Posts Tagged ‘Decisions’

The Approach To Realizing A Profit From Online Currency Trading

October 18th, 2010 56 Comments

The Approach To Realizing A Profit From Online Currency Trading

Some people are unable to stay focused when they participate in online currency trading. They have not yet developed a disciplined way of figuring their projections and are not able to rein themselves in when they see that they are losing money. The have no way planned to approach making a profit so they are unable to realize a profit from online currency trading.

These people are in an online currency trading limbo. Some people in the literary world might refer to it as writers block. The online currency trader has lost their perspective on how to approach trades that day in order to reap any kind of profit. They can only manage enough perspective to sit and watch the computer screen and see that their money is slipping away.

The online currency trader might feel this way because they have failed to meet a monetary goal that they set when they first started trading. If that income is not delivered when they expect it to be everyday, then they consider their online currency trades to be failures. The approach to realizing a profit from online currency trading requires people to see profit as profit and nothing more.

Emotion has no place in a business that places its success on the trends of the current online currency trading market. The values to various currencies will rise and fall throughout the day and night and once an order is placed, people only have the power to set a limit on their losses and have a stop order in place to ensure that all is not lost in the online currency trading process.

Some people take a logical approach to realizing a profit from online currency trading. They feel that they have prepared themselves to make decisions on the online currency trades that they have chosen to place, and are very logical to realize that the money could be lost in a matter of minutes. They are also very logical about the money that they could make if all of their preparations prove to be successful ones.

Knowledge is power and is most certainly one of the factors that is crucial in online currency trading practices. A baseball team owner would not offer a multi-million dollar contract to a player that they knew nothing about. An online currency trader would not trade in a foreign currency that they do not thoroughly understand. The economy of the country and their past trading practices are knowledge that can be used to turn a rapid profit.

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What You Didnt Know About The Psychology Of Forex Market

September 27th, 2010 No Comments

What You Didnt Know About The Psychology Of Forex Market Trading And How It Might Bankrupt You

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader whos been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesnt take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others including the mass psychology of the people that use the currency on a daily basis but neglect to know what moves you, youre going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying Huh? about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged.
All right. Youve heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and youll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info if its math, theres only one right answer, right?

The answer lies in interpretation. The numbers dont lie, but your mind does. Your hopes and fears can make you see things that just arent there. When you invest in a currency, youre investing more than just money you make an emotional investment. Being right becomes important. Being wrong doesnt just cost you money when you let yourself be ruled by your emotions it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? Its that little thing inside your head that says, I KNOW Im right on this, dammit!

Bottom line: You cant keep emotions out of the picture, but you can learn not to let them control your decisions.

To most people, being right is more important than making money.
Heres the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. Youve got to accept that picking a loser is NOT an indication of your self-worth, its not a reflection on who you are. Its simply a loss, and the best way to deal with it is to stop losing money by moving on and really move on. Moving on means you dont keep a running total of how many losses youve had thats the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning.
Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didnt work. But he didnt give up because he knew that creating a source of light from electricity was possible. He believed in his overall theory so when one design didnt work, he simply knew that hed eliminated one possibility. Keep eliminating possibilities long enough, and youll eventually find the possibility that works.

Winning traders see loss in the same way. They havent failed theyve learned something new about the way that they and the market work.

Winning traders can look at the big picture while playing in the small arena.
Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. Im wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades but I made $250,000, making my overall profit $175,000. Its a pretty clear numbers game but how do you keep on trading when youre losing in trade after trade? Simple just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that youve set up but define yourself by what really matters the overall record.

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Tips For Finding The Best Forex Trading Software

September 1st, 2010 No Comments

Finding good Forex software, will help you trade quickly and easily and make greater profits.

It seems that when it comes to Forex software, just about everybody has their own set of programs they would love to have you utilize.

Knowing that software is not necessarily created equally, this means you will have to make some decisions about what you expect from the trading software that you decide to go with.

Here are some tips you should consider before committing to any one software package.

