Everyone that is involved in Forex Trading for awhile would have all heard these 3 misconceptions about Forex Trading, but beginner traders continue to fall for them. These are also some of the reasons why many Forex Traders end up going broke.
So how can we avoid these common traps and make money from Forex Trading?
Firstly lets look at the 3 areas to avoid when you are starting out Forex Trading.
Making Regular income and Profit:
This is misconception number 1.
Think about this for a moment how can you make regular income from something that changes as frequently as the Forex Market. No matter how great the system is the market simple changes all of the time, how often have you been in a well trending trade only to see something strange occur and a nice profit turns to a break even or worse a loss? So the next time you see or hear of someone saying make x% profit every month's run!
Ability to Predict Forex Prices in Advance
This is misconception number 2.
This is the biggest crowd puller, think about it can you see into the future? No. No matter how great the theory, how well it has been back tested you still cannot have a theory that works 100% of the time. Think about it if there was a theory that worked 100% of time we could predict future results. So the theory would need to take into account, all interest rates cuts and rises, speeches from the banks and monetary authorities as you can see highly unlikely. No Impossible.
Make Massive Profits minimal Exposure:
This is misconception number 3.
Many of us would have seen systems advertising the make 100% gains and have less than 1% drawdown. This is not reality and you can see the real results to support this outrageous growth rate to drawdown that has been audited.
So consider this and Improve your chances!
The common fact to trading is that over 95% of all traders will lose their money and the ones that do believe at least one of the above
So how you can become successful as a forex trader is understand that you can make profits in the long term, that making money is going to be up and down and that Forex trading is a game of odds not certainties. They also understand that to make money you need to take risks, the old saying of risk versus reward.
If you want to get involved in Forex trading and win you can, by getting a good solid Forex education and good Forex mentoring. In some cases you can find a Best Forex Brokerthat can assist you. If you are looking for a great Forex Broker, look at the CFD FX Report they have recently researched all the Forex Brokers and have come back with who they believe to be the best.
You can win and enjoy huge rewards for your effort, if you understand the challenge of Forex trading and what the reality really is.
Regular Income From FOREX
The Trend of Forex Trading
Forex trading system of the world performs trade of about $2 trillion each day. The enormity of the gigantic financial capacity of the Forex trade can be truly grasped if you compare this mammoth amount to the $25 billion that New York Stock Exchange trader's trade per day.
The quintessential qualities of a Forex trader are discipline and endeavor. If you are diligent and logical in studying the Forex market trends then it wouldn't take you much time to hit the jackpot in Forex trade. However, if you cannot manually manage to analyze all the currency trends yourself then you might take the help of a automatic signal service or a Forex trading software which would send you alerts and signals about buying and selling currency after elaborate research and analysis.
If you use one of the automated Forex tools available in the market then you would be able to evaluate the trends of exchange rates and Forex market conditions within a few minutes with the help of the data provided by your FX software. As a result you will be able to close your forex deal in less than an hour. Thus an automated Forex tool would ensure that you are making optimum use of your trading time.
The global Forex trading market is only merely remarkable because of the huge volume of monetary transactions that happens through it but it is also a commendable phenomenon due to its geographical dispersion. With the help of automated FX software you can trade in various local as well as international Forex markets within different time zones without personally monitoring those various markets day in and day out.
However, before you decide to buy particular FX software, you need to put in a little effort to search for a Forex tool which is easy to use and is ideal for beginners. Glean information about that particular Forex tool which you plan to buy and thoroughly read the testimonials for that particular Forex trading software before you purchase it.
Forex Trading Errors
When we are trading we will all from time to time make a mistake when forex trading and it is normal and sometimes can be looked upon as healthy, so as to know that the decisions will either make or break you. However, if this becomes severe to a point wherein you lose more than you can afford to, then you would have to take measures in order to avoid further damage. This is why when you are trading you must make sure that you only trade within your limits. If you can't afford to lose it, don't trade.
When trading you must make sure that you keep your emotions in tact, do not let them take over. If you let your emotions take over the result is more than likely to cause even more rash decisions and can cloud your strategies, producing even more disastrous results. You should aim for more positive months with good turnovers but face it; there are some periods wherein gain is not achievable.
Before trading you should make sure that you have a plan and part of that plan is to employ a money management technique; in case is where you went wrong the first time. You should always consider what your losses are going to be. Since most traders would tend to gamble as opposed to trade, instead of making a calculated risk, their bank accounts would be drained each time there is a loss. They don’t have a great capital management system which causes damaging effects.
