What Makes Forex Trading So Appealing?

Forex trading is now quite an acceptable occupation for private individuals. It used to be only available to top financial institutions, but the internet has enabled everyone, even people with a low starting capital, to trade the forex markets. So what makes forex trading so attractive?

Well the most obvious attraction is the earning potential. The amount of money you can make from forex trading is unlimited. The sky really is the limit. If you have a consistently profitable strategy, then you can use leverage to multiply your earnings. For example, if a forex broker offers 1:100 leverage, this means you can trade a $100,000 position with just $1000 and a $10,000 position with just $100.

This means that if you are successful your earnings will grow rapidly. Compare this with traditional share trading where if you wanted to buy $100,000 worth of shares, then you would have to have $100,000 in capital.

Another huge draw is the fact that the forex markets are open 24 hours a day during the week. So you can therefore trade during the hours that suit you. Plus there's the fact that liquidity is always high as currencies are traded in countries all around the world, which means that you will generally not have any trouble getting a large position filled at any time of the day.

Another advantage of forex trading is that it is very easy to open an account with a broker and start trading shortly afterwards. There are many top forex brokers nowadays and a lot of them have excellent trading platforms as well as top of the range charting software that you can use to make your trading decisions.

Charts are one of the key tools for any trader as they are invaluable in helping you to find possible trades. They are useful when trading any financial instrument, but they are particularly useful when trading forex because the price, particularly of the major currency pairs, generally conforms extremely well to technical analysis.

So overall there any many reasons why forex trading is becoming so popular. Of course it's very easy to start trading forex, but it's a lot harder to actually make money consistently from forex trading. This is why I recommend starting off by using a free demo account as this will enable you to become familiar with trading, without risking any of your own money. There is a steep learning curve and it's always best to come up with some form of trading system before trading for real.

James Woolley runs a forex blog where you will find free forex tips and strategies and a review of Zulu Trade, the revolutionary forex signals service.

Becoming A Top Forex Trader - 3 Shortcuts To Success

Forex trading is extremely popular nowadays with many people being attracted by the huge sums of money that can be made, but most successful forex traders are only profitable because they've gone through a long and steep learning curve. There are, however, ways in which you can become a successful forex trader a lot quicker.

The first way is by subscribing to some kind of forex signals service. It should be noted that the vast majority of these subscription services are a big waste of time where you will nearly always lose money in the long run. However, there are a few good signal providers out there. The best ones are run by professional traders who actually trade their own signals.

So how does joining one of these top forex signals companies help you become a better trader?

Well apart from blindly following the service provider's signals, you can often learn an awful lot about successful trading by just watching and interacting with the pro trader who is creating the signals. Many of these premium signal providers will have live chat rooms where you can not only interact with the pro trader and ask them any questions, but also chat and exchange ideas with the other traders in the chat room.

The other way you can become a successful forex trader a lot quicker is by following an already successful forex trading system. So in other words rather than spending hours on end poring over charts looking to devise your own profitable system, why not use a system that's already out there and producing profits?

You can find a lot of successful trading systems just by visiting some of the top forex forums. Many top traders are prepared to share their successful systems because not only does it boost their ego, but it makes no difference to their bottom line how many other traders are trading their system as well.

Finally if you really want to become successful, then my best advice would be to find a mentor, ie an experienced trader, who has been profitable for several years, who can teach you how to trade successfully. Of course not everyone is lucky enough to know a successful trader in real-life but you can always search around online, even if it's just on forex forums, for successful traders. Then you can approach them for advice and offer to pay them for some one-on-one coaching if necessary.

So to sum up, if you want to become a consistently profitable forex trader, you can either go it alone and try and find your own profitable system, or you can use other traders to help you to become successful. So, for instance, you can use an existing forex trading system that's currently being used by other traders or you can gain advice either from a top forex signal provider who trades their own signals or an experienced trader who can mentor you and teach you how to trade.

Click here to read a review of Zulu Trade, the revolutionary forex signals service, and to discover why Zulu Trade is arguably the best forex signals service.

