Tag: forex money

The Art of “Feeling” the Forex Market

~ Vera J.

In Forex trading, one has to learn to gauge market sentiment, listen to what the charts are saying, and adjust accordingly.

More often than not, it’s also about getting the timing right. That’s why intuition plays a huge role. Not to be confused with taking impulsive trades based on gut feel. Forex trading demands a special type of intuition that many refer to as “feeling the market” or being “in the zone.”
Forex tradingIt’s that specific point in your Forex trading career. You have gained enough experience to label market behavior (trending, ranging, breaking out or consolidating). You know what trading setup you will take to tilt the odds slightly in your favor.

Examples:

You noticed that the market is trending, so you use moving averages.
You noticed that the market is retracing, so you use Fibonacci retracement levels.
You noticed that the market is ranging, so you mainly use support and resistance levels.
You noticed that the market is consolidating, so you wait for a breakout.

Did this just magically happen? Heck NO! Just like in any other art form, some are born with the natural talent while others acquire the skill. Either way, you arrived at this point because of constant refinement and deliberate practice.

Through these actions, you have learned to trust yourself and observe the Forex market in an analytical and “artful” way, and not merely by guessing.

You have found out that Forex trading is more of an art than an exact science. Also you have learned that there really is no clear “signal” or set of rules, that indicate that the market environment has changed.

Getting “in the zone” does not happen overnight. It takes time.

Just like in photography, where it takes tons of practice to get the perfect shot, Forex trading requires watching the charts every now and then, before you get to the point where you can instinctively “feel the market.”

This experience is necessary because it will help you understand why the market is behaving the way it is. It isn’t enough to go through the manual and learn all the technical aspects.

At some point, you need to put all this knowledge to work and try it out for yourself. By exposing yourself to the markets, you can gain the skills necessary to gauge market conditions and in the end, come up with your own conclusions.

By Dr. Pipslow

Source: BabyPips

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Forex Trading – Do You Qualify?

~ Vera J.

Global Trading Army is committed to assisting people from Developing countries to obtain Forex trading knowledge and learn how to trade money for money rather than time for money!

We fully understand affordability for everyone is a major barrier to consider. Therefor we decided to offer a substantial 50% discount on our package offerings to students and residents of Developing countries.
Forex tradingWe’re about connecting and freeing Nations from financial constraints!

We will inspire you to understand and tap into the most powerful financial market in the world and gain Freedom to do the things you love!

 

 

 

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Your Worst Trades Can Help You Become a Better Forex Trader

~ Vera J.

In life we usually develop repetitive behavior. We develop daily routines that help us get through the day. And as creatures of habit, we also go through patterns in forex trading. Over time, we form a routine in the way we process and react to information thrown at us.
Forex TradingTry looking at the worst trade you’ve ever had in your trade journal. It’s not easy, I know, but could be a good lesson.

Review the trade setup that you saw, think about what went wrong, and ask yourself, “Why the heck did I ever take that trade in the first place? What was I thinking?!”

More importantly, “Was I even thinking?!”

You probably just took that trade automatically based on a familiar setup. In this case, your decision was a result of your own way of thinking rather than what the market was telling you.

Your worst trade isn’t necessarily the one where you’ve incurred your largest loss.

It can be in the form of a missed opportunity, when you hesitated to long to take what could’ve been your trade of the year, or when you locked in profits too early instead of letting it ride. You might’ve wimped out because of your fear of losing, even when the markets gave every indication that this next trade would be a winner.

Another negative thought pattern is when you become absolutely indifferent to losing that you end up blindly taking one trade after another just to make up for your losses.

In this case, you keep insisting that you’re right and you believe that you will eventually beat the market. Revenge trading turns into a nasty habit and could result in large drawdowns if not corrected.

The usual response to bad trades is just shrugging them off. Much like the memory of getting rejected by crushes in high school. It’s easier to simply push the memory of a bad trade at the back of our heads, and falsely reassure yourself that you’ll prepare better next time, and then move on to the next trade.

But THAT’S NOT ENOUGH!