You must make sure that you educate yourself as much as possible about the Forex Market, a great place for education lessons is the CFD FX REPORT They specialize in offering free Forex Education as well as helping you find the Best Forex Broker.
Each trader has their own attitude towards forex trading and what risks they are personally prepared to take, but learning about the inherent principles can go a long way in helping you develop your own style and making you more successful in the long run. You can also develop a trading system and make sure to be disciplined enough to follow what you have created. Remember create the plan, plan the trade and trade the plan. You should have this next to your trading screen at all times and never forget it.
Do not associate loss with the feeling of being a loser, in order to be a successful trader you will take losses and the best traders can handle them. When trading you should know that you can't pick the market 100% of the time, so there is going to be losses it is how you handle those losses to how successful you are. The forex market is an objective industry wherein sound decision-making and strategies are employed and not about judging your emotional capabilities and dealing with them. If you can't handles losses, or losing money, do yourself a favor and don't trade.
7 Traits Of the Great Forex Trader
To be a successful Forex Trader takes time, education and knowledge, but the great news is anyone can do it. You do not have to be a genius to be a Professional Forex Trader.
There will be many people that disagree with the above and end up broker, because they people have been successful in other areas and they see Forex Trading simply as a financial game. They do not put in the require effort to make themselves successful. So what are the traits to make you a Great Forex Trader?
Lets Examine these factors:
1. Do not take forex trading for granted. They see forex trading as the same if not harder than most specialized profession. They put in a lot of efforts and time to trade well.
2. They acknowledge the financial risks in forex trading. They know that they can win and as well lose money in forex trading. They use smart money management skills
3. They will educate themselves first and build up the knowledge the same as any profession, remember it all takes work. They respect and obey all the previous rules set by the previous successful traders. They understand about trend trading and why it is risky to trade against the trend.
4. They will have patience and understand that it takes time to be successful. They don't see it as a get rich quick scheme. They invest a small amount first and build up.
5. They know the importance of having a mentor like any profession. They understand their deficiencies as a beginner and are always seeking knowledge from the experienced traders.
6. They stay with one proven trading strategy and trading only one currency. They do not jump from one strategy to another. They do not try trading many currencies at one time.
They are devoted to understanding the nature of them and maximizing their profits while minimizing their risks.
7. They set aside sufficient capital that they can afford to lose. With money they can lose, they do not feel pressure while trading. They simply follow their trading plan on executing their trades.
The figures are that 95% of traders will end up broke, because they simply fail to plan and will not use the above traits. Make sure that you get the right level of education and knowledge and if you need more information feel free to visit the CFD FX REPORT , they have a host of free education lessons, they can help you find a Forex Broker.
Forex Trading - The top 5 Tips
We have all heard and read how much money we can make from Forex Trading, so what are the real rules and tips that will make us money from Forex Trading? Below we will uncover the real tips for Success.
Below are the 5 Tips to Help make you big money, they are not listed in order of importance.
1. Never buy a Forex Robot.
This is simple if you had a program that would make real money would you sell it? No.. You would keep it. The simple truth is most of these people are selling these programs and that is how they make the money not from Forex trading. So beware.
2. Get Educated and Learn Fast
Anyone can learn Forex trading and anyone can make money, you don't have to be a genius. You don't need to spend long doing it either and you should be able to learn everything you need to know, in a couple of weeks and then your all set to trade. You should make sure that you have a trading plan and some rules.
3. The Best Proven Systems are Simple:
Make it simple, use some indicators and support and resistance. Forget trying to be clever or complicated, simple systems are far more robust than complicated ones and work. People will more often than not try and complicate things.
4. Make sure you have Risk and Money Management Rules
Success is built on money management and risk management and you need to learn about volatility and standard deviation of price and if you have no idea what it is make it part of your essential Forex education.
5. The Golden Rule is Discipline- Set the Rules and Stick to Them
No matter how great of a trader you are you will have losses, so you need to ride them out and have discipline, which means having rules and sticking to them
Discipline comes from knowledge of what you are doing and the ability to keep your emotions under control. Holding discipline is the key to success.
Trading without Indicators
When it comes to trading most professional traders will be trading with indicators, so when most people hear that someone is trading with out them there is an instant look of bewilderment. To them it sounds like driving in the dark with no lights. But in fact it is the opposite.
So to people that trade without indicators they have to same reaction to people that trade with 10 indicators on their charts in order to place a trade. They will view all of these indicators as causing a blind spot to what is actually going on in the market.
