There are many hopeful traders who wish to find a reliable online Forex trading signal to follow. These are usually people who don't have the time to learn to trade for themselves. On the other hand, there are other traders who completely avoid all forms of Forex trading signals. These people are very skeptical and are very careful about being scammed by online conmen. If you belong to the former group, this article will hopefully give you something to think about. What Are Online Trading Signals? Trading signals are services that tell you when to enter a buy or sell trade. They are typically delivered to you by text messages and/or Email. Subscription to such services can cost as little as a couple hundred dollars, to as much as a few thousand dollars a month. Be very careful when choosing a trading signal service to subscribe to. Here are two things to think about if you're looking for one. Tip #1 - It Won't Be Cheap If a trading signal service is consistently profitable, chances are that it will cost much more than just a few hundred dollars a month. You've probably heard of the phrase "there's no such thing as a free lunch", and this is no different in the world of Forex trading. A successful signal service that can make you tens of thousands of dollars every month so will most certainly cost you more than just a couple hundred bucks! Tip #2 - Stay Away From Automatically-Generated Signals Never subscribe to a service that that's generated by computers alone. Such 'automatic' signals have no way of understanding the current market outlook or investor expectations. You COULD certainly subscribe to such signals if the market behaves in predictable ways, but unfortunately more often than not, the market doesn't. To learn more, Click Here to download my free 26-page guide, "Forex Trading Traps!" Harold Hsu is the owner of ForexSystemProfits.com where he provides premium Forex trading tips and resources.
25.3.08
Online Forex Signals - Trading Signals For The Online Forex Trader
Human Weaknesses in Forex Currency Trading
There are different human weaknesses that are obstacles to become a profitable Forex currency trader. To avoid these weaknesses first we must know them. The main human weaknesses are: 1. Fear By using leverage we can make a lot of money in Forex, but we can also lose a lot of money. The situation in the currency market can change very quickly. Almost everyone is afraid to lose money. The fear of losing money sometimes paralyses inexperienced traders who miss good trades because of the fear. 2. Low Confidence A little similar but different from fear is low confidence. Sometimes some traders start making good profits, but then, because of low or lack of confidence they are afraid to lose what they have gained. So they take only a little profit and run, wasting opportunities to make a really good profit. 3. Hesitation When we hesitate we can't decide to enter a trade or not to enter. We are thinking and hesitating, while in the meantime missing best chances. 4. Greed We want more and more. When we should take 1% profit we want at least 2%. When we have 5% profit we want 7%. But Forex market is very volatile and the situation can change quickly. Because of greed the profitable trade can change into losing trade. 5. Negligence There is no place for negligence in Forex. A little negligence can cause big losses. Account's money sometimes gets lost because of tiny negligence. 6. Tiredness It can be very tiring sitting in front of a computer and following trades. When we get tired it is easy to make mistakes and to lose a trade. 7. No Discipline Without discipline there is no way to be a good and successful currency trader. A disciplined trader will stop losing trades or takes profit when it is the best time. Undisciplined trader will allow his emotions to take over and will continue trading hoping for the losing trade to turn into the profitable one. Or while winning, he or she won't take profit at the right time being greedy and wanting to take more profit. It is possible to control our weaknesses by being disciplined, but without discipline there's no way to be successful. There are of course more human weaknesses that are obstacles to becoming a successful trader, but these mentioned above are the main ones. The way to defeat these weaknesses is by following a plan and by being disciplined. Another way to avoid problems with human weaknesses is to use automated Forex robots. In chess robots often beat humans; similarly good Forex trading robots can be very good at currency trading. Like always in Forex we should never start using robots in real trades without testing them first trading on demo. The author is a currency trader and an internet marketer. His hobbies are self improvement and the law of attraction. If you want to learn more about Forex go to:http://currencytradingmethod.com/trademachine/, where you will receive FREE e-course ($67 value). To trade in Forex easily with Forex Robot visit:http://www.manifestwealthmentor.com/forexautopilot.html
Forex Trading - How To Check Your Forex Broker And Avoid Forex Fraud