You have to REALLY dig in into the problem and review the nitty-gritty of your bad trades. Otherwise, you run the risk of repeating your mistakes. No matter how painful or discouraging the task is, you must force yourself to open your trade journal and ask yourself questions like:

“Why did I take the trade?”

“Did I follow valid signals when I closed my position?”

You get the idea?

In forcing yourself to identify the emotions you felt when you made bad trading decisions, you might be able to see a negative pattern in your behavior and take actions to correct it.

Unlearning bad habits and trading practices can be difficult, but they will certainly bring you one step closer to controlling your emotions and becoming a better trader.

Source: Baby Pips

 

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Forex Trading – More About Revenge Trading

~ Vera J.

Revenge trading is mainly driven by the fear of being wrong. It’s usually when a trader, coming from a particularly frustrating loss, decides to make up for it by being more aggressive in his/her next trades.

This is dangerous for your account for two main reasons. First, it forces you to throw your trading discipline out the window. It shifts your focus from your trading process and good risk management to trying to make enough money to recover your losses with less thought out trades.

Trading based on emotions and luck is not trading. It’s gambling. Without any risk management plan, it can bleed your account one trade at a time.
Revenge tradingIt’s also a lose-lose situation. If you lose a revenge trade, you deepen your drawdown with a trade that you had barely planned for.

Revenge trades come in many forms but the most common one is when traders take impulsive (and usually bigger) trades after a particularly frustrating loss in the hopes of making back the money they’ve lost.

Luckily, there are ways to recover from a bout of revenge trading.

Step Out and Clear Your Head After a Frustrating Loss
Do non-trading related activities and come back only once you’ve acknowledged that losing is part of the game.

Document the Reasons Why You Lost Your Trade
Identifying what went wrong with your trade and focusing on improving your trading process helps lessen the feeling that the market is against you.

Take Note of Your Triggers and Tells on Your Trading Journal
Do you do it when you’re trading big positions or when you got taken out by unexpected catalysts? Do you do usually bite your fingernails or scream at your cat before doing it? Knowing your triggers helps you prevent yourself from taking on more revenge trades.

Trust in Your System!
If you’ve tested your system and follow your trading plan 100%, then you won’t mind the losses much because you know that the end numbers will add up in your favor in the end.

Practice Risk Management
If you make risk management a habit, then you’ll have better trading discipline and are less likely to take impulsive trades. If you’re not used to it yet though, then you can start with following strict rules on position sizes and trade duration.

Remember that even the most consistently profitable traders have bad trading days. It’s all part of the game after all. Don’t take losses to mean that the market is against you. It doesn’t care about your feelings or how sound your trade ideas are. It’s not you, it’s just Forex trading.

By Dr. Pipslow

Source: Baby Pips

 

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Why Trade Forex – Advantages Of Forex Trading

~ Vera J.

There are many benefits and advantages of Forex trading. Here below are just a few reasons why so many people are choosing this market.
Forex TradingNo Commissions
No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail Forex brokers are compensated for their services through something called the “spread“.

No Fixed Lot Size
In spot Forex, you determine your own lot, or position size. This allows traders to participate with accounts as small as $25 (although we’ll explain later why a $25 account is a bad idea).

Low Transaction Costs
The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions. For larger transactions, the spread could be as low as 0.07%. Of course, this depends on your leverage.

A 24-Hour Market
There is no waiting for the opening bell. From the Monday morning opening in Australia to the Friday afternoon close in New York, the Forex market never sleeps.

This is awesome for those who want to trade on a part-time basis because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep.

No One Can Corner the Market
The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.

Leverage
In Forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum.

For example, a Forex broker may offer 50-to-1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $2,500 worth of currencies. Similarly, with $500 dollars, one could trade with $25,000 dollars and so on.

However, remember that leverage is a double-edged sword.Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

High Liquidity
Because the Forex market is so enormous, it is also extremely liquid. This is an advantage because it means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will as there will usually be someone in the market willing to take the other side of your trade.

