Protective Put Secrets » Forex Trading Strategy

Forex Money Management – a Simple Strategy for Bigger Gains and Less Risk

admin — Mon, 11 Jan 2010 20:27:53 +0000

Forex money management is crucial to your trading success and you need to at all time protect your core equity. This is a simple effective strategy I have used for many years to improve profitability and it works. If you want to make money in forex, you have a choice of long term trend following and trading the big trends, or trading the over bought – oversold areas via swing trading. Before we move on forget day trading or scalping it doesn’t work so you have the choice of the above trading methods and this strategy combines them. I am going to start with an example of my own trading. I am dollar bullish on the euro and got my short in at 1.60 and we have seen a big decline of 500 odd pips. A nice return and I think the euro is going far lower – but we could get a good rally as we are oversold at present. So what am I going to do? Simple… Put 50% of the trade in the bank and leave 50% in the market. Ok it could run lower but I am still in the market with 50% and will put another 50% in on the next euro rally when it becomes over bought. The advantage of this simple money management tool is: You are following the long term trend and banking along the way using swing trading indicators, taking profits on surges and putting dollar longs back in when the euro becomes overbought. You are active but still following the long term trend. Sure 500 pips is nice – but I think the euro is going to trade into the 1.40s, so I want to hold the trend but if things go against me, this strategy allow me to come out with a profit. This method allows you to take a bit more risk to the stop and remember – most traders can pick direction of trends, what they can’t do is get their stop levels right and get stopped out to soon. Most traders cannot simply sit on a long term trend and this method allows them to do so and you are always in the market. If you look at any forex chart you will see trends that last for many months and make tens of thousands of dollar and this method will let you tap into them. 50% is the core position 50% is liquidated on surges in your favour and then put back in for full exposure on short term rallies against you. In the next article I will show you the indicators to use and how to decide when to take profit and when to enter new positions, with this simple but powerful money management technique.

Forex Education – The Key Elements Of A Successful Forex Trading Strategy

admin — Fri, 08 Jan 2010 07:52:32 +0000

An essential part of Forex education for a new trader is knowing the key elements that a successful Forex trading strategy must contain to succeed. Here we will look at all the salient points. Most traders lose, so make sure you have all these key elements in place before you start to trade.Let’s take a look at the key points 1. Trade Valid Time Frames Not Market Noise Most Forex traders try scalping or day trading but this is doomed to failure; all short term volatility is random so you can’t win. The majority of Forex robots also trade short term and I saw one that generates 20 trades a week! I know traders who make triple digit gains and trade less than that in a year. Trading frequency is not linked to profitability, so trade valid time frames and that means either long term trend following or swing trading. Leave day trading alone unless you want to lose quickly… 2. Simple Methodology and Not Curve fitted Ideally your system should be simple just a few rules and that’s it. Complicated systems lose because they have too many elements to break and in Forex keeping it simple is the way to make profits so, forget about being clever. Also your system must not be a curve fitted system in hindsight. Curve fitting is where you keep bending the rules, until they make a profit on historical data but of course, the data never repeats exactly again and the system losses. If you want to see a good example of curve fitting, look at any Forex robot, great gains in hindsight and losses in real time trading. 3. Trade the Reality of Price Change Forget the people who tell you prices move to some higher theory and there is order in price movement there isn’t. You are trading an odds based market and dealing in probabilities not certainties. When dealing with an odds based market you need to trade the reality of price change and not predict. Prediction is hoping or guessing and doomed to failure, so leave it to the far out investment crowd. Trade the reality of price change, not where you think prices may go and you will have the odds on your side and that’s what Forex trading success is built on. 4. Money Management and VolatilityMost traders think that money management takes care of itself but it doesn’t and when working out stops, you need to take into account the standard deviation of price of the market you are trading- don’t know what it is? Make it part of your essential Forex education! You need to place stops to protect yourself but make sure they are outside of random volatility. If you want to win at Forex, you need to learn how to do this; it’s the very basis of Forex trading success. Summing Up Your aim is to make money and that means working smart not hard. Forget about trading a lot, being clever or trying to predict. Keep you Forex trading strategy simple and robust and pay attention to the volatility of the market traded. If you follow the points in this article, understand them and build your strategy around them, they will lead you to currency trading success.

Forex Trading Strategy – 4 Steps for Forex Success

admin — Tue, 05 Jan 2010 19:50:03 +0000

If you want to make money in forex trading you need to have a soundly based forex trading strategy. This is far easier to achieve than many traders think it is and here we will show you how to build one in 4 simple steps.

1. Success Comes From Inner Understanding

To succeed at forex trading you need to do it on your own and understand EXACTLY how and why your system works.

Even if you follow a vendor or someone else’s currency trading system, you can’t simply follow it you must learn it and have confidence in it.

