Tag Archives: forex

Forex Trading

Handling Your Emotions When You Are Trading

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For generating money through a forex market you must to be exceptionally patient and be on lookout for the precise thing you want and then go for the trade instantly when you see what you have been waiting for without any delay. This is the most crucial thing than your trading system or any of your money management ratios.

A large casualty rate prevalent among the currency traders is due to the predominance of emotion over logic. A rational thinking other than getting carried away by the emotions of succeeding or loosing is what is very much necessary in Forex trading.

To succeed in a long run, sticking to emotional discipline strictly is the key but in fact this comes as a package which is disliked by most of the people.

You have to remember that you are trading to make money, so treating it like any other job is a good way to go. You’re not in it for the excitement and fun, becoming too emotional will impede your ultimate goal of making money in the market.

Though the job may often of extreme boredom due to its repetitive nature, the effective traders keep watching themselves on their job and by following a checklist of a given trading system and taking care of not placing any trades at wrong time, they reap success. They have the know how of waiting in pertinence and then striking at the most appropriate time and they do it again and again.

Keeping emotions in check is not something everyone can do. People with only personal finance knowledge and skills probably won’t be able to do it and will end up going for big wins instead of consistent smaller gains.

Believe it or not, letting a potentially huge profit pass you by is actually better than getting into the market at the wrong time and having to mark your trade as a loss.

“Hurrying yourself is burying your self ” is something correct in forex trading. Hurrying unnecessarily leads to confusion and lessens your chance to gain.

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Forex Trading

Money Management: What Are The Rules of Proper Risk Control?

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I bet you are eager to learn the secrets to be a profitable trader

Surprisingly most new traders jump on the forex market with no specific plan thinking that they will make thousands of Dollars in record time. You see trading is not that easy of a job. Yes it is a job, not a leisurely activity but simply a job which needs to have some strategic plan in place so that it may be performed properly.

In my early days of trading I did a common mistake that most new traders tend to be a prey of, which was ignoring my Money management rules. This one mistake was the cause of my failure in the currency market.

Quite surprisingly, being a good trader doesn’t require having an awesome system that wins 95% of the time. A lot of new traders get caught up in the hype of the amount of money they can make and forget about the proper trading size they should use per trade. This major mistake causes a lot of traders to blow their whole account in a matter of days. Simply because they ignored the Money Management rule.

Money management is in other words the back bone of your trading. Having well thought rules and sticking to them will help you stay in the FX arena for longer. Bear in mind that trading is to some extent a game of probability, a reason why to have a good money management rule in place.

To make things easier, I have outlined those critical Money Management rules below.

* Risk only 1-2% of your total account per day. (You will thank me for that)

* Your trading size should be less than 1/10th of your account size.

* Always use a Stop Loss when trading. Remember to place your SL at a decent swing low/high so that you do not get thrown out of the market too early by some stop-hunters.

* Always use a decent Stop Loss so that you are not thrown out of the market too quickly. I use a 15 minutes chart to access my SL when I trade off a 5 minutes time frame.

Those rules are ridiculously simple but heavily ignored by many new comers in the trading world. Following the critical points stated above will greatly help you in your trading. This will undoubtedly keep you in the game long enough to be profitable.

Below is a sample of trading lots you should be familiar with:

1 Lot = 100.000 Units of a currency. Pip value = 10 Dollar

0.1 Lot = 10.000 Units of a currency. Pip value = 1 Dollar

0.01 Lot = 1.000 Units of a currency. Pip value = 0.1 Dollar

Risking only 2% of your total equity will result in you having to pick the right lot size to trade.

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Forex Trading

Automatic FX Trading Robots – Yes Or No

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While there are so many people offering up their commercial FX trading robots online, it is hard to know how trustworthy these robots are and whether or not it is a good decision to have money that you have worked for to be at their mercy.

Unfortunately, these offers are not to be trusted. There are several instances of scams. Also, inefficient robots make the wrong trade and you end up losing your money.

So, if you’re considering buying a robot and you’re not an expert, take heed: A robot is only as good as its designer!

If the designer is an expert in forex trading, he will program the robot efficiently with his winning strategies. He will be able to design an increasingly efficient robot so that it automatically makes profitable trades in the long run.

Another very important feature that these robots should have programmed into them are loss prevention systems. These will prevent you from losing any money. The robots may not make you have any gains but this will deter against you experiencing a loss.

A back test result will give you insight into the effectiveness of the robot as well. However, it is important to understand that a back test result showing the robot performs well does not ensure 100% in live trading the robot will do just as well.

Another key in knowing the robot will perform productively and earn as market conditions are ever changing is if they were made to trade with different strategies depending on different market conditions. This way when the market changes, the robot will be able to alter its approach when trading.