Before you start with forex trading you must have a broker. Be careful choosing the right forex broker because this market is not regulated like the other financial markets. About $2 trillion Dollars per day are traded on the currency market each and every day. It is bigger than any other financial market out there. The main market participants are big companies, central and commercial banks and other institutional traders. Compared to the stock or futures exchange, there is no forex exchange market. The trades are made directly between the traders. A forex broker gives you access to this market but only to a part of it. A currency broker can make his own prices. If you would open two accounts at two different brokers then you would notice that you will get two different prices for the same buy or sell. This system of pricing and trading opens a door for fraud and scams. There are forex brokers out there that do not play correctly. It is also allowed for FX brokers to trade against their customers. When you choose a broker be careful with everything. Check where the money is held, if there is any form of guarantee or security. Check the spread, that means how much is the average difference of the buy and sell price in your currency. Find out for how long your broker is in the game and if the company has any references. Verify their address and phone numbers, test out the phone support of the trading desk. Check and verify any of the brokers licenses and find out if the broker is regulated by any trusted third party company or authority. There are some great and serious forex brokers out there which offer excellent trading platforms and support. They are not necessarily more expensive than other currency brokers because they trade more volume instead. Highly Recommended Reading: Click on one of the links above to download Nelson Woolwine's new and FREE Forex e-book.
What Makes A Good Forex Trading Software?
In my experience as an day trader with forex currency trading software is that it has the ability to give you all the correct information in all the right places in the market and that it then places it at your fingertips each day or evening. Today the world-renowned forex trading software pioneers have learned to make it so that you can forecasts stocks, futures, commodity, forex, and ETF markets with nearly eighty percent in accuracy. Now you might say, wow that is a high number, but with the correct forex trading software, now that doesn't go to say that it will be a cheap version of software. But when you can predict at eighty percent what is a couple of hundred dollars anyway. Other things that make a good trading software is that it combines intermarket analysis and it predicts moving averages to generate a consistently accurate trend in different forecasts that give you the confidence to take or make trades at the right time and keep you from missing out on the great trading opportunities of today. Next thing a software has to do you is give a precise forecast of the trend direction for the next one, two and four day periods. With a projection of the next day highs, and lows, also saying what the strength of the trend is. And my personal favorite extra a good software provides is a heads-up on the whether the market is expected to make, for example, a top or a bottom market over the next 2 days. With that said, if you have a forex trading software with these things in it you will be so confident in the program's accuracy, you will be able to sleep at night knowing that you are in good hands with the manageable risk at hand. We'll provide you with free up to date extras and ideas for a good forex trading software at http://www.Prolificinfotoday.com and find useful trading software information.
Forex Trading - Are Currencies The Best Markets to Trade?
Forex Trading is catching on like wildfire amongst private traders, and there are good reasons for it. Forex is the largest known financial market in the whole world, and the most liquid to trade in. Also, the requirements to open a currency forex trading account are much less stringent than for stock trades. The term "Forex" is short for Foreign Exchange. The daily turnover in currency markets is currently $1.9 TRILLION dollars. Amazingly, this is over TEN times the average daily turnover of ALL the global equity markets put together. It's more than 40 times the daily turnover of all securities on the New York Stock Exchange. So what is Forex? In layman's terms, Forex trading means the simultaneous buying of one currency and the selling of a second currency. In other words, the currencies are traded in pairs, i.e. one currency traded for another. Interestingly, only 5% of the turnover in daily forex currency trades comes from companies and governments buying and selling products and services from foreign countries. These entities then engage in forex trades in order to convert their foreign currency profits back into their respective domestic currencies. Amazingly, the remaining 95% of turnover is pure speculation, i.e. forex trading entirely for profit! If you're new to FOREX currency trading, familiarize yourself with the most liquid currencies. These are the most traded, and where you stand your best chance of trading success. They include the US dollar, Euro, Japanese yen, British pound (also nicknamed "Cable"), Canadian dollar, Swiss franc and the Australian dollar. The good news for small traders is that the Foreign Exchange Markets cannot really be manipulated. Their enormous size and liquidity, as well as the fact that forex markets are not under the jurisdiction of any one country means that no single investor can usually hope to move a major currency market in a serious manner (of course, there are always rare exceptions and George Soros' famous exploits