If you don’t understand how your trading system will help you succeed, you won’t have confidence in it which will lead to a break down of discipline if you hit a losing period.

Keep in mind if you don’t have the discipline to follow your trading method, you don’t have a method!

2. Keep It Simple & Work Smart

Many traders believe the more effort they put into their forex trading strategy the more they will make – this is not true. You get rewarded for being right with your trading signal and that’s it.

Other traders think the more complicated their system is the more chance it has of succeeding but again – this is not true.

All the best forex trading systems are simple and this means they have fewer elements to break and are more robust in the face of brutal market conditions.

This is actually good news, as you need to work smart and not hard to succeed.

Simply focus on the right areas and learn them. If you do this, it will lead you to currency trading success.

3. A Successful Trading System

Here we can’t give you all that goes into a successful trading system – but we will give you some important basic elements you need to keep in mind when building one.

- Do not day trade, as you are guaranteed to lose. All short term volatility is random and you cannot get the odds on your side, either swing trade or follow long term trends.

- Base your system on the concept of support and resistance and breakout methodology.

- Do not predict with your system. Use momentum oscillators to confirm each and every trading signal.

If you predict that’s simply hoping or guessing and you won’t win.

Trade the truth of price action and confirm.

- Always place stops and assume the worst eventuality – you need to protect what you have above all else. As one trader I once knew said:

“If you take care of the losses the profits will look after themselves”.

4. The crucial Point You Need to Understand!

In forex trading 95% of traders lose.

This is simply in most instances down to the fact they don’t work smart and learn the right information.

They therefore don’t have confidence to apply their system with discipline.

You need to understand as part of your forex education that your method is important – but you need the right mindset to apply it.

If you want to learn currency trading you can, in fact anyone can – but you must learn how to trade currencies the right way and build a logical, simple forex trading strategy which, takes into account all the points we have made above.

If you do, you can build a forex trading strategy for success.

Forex Trading Strategy How to Build Your Own for Triple Digit Gains

admin — Tue, 05 Jan 2010 09:49:22 +0000

There has been a trend I recent years for more and more traders thinking they can buy success from a vendor, or a forex robot – but this method ends in tears and the market teaches them a lesson. If you want to win, you need your own forex strategy that contains the enclosed… First let’s quash the myth you can buy success, most of the systems sold by vendors, come with simulated, back tested track records and that’s no help going forward! Now to encourage you that you can win, here is a simple fact which most traders never really think about. 95% of traders lost 50 years ago and 95% lose today. It’s the same ratio despite all the advances in forecasting software and powerful PC’s we have seen in the intervening period. What is so significant about the above fact? Simple forex trading systems work best and to win, you don’t need to do anything complicated. Your forex trading strategy should contain the following: The Logic The logic should be based on long term trend following and trading breakouts – to new highs and lows on charts. This is where most major moves start from, so if know how to trade breakouts you can get in on these trends. The IndicatorsMost traders think the more indicators they combine the better – but this is doomed to failure. Use too many and your system will have too many elements to break and will not be robust. In my opinion you should start with trend lines and an understanding of support and resistance.You then need to use a few momentum indicators to time your trades. Always, make sure when you buy or sell, your trading signal is supported by momentum. One or two, is all you need and the stochastic and the RSI, are a great place to start Money Management You need to pay careful attention to this and don’t make the mistake most traders make which is to use all the leverage their given! You can get 200:1 but you don’t need to use more than 10 – 20 in my view. Furthermore, if you are trend following allow the market room to breathe and don’t get your stop to close. If you do you will be bumped out of the trade and then see your trend sail on over the horizon making thousands of dollars and you’re not in! There is a balance, you have to have your stop far enough back so that random volatility doesn’t take you out and close enough to protect yourself. To win long term you must run the big trends and you must balance this risk to reward. Discipline The real advantage of building your own forex trading strategy is – you will understand it, have confidence in it and this will enable you to trade with discipline, through losing periods until you hit a home run. If you can’t trade your system with discipline, you don’t have a system!Most traders lack discipline and cannot execute their trading system through losing periods and throw the towel in to soon. The above is a simple framework for getting a forex trading strategy together, you can seek big gains with. The route to currency trading success is: A simple forex trading system, which you can trade with discipline and it really is no more complicated than that. .

Forex Trading Strategy â the Easiest Trading Method for Novice Traders

admin — Wed, 30 Dec 2009 19:40:52 +0000

If you are a novice trader perhaps the easiest forex trading strategy to use is a swing trading strategy as it overcomes two problems that most novice traders face but cant overcome.

By using a swing trading strategy not only can you overcome these problems, you can give yourself a great chance of currency trading success.

Letâs look at this forex trading strategy in more detail

1. Patience

Most novice traders lack patience and they think the more they trade the better.