The Major Pitfalls Of Backtesting Technical Indicators

Backtesting technical indicators and viewing historical charts of currencies or stocks, for example, can provide useful information about whether a technical indicator or combination of indicators can be relied upon to help make profitable trading decisions.

However in my years of experience as a forex trader and having spent hours on end poring over historical charts to see how effective a particular indicator or system is, there is one thing I've learnt and that's that historical data can very often be misleading.

Often you will find that the latest technical indicator that you're testing out has proven to be extremely effective at predicting forthcoming price moves based on historical charts, but when you come to trade this indicator in real time the results are not as profitable as it would seem from your past analysis.

This is because there are certain indicators that repaint data in real time that doesn't necessarily show up in historical charts. They may change or give a clear signal during a particular candle period, but after the candle or bar is closed, there is no evidence that such a signal ever took place.

This is why real time trading is so much harder than it would seem from analysing price charts from the past.

An example of such an indicator is any of the moving averages. Let's take the EMA (Exponential Moving Average) as an example.

Often you will see a shorter term EMA cross a longer term EMA in real time, which is very often a strong signal, but if the price suddenly reverses then the shorter term EMA will also reverse and so a crossover may not happen at all.

Therefore when the current candle closes it will appear as if a crossover never actually happened even though in real time it did briefly and you could have made a trading decision based on this crossover. So this is an example of how historical data can be misleading and doesn't always tell the whole story.

Similarly there are are a number of other repainting indicators which can also change or reverse in real time, but which don't necessarily indicate this when viewed later on on a historical chart after the candle is closed.

So overall you have to be very careful when viewing past data because often the chart will tell a different story after the candle or bar has closed than what actually happened when you were trading live. If historical patterns and trends played out exactly in real time as they appeared to do in the past, with no misleading or false signals, then we would all be extremely wealthy.

Click here to read James Woolley's FXcast review, his Forex Trading Machine review and all the latest tips and strategies related to forex currency trading.

Forex Day Trading 101 - Important Facts for Novice Traders

This article is for novice traders and we are going to look at 3 facts which are all you need to know to decide whether day trading is right for you. So let's continue and review our forex trading 101 continues below...

Fact 1

All Short Term Volatility is Random

There is no order to short term volatility and prices can and do go anywhere in short time periods - Why?

Quite simply there are huge numbers of traders all with different levels of skills, systems and motivations for trading and you can tell what this mass diverse group of people will do in short periods of time - it's laughable that traders think you can measure human psychology of millions in just a few hours but they do and they lose for believing it.

Fact 2

Random Volatility = No Odds on Your Side

Forget the far out investment crowd who believe there scientific order and you can predict forex prices you can't ( if you could there would be no market as we would all know the answer in advance!), so those systems who tell you can make a regular income guaranteed are totally wrong. Forex trading is an odds game and to win you must be able to get the odds on your side. If volatility is random, you can't get the odds on your side and will lose - period.

Fact 3

Day Trading Breaks a Fundamental Rule of Trading

This is of course run your profits to cover your inevitable losses.

In forex day trading stops are close and losses are small and because you can get the odds on your side, you have a lot of them. Of course sometimes the forex day trader ends up with a profit when he's lucky - what does the trader do? Run it? Not a chance he cuts it!

It's pretty obvious that you would have to have luck constantly on your side to win and of course luck doesn't last forever. Eventually you have small losses and lots of them and the occasional small profit which leads to a decline and final wipe out of equity.

What about all the track records that claim to make money you may ask?

Well they all have the disclaimer / warning repeated below or a similar one and they mean nothing, as there just saying the track record has been made up and simulated on paper in hypothetical trading, read it carefully:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

You will NEVER see a day trading system sold online with a long term audited track record of gains - Why? If you have read this article you will already know the answer it doesn't work.

If you want to win you need to trade the odds and that means trading longer term.

So instead of day trading make longer term trading part of your forex education and you could enjoy currency trading success.