in taking the British Pound out of the EMS is a famous and extremely rare exception to the rule). Forex Markets entertain a wide variety of participants with varying goals. Some enter the market with a long term investment goals, while other are day traders acting for the extremely short term only. Forex trading, involving foreign currencies on an exchange, is not centralized. It takes place via telecommunications. Also, currency trading is open twenty four hours a day. Currency dealers will quote all the major currencies in every time-zone in the world. Forex currency trading can be an extremely rewarding business, provided you thoroughly know what you are doing. However, like any other business there are always risks (and potentially disastrous ones) for the novice who foolishly dives in without thorough preparation. Where there are risks, there are also rewards. The upside potential, with limited downside risk (provided you know how to place trades with discipline and exercise excellent risk management) can be enormous. Hence, in order to profit from trading in Forex, it is critical that you become an excellent student first and really STUDY forex markets in particular and good online trading principles in general. The Forex markets lend themselves particularly well to Technical Analysis, i.e. forecasting via price charts. Some general awareness of current events around the globe, be it political or economic, is important in order to understand underlying driving forces. However, don't get too anal about this and focus your time on the hot air voiced by self-appointed economic market experts on business and market programs. Most of them know nothing about the process of trading itself, and their opinions are often plain wrong. In conclusion forex trading can be a very attractive and highly profitable business. You can trade currencies very profitably from home and, depending upon your trading knowledge and appetite for risk, the sky's the limit as to how much you can make. However, be prepared in advance to invest a large amount of time and practice before you start to make money from forex trading on a consistent basis. Discover FREE expert Trading videos, podcasts and articles packed with secret strategies to super-charge your Trading and rocket your profits. Dr. Asoka Selvarajah also offers you his vital new FREE report, "The 7 Deadly Mistakes Of Forex Trading". Visit http://www.ForexTradingRebel.Com right now!
22.3.08
12-Steps to Good Trading - Step 3 - Ego, Risk-Tolerance and Confidence - The Psycho-Enchilada
This step in the 12-steps to good trading will be the most challenging and will take the longest for most people to overcome. It will require the most maintenance over the life of your trading career and it will also be nearly impossible to learn from a short article like this but hopefully I can get you on the right track and help identify some resources and exercises to help.
Ego is really a tough thing for me to write about. I don't fully understand it and apart from my Christian viewpoint it wouldn't make any sense at all to me. Ego is that part of you that you refer to when you say "I." Its part of your soul as opposed to your spirit. Both reside in your body. Its everything you think you are. Your self-concept. It says "I am hungry...I am a winner...I am a loser...I am a Californian...I am a Republican...I am nice...I am clever...I don't believe that...I believe that more than anything...blah blah blah.." It's the inner part of you that is most influenced by the outside world and I believe outside forces as well but I wont get into that unless you ask.
Ego is the part of you that has been shaped over the years or the last five minutes along with your concepts of who you are and how you see yourself in the future. It is the part of you that you display and defend and its also the part of you that keeps you from living in the very now moment.
In step one of this series I emphasized how there are no destructive trading emotions in the very now moment. In the now moment fear cant reside because it is based on images of the future and past. Greed cant reside there either. Well, the thing that blocks easy access to that place is the ego. It always wants center stage. In trading rooms and in sports and everywhere in performance based art, the ego stands out. In trading rooms it presents itself in bottom and top pickers and calling trades from the past and announcing one-sided results. Said plainly, it usually shows up as boasting. The trader who boasts not only doesn't likely think he or she has an ego issue, but they certainly don't recognize that they are led by it. The danger to them in these cases is that they are not market focused but are running their trading business from the part of the self that is most subject to the winds of the world and are linked arm and arm with the most destructive trading emotions they can face (fear, greed & denial). It effects everything from their risk tolerance to their confidence which are the other two pieces of this enchilada so I will move on and tie them together and help you develop a plan to make sure your ego is in check.
The number one issue I see people have when working with them on their trading is not accepting risk. Its normal for us to want to avoid risk and that shows up as the normal thing to do when we come to trade. The trouble is that being normal in trading is being a losing trader and washing out.