You are never “stuck” in a trade. You can even set your online trading platform to automatically close your position once your desired profit level (a limit order) has been reached, and/or close a trade if a trade is going against you (a stop loss order).

Low Barriers to Entry
You would think that getting started as a currency trader would cost a ton of money. The fact is, when compared to trading stocks, options or futures, it doesn’t. Online Forex brokers offer “mini” and “micro” trading accounts, some with a minimum account deposit of $25.

We’re not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn’t have a lot of start-up trading capital.

Free Stuff Everywhere!
Most online Forex brokers offer free “demo” accounts to practice trading and build your skills, along with free real-time Forex news and charting services.

Demo accounts are very valuable resources for those who are “financially hampered” and would like to hone their trading skills with “play money” before opening a live trading account and risking real money.

Source: Baby Pips

 

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What Forex Traders Do To Guarantee Their Own Failure

~ Vera J.

Did you know that the five deadliest factors that cause traders to fail are self-inflicted? Many traders self-sabotage their own trading and may not even be aware they’re doing it. When their account goes to zero, they have nobody to blame but themselves.

While it might be too late for these traders, fortunately, it’s not too late for you. We want to make sure that you don’t suffer from the same blind spots and can, hopefully, avoid sharing the same fate of a blown account.

To make it easier to remember, we call these negative factors, the “O’s of Trading“, and there are five of them.

What are the 5 “O’s”?
Forex traders
Overconfidence
Overconfidence isn’t simply the feeling that you can handle anything. Overconfidence is characterized by an inflated belief in one’s own trading skills.

Confidence is critical in becoming a successful trader. When you’re confident, you’re more likely to take risks or look for opportunities.

However, it’s one thing to believe that your trades can potentially be profitable, but it’s another thing to think that you know everything about the markets and that there’s no way for you to ever lose because all you do is win.

While confidence is necessary, too much confidence can have negative consequences.

To minimize the effects of the overconfidence effect, you must take time to truly understand yourself and what you are capable of achieving. Most importantly, you must ALWAYS consider the possibility that you are WRONG, to listen to new evidence, and to know when to change your mind!

Overtrading (Including Revenge Trading)
Overtading is when you are trading too frequently, taking extremely large trades, and/or taking uncalculated risks.

Successful traders are extremely patient. Quality setups take time to materialize, so they remain patient and wait for confirmation.

It doesn’t matter if the setup takes two hours or two weeks to take shape. What matters is protecting their capital so they will wait until the odds are more in their favor before entering.

You will know if you are overtrading. If you close a trade for a loss and deep down, you feel like you shouldn’t have taken the trade, then you’re GUILTY of overtrading.

For example, when you’re supposed to trade from the daily chart, do you find yourself still looking at the lower time frames like the 5-minute chart and “discovering” better trades there?

Do you find yourself spending hours staring at charts and trying to “force” a trade with a “good enough” setup?

Revenge Trading
Letting your emotions get to you regarding your trading performances is dangerous. When it comes to trading, the head, not the heart, should be in charge.

When you suffer a large loss, or a series of losses, within a short span of time, you might be tempted to “revenge trade”. You want to “get back at the market”.

Revenge trading is when you jump back into a new trade right after taking a loss because you believe that you can quickly flip the loss back into a profit.

When you start thinking like this, your state of mind is not objective anymore. You become more prone to making even more trading mistakes, which results in you losing even more money.

Trading is a game of patience. Traders who wait for quality setups and sit on their hands in between are the ones who will end up profitable in the long run. Focus on the process. Not on the profits.

Overleveraging
In Forex trading, leverage means that with a small amount of capital in your account, you can open and control a much larger trading position.

For example, with a $1,000, your broker might allow you to open a $100,000 position. This is 100:1 leverage. The advantage of using leverage is you can magnify gains with a limited amount of capital. The disadvantage of leverage is that you can also magnify your losses and quickly blow your account!

Overexposure
When you have multiple positions open in your trading account and each position consist of a different currency pair, always make sure you’re aware of your RISK EXPOSURE.

