For the past five years my sole source of income has been profits made from trading on the forex market. Over that time period, many people, perhaps somewhat envious of my ability to earn money from home without having to report to a boss, have asked me what it takes to trade for a living. How can one arrive at a point where one feels confident enough to leave ones regular employment, strike off on ones own with no guarantee of a regular paycheck, and put what might conceivably be ones entire savings up to that point at risk in the markets?
While I unfortunately cant actually give you confidence in your ability to make it on your own, nor the stomach to risk your hard earned savings, I can tell you the practical steps that I took to get where I am today. These steps do not include the obvious ¨learn of the existence of the forex market¨, as presumably you already know something about forex trading, or you wouldnt be reading this article.
Furthermore, while these steps have been applicable to trading the forex market in my case, one could easily apply the same principles to becoming a professional trader in the equities markets, derivative markets, etc.
Step 1) Start saving your money.
To trade professionally you need a bankroll, and one that is large enough to withstand the ups and downs that are a natural part of trading. For me, this was easy. I had been putting money aside ever since I started working. Those like me that have been raised to understand and appreciate the value of saving, will accomplish this quite naturally. However, if you are a habitual spender and are accustomed to living paycheck to paycheck without putting anything extra aside, be prepared to expend some serious effort curbing your habits and learning to save instead of spend. How much money will you need? Unfortunately I cant answer that specifically because it will depend on the trading strategy that you use, the amount of leverage you plan on trading with, and the amount of money that you need to take out in profits. You should count on having a bare minimum though, of a full six months salary saved up before beginning full time trading. One years salary would be still better. Keep in mind that the larger your bankroll, the more money you can earn without risking an unnecessarily large percentage of your bankroll.
Step 2) Get an education.
You cant start trading before you know something about the market you are trading in. This education does not have to be formal (as in University classes), and you do not have to understand economic forces as well as Alan Greenspan prior to getting started. You should, however, have a basic understanding of why the market that you are trading in exists, how buying and selling on that market works, and the strategy that you are going to employ to take your profits out of the market. There are a lot of totally free resources on the internet that are worth your time to read (and there are a lot of opinions and ideas that are NOT worth your time, but reading some of those that are not worthwhile is part of the process of developing discernment about what is and is not a good resource).
There are also some inexpensive trading courses on the internet that are useful. Part of the education process is coming up with a trading strategy that you are comfortable with, as well as a money management strategy to ensure the long term viability of the trading strategy. There are many good trading strategies out there, but regardless of which one you choose, you must understand that the traders that are successful cut their losses early and let their winning trades run. This can be somewhat more difficult than it sounds, but is really the key to making money trading.
Step 3) Sign up for a demo trading account and start practicing while you are not at your regular job (or, if you have free time and internet access at your job, WHILE you are at your regular job).
We list some good forex brokers at forex-rates, so if you are planning to trade currencies, be sure and sign up for a demo account with one of the listed brokers. In order to get a real feel for the trading strategy that you have chosen, you will have to do a lot of practice, so take your time with this step. Dont start trading with real money until you have an actual history of successful demo trading
Step 4) If you are making money trading on paper and are comfortable with your trading strategy, go ahead and get started trading for real on a part time basis. Don't include all of your savings as part of your trading bankroll yet. Start slowly and gain a comfort level. As your confidence builds, move money from your savings to increase the size of your bankroll.
Step 5) When you can estimate that your average gains from real trading (from step 4) are at a level where, if you were to trade full time using your current bankroll, you would be making profits that slightly exceed your current employment salary, you are ready to quit your job and trade full time. Remember, you want your trading profits to exceed your present salary. This will give you the opportunity to maintain your current financial level, but at the same time continue to increase your trading bankroll, which will enable you to earn more and more money as the size of your available funds grows larger.
It is important to have patience with yourself at each of the steps mentioned. Maintain emotional equanimity and understand that fear and greed are a traders most dangerous nemesis. If you can keep these emotions under control and maintain the discipline established while following these steps, you can look forward to making it as a professional trader.
Samuel Garcia is a full time forex trader based in San Jose, Costa Rica. He considers that being a successful trader is 90% due to proper money management and emotional discipline, rather than the trading strategy employed. Visit www.forex-rates.biz
Showing posts with label day trading. Show all posts
Showing posts with label day trading. Show all posts
Saturday, 29 September 2007
Saturday, 18 August 2007
Day Trading Futures Contracts - How To Win
(by D.Bennett)
The successful futures day trader knows that trading is a form of betting. It is a numbers game based on probabilities. The trader’s task is to adopt a strategy with favourable odds and execute the strategy as perfectly as possible.