Never makes it in trading. We have to be abnormal and take risks. Calculated risks of course and that is where having a system or method comes into play but it goes beyond that. Lets just assume you will have a method of approaching the market that will put the odds in your favor and that you will work at it and know how to use it. We also have to have very clear and realistic concepts about what trading is and align our expectations with reality. It is not something you can realistically try and squeeze in to your summer vacation and learn in a few weeks so you don't have to go back to work. Some of you are saying "yeah, of course not. Who would think that." Well unfortunately, and also understandably so, as the marketing in the trading education space paints a really rosy picture and more people think that way than you could imagine. Plan on a long learning curve and doing a lot of hard work. Plan on training your focus on learning to trade and not on money or exotic calculations of what-ifs as far as how much you could earn in a year or whatever "normally" comes to your mind. Prepare to be abnormal. We don't think about money much outside the development of our trading plan. If you do think about money then as quick as you earn it in your head you had better give it away in your head or you will be the one giving it away instead of earning it in reality. Again we think abnormally.
Would you want to go to a heart surgeon and have him chopping into you and at the same time thinking about the boat you are buying him on his lake? Or would you rather him keep his now moment eyes on your aorta? For that matter, would you want that same doctor to have had a speedy summer Internet Heart Surgeon degree program or put his time in learning the hard way (at John's Hopkins no less). I know that's not realistic, or at least I sure hope not, but it's the same idea as someone thinking they can speed through the process of learning to trade. After all, the heart is pretty much going to be in the same place give or take a few inches for all of us but the market can and will change daily or even quicker (yes, it at least follows the same structure most of the time).
What does this have to do with risk-tolerance you ask? Well if you choose to trade I just want to make it clear you are taking a big risk. Most wont make it but if you really get these first few steps down and make building a better you a priority along side your chart studies then you have a great chance. Most wont do that though. You are risking the time and chances to do something else more normal and you have to know that.
Now here is the kicker. Most people wont or cant accept risk because they are under capitalized. They can too clearly see the end of the road. You can learn on as little as you want, but it will effect your thinking. Fear and greed will get all over your face or try to anyhow and your ego will get invaded with denial and if you don't take those early steps I have already covered and stay in the now it will be very, very, normal. If however you do train yourself to stay in the now then the capital wont matter as much. I suggest you have at least ten times your margin amount if you want to help quiet fear and greed and be able to accept the risk. Some people need a lot more than that. Whatever amount it would take where you can look at your per-trade maximum loss and think of it about the same as if you misplaced a dollar or bought a raffle ticket from some kid. This is important to understand so if you don't please start a dialogue with me via email so we can go over this more.
Moving on to confidence now, and really each of these could be their own series. I just want you to be introduced to them and make it known that you will have to contend with these things. At the end I will give you some practical ideas for dealing with some of them. Confidence in your trading is important. Both in your system and your ability to operate it. You need confidence that the odds are in your favor if you do what you are supposed to do so that you can accept the risk and put a trade on and let it play out without gripping that poor mouse until it has no life in it. You need this confidence because without it your fear will block you from doing your breathing and getting to the now moment. I hope you can see how these three topics tie together here.
How do we get that confidence? Lots and lots of work. It requires many hours of screen time and replays. Technology now makes it really easy to get the operational side of your system down when there is nothing at risk. That is good even though it doesn't train you much on the more challenging part of trading, which is controlling yourself when it really matters. But replays and simulation are great for just drilling into your head the steps you take when you trade. Its vital that those things are automatic when you do get into live trading. You need the confidence that comes from doing the exact same thing hundreds or thousands of times. This is the same concept that US Marine Corps or other armed forces go through when they drill or train. All of their training is done in conditions that largely not life threatening. I am not sure spy-rigging counts because that just looks downright crazy. But nobody is actually shooting at Marines in training with hostile intent or rather, capability. Those in charge of the training know this and don't belittle it as being "not-real." They make it as real as they can and that's what we need to do in when we simulate trading. When those Marines hit the ground in actual war zones they act automatically. Not because they know the actual beach or woods or desert or towns but because they know how to move together towards an objective as they have done countless times in training.
