Apr 28, 2019

What Are the Hidden Odds of Trading

What Are the Hidden Odds of Trading
Anyone who is vaguely familiar with gambling knows that the house has the odds in their favor. Do some people leave a casino with large winnings? Yes, but that's because they left before they lost it back to the casino. If they had won and then continued to play long enough it is a mathematical certainty that would lose all of it back to the house. I watched a program one time about a group of students from MIT that had developed a system to beat the odds in blackjack. The program stated they had won large amounts of money before they all were blacklisted from the casinos. The system they used involved waiting to place large bets only when the cards were in their favor.

This system works, it's called card counting and others have used it to win in blackjack also. By placing minimum bets on almost all the hands played they controlled their losses. When the cards left in the deck were in their favor they would place large bets and win most of the hands. During this streak of winning they would make up their losses and turn a profit. When a new stack of cards is brought out to the table they would leave and cash out because with the introduction of a new stack of cards the odds swing back in favor of the house.

If they had stayed for more hands they would have slowly chipped away at the winnings until it was gone. In trading the house doesn't exactly have odds but commissions and slippage amount to odds against you. If you are new to trading you are probably thinking that commission and slippage are not that big of a hurdle. Well, I tracked it one time in my account, at the time I was daytrading. After six months I had lost more to commissions and slippage than I had lost on losing trades. Also keep this is mind I only traded on average 3 times per day and had a profit 66% of the time. During that sixmonths I had only realized an increase of 5.5% in my account balance.

Now that would be fine if you are trading a million dollar account but I wasn't. At the time I tried to fix my system which ended in disaster because I began to over trade which resulted in more losing trades than winning trades. What I failed to realize was that my winning system did not need to be fixed my money management skills did. Later when I realized that money management was the problem I went back to my old system with a few changes to the money management rules that I follow and performed much better. If you really want to become a better trader focus on the money management side of your trading. The markets go up, down, and sideways you cannot control the market. We need to focus on the things we have control over and money management strategies are a good place to start.


Lesson 6.1: What is swap in forex trading?



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Apr 27, 2019

Use These 3 Simple Guidelines to Boost Forex Profits

Use These 3 Simple Guidelines to Boost Forex Profits
 
FOREX trading is nothing more than direct access trading of different types of foreign currencies.  In the past, foreign exchange trading was mostly limited to large banks and institutional traders.  Recent technological advancements have made it so that small traders can also take advantage of the many benefits of FOREX trading by using the various online trading platforms.

FOREX markets possess unique attributes that offer unmatched potential for profitable trading in any market  or any stage of the business cycle.  For starters, FOREX trading boasts a 24-hour market, giving traders the chance to take advantage of profitable market conditions anytime.  Secondly, the FOREX market is the most liquid market in the world.  FOREX traders can enter or exit the market whenever they want, during almost any market condition. There also exist minimal execution barriers or risk and no daily trading limits.


For all the advantages of the FOREX market, one glaring weakness emerges.  The FOREX market is seen as unregulated although the operations of major dealers, like commercial banks in money centers, are regulated under the banking laws. The daily operations of retail FOREX brokerages are not regulated under any laws or regulations  specific to the FOREX market.  Many of these types of establishments in the United States, don't even report to the I.R.S.  To make the most of the explosive potential of successful FOREX trading, individuals should follow these guidelines.

1.Determine the quality of the broker institution you choose.
Unlike equity brokers, FOREX brokers are usually attached to large banks or lending institutions because of the large amounts of capital that is required.  FOREX brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Future Trading Commission (CFTC)

2. Request a free trial.
Before you commit to any broker, be sure to request free trials so that you can test their different trading platforms.  Brokers usually provide technical as well as fundamental commentaries, economic calendars and other research as a means of assisting you.  Basically, a quality broker will provide everything one needs to succeed.


3.Monitor two financial meetings to provide insight into the upcoming FOREX market.
Two important meetings FOREX traders should watch for are the federal Open Market Committee and the Humphrey Hawkins Hearings.  By reading the reports and examining the commentary, FOREX fundamental analysts can get a better understanding of any and all long-term market trends it also allows short-term traders to be able to profit from extraordinary happenings.

Massive Success As A Digital Nomad Forex Trader - Navin Prithyani | Trad...



