Thursday, September 19, 2019

Forex Trading Money Making Recipes



The best traders who make money in forex trading sharpen their skills through practice and discipline. In addition, they carry out self-analysis to find out what actually drive their trades and learn how to keep their greed and panic out of the equation.
Actually, nobody will ever reveal the exact strategies and secrets he uses for making money in forex trading, but I will expose some of the secrets you can use to succeed.
These are the skills any forex trader who want to make money trading forex should practice.

1. Describe Trading Style and Objectives

It is important for you to have an idea of your destination and how you will reach there, even before you embark on a journey. As a result, having clear goals in mind is very important, and make sure the trading method you are using will accomplish these objectives if you want to be a successful forex trader.

With every trading style, there is always risk profile associated with it and it necessitates a certain approach and mind-set to trade successfully. For instance, you may have to think about day trading, if it is impossible for you to go to bed with an open position in the market.

Moreover, you may be more of a position trader in a situation where you have funds you believe will gain from the positive reception of a trade for some months. Just make sure that your traits fit the trading style you carry out. A personality divergence will cause stress and some losses.


2. The Broker and Forex Trading Platform


If you want to be successful in this trade, then it is of great importance for you to choose a broker of good reputation. In addition, spending ample time comparing different brokers will be very handy. It is also important for you to know the policy of each broker and the way they make a market.

Furthermore, make sure the trading platform of your broker is appropriate enough for your intended analysis.  A good broker that has a poor trading platform or an excellent platform with a bad broker can constitute a problem. Make sure you balance the two and get the best of them.


3. Use a Consistent Methodology


As a trader, you ought to have some ideas of how you will make decision in order to execute your trades before you enter any market. Hence, you must know the type of information needed to make the right decision when you are entering or exiting a trade.

In order to determine the best time to carry out a trade, quite a number of people prefer looking at the underlying basics of the economy and a chart. However, other traders make use of the technical analysis alone.

Make sure are consistent, irrespective of the methodology you use, and make sure that methodology is adaptive. Your system should follow the changing dynamics of a market.


4. Establish Your Entry and Exit Points


A lot of forex traders are confused by contradictory information that happens when looking at charts in diverse time frames. But it is noteworthy that what shows up as a buying opportunity on a weekly chart could actually show up as a sell signal when it comes to an intraday chart.

Consequently, make sure you synchronize both your daily chart and time entry, if you are taking your basic trading direction from a weekly chart. In other words, if the weekly chart is providing you with a buy signal, make sure you wait until the daily chart too confirms a buy signal. Sync your timing.


5. Work out Your Expectancy

 

The expectancy is simply the formula you use to establish how dependable and consistent your system is. You should go back in time to measure all your winning trades and losing trades, and find out how profitable your winning trades were versus the amount that your losing trades lost. Consider your last ten trades.

 

However, revert to your chart where your system would have shown that you should enter and exit a trade, if you have not made real trades yet. Find out if you would have actually made a profit or a loss. Write down these results.

 

 Sum up all your winning trades and divide what you get by the number of winning trades you made.

 

Below is the formula:


E= [1+(LW)]×P1

Where:

E= Expectancy

W= Average Winning Trade
L= Average Losing Trade
P= Percentage Win Ratio



For Instance:

Assuming you made 10 trades of which 6 were winning trades and 4 were losing trades, it means that your percentage win ratio would be 6/10 or 60%. If the 6 trades made was $2,400, then your average win would be $2,400/6 = $400.

But if your losses were $1,200, it means your average loss would be $1,200/4 = $300. Apply these results to the formula above and you get E= [1+ (400/300)] x 0.6 - 1 = 0.40, or 40%. A positive 40% expectancy means that your system will return you 40 cents per dollar over the long term.


6. Small Losses and Focus on Your Trades


It is noteworthy that as soon as you have funded your forex account, your money is at risk. As a result, you must not use your money for normal living expenses. The key to managing your risk in forex trading is to learn to accept small losses.

You will be much more successful when you focus on your trades and accept small losses instead of counting your equity continuously.


7. Positive Feedback Loops


As a result of a well executed trade in accordance with your plan, a positive feedback loop is created. You form a positive feedback pattern when you plan a trade and execute it well.

Success they say breeds success, which will further breed confidence, particularly if the trade is profitable. You will be building a positive feedback loop, even if you take a small loss but do so according to a planned trade.


8. Carry Out Weekend Analysis


Study weekly charts to look for news or patterns that could affect your trade when the markets are closed on weekend. Maybe a pattern is making a double top and the news and the pundits are recommending a market reversal.

This is a type of reflexivity where the pattern could be prompting the pundits, who then reinforce the pattern. You will make your best plans in the cool light of objectivity. Just wait for your setups and be patient.


9. Maintain a Printed Record


A great learning tool is a printed record. Print out a chart and list all the reasons for the trade, such as the basics that influence your decisions. Mark the chart with both your entry and exit points. Make any significant comments on the chart, like emotional reasons for taking action.

Are you afraid? Are you full of anxiety? Are you too greedy? You can only develop the discipline and mental control to execute according to your system rather than your emotions or habits, only when you can objectify your trades.