I grew up around people just like that and have seen the payoffs and that is why it is so important to me to train thoroughly in my trading and also important that you do the same. Confidence comes from that and from the translation of that training into real live success in the markets. Plan on being abnormal here as well. Most wont do this.
Ok, now to the battle. The best way to keep your ego in check is to keep quiet until you do have it in check. Its not about you. Concentrate on becoming a listener. The next time you are in a conversation with your wife or husband or whoever, try and just listen. If you are jumping out of you skin because you need to talk then this is an area of struggle for you. If you don't even catch it until later that you went on and on about " I, I, I, me, me, me" then it is a dominant area in your life that needs to be addressed before successful trading will occur. Part of what the ego does is express emotions in packages. If you focus on the breathing and self-awareness techniques of steps 1 & 2 you will get better at getting in the now moment. The thing that deflates the destructiveness of all emotions and the ego is identifying the emotion from the now moment and calling it by its name. So if you feel fear or you feel the ego rising in your own unique pattern then what you do is say it. Say "fear, I see you and you have no power over me." If you are Christian, and I pray that you are, then really let the emotions have it in the name of Jesus. When you operate in the now moment and identify your feelings like that it deflates them. In other words it keeps you in self-control and in the moment and not subject to them. This like anything is a learned skill and will require you to be a good listener to not only others but yourself and what is coming up from inside you. The great thing is that while it deflates negative emotions, staying in control and recognizing positive emotions perpetuates the benefits. Understand me clearly here. I am not talking about visualizing the outcomes of fearful things. I don't want you to mediate on the negative stuff. Just call it by its name and tell it to leave because it has no authority over you. If you make this a habit your life will change like you cant imagine.
Now as far as risk-tolerance goes, you have to raise capital and stay in the now moment along the way. The less money you have the less you can do. Trading something like FOREX at Oanda is probably the best option for you if you are starting with very limited funds because you can trade fractional pips and stay in the game on little for a long time while you learn, but at some point you will have to add capital. Do not set yourself up thinking you will trade your way from $1,000 to millions. If you don't treat your opponents and your business with the proper respect it just wont likely happen for you. You may have a good hobby and learn a lot and that may be great in itself, but until you treat your trading as a start-up business with real capital needs it wont likely prosper. I pray that some of you prove me wrong, and I have seen it done, but they were really abnormal. If you try and do the same I would be as abnormal as you can in the places you can afford to in order to compensate for the very normal idea of starting with nothing or close to it.
Lastly, for confidence, plan on working and building a life of balanced confidence and keeping confidence in check and based on real training. If you find yourself down the road trading and needing layers and layers of confirmation before you take a trade then you drifted away from confidence to some blend of being unconfident and being overconfident. Being unconfident in your system and over confident in your ability to handle it on your own. Needing excess confirmation is like a farmer who says he will plant corn seed just as soon as he sees some tassels. It just wont work that way. He has to plan his crop (develop a business plan), buy his seed (raise his capital), plant it (release some capital), and then let the earth do its thing in its due course so he can harvest (evaluate the results and learn from them). Try and blend some of your personal traits that are strong outside of trading with your trading. If you are a mother or father and somehow are very patient with our kids then have confidence that you can use those same abilities in the market if you stay in the now. If you think about it, that is exactly what you do with your kids if you are one of those people. They make a big mess or if older kids, wreck the car or whatever, and you take a deep breath and just release in an instant all those destructive emotions so that we don't kill them. The same thing we do when we prepare to trade.
Anyhow, I covered a lot. Probably too much for one article but a couple of you probably made it this far. If we end up working together or if we already are then chances are we are already deeper into some of these areas and techniques. We will get to some chart stuff in the next article. Spend the majority of your time in these first three steps though and pick my brain or do whatever it is you need to do to get yourself in a position where you can operate from self-control rather then being dragged through life. There is so much more to say on these mental topics and more so I will write more later. Thanks for listening.