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Apr 26, 2019

Understanding the Forex Trading System

Understanding the Forex Trading System

 
The forex trading system involves buying and selling foreign currency. Unlike the stock market there is no fixed market for the forex trading system. A good and effective forex trading system allows the traders to transact easily and provide more chances to increase the earnings.  Forex, foreign exchange market, is a market place where a currency of one country is sold for another country’s currency for some profit. Currencies are traded in pares, like, US Dollar and Japanese Yen or US Dollar and Euro.

Foreign exchange tradings are a greatmoney making opportunity for those who know their way around, for newbie it’s a dream world where they either fall hard, sail well or fly high, its not easy to be a successful trader in the forex trading system., it’s a mix of luck and experience that must work to find success. There are a lot of companies and individuals over the internet and offline willing to help you earn money from the forex trading system but only a handful of these are true and can actually help.

Nowadays most of the calculations are done by easy to use software that need minimum input from the user. You will need help initially, and may take some time for you to get to know the forex trading system. The high degree off leverage can sweep you either way, in the forex trading system one has to assess the risk for self, think of the chance one may have individually or with the help of a broker and/ or signal provider one may have and the amount which one can safely risk without putting yourself into financial trouble. It’s a law of nature, where there’s potential to earn there’ potential to loose so just be prepared before you dive in.


90% of traders lose money... So how to be in the top 10%?



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Apr 25, 2019

Understanding What Influences Forex Prices

Understanding What Influences Forex Prices
 
 
This article will explain some of the differences between Technical Analysis and Fundamentals and explain a bit about each type of trading. Excerpts are taken from the best-selling book ‘Market Wizards’ where Jack Schwager interviews Ed Seykota and Bruce Kovner.

Ed is a trend trader  (uses technical analysis) and also relies on hunches from 20 years of experience. He definitely emphasizes his reliance on technical analysis. While reading this, I liken, the ‘hunches’ to knowing the effect fundamentals can have on a market although I could be mistaken, they could be purely from reading lots of charts so well. Here are is exact words “Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them ‘funny-mentals.’ However, if you catch on early, before others believe, then you might have valuable ‘surprise-a-mentals.’”

Ed says his priorities when trading are the long term trend, the current charts and picking a good spot to buy or sell, in that order.

Bruce says technical is awesome and very useful but by no means disregards fundamentals.

It’s important to note that technical analysis is a critical method of understanding the history of market movements and hence useful to identify trends. It doesn’t actually tell us where the currency is going but analyses historical data. We then need to use our own intelligence to see what the activity of trading says about future trades.

Technical Analysis can be compared to taking a patient’s temperature. To ignore it is ignorance and it can tell you whether a market is active, or cold and dormant.

It also picks up unusual behaviour. Anything that creates a new chart pattern is something unusual. He also says “Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.”

It’s the fundamentals that will help to indicate whether a trading value will increase or decrease.

Everything that makes a country tick, in Forex terms. Consumer spending, government spending, employment cost index, government policy, political concerns and even an individual event can influence the market heavily.

In summary, the fundamentals will indicate the direction of a price but not exact prices. The chart analysis or technical analysis is better for that, so together you can really increase your chances of coming away with some pips.

The reason technical analysis is so emphasized is that many traders use charts to trade and at any given time, will be drawing the same lines of resistance and same lines of support. So if you can read the charts well, you have an awesome chance of predicting market movements. The best way to learn about the effect of fundamentals is to learn one piece of economic data at a time. This will help you make better-educated trades.

Successful SWING TRADERS Making A Living | Forex Trader Motivation



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Apr 24, 2019

Trading Flexibility In The Forex Market

Trading Flexibility In The Forex Market
 
How does a trader test his/her strategies and abilities without paying (or paying too much) for his/her mistakes ?
I would say there are three possible answers.

One first answer, of course, is by paper trading. Paper trading means that you do not actually execute your orders, but you only "bookkeep" them, testing on paper what their results would be.

At the next level you can trade in a simulated account. This is similar to paper trading, as you are not trading with real money, but just testing the result of your strategies; on the other side with a simulated account you are really using you Broker platform so you are at the same time training yourself in dealing with order execution issues.
Simulated accounts are nowadays offered by many Brokers; in the Forex market it is common to get this feature.