To be successful, the trader identifies one or more setups which signal high expectancy trades. The setups are most often related to some kind of chart pattern, or a signal given by one or more technical indicators. I look at some ideas for setups in other articles. For now it is sufficient to understand that a setup should be measurable. It is a clear, unambiguous signal to enter a trade, and each trade should be managed in exactly the same way so that the results of the trade can be accurately determined in a theoretical test situation.
The expectancy of a trade cannot be estimated without testing the strategy. You test by either trying out the strategy on historical data (back-testing), or paper trading the strategy for a period of time. In either case you are unlikely to get a decent estimate unless the sample includes a minimum of 20 trades, preferably more.
You should observe the results for the trades in your test sample and calculate the Probability of Winning - P(W), the Probability of Losing - P(L), the Average Win in dollars - A(W), and the Average Loss in dollars - A(L). Use the following formula to estimate the Expectancy for your strategy:
E = P(W) x A(W) - P(L) x A(L)
For example, you test 50 trades resulting in 30 wins (60%) and 20 losses (40%), with an average win of $300 and average loss of $200.
E = (60% x 300) - (40% x 200) = 180 - 80 = $100
This means that in the long run you expect to make $100 per trade using this strategy.
Many people examine historical data to determine a good trading strategy. After this, you cannot use the same data to estimate Expectancy, because the strategy is optimised for this particular set of data. To estimate Expectancy, back-test data from a different period or run an independent paper trading trial. Ignoring this principle results in curve fitting and you delude yourself into thinking your strategy is better than it really is.
No strategy can be profitable unless it has a positive expectation, but higher expectation does not necessarily lead to higher profit. You must also consider the opportunities to trade generated by your strategy. A strategy averaging 10 trades per day with an Expectancy of $50/trade is better than a strategy providing 2 trades per year with an Expectancy of $1,000/trade.
You can see from the formula that Expectancy is a function of both the Probability of Winning and the Average Win to Average Loss ratio. If you only win 1 in 4 trades, but the average win is $400 versus an average loss of $80.
E = (1/4 x 400) - (3/4 x 80) = 100 - 60 = 40
This is a situation where a strategy with a low probability of winning has a positive Expectancy because wins are much bigger than losses. In contrast, suppose you win 8 out of 10 trades with an average win of $80 and an average loss of $300:
E = (0.8 x 80) - (0.2 x 300) = 56 - 60 = -4
This strategy wins much more often than it loses, but has a negative Expectancy because losses are substantially bigger than wins.
There is no right answer for the balance of these parameters, other than that the Expectancy for your trading strategy must be positive. Often, improving your average win to average loss ratio will decrease the probability of winning, and vice-versa.
However, for a small trader there is an advantage in gaining positive Expectancy by having a high probability of winning. Sticking to a strategy that generates a lot of winners is less strain on the trader!
A positive Expectancy is no guarantee against a run of losses. Indeed, with most strategies it is almost certain that there will be significant strings of losses at some time. However, a positive Expectancy should lead to profits in the long run, providing the trader uses proper money management and can survive losing sequences.
In summary, the trader needs to specify clearly defined strategies which can be traded in a mechanical manner whenever their setup occurs. The strategy should be tested (avoiding the trap of curve fitting) to ensure that it has a positive Expectancy. Thereafter, the trader should execute the strategy at every possible opportunity.
That is how to win.
David Bennett trades US commodity futures from his home on the Gold Coast in Australia. He provides coaching and mentoring services for people wanting to start trading for themselves. Visit http://www.12oclocktrades.com to read more futures trading articles.
The successful futures day trader knows that trading is a form of betting. It is a numbers game based on probabilities. The trader’s task is to adopt a strategy with favourable odds and execute the strategy as perfectly as possible.
To be successful, the trader identifies one or more setups which signal high expectancy trades. The setups are most often related to some kind of chart pattern, or a signal given by one or more technical indicators. I look at some ideas for setups in other articles. For now it is sufficient to understand that a setup should be measurable. It is a clear, unambiguous signal to enter a trade, and each trade should be managed in exactly the same way so that the results of the trade can be accurately determined in a theoretical test situation.