The first question you should ask yourself about any trading software has to do with usability.

Do you find the software to be logical to your mind?

Can you manoeuvre through the prompts with a full understanding of what you are doing?

Should you need assistance at any point in the process, does the software provide the ability to access a help section?

Being comfortable, with the way that the software works, is a huge part of whether or not you need to consider a particular software trading package.

If it seems too complicated, then pass on that selection and move on to another potential candidate.

When you have identified a few software packages that you believe are workable for you, then you need to begin doing some investigation into each one.

Find out what other consumers are saying about these particular software options. Is there a consistent history of persons who have found the software to not be what they thought it would be?

What types of complaints can you find, and how did the software manufacturer respond to the problems?

Do the issues you uncover have to do with earlier versions and are not relevant to the current version that you are considering?

Getting feedback, from other consumers, can help you to narrow your list of software candidates down to a manageable few, to give your focused attention.

After you have narrowed the list down to those that you believe will be easy for you to use and that have a proven track record of success, the time has come to compare apples to apples.

What type of trade limitations does Candidate A software have versus Candidate B?

How quickly can a transaction take place on each of the software platforms?

While you have previously determined that you could work with each of these programs, the time is now here to decide, which one goes beyond that stage and actually is the one that you would enjoy using as your trade software of choice.

By identifying potential trade software packages and performing due diligence to obtain the relevant comments that have been shared by other consumers, you go a long way toward finding the ideal software package.

Once you have narrowed the list by comparing the functionality of each of your top choices point by point, you will be able to enjoy your choice of Forex software for a long time to come.

Download some free forex trading software today by clicking on the link below.

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How to Achieve Currency Trading Success: Part 2

August 1st, 2010 No Comments

Choosing a Trading Method

While there are many ways to achieve currency-trading success, all methods have the following salient points in common:

1. Simplicity

Most of the best trading systems are simple.

There is no correlation between how complicated a strategy is and how successful it will be.

In fact, the simpler a system the more likely it is to be robust in the face of changing market conditions.

Some of the most successful systems of all time have been extremely simple and you dont need much mathematical knowledge to understand them.

2. Liquidate Losers Quickly and Run Big Profits:

The basis of any successful trading systems that deals in leveraged products is:

You need to be able to run the big profitable trends and exit losers quickly.

All good trading methods do this, and use strict money management rules, to ensure preservation of equity.

3. Understand your Method

This may sound obvious, but you need to understand your trading method, and the logic behind it, so you can execute it with confidence and discipline.

4. The Importance of Discipline

Currency trading success is rooted in a successful method applied with discipline. This means a trader has a method and follows it. This however is much harder in practice than many traders believe.

When money is on the line all traders emotions come into play and unless they can maintain discipline, currency-trading success will elude them.

Let’s look at some ways to maintain self-control and discipline when making trading decisions:

Firstly, you must be confident in your trading method. You should know exactly what you are going to do:

When a signal indicates that you should enter a trade

When a signal tells you to exit

You must execute your trading method in a disciplined fashion; if you dont, you wont have a method in the first place!

Secondly, and perhaps the best way to maintain self-control and discipline, is to feel confident in your trading method from the start.

If you have confidence when you execute your trades, you will “know” that over time they will be successful – even if you are suffering a string of short-term losses.

You must execute the buy and sell signals with confidence – these signals will lead to currency trading success in the long run, as you rigidly adhere to your method.

You need to stick with your method through good and bad times, and confidence in the underlying logic, will help you remain disciplined.

The more disciplined you are in trading, the more profits you will make longer term.

You should not underestimate the need for discipline, if you want long-term currency trading success.

If you read Jack Shwagers Market Wizards, and the New Market Wizards, where he interviews the top traders of all time, you will see how all of them place an influence on discipline.

Currency trading success relies on a number of factors and these are:

Robust trading method + discipline = currency trading success

Remember, when trading any method, it will be of little use to you, unless you have confidence in it and can execute it with discipline.