FOREX Traders have been trading without indicators for as longs as the market have been around. This is what is simply known as price action. This particular trader is looking at the chart, looking at the current prices movements, comparing it to past price action movements to predict future price movements. So in simple terms everything we need know is sitting there right before our eyes, without the block of needless indicators.
Here is an example, within the FOREX Market there are certain patters that will be repeated on a constant basis. They are predictive in nature, as opposed to indicators like and RSI or MACD which are always lagging. They are only telling us what has already happened. Anybody can be a millionaire if they only tell you what has happened already. The real skill is using past information to make an informed decision about what the future holds. Trading without indicators is as close as we'll ever get to being a FOREX Trading psychic.
For more education lessons please feel free to visit the CFD FX REPORT they are helping traders become more educated.
Indicators In Forex Trading
Forex traders often look at indicators such as Bollinger Bands, Pivot Points, MACD, Moving Averages which help them to determine where to enter or exit trades. Using technical indicators is fine, however many traders overemphasize their importance or just plain misunderstand them.
Many Forex traders think that they can simply download an indicator and then mechanically apply it into their trading and do so profitably. This is just a plain illusion. Successful traders realize that there is a lot more to using indicators than just asking them to generate buy/sell signals or pin-point exact entry points. Technical indicators for them represent just one part of their trading strategy.
Let us take a look at some of the reasons why you should not put all your faith into those sometimes confusing little indicators.
Take Moving Averages for example. They are "supposed" to show the direction of the trend. The most common and often used are the simple 200day MA, 100day MA, 50day MA, 35day MA and the 21day MA but they are only valid on daily graphs. Some Forex day traders say that a good signal is when the 50day MA is crossed by the 13day MA and that when this occurs you should trade in the direction of the cross.
The problem with this (apart from the fact that it only works on daily graphs) is that these types of ¡°crosses¡± do not occur often enough for traders to exploit them. This can often lead to a situation where traders are seeing what they thought was a cross now reverse and uncross. Even worse, it can lead to a situation where day traders are "chasing" and trying to anticipate a cross. If you are doing this, you are distancing yourself from the market which you are trying to trade. Not only are you trying to guess what the price is going to do next but you are guessing what the indicator, based on the prices, is going to do next.
Other problems with technical indicators involve issues with the quotes and prices given to you by your broker. Forex brokers are market makers and as such different brokers will give you different quotes and prices at a specific point in time. Naturally, a different price could lead to a situation where different traders, trading the same market have the same indicators giving them different responses. Thats how arbitrary technical indicators can be.
Finally, a lot of these technical indicators were developed by people trading the stock market. With the growth of computers and software packages that incorporate these indicators, technical analysis has become very popular and spread to other markets such as the Forex market. What currency traders should be aware of however, is that as these indicators were developed in a time where real time information did not exist. As such, the limitations of technical analysis becomes even more exaggerated in Forex trading ¨C not only is technical analysis an interpretation of historical events but it becomes even more so in the Forex market, a market moved by real time events.
For Forex Traders
Forex trading can deal with lots of money and so when you are trading you need to be sure that you have optimal conditions. Too many traders trade out of habit and this can be a dangerous thing because it may not mean you have the best conditions. As a matter of fact trading in poor conditions can cost you hundreds and sometimes thousands of dollars. Trading conditions will not always be optimal and you cannot wait to only trade when they are. It isn't about recognizing the perfect time to trade. Instead it is about knowing when not to trade. When the market is moving sideways or not really moving at all it is unwise to trade real money. You have no indications of what is going to happen and so you are making your decisions off of pure guess and that is a dangerous place to be in. Do not trade real money when you are ill or overly tired. The condition of your body can have a big effect on how your mind thinks. If you dive into trading and you are tired, worn out or just sick it will have an effect on how quick you think and what you think. Trading when your mind is not at a high will mean trouble. Give you body the time to rest and save your bank account the funds of you trading while sick or tired. There is almost nothing worse than trading when you are emotionally distracted by other factors. It is horrible for two reasons. One your mind isn't on the trading take place, it is off trying to resolve or analyze the problem. The less focus you have the more mistakes you make. The second reason is that if you are emotionally distracted then you are already allowing your emotions to take precedence on your decisions. If you are emotionally distracted then the odds of you trading based on emotion are extremely high. And finally never trade with money you cant afford to lose or when you feel you have to make a certain amount. Those factors create unnecessary pressure on you and your trading.
Global Forex Trading
Forex is one of the greatest homey work opportunity to make money. It gives an opportunity to make money from the comfort of your home and spending the time with family at the same time.