The expectancy of a trade cannot be estimated without testing the strategy. You test by either trying out the strategy on historical data (back-testing), or paper trading the strategy for a period of time. In either case you are unlikely to get a decent estimate unless the sample includes a minimum of 20 trades, preferably more.
You should observe the results for the trades in your test sample and calculate the Probability of Winning - P(W), the Probability of Losing - P(L), the Average Win in dollars - A(W), and the Average Loss in dollars - A(L). Use the following formula to estimate the Expectancy for your strategy:
E = P(W) x A(W) - P(L) x A(L)
For example, you test 50 trades resulting in 30 wins (60%) and 20 losses (40%), with an average win of $300 and average loss of $200.
E = (60% x 300) - (40% x 200) = 180 - 80 = $100
This means that in the long run you expect to make $100 per trade using this strategy.
Many people examine historical data to determine a good trading strategy. After this, you cannot use the same data to estimate Expectancy, because the strategy is optimised for this particular set of data. To estimate Expectancy, back-test data from a different period or run an independent paper trading trial. Ignoring this principle results in curve fitting and you delude yourself into thinking your strategy is better than it really is.
No strategy can be profitable unless it has a positive expectation, but higher expectation does not necessarily lead to higher profit. You must also consider the opportunities to trade generated by your strategy. A strategy averaging 10 trades per day with an Expectancy of $50/trade is better than a strategy providing 2 trades per year with an Expectancy of $1,000/trade.
You can see from the formula that Expectancy is a function of both the Probability of Winning and the Average Win to Average Loss ratio. If you only win 1 in 4 trades, but the average win is $400 versus an average loss of $80.
E = (1/4 x 400) - (3/4 x 80) = 100 - 60 = 40
This is a situation where a strategy with a low probability of winning has a positive Expectancy because wins are much bigger than losses. In contrast, suppose you win 8 out of 10 trades with an average win of $80 and an average loss of $300:
E = (0.8 x 80) - (0.2 x 300) = 56 - 60 = -4
This strategy wins much more often than it loses, but has a negative Expectancy because losses are substantially bigger than wins.
There is no right answer for the balance of these parameters, other than that the Expectancy for your trading strategy must be positive. Often, improving your average win to average loss ratio will decrease the probability of winning, and vice-versa.
However, for a small trader there is an advantage in gaining positive Expectancy by having a high probability of winning. Sticking to a strategy that generates a lot of winners is less strain on the trader!
A positive Expectancy is no guarantee against a run of losses. Indeed, with most strategies it is almost certain that there will be significant strings of losses at some time. However, a positive Expectancy should lead to profits in the long run, providing the trader uses proper money management and can survive losing sequences.
In summary, the trader needs to specify clearly defined strategies which can be traded in a mechanical manner whenever their setup occurs. The strategy should be tested (avoiding the trap of curve fitting) to ensure that it has a positive Expectancy. Thereafter, the trader should execute the strategy at every possible opportunity.
That is how to win.
David Bennett trades US commodity futures from his home on the Gold Coast in Australia. He provides coaching and mentoring services for people wanting to start trading for themselves. Visit http://www.12oclocktrades.com to read more futures trading articles.
Tuesday, 14 August 2007
Forex Day Trading - A 100% Way To Lose All Your Money Quickly
(by Kelly Price)
Having been a forex trader for 25 years it amuses me when I see writers defend day trading. They say it really can make money! - Of course they have no track record to back it up just empty words. Fact is you are guaranteed to lose in day trading for one simple reason:
All Movements in Short Time Frames Are Random
Trillions of dollars trade hands each day and million of trader’s trade, all with different objectives and opinions and to say that you can predict what they do in a few hours or a day, is ridiculous. You can’t.
Volatility takes prices anywhere in a day and support and resistance levels are meaningless, so you would have the same success rate flipping a coin.
It’s absolutely impossible to get the odds on your side – PERIOD
This is of course why you NEVER see any of the vendors selling these systems give you a real time track record – Why?
Because they don’t dare trade it!
They would rather write some enticing copy and appeal to the greed and naivety of traders and make their money selling you the system – they win you lose – period.
But I have seen a track record you may say and yes will have, but it’s NOT real.
If you check the disclaimer on it you will see there all hypothetical!
What does that mean?