Say you trade your strategy for some time with a simulated account, and everything goes fine; you would expect that real trading should go fine as well. Still, there is an issue you did not deal with: your emotions. These will come into the game only when you trade with your real money. Emotions can do a big difference. They often explain differencies in results between traders that can be absolutely comparable in terms of market know-how and strategy. Why ? because they often force you not to follow the rules of your trading plan. Emotions can make you a hard life in keeping the necessary discipline.

So, how to deal with the emotional issue of trading ? There are ways to learn also in this topic, of course, but in this case your own direct experience is more difficult to replace, in my opinion. However, the experience can be expensive, of course. A possible solution is to trade with real money, but in a very small size. This is always a good idea at the beginning. Start small, gain experience and then increase gradually your trading size.

So the third answer to our first question is: by trading small. You might object that, if the trading size is too small, your emotional involvement will also be small, so the aim of putting emotions into the game is missed. Partly, this is true. However, the difference between using real money and just playing with numbers is there. And the decision about how big the size should be, is just yours.

The forex market gives you big flexibiliy about your trading size.
First, because the minimum required to open an account can be really small, in the order of $300. Trading size of course can be small too. The Forex market offers you a great leverage possibility, but again, how much of it to use is something that only you can decide.
Second, because in the forex market it is common for Brokers not to charge a fix commission to trades. The cost of the trade is generally represented only by the bid-ask spread. This means that small trades are not penalized by fix commissions.
This flexibility can offer an advantage for traders who want to gain experience before moving forward.

Struggle To Massive Success Stories | Forex Trader Motivation



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Apr 23, 2019

The First Truth About Trading

The First Truth About Trading
 
Take two traders, give them the same starting capital, the same trading platform, the same market and the same trading system with precise rules for entry and exit. Come back a month later and what will you find? One trader will be up 20% and the other down 40%.

It’s amazing isn’t it, how two people can have the same opportunities in life and yet get very different results. The answer to success in trading lies within each of us. Whatever happens it’s your fault, plain and simple, it’s not your trading system or some other factor, it’s you. Yes, you!

Therefore, understanding the truth about trading, the ability to see the big picture is vitally important, especially for the beginner or the trader who is loosing money. Once you understand the foundational truth about trading then you are on your way to success. This is the first step.

Trading is a game of probabilities!

Let’s flip a coin. Heads I win one dollar, tails you win one dollar. Heads should come up half the time and tails the other and we are both even. However, unknown to me you have a loaded coin. For every 100 throws, heads comes up 49 times, and tails comes up 51 times. You have a license to print money. Let’s call it the Tails Trading System.

All you have to do is sit back and bet on tails all the time and eventually you would win all my money and anybody else’s one bet against you. The only thing any trading system does is give you an edge, a favorable bias, something that is more likely to happen than not.

Whatever trading system you use be it pattern breakouts, trend-following, Fibonacci, moving averages, channel following, oscillator signals, Bollinger bands, swing trading,
opening gaps or any of the myriad of other systems about the place, you are essentially relying on a positive bias. Your system says when I see “x” then “y usually follows”. Big emphasis on usually. Sometimes it works sometimes it doesn’t. Most of the time it does.

All your trading system does is help you identify high probability trades, enter them correctly, and protect yourself while allowing your profits to grow. Some trading systems are better than others. Find a system you are comfortable with, paper trade it, test it in real time with small amount, then stick to it. Don’t waste time looking for the perfect system. It does not exist.

A cool disciplined trader will take an average system and make money with it. An unsure, lacking confidence Trader will take a great system and wreck it. All traders have good days and bad days. Some days you will make small profits and others you will make small losses. A couple times a month you will make some big profits. Problem is you never know when. You have to keep playing the game to score the big winner. If you are not in the game you don’t have a chance.
You must see the big picture. Realize that the current trade is only one of many. On that basis the current trade hardly matters. It’s like a little piece of plankton in a very large ocean.

Trading is all about managing risk and then surrendering yourself to the oldest law in the Universe: The ancient law of probability. That my friend is the first truth about trading.