God Bless ~
Ryan
Ryan Watts is a full-time technical trader, money manager, and trading coach with over twelve years experience in short-term trading. For more information on his trading system and live trading room visit http://www.wattstrading.com
How To Calculate Profits In A Forex Trade
Unlike the stock, futures, or options markets, calculating profits in the foreign exchange market can be a bit more complex. This is because you have to transfer profits from the foreign currency you purchased back into your home currency.
This concept is best understood through an example. So, let's say you have 10,000 US dollars, and let's say the EURUSD is trading at 1.5000. This means that 1 euro buys you 1.5000 US dollars -- or, conversely, one US dollar buys you 0.667 euros (1 / 1.5 = 0.666). So, with your 10,000 US dollars, you are able to buy about 6,666.66 euros.
Now, let's say the EURUSD exchange rate jumps up to 1.5500 -- meaning that one euro can now buy you 1.5500 US dollars. Since the euro rose in value since you made your purchase, you can now sell your euros for more dollars than you initially purchased them with. In other words, you made a profit!
To realize your profit, all you need to do is convert the 6,666.66 euros you now have back into US dollars. Since one euro now buys you 1.5500 US dollars, you can simply multiple your quantity of euros -- 6,670 -- by the exchange rate (1.5500). The result is 10,333.33. So there you have it -- a profit of 333.33 US dollars!
Profiting By Selling a Currency (aka "Going Short")
Slightly more involved are transactions in which you go short -- in other words, in which you believe the exchange rate is going to fall. In such a scenario, what you are actually doing is borrowing the currency you believe is going to fall in value. So, let's say you borrow the equivalent of 10,000 US dollars when the EURUSD is trading at 1.5000. This means you have borrowed about 6,666.66 euros, and have used those borrowed funds to purchase 10,000 US dollars.
Now, let's assume the exchange rate falls to 1.4500, and you decide you want to exit the trade. To do this, you simply want to exchange the 10,000 US dollars you purchased back into euros at the new exchange rate. At a rate of 1.4500, your 10,000 US dollars buys you 6,896.55 euros. You now have to repay the original 6,666.66 euros you borrowed, leaving you with 229.89 euros. You then want to convert this back into US dollars -- your home currency -- which, at an exchange rate of 1.4500, amounts to 333.33. This is your profit from the trade.
As you can see, foreign exchange trades can be a bit more complex than your typical stocks or futures trade -- but if you take it step by step, you'll see it's really just a few straightforward math equations.
Simon Parth has been an active trader of currencies since 2002. He is a founding member of InformedTrades.com, a community dedicated to creating a free and comprehensive learning resource to help traders learn how to take advantage of opportunities in the world's financial markets.
Forex Autopilot Robot Review - Will It Do All The Trading For You?
I am sure that if you are a Forex trader you have already heard of Forex Autopilot robot. If not, this is the software by Marcus Leary that is said to be the greatest breakthrough in Forex business.
I first heard of this robot from my friend Jack who is a professional trader as well. He told me that I had to check it out because it was supposed to be really good.
I tested different kinds of Forex software in the past and I am always open to try new ideas and tools.
So, I went to Forex Autopilot website to read the sales letter and I was amazed with what I was reading. Marcus Leary was promising a lot and I started wondering if it was really possible to create the robot like that one.
Trading Forex on autopilot?
I couldn't believe that.
It was just because of Jack who recommended it to me that I decided to purchase it. I trusted my friend and it was only $99 with 8 week money back guarantee so there was nothing to worry about.
I downloaded the robot to my PC 2 minutes after the purchase. I had to download a new meta trader as well because the old one wasn't compatible with Forex Autopilot.
I read the manual and FAQ and I installed robot on my PC.
I didn't want to lose any money so, I opened demo account something I hadn't done for years and I decided to start testing the software.
One thing I want you to be aware of is that Marcus Leary's robot is really complicated to use. One will need advanced skills at Forex and computing because the manual provided was pretty poor.
My first two trades were bad ones and I lost 200 pips.
There are several digital advisers on the software main screen and I was not sure which one I should have used. So I decided to check them all out the following day.
Finally after two days I started making profit and I moved to my real account. Everything has been great since then and I will recommend Forex Autopilot robot to anyone who wants to make money on Forex.