It means done in hindsight knowing the closing prices!
Now who can’t do that it’s not exactly hard.
If we all knew tomorrows price today we would all be millionaires but we don’t – and neither do we know what will happen tomorrow, so there not worth the paper their written on.
Day trading is a good story but the logic doesn’t add up and the biggest lie about day trading is you can make money at it longer term.
If you could you would see a track record or the vendor would shut up and trade it himself and not need your few hundred dollars.
If you want to win
Appreciate that trading is an odds game and to trade the odds you need to trade over longer periods, where the data is valid and you can have a chance of getting the odds on your side.
Finally
Don’t day trade, get real and trade with the odds on your side.
GRAB 3 X FREE TRADER PDF'S NEWSLETTERS AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Having been a forex trader for 25 years it amuses me when I see writers defend day trading. They say it really can make money! - Of course they have no track record to back it up just empty words. Fact is you are guaranteed to lose in day trading for one simple reason:
All Movements in Short Time Frames Are Random
Trillions of dollars trade hands each day and million of trader’s trade, all with different objectives and opinions and to say that you can predict what they do in a few hours or a day, is ridiculous. You can’t.
Volatility takes prices anywhere in a day and support and resistance levels are meaningless, so you would have the same success rate flipping a coin.
It’s absolutely impossible to get the odds on your side – PERIOD
This is of course why you NEVER see any of the vendors selling these systems give you a real time track record – Why?
Because they don’t dare trade it!
They would rather write some enticing copy and appeal to the greed and naivety of traders and make their money selling you the system – they win you lose – period.
But I have seen a track record you may say and yes will have, but it’s NOT real.
If you check the disclaimer on it you will see there all hypothetical!
What does that mean?
It means done in hindsight knowing the closing prices!
Now who can’t do that it’s not exactly hard.
If we all knew tomorrows price today we would all be millionaires but we don’t – and neither do we know what will happen tomorrow, so there not worth the paper their written on.
Day trading is a good story but the logic doesn’t add up and the biggest lie about day trading is you can make money at it longer term.
If you could you would see a track record or the vendor would shut up and trade it himself and not need your few hundred dollars.
If you want to win
Appreciate that trading is an odds game and to trade the odds you need to trade over longer periods, where the data is valid and you can have a chance of getting the odds on your side.
Finally
Don’t day trade, get real and trade with the odds on your side.
GRAB 3 X FREE TRADER PDF'S NEWSLETTERS AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Friday, 10 August 2007
Forex Trading - If 95% Of Traders Lose Then To Win You Need To Do This
(by Kelly Price)
Do the opposite of what they do! This may sound obvious but most traders like to follow accepted market wisdom and trade in the direction of the crowd. If you want to win at forex trading you need to step away from the crowd – and that’s what this article is all about.
In terms of following accepted market wisdom like day trading, buying low – selling high and predicting the market, these are 3 examples of how to lose when devising a forex trading strategy and if you don’t know why read our other articles!
Here we want to focus on taking trades that the majority take and see their equity slaughtered and how you can trade in the opposite direction at the right time.
FACT:
If you buy into extreme bear markets and sell into extreme bull markets, as greed and fear blinds the participants to the reality – you will win.
Not only that - but you will trade with low risk and high reward.
It’s a fact that humans push both bull and bear markets too far and if you can spot these extremes and hit the turn you will rack up fantastic gains with low risk.
But How Do You Spot Them?
There are of course forex charts, where you can use technical analysis to look for price spikes - but this does NOT tell you how bullish or bearish the participants are - it just shows you price spikes and trends.
What you need are some sentiment indicators that show how much emotions are moving prices and when the turn is coming.
The best one of all is the CFTC Net Trader Positions and their FREE!
Not many traders use them, but this bi-weekly report is essential for all forex traders.
They show the breakdown of the futures forex markets - but these positions are just as useful when trading cash.
What do they do?
Quite simply they break the position into three main groups:
- Hedgers: These guys are the real pros and are simply hedging a cash position. There not trying to make money so are not influenced by greed or fear.
- Large Speculators: These are large funds who are mostly trend followers
- Small speculators: Everyone else
So why is the above breakdown so relevant?
Quite simply, you can look for extremes either bullish or bearish in speculative positions – with commercials holding and opposite position and moving the other way.