Conclusion


The above steps will guide and direct you to a well thought-out approach to forex trading and help you develop into a more refined forex trader. Forex trading is an art, and disciplined and consistent practice is the only way to become increasingly proficient.

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Basic Terms in Forex Trading



When it comes to forex trading, Euros Vs American Dollar or EURUSD is the most common pair traded. Basecurrency is the currency on the left, and it is the one you want to either buy or sell.

On the other hand, secondary currency is the one on the right, and it is the one normally used in making transaction.

For each pair, there are two prices – The ask price or the price for selling the base currency and the bid price or the price for buying.

Spread: This is the difference between the base currency and the secondary currency. Spread stands for the amount charged by brokers to open the position. The more currency is traded (high liquidity), the narrower will be its spreads. As lower liquidity normally comprises of increased volatility, the rarer the pair is, the wider the spreads will be.

Normally, a quote will be presented with four numbers after the dot. For example, look at the case of 1.2356. In the case of EURUSD, meaning that for every Euro the trader wants to buy, he will be required to invest 1.2356 US dollars. Any change in the currency value will normally be seen on the fourth figure after the dot, which is normally referred to as a pip.

The losses, gains, and spreads will normally be presented in pips.

 

 

Normally, a quote will be presented with four numbers after the dot. For example, look at the case of 1.2356. In the case of EURUSD, meaning that for every Euro the trader wants to buy, he will be required to invest 1.2356 US dollars. Any change in the currency value will normally be seen on the fourth figure after the dot, which is normally referred to as a pip.

The losses, gains, and spreads will normally be presented in pips.
Other terms used in online forex trading include Going short and Going long, which stand for selling and buying respectively.

Bullish Trader: This is the trader who speculates that the market will rise.

Bearish Trader: This forex trader is more on the defensive position.

The Bear Market and Bull Market describe how the market goes. While a bear market is normally decreasing, a bull market rises.

Professional and knowledgeable forex traders will decide their tactic based on the market trends and will follow all related events, in order for them to follow the changes in the market and make profit.

Gone are the days when a trader called his broker and give instruction on what to do or the action to be taken. Nowadays, forex trades are performed on software known as trading platform by the client directly.

Quite a lot of these forex trading platforms are available for Internet, Computer, and Mobile. Each trader has his own particular strategy, and should look for the trading platform that will allow him to do it in the best way possible – what he will feel more comfortable in.

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What Is Forex?



Forex, aka FX trading, or foreign exchange is an international market where one currency is exchanged for another. The forex market is one of the most actively traded markets in the whole world, having an estimated trading volume of $5 trillion.
In forex trading, buyers and sellers meet to transfer or exchange currency among each other at an agreed rate/price. Hence, fx trading is the means by which central banks, companies, and individuals exchange one currency into another.
The enormous majority of currency exchange is undertaken with the intention of earning profit, even as a lot of foreign exchange is done for practical reasons. The price movements of a number of currencies can be extremely volatile with the amount of currency converted each day. It is this volatility that makes forex trading very attractive to traders. As it brings about a greater chance of high profits, it also increases the risk.
There is high liquidity in the forex market, being the largest market in the world, bigger than the stock market. As a result, the foreign exchange market creates a center of attention for many traders, including the experienced and novices.
Forex Market
 The forex market has the highest liquidity in the world, with about $5 trillion every day, as mentioned earlier. In other words, you can buy any currency you want in huge volume, even as the fx market is opened for 24 hours in 5 days per week (Monday to Friday), except on public holidays.

Trading starts with the opening in Europe, Asia, and Australia, to be followed by the USA until the market closes.

The commencement time of forex market in summer is 9:00pm GMT on Sunday, and ends by 9:00pm GMT on Friday. In winter however, it is from 10:00am to 10:00pm accordingly. This means that currencies are traded at all times, day and night. The fx market can always a buyer or seller, compared to other instruments where a downfall of the market would leave their traders with untraceable assets.

Currency Pairs

There are more than a few currencies in the world and each of them has a three letter symbol as follows:

o   USD for American Dollars
o   EUR for Euros
o   CHF for Francs
o   GBP for British Pounds

These currencies are grouped into Major and Minor sorts.

Major Currencies: These are the most powerful economies in the universe and they include New Zealand, Switzerland, Australia, Canada, Euro Zone, UK, Japan, and US. They make forex pairs in addition to other currencies.

When trading forex, you buy and sell currency to each other. The currencies in pairs are known as one against another.

Forex pairs are grouped into three – Exotic pairs, Minor pairs, and Major pairs.

Exotic Pairs: They have one major currency and one minor like USDNOK, EURTRY, and lots more.

Major Pairs: Always involve USD and the most traded types. The seven major pairs are:
o   EURUSD
o   USDJPY
o   GBPUSD
o   USDCAD
o   USDCHF
o   AUDUSD
o    NZDUSD.

Minor Pairs: Currencies are traded between each other in the minor pairs, apart from USD. Pairs can be CHFJPY, EURGBP, and others.

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