It is not a scam.
Sam Graham is a professional Forex trader. He has created http://www.forexautopilotreview.com website where he explains all of Forex Autopilot features and answer any questions regarding this software.
Forex Trading - It is Possible to Make Money With Only 50% Wins
To be realistic, most people will have a win loss ratio no better than 50%. The reason so many people lose money in Forex trading is that with a 50% win rate, they lose much more money than when they win.
It is possible to make money in Forex trading by picking winning trades with no better statistical advantage than flipping a coin.
How can someone make money when you only get half the trades right? That means 5 out of every 10 trades are losers. Well, if your money management is set up with the right profit loss ratio, it is possible.
Let's use 30 pips as a profit target on every trade and 20 pips as a stop loss on every trade. We will use 10 trades to make it easier using percentages. Winning 5 trades at 30 pips per trade, nets 150 pips profit. Losing 5 trades at 20 pips per trade is 100 pips loss. The net profit for ten trades is 50 pips gain. With one contract, this is $500.00 or one mini-contract, this is $50.00 per ten trades.
Let's say you get better at your trading and win 60% trades. Winning 6 trades at 30 pips per trade, nets 180 pips profit. Losing 4 trades at 20 pips per trade is 80 pips loss. The net profit for ten trades is 100 pips. With one contract, this is $1,000.00 or one mini-contract, this is $100.00 profit per ten trades.
A more rare win percentage is 70%. But working out the math, 7 winning trades at 30 pips, nets 210 pips profit. Losing 3 trades at 20 pips per trade is 60 pips loss. The net profit for ten trades is 150 pips. With one contract, this is $1,500.00 or one mini-contract, this is $150.00 profit per ten trades.
This shows that even with only 50 % wins, money can be made. Using a 3:2 profit loss ratio is profitable for making money in Forex trading. This could mean using a 60 point target with a 40 point stop loss as well.
Using a smaller ratio like a 30 point target and 30 point stop loss, a 1:1 ratio will only give a profit with a win rate greater than 50%. You may find that your trading strategy can only get a 20 point target so you may need to do the 1:1 ratio. Using the 3:2 ratio, with a 20 point target, you will have less than 20 as a stop loss and this is too small of a stop loss for Forex trading. There are so many market forces that can swing more than 20 pips and hit your stop loss. Practically speaking, you need to work with the currency pairs with the smallest spreads when using a 20 point stop.
Now, knowing the right target loss ratio, the right trading strategy needs to be incorporated to make this work. Finding the right strategy is vital to this ratio.
On our website, we have reviewed different trading strategies or trading systems available on the internet.
For information on trading strategies we reviewed, visit our website at http://blog.opinionandreview.com
Penny Stocks Profits - Swing Trading or Day Trading?
Entering the world of stock trading means learning a new language. Just as with any industry, stock trading has its own terms and vernacular. One of the more basic terms in the stock-trading glossary is the type of trading you are involved in. Or more exactly, what "timeframe" are you involved in?
When you see the terms "day trading," and "swing trading" swirling all around the Net, it can become confusing. Throw into the mix the term, "day trading penny stocks investor" and "long-term buy-and-hold investor," (and a few others) and it gets even more muddled. What's what?
There are numerous ways for traders to invest. A few decades ago - before PCs and online trading - buy-and-hold was the keyword. Stock brokers were as revered as much as a physician or clergyman. Stockbrokers ruled their world. And they made a pretty penny off their clients. It mattered not if their client made money or lost money in the market, the broker always made a buck! (Many bucks!)
In those days, people involved in the stock market were known as investors rather than traders. Because the main reason to buy stocks was for long-term investment. What a lot has changed in a very short time. Technology brought forth those who were looking, not for long-term investment, but quick profits. Profits that can be realized within a few months, a few weeks, a day, and in some cases, a few seconds.
So, let's look at each of the terms mentioned above and learn what each means. The clearer your understanding, the better trader you will be.
Swing Trader
This investor could be involved in stocks, options, or futures. Swing traders will hold open positions for a few weeks or a few days. As they follow a slower cycle of trades, they have fewer trades to make. This means fewer commissions, less chance of error, and the ability to catch the more vital multi-day profitable swing trades.