For example, on most occasions, trading AUD/USD and NZD/USD is essentially like having two identical trades open because they usually move in a similar manner.

Even if there are two valid trade setups in both pairs, you may not want to take both. Instead, it might make more sense to pick ONE out of the two setups.

You might believe that you’re spreading or diversifying your risk by trading in different pairs, but many pairs tend to move in the same direction. So instead of reducing risk, you are magnifying your risk! Unknowingly, you are actually exposing yourself to MORE risk. This is known as overexposure.

Unless you plan on trading just one pair at a time, it’s crucial that you understand how different currency pairs move in relation to each other. You need to understand the concept of currency correlation.

Overriding Stops
Stop losses are pending orders you enter that effectively close out your trading position(s) when losses hit a predetermined price.

It might be psychologically difficult for you to acknowledge being wrong, but swallowing your pride can keep you in the game longer.

In the heat of battle, what often separates the long-term winners from the losers is whether or not they can objectively follow their predetermined plans.

Traders, especially the more inexperienced ones, often question themselves and lose that objectivity when the pain of losing kicks in. Negative thoughts appear such as, “I’m already down a lot. Might as well hold on. Maybe the market will turn right here.” Wrong!

If the market has reached your stop, your reason for the trade is no longer valid and it’s time to close it out. Do not widen your stop. Even worse, do not override or remove your stop and “Let it ride!”

Increasing your stop only increases your risk and the amount you will LOSE! If the market hits your planned stop then your trade is done. Take the hit and move on to the next opportunity.

Source: Baby Pips

 

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Forex Trading – Trade Forex Like a Hunter

~ Vera J.

In many trading-related books we often see the markets become associated with a jungle. And why not? Every day traders battle it out with animal references such as the bulls and the bears, the hawks and the doves, and the wolves and the sharks.

This is likely why traders love referencing themselves as the modern-day hunters. Some say that they’re like the cheetahs who catch their prey using sheer speed while others see themselves as crocodiles who lie in wait for a big, fat catch.
forex trading
So what does it take to become a successful hunter? And for traders, what does it take to consistently make pips?

1. Know Your Prey
When a lion wants to eat a buffalo, it doesn’t attack the first one it sees. It studies and analyses the herd’s behavior patterns and looks for its potential weaknesses. By the time the lion is ready to strike, it already knows what makes the herd tick, where to attack, and how to get the fattest buffalo with the least amount of effort.
forex trading
Like in the lion’s case, it’s essential for traders to collect data before striking. Before you enter a EUR/USD short, for example, you must first know which factors can influence its price action and which levels present the best reward-to-risk ratios.

Ask yourself questions such as “Which economic reports does the pair usually respond to? When does the pair move the most? What factors can shift its current trend?” Collect data and turn them into probabilities.

2. Wait for the Best Opportunity to Strike
Once you’ve gathered information on your prey, use it to your advantage by striking at the best possible opportunity. After all, hunters usually just get one chance.

Maximize your gains while minimizing your effort and your risk. The difference between an average and a skilled hunter is that the skilled hunter waits until the odds are overwhelmingly in his favor.

3. Execute According to Plan
For traders, the time to think about what could happen and what you would do in an alternate scenario has passed. In this stage, it’s all about just doing what needs to be done.

Be quick, aggressive, accurate, and confident in your execution. Don’t let fear and greed get in the way of your performance. Of course, it would help if you’ve already back and forward tested your trading strategy and that you’re confident that the numbers will add up in the end.

4. Monitor and Adjust
At any given day a leopard could encounter an extraordinarily resilient gazelle or a similar scenario that could change the outcome of its attack. Should the leopard use a different approach? Or should it abort its plan and wait for another opportunity?

If the actual trading scenario is different from the one you initially envisioned, then it’s time to make adjustments. The first step is to consult your play book for any alternative strategies you might have written or executed before. Then, weigh the outcomes of your options.

Should you cut your losses or let your profits run? Should you add to your position or close it and wait for another opportunity? Whatever your decision is, remember to choose the path of minimum risk and maximum gains.