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Beginner Forex Trading - What Every Beginner Should Know About Currency Trading

Forex trading is a very appealing way to make money online. Trillions of dollars exchange hands every day, and entire fortunes are made and lost literally overnight.
Part of the attractiveness of the Forex market is the ability for retail traders to trade on margin. Margin trading essentially involves the ability to trade a large sum of currency using only a fraction of your own money.

For example, when trading on a margin of 1:100, you can control $10,000 worth of currency using only $100 of your own money. This is what lures many amateur traders to take part in this multi-trillion dollar market - the potential to make a lot of money, by risking only a little of your own.

Understanding The Risks Of Margin Trading

Although margin trading is indeed a great way to make big bucks, beginner traders would do well do remember that it's actually a double-edged sword - it's just as easy to lose money as it is to win. So even though one can make potentially $300 in an hour, it's also equally likely for that person to lose the same amount within an hour (or even in a shorter time period!).

There Is No Central Governing Authority

The next thing beginner traders should know is that there is no official governing authority in the Forex trading industry. What this means is that unlike other financial trading exchanges where there is centralized control (such as the SEC for the stock market), the currency exchange market is not regulated by any organization at all.

This poses an extra risk for retail traders as it leaves the potential for scam ‘brokers' to set up shop, take your money and basically run away with it.

That's why retail traders will have to be extra careful when choosing a broker to work with. Where possible, do try to find reputable brokers such as big banks or other well-established trading houses.

You definitely wouldn't want to risk having your money cheated by scammers who are looking to make a quick buck at your expense.

Harold Hsu is currently giving away a free 26-page report on how to trade Forex profitably, and you can get it now at http://www.ForexSystemProfits.com. Harold is the owner of http://www.ForexSystemProfits.com where he provides premium Forex trading information and resources.

The First Lesson I Learned As A Forex Trader

I started trading forex a few years ago now after having previously traded the FTSE 100 index and specific shares. Just as in these other markets there is one big lesson to be learned from trading forex and that is as follows.

If you want to become a successful forex trader you have to learn to cut your losses early and let your winning trades run for as long as possible.

When I first started out I used to make a lot of mistakes, but it was all part of the learning experience and I've come out of it a consistently profitable trader.

The biggest mistake I made initially was not having any stop losses at all, so any relatively small losses I incurred used to mount up and become big losses.

It's very easy to believe that you will ultimately be proved right and stick with a trade, which is what I did quite a lot initially, but this can be very expensive and to be honest I quickly learned that's it's best just to accept you were wrong, take a small loss, and move on to the next trade.

On the opposite side, when it comes to winners you should either have a set target price and profit you are looking to achieve and stick to it, or ideally you should let your profits run as long as possible.

Any target profit should be higher than the stop loss you are setting. For example, if your stop loss is 10 points away from the entry price, then your limit price should be more than 10 otherwise you will need a fairly high win ratio of 50% just to break even.

Make sure you stick to this target as it is very easy to see a profit and grab it before the price has reached your target price.

Another approach is to close part of your trade at the same number of points away from the entry price as the stop loss so you guarantee yourself a profit, and let the remaining portion run as long as possible to squeeze out as much profit as you can. You can move your stop loss to break even so this remaining portion left open doesn't turn into a loss, and the worst that can happen is you break even.

Alternatively you could just let your profits run as long as possible and use technical indicators to decide when a trade has run it's course. For example, if a trade goes into profit, you could move the stop loss to break even straight away and let it run.

All of these methods are used to some extent by all profitable traders, but the key lesson is to make full use of stop losses. You want to make your trading pot grow over time, and the best way of doing this is by cutting your losses early and letting your winners run. This way you don't need a high percentage of your trades to be winning ones, you just need a small percentage of winning trades which are allowed to accumulate.

James Woolley has been trading currencies for around five years and also runs a blog dedicated to offering free forex tips and strategies. Click on the following link for more information:

http://theforexarticles.com

Learn The No BS Method To Successfully Trading Forex - Part 2

In Part 1 of 'Learn The No B.S Method To Successfully Trading Forex' we discussed money management and how small daily targets will inevitably make you very wealthy.