The swing trader relies mainly on technical analysis, but may also be interested in basic fundamentals. In other words, they will keep an eye on news releases in the industry in which they are trading.
Swing trading usually has an average profit target percentage that is higher than in day trading. Higher profit targets equals higher average risk per trade. One also has to factor in the overnight exposure during which time the trader would be exposed to any major developments that might occur.
Long-Term Swing Trader
There is that trader who has become comfortable moving with the longer timeframes of several weeks to a few months. This investor might be trading in the indexes, timing mutual funds, or assessing both technical and fundamental information.
This trader will be more apt to filter out the "noise" that is present in all trading. What this means is, it's easy to get fooled by small moves against the trend, or your trade, when day trading or even short-term swing trading. These little variations aren't as likely to trip up the long-term swing trader. The percentages these traders take off the table can run as high as 20%, 30%, and even 50% as they trade out over a few weeks.
The biggest disadvantage here is the chance of missing out on so many shorter-term swings that any market will make.
Day Trader
Day traders are buying and selling in the timeframe of a day. "Intraday trading" as it is known. Some traders will make two or three trades a day; others may make a dozen or more. They experience no overnight hold exposure. The stock may go up, the stock may go down, day traders are able to profit from both long and short. They take advantage of quick swings in both directions. In this way, they focus on higher winning percentage of trades by taking quicker profits and smaller risks. They are jumping in and jumping with a great degree of regularity.
The problem here is the need for attention during the trading day. The day trader has to be actively watching the charts; investing quality time in the endeavor. Many people don't have that kind of time to watch charts.
Attention must also be given to the costs of the transactions. Commission bills can run up very quickly. The day trader must be aware and factor this into the "cost of doing business."
Buy-And-Hold Investing
In this day and age, these investors are still around, but are almost thought of as old fossils to the faster-paced swing trader and day trader. The Buy-And-Hold investor may have a large portfolio of stocks, bonds, and mutual funds and looks to hold them... forever? Well, close.
If the investor has used plenty of fundamental analysis and market sentiment analysis, the gains can be quite profitable - and the commission costs are almost nil. By and large, the problem with this type of investor is their almost complete lack of plan for their investment.
Why did these buy-and-hold investors lose 90% or more of their holdings in the bear market? It's because they could not bring themselves to sell. (They hold hold hold! It's a mind-set.) So few of the buy-and-hold investors have any idea what a protective stop means. Having no plan for profit objective, nor any idea of when to give up and move on, spells disaster for this type of investor.
The best the buy-and-hold investor can do is move from no strategy to a specific strategy where their objectives are clear and exactly when and how they will exit. AND to place protective stops all along the way.
Which is Best?
Figuring out which trading system is best depends on who you talk to. "Swing trading," said one broker, "is easier to master, requires less attention and can be just as lucrative. There is no real reason to liquidate every position daily. Most of the news that may affect a stock's price also occurs during business hours."
Another professional is quoted as saying, "You have more control as a day trader. Overnight you are exposed to overnight risk, since the market doesn't necessarily open where it closed. Intraday you have far more control over your entry and exit prices."
And yet another opinion: "When the market turns, a good day trader can get out of a position and get back into it at better prices."
So there you go. Who is right? In the final analysis it all boils down to you. What are your objectives? What is your personality? What are your time restraints? Most people involved in the market may think they are traders, but indeed the true trader is the one with a plan and the discipline to adjust and follow it.
Trading Coaching
No matter whether you swing trade or day trade; whether you work with penny stocks, futures, or options; it's vital that you gain as much knowledge as possible. Knowledge is indeed power in this business. Rockwell Trading Inc. is a group of trading coaches. Their specialty is to turn failing or marginal traders into success stories by offering trading coaching. Rockwell brings their clients onto a path to success. Their success ratio for new traders is over 97.7%. Rockwell's Trading Coaching Program promises to improve the trader's trading techniques and increase returns, or they'll refund the purchase price. No other trading coaching company can touch their credentials. Rockwell Trading is the real deal.
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