It is also an opportunity which you can do along with your existing day job. Forex means foreign exchange and Forex trading means is the trading between foreign exchanges.
Forex trading requires some knowledge about the way the Forex market runs. You have to learn about he factors both local and the global which affects the market.
If you want to succeed in this particular trading you must have the knowledge about the basics and facts.
Global Forex Trading offers the chance to deal in real time online currency trading that makes millions of forex brokers become more rich every day.
Global Forex Trading has less publicity that stock and commodities market and even the futures, even more than $2 trillion of currencies are transacted every day on the global forex market.
Compared to stocks and shares or commodity markets that have specific opening and ending trading times. At the same time, Forex markets are available for trading anytime with price of currencies changes and fluctuates every time.
Forex trading has become an extremely popular way to trade the global market, the largest and most liquid market in the world.
The Forex Trading market is open 24 hours a day. Forex trading also gives free commission and available on more than 60 currencies worldwide.
Global forex trading boasts that they provide the only forex trading platform that is suitable for both beginners and professionals.
Forex Trading has no restrictions of getting profits no matter what the market condition.
Nowday, the Global Forex Trading is available not only for the large investors but the smaller one can take a part too.
Leverage is the main key and powerful tool to Forex Trading wealth. You should have a good education in Forex trading to reach gain and profits consistently.
In Forex trading, you can get a leverage of 20 to 50 times commonly up to 100% margin in some special cases. In stocks or shares, you may be able to get it of 50 - 70% of your stocks or shares.
Leverage is the main key and powerful tool to Forex Trading wealth. You should have a good education in Forex trading to reach gain and profits consistently.
With that leverage comparison, you may be able become a millionaire fastest in Forex trading.
All things you need to know and learn it up in Forex trading ; knowing risk level - how much you are willing to lose, understanding the different Forex trading systems as technical and fundamental and research the trading systems which you can be familiar with how they work.
Also learning the trading trends, price history, support and resistance lines, familiar with the fundamental economic factors and its issues that effect to the Forex market.
Be a Successful Trader
The share market today is as volatile as we have seen it, as stock prices continue to fluctuate the only way to preserve your money is to sit on the sidelines and the chaos goes on in the financials and other sectors. With the wild swings in the market as it continues at times to make no sense. We have seen days of down 500 points, followed by days of up 450 points, actual trading sessions moving as much as 1000 points. How do we make sense of these crazy markets and more importantly how do we make money.
Do not worry there is a systems out there that will teach you manage your trades. With this type of knowledge you can go from a learner trader to an Expert Trader
Forex Broker in no time.
Becoming a successful stock market trader requires learning and having a certain level of knowledge, confidence and the ability to control your fear and greed. Stock Market or Forex Trading is best explained as supply and demand, if a lot of people want the stock it goes up, if they don't want it then it falls. There are endless amounts of research available today from online reports, newspapers, education lessons the list is quiet long so how do you decide when and where to start. The first step you need to take is to decide that you want to become a trader. Then you need to right out your goals and your reasons why.
What you now need to do is to learn and understand that in theory things can seem simple however once you are trading in these at times crazy trading markets things can seem confusing. This is why it all comes back to having the right level of education and knowledge and where possible a great mentor or Broker. Using these steps almost anyone can become a trading success.
To learn more on the stock market or forex market feel free to visit the CFD FX REPORT as they have some excellent education lessons available, and they can also help you find the best online brokers in the market.
Successful Forex Trading
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There are some major advantages to Forex Trading.
* The long hours that the Forex market is open, it trades 24 hours a day for 6 days per week and is the most liquid market in the world. So even if you have a full time job you can still come home and trade. It is a great way to start out, paper trade build up confidence start achieving financial success then you can leave your current job.
* It doesn't matter what the market is doing as you can just as easy go long (buy currency) or go short (sell currency) so there is never a bad time unlike buying stocks. The liquidity means that you have no problem selling.
* You don't need thousands to start. The reason that you don't need massive bank balance is because you can use leverage, in some cases you can get 400:1 so if you have $1000 you can leverage that into $400,000, which can make for great profits. Also you don't pay brokerage or commissions. If you are looking for a great Forex Broker feel free to visit us and we can show you the best Forex brokers in the markets.
* The market will never go broke. Unlike share trading where companies can collapse it is very unlikely to happen in Forex. Imagine if the USD was worth $0, so you can see very unlikely.
* If you are new to the foreign exchange market, you do not have to worry about spending thousands of dollars to learn or buy a course. There is online Forex trading course that will explain how the forex market works and a Forex tutorial will also explain about fundamental and technical strategies that are available to you as a Forex trader.