There are a number of variables involved in longer-term currency trading success and the above are the salient points to keep in mind when deciding how to trade currencies.

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Forex Trading System: Discretionary vs. Mechanical Systems

May 5th, 2010 No Comments

There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? These are the answers we will try to answer on this article.

We will first analyze the pros and cons about each system approach.

Mechanical systems

Advantages
This kind of system can be automated and backtested efficiently.
It has very rigid rules. Either, there is a trade or there isnt.
Mechanical traders are less susceptible to emotions than discretionary traders.

Disadvantages
Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data.
The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same.
A system that worked successfully the past year doesnt necessary mean it will work this year.

Discretionary systems

Advantages
Discretionary systems are easily adaptable to new market conditions.
Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.

Disadvantages
They cannot be backtested or automated, since there is always a thought decision to be made.
It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment wont play an important role in your system. You only take the trades that your system signals.

If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.

On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.

Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.

I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.

Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:

1.You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system.
2.You also need to have some rules and most importantly have the discipline to follow them.
3.Take your time to build the perfect system for you. Its not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
4.Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.)

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Forex Trading Software – First Rule You Need To Know

April 30th, 2010 No Comments

Forex Trading Software – First Rule You Need To Know Before You Start

So, now you are a forex currency trader. But how can you avoid the risk of losing money if you are a newbie? I think many newbie traders would like to have an experienced successful adviser, who could help both newbie or experienced trader, someone who could teach them how to trade without losing money.

Before you start or continue trading, you need to know the main rule of successful forex traders: you should use your own forex trading system. You can ask: why is this system so important? It is very simple. If you don’t have your own successful trading system you may lose your money after only 1 or 2 weeks. It’s very difficult to be a successful trader without using a tried and tested system. For many people trading is a gamble. They try to start trading as soon as possible and make money too quickly. This usually leads to losing on the first trade. Many successful traders have their own strategies that have proven their effectiveness.

But the problem is – it can take many years before you you’ll find this strategy, and also it will take some time to test how well it works. Yes this is true – some traders develop their strategies over 2 or more years! Here’s a simple test for you – Check your trading results for the last 3 Months. – Do you have your own rules? Do you make profits consistently? Is your capital growing every week / month? – If all answers are “yes” – you have already your own forex trading strategy. But if any questions were answered “no” – Stop your trading immediately! You’re losing your funds and you need to make some changes.

The easy way to change your losses to profits – Get an already working trading strategy from traders who are already making money! These successful traders have incorporated their trading strategies into a piece of forex trading software that helps traders make their decisions immediately. You need to be using software that gives you exact buy/sell signals.

This forex trading software will alert you about the best opportunities at the right moments – Because the program calculates many forex indicators and follows all trading rules automatically. So there isn’t the “human-error” factor. Ask yourself – do you say sometimes “It was a bad day today…” I’ll tell you why this is bad day for you. Because you think this is a bad day… and you made mistakes in your trading and lost money today. This software doesn’t know about “bad” days. It just follows the trading rules without emotion to make profits for you.

Every successfully trader uses a few strategies to increase their profits, and minimize losses. The simpler a strategy is, the better it is. I started to use an already proven and working forex trading system after an experienced professional trader gave this advice to me. And this helped me a lot. I think for many new traders or people who have some problems with it right now “I mean losses” this will be a good opportunity to turn your losses into profits.

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Forex Trading: The Perfect Forex Trading System

April 9th, 2010 No Comments

Trading the Forex market has became very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.

Most Forex trading systems are made off technical indicators (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.

There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as the MA crossover made the price go up, but it happened the other way around, the MA crossover signal occurred because the price went up. Where Im trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesnt want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.

Dont get me wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?
First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.

Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.

Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

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Forex Trading: Making Money With Money

April 4th, 2010 1 Comment

Forex trading is one of the growing markets for making money in todays world economy. If you are part of the forex trading game, you need well thought out and planned strategies. You also need up to the minute information and reliable data to help you along the way. With this said, in order to be successful at forex, youll want to invest in high quality products to help you analyze, watch and track the forex market. No little project at all. The good news to you is that there are options out there to help you do just that.