Just to recap on this I am talking about 3-5 pips a day, I personally go for 3 pips and I'm done. Now you may laugh but I have little risk in the market and a $10,000 account would grow to $571,474 in 24 month with only 3 pips a day!

Getting consistent with extracting 3 pips a day take some practice, by consistent I mean you should not have a loss more than once a month. Trust me this is possible when your targets are so small.

I recommend trading the London open and it is crucial that you have a broker that allows scalping (any legitimate broker does) and has spreads of 1 pip or less, I pay 0.9 on the EURUSD at the moment.

Wait for the London open to get under way with a small trend forming on the 5 minute charts. Always keep an eye on the 1 hour charts for strong support/resistance areas. We do not want to be buying into resistance.

Once you have an high volume candle that has closed with the trend initiate the trade in that direction with a 20 pip stop. Keep a close eye on your profit/loss and never let the trade go against you by more than 6-8 pips. The 20 pip stop is a safety net only in case of emergency and you could not close the trade manually.

This is not the only way to trade the forex market and capture 3 pips a day, you may have your own strategy to achieve this however what is important to understand is you do not need a huge amount of pips to become wealthy, its all about consistency.

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Learn Forex Trading - Dealing With A Market That Is Always On The Move

(by Donald Saunders)

The foreign exchange market never stands still and, while it may move slowly at times, it is always on the move. In many ways this is one of the great benefits of Forex trading as it is this movement which provides the opportunity to profit from buying and selling global currencies, but it can also make it difficult to decide when to get into a trade, get out of a trade or simply stay out of the market altogether.

Perhaps the biggest problem with a market which is constantly presenting the trader with the opportunity to make a profit is that it plays on our natural sense of greed and this is a very real problem if you are not aware of the danger you face.

We all love to make a profit, but how much profit is acceptable? If you're in a trade and looking at a profit of $800 should you close out your position and take that profit or hang on in there for $1,000? You trade to make money and the more money the better so, when the market is moving in your favor it's only natural to want to ride the wave all the way to the beach. The problem however lies in knowing when you've hit the beach and not waiting until the undertow starts to drag you back out to sea again. Once you get caught up in the undertow it can prove to be very strong and drag you out again very quickly.

Many people enter Forex trading with a picture in their mind of just what they're going to do with all the money they make and that's no bad thing. It's extremely important to have a goal, and a plan to reach that goal, and to plant a visual picture in your mind as something concrete to aim for. However, the other side of this coin is that you may well be tempted to try to reach that goal faster than you had originally planned or to create a bigger and better goal as you go along, allowing your natural tendency towards greed creep in and begin to take control of your trading.

Another problem here is a simple failure to recognize that money does not drive the market.

Think about it for a moment. Whether you have $5,000 or $500,000 in your trading account is not going to make any difference at all to the way in which the market moves. Similarly, whether you have a $700 profit or a $700 loss in an open trading position isn't going to make the slightest difference as far as the market rising or falling is concerned.

The fact that you've done well in a trade and have made a profit of $700 doesn't mean that this is going to turn into an $800 or $900 profit if you wait a while longer. However, it's perfectly natural to find yourself caught up in your 'winning streak' and to convince yourself that there is more to come.

It's also perfectly normal to find that, having lost $700 in an open trade, your natural fear of losing is going to convince you that things will turn around if you just keep your nerve and hold on a little bit longer.

Setting yourself a goal and making a plan to reach that goal is essential, but your trading decisions need to be based not on your goal but on the market. Money should have nothing to do with whether you enter or exit a trade, or stay out of the market, and such decisions should be based solely on what your analysis and the numbers tell you.

ForexOnlineTradingSystem.info is the ideal place to learn Forex trading and provides information on a wide range of topics including currency exchange rates and the benefits of testing the water through mini Forex trading

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