In conclusion, I must once again stress the importance of being careful when you buy yourself and automatic FX trading robot. It is very important that the robot you buy brings you profit over the years. If you have chosen the right type of robot you will certainly make huge profits over a period of time.

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Forex Trading

Global Forex Trading Know How

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Global forex trading has been taking off faster than ever with the way that the economy has turned. So many new people are turning to forex as an alternate source of income. It may take a few weeks or even a few months to learn it. Once you learn it, it is well worth while as it can be a very rewarding career.

From doing global forex trading for years, I found that there is a long learning curve to it. If there is ever ways to cut down on learning time it would help out substantially. It was not till after months and months of trading that I started to finally turn some consistent profits. I found that the key was to be persistent and don’t give up your trading. Having a bad trade day? Walk away, trying to chase the losses will end up making more.

When pursuing global forex trading as a career, be sure you have an idea of what you are getting your self into. Forex is a great market to make full time income from, but it still is a high risk market. One can become successful as long as they keep in mind that there is a risk in every trade and caution is needed.

Global forex trading is one of the best paths of career choice I have taken in life. Nothing can be more satisfying than working for your self. There is one thing that I know now that I wish I knew when I started out in forex. This one method was shown to me by a fellow trader. Incorporating this one method into my trading ended up doubling my profits in the first month! The cost of the product was nothing since it paid for itself in the first 24 hours!

If you wonder how global forex trading is constantly dominate by these big traders, wonder no more. This one method that I discovered has yielded the highest profits I have ever experienced or seen! They tried to keep this hidden for so long, it is about time that people hear about it. This method has generated pure profits since the day it was incorporated into my trading!

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Forex Trading

Backtesting Explained (Part II)

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The first was doing automated Backtesting. Automated Backtesting is easy. The second method of Backtesting is performed manually and visually by the trader. The trader would take the historical data and scroll back in time on a chart and manually apply the trading strategy as if it was in a real time environment.

One of the major drawbacks with manual Backtesting is hindsight. How to eliminate the hindsight factor while doing manual Backtesting? The trader would advance the chart bar by bar in order to refrain from seeing price action subsequent to the trade at hand. This eliminates trading in hindsight that is detrimental to an objective backtest.

Manual Backtesting is complicated and difficult. It requires a lot of patience on part of the trader. The major disadvantage of Backtesting as compared to automated testing is the significant potential for human error in executing simulated trades and recording performance results.

Emotions are your enemy in trading. When you do manual Backtesting, these emotions can cause problems for your Backtesting results. The normal range of human emotions and biases that often interfere with actual trading can be a detrimental factor in achieving objective backtest results. Furthermore, it takes a great deal of work and discipline to simulate trades manually over a large data set without straying from the strict rules of the trading strategy.

These were some real disadvantages of manual Backtesting. However, this provides valuable trading experience although simulated but still a valuable trading experience that no automated backtest could possibly provide. Backtesting manually can provide the trader with the real feel for actually trading the strategy.

Backtesting can save traders a great deal of time and money that might otherwise had been wasted on trading unprofitable strategies. Backtesting whether done manually or automatically can be one of the most important elements of building a solid trading strategy.

Any mechanical trading system can be backtested. This leads us to the important question of autotrading. Autotrading is the latest fad especially in forex where the number of major currency pairs is only six and this makes programming autotrading easy. These autotrading systems are popularly known as Expert Advisors or Forex Robots.

The US Stock Market has got more than 50,000 stocks listed with them as compared to the forex market where there are not more than six major currency pairs. This makes programming a stock trading robot a bit complicated. However, during the past decade major breakthrough in computer programming has been made.

An autotrading system needs to be thoroughly tested before being put to live test. The only way to do this is through Backtesting. Backtesting is one of the most important components of testing an autotrading system. Big institutions like banks, corporations and hedge funds have always been taking benefit of these autotrading systems.

What type of trading strategies can be backtested and autotraded? These types of strategies are primarily technical in nature, and they must necessarily have rules and criteria that are unambiguous. Backtesting and autotrading are two important components of implementing trading strategies that generally do not rely upon the trader’s judgments or discretion.

Backtesting gives you the benefit of testing your trading system on a large historical dataset. Backtesting allows the trader to determine if a given strategy would have been profitable using past price data, which is an indication of how it might potentially perform in the future. In contrast, autotrading actually executes real trades automatically according to a pre – programmed set of instructions that sets trade entries, stop losses, and profit limits.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This Cash Printing Forex Signal Service From Heaven! First practice on your Forex Demo Account! This and other unique content ‘forex’ articles are available with free reprint rights.