First of all, realize that forex trading is an excellent market to trade in. It has the ability to make you money without a whole lot of investing. And, you can trade with whatever you have, not necessarily millions of dollars. To get into the forex market, it makes sense to pay attention to the numbers for some time. Then, youll have a good feel for it long before your dollars are involved.

But, once you do get in, youll need up to the minute information. Consider the purchase of and use of valuable forex trading software programs. These programs can help you to track what is happening and in some, it will help you to better analyze the information as well. Of course, this in turn will help you to make the right decisions about your investments.

While market trading is always risky, many find that forex trading, when done right, is one of the most profitable without much start up investment opportunities out there. With the ability that you have to monitor and respond virtually instantly to the worlds market in forex, you are better able to make the right decisions which will then lead to those gains you are seeking.

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Choosing The Best Online Forex Trading Systems

January 21st, 2010 No Comments

Forex is not really new in the financial market. In fact, it is not only known by big players in the world, but also by small organizations and individuals lately. Now, forex is no longer ruled by the big players; people from all walks of life can actually do forex trading.

Before plunging in trading, you must know certain terms that are used in the market. One important term is the forex trading system. What it is all about, and what is its use.

The birth of the internet has changed the face of forex trading. Because of this very valuable tool, the FX market is easier to access, making it more convenient to small players. And all most importantly, all of this happens in real time, which is why online traders can actually make quick decisions regarding their trade.

Forex trading system is ergonomic and intuitive. All the necessary functions involved in forex trading can be done from your main screen. You can place a trade and leave an order. And not only that, you can also conduct margin analysis and position/order management.

There are many companies, located in different countries, which can provide you with a forex trading system. The very first thing that a system usually involves is investment of money. Some companies would require you to invest as low as five dollars while some can ask for as high as five hundred dollars for upfront payments. Forex systems greatly vary, and it depends largely on the company offering such service.

With the system, you can purchase companies, stocks, and make investments even in other places. You can enhance your wealth and personal preferences by investing in a forex trading system. By investing a certain amount of money, you can make even more money in the future. The forex trading system that many traders know about is built among leading companies, investors, and worldwide currencies.

The trading system can be offline or online. You are free to choose which system will work best for you. However, online trading systems are gaining more and more popularity because you have easy access to the money that you’ve invested. Offline trading systems usually involves a lot of paperwork; while with an online system, you can instantly invest, trade, move, and remove money faster.

All it takes is for you to learn about the investment, and how to trust the right brokers in case you may need to make additional decisions in the future. You must be involved with a company which you can communicate with any time during a business day. That particular company should be able to provide you with a telephone number, fax number, and email address. Steer clear from companies which do not disclose such information.

Without the right trading system, you can’t trade effectively. Therefore you must choose a system which is suited for you as an individual. You must consider the trading style and the risk that it involves. A system which focuses more in risk and money management techniques is a good one. Look for a company who has been in business for many years and those with proven professional experience. It must also provide you with tools and strategies that will help you in developing your very own online trading system. If you select the right company, you can find one that is of best value for your money.

Choosing a good, and probably the best, forex trading system is one of the first things that you should learn in forex. There are three factors usually considered in choosing a forex trading system, namely: profitability, acceptability, and one that fits your daily routine.

Profitability is probably the most important consideration. People invest money to make profits, and a good system should provide that. It is shown in dollar amounts or pips/month.

Every system has a drawdown, and it is also expressed in pips. It is the biggest decrease in equity in the past. In comparing different systems, you should take a close look on its historical drawdown.

Also check for the systems profit and loss ration, as well as its win and loss ratio. The system should have consistency and you can effectively tell this by looking into their monthly or quarterly, and yearly results.

Once you’ve chosen a system, learn all about it, and you can expect to gain a lot from your investment.

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