5. Learn and Earn
The best hunters are ones that have learned the most from their previous experiences. In the jungle, you eat what you kill.

As in the jungle, the consistently profitable traders are not the ones who have the most trades, but those who have learned from their experiences and continue to improve their skills with each trade.

One way to speed up your learning process is to engage in deliberate practice. The process of journaling, recording, and reviewing your trades turns one experience into many and makes it easier to correct your mistakes.

Surviving the Forex jungle doesn’t require expensive tools or a fancy trading course. Sometimes it just takes simple processes such as the one stated above, repeated day in and day out, to become slowly but consistently profitable.

By Dr. Pipslow

Source: BabyPips

Images: Vera J.

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More About the Japanese Candlesticks

~ Vera J.

The Japanese candlesticks trading is one of the most powerful trading systems in history. It was invented by Homma Munehisa. The father of candlestick chart patterns.

This trader is considered to be the most successful trader in history, he was known as the God of markets in his days, his discovery made him more than $10 billion in today’s dollar.

Learning Japanese candlesticks is like learning a new language. Imagine you got a book which is written in a foreign language, you look at the pages but you get nothing from what is written.
The same thing when it comes to financial markets. If you don’t know how to read Japanese candlesticks, you will never be able to trade the market.

Japanese candlesticks are the language of financial markets, if you get the skill of reading charts, you will understand what the market is telling you, and you will be able to make the right decision in the right time.

More importantly, learning the principals of market psychology underlying the candlestick methodology will change your overall trading psych forever.

Just as humans, candlesticks have different body sizes, and when it comes to trading, it’s important to check out the bodies of candlesticks and understand the psychology behind it.

The human behavior in relation to money is always dominated by fear, greed and hope. Candlestick analysis will help you understand these changing psychological factors by showing you how buyers and sellers interact with each other.

Source: The Candlestick Trading Bible

 

 

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The History of the Japanese Candlesticks

~ Vera J.

Candlesticks have been around a lot longer than anything similar in the Western world. The Japanese were looking at charts as far back as the 17th century, whereas the earliest known charts in the US appeared in the late 19th century.

Rice trading had been established in Japan in 1654, with gold, silver and rape seed oil following soon after. Rice markets dominated Japan at this time and the commodity became, it seems, more important than hard currency.forexMunehisa Homma (aka Sokyu Homma), a Japanese rice trader born in the early 1700s, is widely credited as being one of the early exponents of tracking price action. He understood basic supply and demand dynamics, but also identified the fact that emotion played a part in the setting of price. He wanted to track the emotion of the market players, and this work became the basis of candlestick analysis. He was extremely well respected, to the point of being promoted to Samurai status.

The Japanese did an extremely good job of keeping candlesticks quiet from the Western world, right up until the 1980s, when suddenly there was a large cross-pollination of banks and financial institutions around the world. This is when Westerners suddenly got wind of these mystical charts.

Obviously, this was also about the time that charting in general suddenly became a lot easier, due to the widespread use of the PC. In the late 1980s several Western analysts became interested in candlesticks. In the UK Michael Feeny, who was then head of TA in London for Sumitomo, began using candlesticks in his daily work, and
started introducing the ideas to London professionals.

In the December 1989 edition of Futures magazine Steve Nison, who was a technical analyst at Merrill Lynch in New York, produced a paper that showed a series of candlestick reversal patterns and explained their predictive powers. He went on to write a book on the subject, and a fine book it is too. Thank you Mr Feeny and Mr Nison.

Since then candlesticks have gained in popularity by the year, and these days they seem to be the standard template that most analysts work from.

Source: The Candlestick Trading Bible

 

 

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The Need to Exchange Currencies

~ Vera J.

The need to exchange currencies is the primary reason why the Forex Market is the largest, most liquid financial market in the world. Currencies are important to most people around the world, because currencies need to be exchanged in order to conduct foreign trade and business. The foreign exchange market is the “place” where currencies are traded.

Like a Pro 1

Currency trading is conducted electronically, which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week. Currencies are traded worldwide in the major financial centers of the world.

 

 

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