History shows us that the commercials are the right way around at EVERY major top or bottom and the speculators get slaughtered as the market turns.
Be careful!
You have to look for extremes. Once you see speculators heavily net long and commercials moving to the short side – a turn is coming - Prices are to far from fair value and its time to look for a position.
Watching these positions and spotting extremes in sentiment will allow you to:
Trade against the majority when everyone else thinks you are crazy!
You will have the confidence to do this, as the commercials are right about market extremes time after time and you can then look to enter your trading signals, knowing your trading with the smart money.
A Word of Caution
Net Traders positions alert you to the fact a big contrary trade is coming against the herd – but they should not be used on their own – they are not a timing indicator.
You need to use your forex charts and your normal indicators to enter a trade when price momentum turns in your favour.
Trade With the Pro’s
Want to know what the real pros are doing?
Then that’s what following the commercials via Net Trader Positions gives you.
If you want to trade with the smart money and catch the big profits from the big moves - trade with the commercials for bigger forex profits!
GRAB 3 X FREE TRADER & FREE TRADER PROFITS NEWSLETTER
More on becoming a profitable trader some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Do the opposite of what they do! This may sound obvious but most traders like to follow accepted market wisdom and trade in the direction of the crowd. If you want to win at forex trading you need to step away from the crowd – and that’s what this article is all about.
In terms of following accepted market wisdom like day trading, buying low – selling high and predicting the market, these are 3 examples of how to lose when devising a forex trading strategy and if you don’t know why read our other articles!
Here we want to focus on taking trades that the majority take and see their equity slaughtered and how you can trade in the opposite direction at the right time.
FACT:
If you buy into extreme bear markets and sell into extreme bull markets, as greed and fear blinds the participants to the reality – you will win.
Not only that - but you will trade with low risk and high reward.
It’s a fact that humans push both bull and bear markets too far and if you can spot these extremes and hit the turn you will rack up fantastic gains with low risk.
But How Do You Spot Them?
There are of course forex charts, where you can use technical analysis to look for price spikes - but this does NOT tell you how bullish or bearish the participants are - it just shows you price spikes and trends.
What you need are some sentiment indicators that show how much emotions are moving prices and when the turn is coming.
The best one of all is the CFTC Net Trader Positions and their FREE!
Not many traders use them, but this bi-weekly report is essential for all forex traders.
They show the breakdown of the futures forex markets - but these positions are just as useful when trading cash.
What do they do?
Quite simply they break the position into three main groups:
- Hedgers: These guys are the real pros and are simply hedging a cash position. There not trying to make money so are not influenced by greed or fear.
- Large Speculators: These are large funds who are mostly trend followers
- Small speculators: Everyone else
So why is the above breakdown so relevant?
Quite simply, you can look for extremes either bullish or bearish in speculative positions – with commercials holding and opposite position and moving the other way.
History shows us that the commercials are the right way around at EVERY major top or bottom and the speculators get slaughtered as the market turns.
Be careful!
You have to look for extremes. Once you see speculators heavily net long and commercials moving to the short side – a turn is coming - Prices are to far from fair value and its time to look for a position.
Watching these positions and spotting extremes in sentiment will allow you to:
Trade against the majority when everyone else thinks you are crazy!
You will have the confidence to do this, as the commercials are right about market extremes time after time and you can then look to enter your trading signals, knowing your trading with the smart money.
A Word of Caution
Net Traders positions alert you to the fact a big contrary trade is coming against the herd – but they should not be used on their own – they are not a timing indicator.
You need to use your forex charts and your normal indicators to enter a trade when price momentum turns in your favour.
Trade With the Pro’s
Want to know what the real pros are doing?
Then that’s what following the commercials via Net Trader Positions gives you.
If you want to trade with the smart money and catch the big profits from the big moves - trade with the commercials for bigger forex profits!
GRAB 3 X FREE TRADER & FREE TRADER PROFITS NEWSLETTER
More on becoming a profitable trader some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
Friday, 4 May 2007
FOREX Day Trading - Brokers Love Day Traders For One Reason
(by Kelly Price)
FOREX Day traders are loved by brokers these are the traders they simply want more than any other type of trader.
FOREX day traders are wary of brokers, because they think they pick their stops off and that’s why they love them – but the real reason is:
Day traders are guaranteed to lose their money without any help from a broker. I used to work in the back office of a broker and we factored them in as losing straight away and a big fat profit for us.