Most go for forex day trading which is probably the best way to lose money you can get â day trading simply does and cannot work, due to the fact all short term volatility is random.

You can never get the odds in your favour and you can never win â PERIOD.

Other traders however lack patience when long term forex trend following â they simply cannot accept the profits it wants to give them!

We all want profits â but when you sit on a long term trade and see open equity dips of thousands of dollars the temptation to take it is huge and most novice traders bank profits far to soon.

If you are forex trend following you need to take a bit more risk and that means hanging on for longer term gains.

Most traders simply donât have the patience and discipline to do this and itâs hard even for pro traders.

Swing trading when incorporated in a forex trading strategy overcomes the problem.

You are looking at making profits in periods of 3 days to a few weeks, so you are never holding a position for long periods, and there are plenty of opportunities to keep the trader interested and finally, stop loss protection can be tight keeping risk low.

Forex swing trading is easier than long term trend following as you donât have to be so patient, itâs easy to maintain discipline, which is the key to big forex gains.

2. Swing Trading is simple

Swing trading tends to be quite simple to learn.

All you need to do is look at support and resistance and use some momentum indicators to time your trades.

One or two timing indicators are all you need to judge price momentum as it moves into test support and resistance and your all set to swing trade.

Being simple to understand is a big advantage, because from understanding comes confidence and from confidence, flows discipline â the key to successful trading is having the disipline to foloow your plan through periods of losses and is a trait all succesful traders have.

So if you want to trade currencies then try swing trading its simple, easy on the mind and can be very profitable.

Consider it as part of your forex trading strategy and let it help lead you to the currency trading success you desire.

Forex Training – What Makes A Good Forex Strategy?

admin — Sat, 26 Dec 2009 08:50:29 +0000

If you are trying to develop a successful forex strategy for the first time, you are probably struggling a little bit in trying to figure out what works and what does not. There is so much bad information out there that the forex market itself is getting a bad name. The market isn’t bad, it’s just the bogus strategies that are making the market look more difficult than it is.A good forex trading strategy will not actually be a forex system, but an analysis that breaks down several different areas of the market itself that will consistently produce a profit. Trying to predict the market is just plain foolish, what you need to do is develop a way to spot trends and quickly and accurately as possible so that you can take full advantage of them when they occur. This market is built on taking advantage of profitable trends.If you follow trends versus trying to predict the market, you will find that you are able to keep your risk of loss lower. In order to do this, you must follow a few basic rules, in essence, this becomes your strategy. The most important that you need to become familiar with when trying to spot trends is that you must understand how the market actually works. Education or good forex training is the one key that cannot be avoided or overlooked.Once you are in the market, you have to establish a market stop. This is your safeguard against getting yourself buried. You should never change this, it is there to protect you. Do not try and go against a loss, it is going to happen and you are just going to have to get out on your stop and reanalyze your data. There is no shame in admitting that you made a mistake as long as you learn from it. Trust me, it happens to everyone sooner or later.Another thing that you will want to keep in mind is that as no human is perfect, no forex trading system is either. The key is in having a system that will regularly and consistently produce a profit. Taking a loss every now and then is expected, you just have to be able to control them. Follow the simple philosophy that you buy when the market is going up and sell as it begins to go down (this is a trend in case you weren’t paying attention earlier) and you will do fine.I have to emphasize this again – avoid the pratfall of trying to predict where the market will go. Try to do this and you may get lucky, but that luck could lead to overconfidence and horrible losses down the road. Taking any loss of more than 10% is almost impossible to recoup from and trying to predict a market could result in exactly that.

Forex Trading Strategy – How To Achieve Success With Forex Trading

admin — Wed, 16 Dec 2009 09:02:04 +0000

Learning Forex trading strategy is not a simple task, but in no way it is difficult either. Forex trading is all about regulation, willpower and determination. Leveraging your strength could be extravagant by organizing the apt trading strategy. Forex trading strategies are the key to successful trading or online currency trading. A knowledge of these trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in trading.
Forex trading is very different from trading in stocks and using strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of trading strategies available to investors and one of the most useful of these trading strategies is a strategy known as leverage.
This strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this strategy you can maximize the trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any trade which will make backing higher yielding transactions even easier and therefore allowing better results in your trading.
The leverage strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the market.
Another commonly used strategy is known as the stop loss order. This strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.
An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.
All these forex trading strategies are designed to help investors get the most from their trading and help to minimize their losses. As mentioned earlier knowledge of these strategies is vital if you wish to be successful in trading.
Take the time to actually understand the forex trading strategy. Study the components independently so a deeper understanding of the strategic mechanisms would be mastered. If you recognize the components, internalize its use, and make consistent profits into your trading account, then you have your own Forex trading strategy. It does not really matter what the professionals say, your account balance is the final judge and judges for your strategy.