Daily Routines Of Full Time Traders | Forex Trader Motivation



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Apr 22, 2019

The Basics Of Forex Trading

The Basics Of Forex Trading

Forex Trading, also known as FX Trading or Foreign Exchange Trading, is what happens when you trade one nation's currency for another. For example, if I go to the bank and exchange ten United States dollars for 15 Australian dollars, I have completed a simple Forex trade.

The forex trading market is the largest trading market in the world. According to a study done in 2004, approximately two trillion dollars are traded each day in markets across the globe.

The forex trading market is very unique in several aspects, one of which is its international presence. Unlike the stock exchange, which is largely located in New York and has set hours, the foreign exchange market is open twenty four hours a day. In between the united states, European, Asian, and other markets, there is always at least one market open.

Other factors that make the forex market unique are the high liquidity of the market, the wide variety of traders and institutions involved, and the wide variety of factors which affect prices.

In the forex market, there is the ask price (the price at which currency is sold) and the bid price (the price at which the currency is bought. Usually, these prices are very close together, often about one-hundredth of a cent apart.

The United States dollar is by far the most traded currency. Approximately eighty nine percent of transactions involve the United States Dollar. Other highly traded currencies include the Euro, Yen (Japanese), Sterling (British), Franc (Swiss), and the Australian Dollar.

The forex market includes many types of traders. The largest traders are banks. Actually, about fifty-three percent of forex transactions are in between two banks. Other traders include non-bank financial institutions, other corporations, retail exchange brokers, investment firms, hedge funds, and speculators.

The forex marketing is the largest, and arguably most complex market in the world.

How to Calculate Lot Sizes



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Apr 21, 2019

Technical Analysis - Reading FOREX Charts

Technical Analysis - Reading FOREX Charts
 
Price charts can be simple line graphs, bar graphs or even candlestick graphs. These are graphs that show prices during specified time frames. These time frames can be anywhere from minutes to years or any time interval in between.
Line charts are the easiest to read, they will show you the broad overview of price movement. They only show the closing price for the specified interval, they make it very easy to pick out patterns and trends but do not provide the fine detail of a bar or candlestick chart.

With a bar chart the length of a line displays the price spread during that time interval. The larger the bar is the greater the price difference between the high and low price during the interval. It is easy to tell at a glance if the price rose or fell because the left tab shows the opening price and the right tab the closing price. Then the bar will give you the price variation. When printed bar charts can be difficult to read but most software charts have a zoom function so you can easily read even closely spaced bars.

Originally developed in Japan for analyzing candlestick contracts candlestick charts are very useful for analyzing FOREX prices. Candlestick charts are very similar to bar charts they both show the high, the low, open and close price for the indicated time. However the color coding makes it much easier to read a candlestick chart, normally a green candlestick indicates a rising price and a red one indicates a falling price.

The actual candlestick shape in reference to the candlesticks around it will tell you a lot about the price movement and will greatly aid your analysis. Depending on the price spread various patterns will be formed by the candlesticks. Many of the shapes have some rather exotic names, but once you learn the patterns they are easy to pick out and analyze.

Price charts are not usually used by themselves to get the full affect you need to supplement them with some technical indicators. Technical indicators are normally grouped into some pretty broad categories. Some of the more common ones used to monitor and track the market movement are: trend indicators, strength indicators, volatility indicators, and cycle indicators.

Here is a list of some of the more commonly used indicators as well as a brief description.

Average Directional Movement Index (ADX) – This index will help indicate if the market is moving in a trend in either direction and how strong the trend is. If a trend has readings in excess of 25 then this is considered a stronger trend.

Moving Average Convergence/Divergence (MACD) – This shows the relationship between the moving averages which allows you to determine the momentum of the market. Any time that the signal line is crossed by the MACD it is considered to be a strong market.

Stochastic Oscillator – This compares the closing price to the price range over a specific time frame to determine the strength or weakness of the market. If a currency has a stochastic of greater than 80 it is considered overbought. However if the stochastic is under 20 then the currency is considered undersold.

Relative Strength Indicator (RSI) – This is a scale from 1 to 100 to compare the high and low prices over time. If the RSI rises above 70 it is considered overbought where as anything below 30 is considered oversold.

Moving Average – This is created by comparing the average price for a time period to the average price of other time periods.


Forex Trading for Beginners



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