So here are the reasons we loved them and other brokers do to:
1. Day trading by its very nature doesn’t work
Trying to trade in short time spans of a few hours or a day and to try and measure where prices are going is ridiculous.
All short term volatility is random and prices can and do, go anywhere.
We traded several thousand day traders and not one made money, they all lost.
The logic FOREX day trading is based upon is totally flawed.
Try this simple test:
Ask any vendor selling a system on the net and ask for a real time track record and see if you get one – You won’t.
Many of them are simply writers or failed brokers.
They make up track records sell them and then do a deal with a broker for a kick back commission and believe me the commission is good – we paid out tens of thousands every month!
2 Great commission
Day trading is the best commission to equity you can get and for a broker that’s great.
Lots of trades, eroding account equity to zero and paying commission every day.
Much better than a trader coming in and blowing his equity in a couple of trades.
Market makers are equally happy.
As they want the traders deposit lost and on their book.
They are trading against the client and don’t need to worry it will soon be in the bank. Furthermore, as day traders never make any big profits (running profits is totally alien to them)
The risk of carrying a day trader on your own book as a broker is low.
DO BROKERS HUNT STOPS?
The answer is no.
Day traders believe this, but the real reason is they set their stops to close.
Support and resistance are meaningless in day sessions and that’s why stops get hit all the time.
Its not the brokers fault, it’s the day traders for being stupid and placing his stops in meaningless time frames where volatility is random.
There you have it.
The reason brokers love day traders is their great money earners for the house and guaranteed to lose as well, which is perfect for market makers.
GRAB 3 X FREE TRADER PDF'S AND MUCH MORE!
On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html
---------------------------------------------------------------------------------
If you're looking for a forex trading platform, I can highly recommend Easy Forex. They offer competitive spreads, guaranteed stop-losses if required, live training and support, and you can start trading with as little as $25.
Saturday, 28 April 2007
Forex Day Trading- Two Step Trend Analysis
(by Michael A Jones)
If you approach forex day trading by just looking at the 5 minute and 15 minute charts there is a strong possibility your account will evaporate sooner rather than later.
In order to get a feel for the market and an indication of the current trend it is necessary to do an analysis by looking at multiple charts on different time frames starting with higher level charts first.
Rather than having the charts cluttered with numerous indicators and signals which can cause signal paralysis, I recommend just two:
1. MACD (with default settings)
2. 200 EMA (Exponential Moving Average)
Now examine your charts using a top down approach:
Daily
4 Hour
1 Hour
As you check each chart take note of these two factors:
Has MACD crossed down or up and is it above or below the water line?
Is price above or below the 200 EMA?
While it is not crucial to have them all lined up on these three time frames for successful forex day trading, if you want to be a cautious trader and go for high probability trades then certainly MACD on the 4 hour chart and 1 hour chart should be in agreement as also should price in relation to the 200 EMA.
The daily chart can be useful in seeing the larger picture and for noting key levels of support and resistance. They stand out on a daily chart so if price is within 100 pips of a crucial level of support or resistance as seen on the daily chart, make a note of the figure.
Then scale down to the lower time frames and see if this level matches with other indicators such as pivot points or Fibonacci levels.
Once you have done this groundwork, NOW you can look at the 15 minute and 5 minute charts for a suitable entry point.
Remember, for successful Forex day trading you need to adhere to the No. 1 commandment: Buy The Dips and Sell the Rallies!
So avoid chasing the market and going with the flow. Instead, wait for price to come the level you want, set your entry order, and let price pull you into the trade.
The Danger With Lower Time Frames
Just concentrating on the 15 minute and 5 minute charts will not give you the bigger picture. You could see what looks like a perfectly good trade and set your stops and limits only to find you get blown out within a few minutes.
By looking at the higher time frame you would probably have seen you were close to a key support or resistance level and either not gone into the trade or adjusted your stops and limits accordingly.
For the novice, Forex day trading can involve a huge learning curve. Include this simple daily top down analysis approach to your trading and protect yourself against making trades you wish you didn't!
Michael A. Jones is a writer, webmaster and Forex trader.
