to 3% of your account is at risk at any one trade. Once a trade signal has been given according to your trading system, you simply forget about guessing the outcome of the trade. You then commit to it. Don’t get out of the position for fear of losing. The trade will either get stopped out or gain pips. Once the trade is triggered you simply let it be and let it go. You will have losing trades, it’s inevitable. If you let your winners run and make sure your stop losses are figured out, eventually your winners will recoup your losses from the stopped out trades. You have to learn how to simply accept the stop losses and be able to keep on placing trades when setups and signals occur.

Having this mindset will enable the trader to not pull out of trades prematurely, and it will also help the trader not rush into placing trades. The attitude is a type of “letting go”. Your job is to implement the trading system as accurately as possible, and be able to correctly interpret the indicators on your chart.

Other Great Tips and Habits to Develop

a) When you get 2 or 3 losing trades in a row, keep on trading the system until you get a winning trade., making sure to wait for the entry signals.
b) When you get a streak of 2 or 3 winning trades, stop. Winning opens you up to the dangers of over-trading.
c) Always wait 1 to 2 hours after winning a trade to place the next one.

Remember to keep your emotions in check, and realize that there are abundant opportunities during your trading day to get some pips!

Technorati Tags: attitude, forex, mindset, systems, trading