Do you want to make consistent profits and take your trading to the next level?
http://www.vitalstop.com/Forex/forex-course.html
For a purely mechanical strategy for the EUR/USD pair click here:
http://www.vitalstop.com/Forex/Advisor/forex-trading-machine.htm
For a collection of invaluable free Forex tools:
http://www.vitalstop.com/Forex/tools.html
--------------------------------------------------------------------------
If you're looking for a forex trading platform, I can highly recommend Easy Forex. They offer competitive spreads, guaranteed stop-losses if required, live training and support, and you can start trading with as little as $25.
Saturday, 21 April 2007
FOREX Day Trading - A Great Way To Wipe Out Your Equity Quickly
(by Sacha Tarkovsky)
There is no better way to wipe out your equity quickly than FOREX day trading.
I read all the time about how great FOREX day trading is, but never seen anyone able to give me a real time long term track record.
The reason of course is:
FOREX day trading is based upon logic that is simply ridiculous and dooms it to failure.
So why do day traders lose?
Consider this:
Day traders think they can predict movements in short time frames, but all short term moves are random and volatility can (and does) take prices anywhere.
If all the moves in a day are random you have no chance of making money as support and resistance points are meaningless.
Trillions of dollars are traded daily by millions of participants and to try and predict where prices will go in short time frames is laughable.
Support and resistance levels are NOT valid
Day traders try and work off support and resistance levels and continually get stopped out as volatility can and does take prices anywhere.
So you have a high probability of being stopped out and day trader’s pile up a huge number of small losses.
Occasionally they get a winning trade (more by luck than judgement) but of course they snatch any profit they can get as running profits is totally alien to day traders.
The result is a wipe out of equity and it normally happens quickly.
What about all the day trading systems promising gains?
Most of these are sold by people who have never traded and rely on enticing copy to sell their systems, or failed brokers looking to appeal to the greed and ignorance of buyers.
These day trading systems NEVER come with real time track records they come with hypothetical track records.
If you don’t know a hypothetical track record is one those us done in hindsight knowing the closing prices!
Well that’s hard; my seven year old daughter could do that.
The fact is day trading is simply a great way to lose money quickly and it is surprising how many traders fall into the trap of trying to win at it
Don’t make the same mistake, unless you want to lose your account equity quickly.
FREE ESSENTIAL TRADER PDF'S AND MUCH MORE
On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html
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If you're looking for a forex trading platform, I can highly recommend Easy Forex. They offer competitive spreads, guaranteed stop-losses if required, live training and support, and you can start trading with as little as $25.
Thursday, 5 April 2007
Day Trading – Why You Are Guaranteed To Lose
(by Sacha Tarkovsky)
Day trading is popular and you will find more vendors selling day trading systems than any other method.
People buy them yet they don't work and guarantee you will lose longer term. Why?
Let’s find out.
Successful trading is all about trading the odds and you must have data that’s reliable that enables you to do this.
In day trading you simply don’t have any reliable data to work with and therefore cannot get the odds in your favor and may as well flip a coin.
Trillions of dollars are traded daily by countless millions of traders and daily volatility is random.
Therefore, using support and resistance areas in a day session is useless.
The only people who take any notice of daily support and resistance levels are day traders and their small losing minority.
The net result is:
Day traders place stops behind meaningless levels and are then surprised when they get stopped out. Of course, even if their lucky enough to get a profit in day trading, they break one of the fundamental rules of investing:
Run your profits
Day traders are normally glad to scalp a few points or want to close out at the end of the day.
They therefore have huge amount of losing trades and their winners are tiny ensuring that their account equity is wiped out quickly.
Still not convinced?
Then try this simple test:
Ask any day trader for a real time track record of profits over the longer term and you simply won’t get one.
Of course, they can produce hypothetical track records (but their done knowing the closing prices!) so they are no use at all.
People selling day trading systems make their money selling a good story and collecting money from greedy or in experienced traders, so they are guaranteed to make money while the trader loses.
Day trading sounds great in theory but although it looks low risk it is not.
You are working with data that is simply unreliable and all day traders eventually end up losing their money.
If you want to make money in online forex trading then avoid day trading.
FREE ESSENTIAL TRADER PDF'S AND MUCH MORE
On all aspects of becoming a profitable trader including features, downloads and some great FREE Trading PDF's visit our website at http://www.net-planet.org/index.html
------------------------------------------------------------------------------
If you're looking for a forex trading platform, I can highly recommend Easy Forex. They offer competitive spreads, guaranteed stop-losses if required, live training and support, and you can start trading with as little as $25.
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