* Work your own hours if you don't feel like trading then you don't have to, it will always be open tomorrow.
Forex Report - How to Be A Millionaire Trader in FOREX trading
We all want to make money from trading, and we all want to make millions from the stock market of the Forex market. However it is a well know fact that over 90% of traders will in fact go broke and not become successful. So if we are to look at who does become successful there is a group of people that tend to become more successful than others.
There is a group of individuals who tend to make the better traders and their non mathematicians or College educated, they have a skill that anyone can actually learn and their very successful. The group of individuals I am referring to are...
Professional card players who are great at playing cards and poker and the exact same skills you need in these games are the ones you need in Forex before we explain why lets dispel one of the greatest myths about Forex Trading:
One reason for this is if you watch all great card players, they will all have one common trait, which is patience. They also realize that they cannot win every hand, and as traders we cannot win every trade. If we understand this we are increasing our chances of success as a trader.
We also must realize there is more trading days to come, as there is more cards to be dealt. So if we miss a trade, don't trade for trades sake.
Remember DO NOT Trade for TRADES SAKE
Forex Trading is Complicated
To enjoy Forex trading achiever does not take you have a college education or have a complex Forex trading strategy or knowledge of maths and the reason is simple - Forex trading is simple and if you get a system to Complicated it will break in the ever changing brutal world of Forex Trading. Also as humans we like to complicate things and we believe that if they are complicated, then we are smarter therefore it makes us feel better. Quiet often though simple things will make us a lot of money. This can be also looked at with trading strategies, keep them simple.
Mathematics doesn't aid, because markets don't move to certainties, you are only trading with odds and probabilities and that's why card players are so great at Forex trading.
Here are the reasons card players make such great Forex traders.
1. They are Patient
They wait for the right hand and only play when the odds are in their favour. Contrast this with the bulk of Forex traders who are always in the market or trying losing strategies like scalping. In Forex Trading you don't get rewarded for trading often, you get rewarded for being right.
2. The Ability to Fold
A fabulous card player will pass hands by when the betting odds are non in his favour and he is also happy to fold when in a hand, if he doesn't think he will win. He keeps his losses tight and he doesn't mind dealing them, as he knows his time will follow.
Most Forex traders on the opposite hand simply can't do this and run losses or get disappointed, as their emotions get involved.
3. Courage at the right Time
The fabulous card player knows when a great hand comes up, he needs to maximize his potential and will milk as much money from it as he can. They are prepared to bet huge amounts and hold on with discipline and win.
Contrast this with the average Forex trader who banks his profit early or bets 2% and thinks he is going to make a lot of money. In Forex trading, you need to hold and profit from long term trends and have enough riding on them to make a great profit.
4. discipline discipline discipline!
You have heard about how serious it is in Forex Trading and it is to take loss after loss as the market hurts your ego and makes you look stupid is hard. Most traders cant do - Professional card players know it's the key to success and are mentally prepared to do this and know they will hit a home run.
Keep it Simple.
Forex Trading is simple and always has been and the huge difference between winners and losers is the correct to keep losses small and bet big amounts when the time is right.
Forex Market - Make Money in trading
The Forex Markets do not create clear trend lines all the time. Quiet often we will experience very volatile markets and the prices can move dramatically up and down. Sometimes they can start to trend then also of sudden make a strange upward or downward movement which will trigger your stop loss and stop you out of the trade.
So How can we trade this sort of Forex Marketand make money?
1. Don't expect a long swing plan or any sustained price movements if you are already in an open position, get some profits out when you have made some from the forex market or shift it to the breakeven price as soon as possible. This will reduce the risk of losing that position.
2. When you need to trade in these conditions trade the currencies pairs that are highly correlated. So we are talking about the top 6 currencies pairs.
3. It can be also useful to use some level of Fundamental analysis such as referring to the calendar of economic announcements every now and then in forex trading. Sometimes a choppy market occurs when there is two or more economic data releasing at the same time or within a few hours. A particular news may trigger an up movement while the other one may trigger a down. Therefore it is a bad time to trade forex as you do not know exactly where the forex market is moving.
4. Sometimes when the forex trading market is choppy, it forms range-trading channels, which sets one up for a breakout. If there's is no indication on which direction the market is moving, Forex trader may go long when it's at the bottom range, and short when it is at the top range. This may earn you some pips, but again, it is better to wait for price to break out from the range-trading channels so that ideally you will be able to catch the breakout trend. This is why is why it is important to have a great forex broker too as they can help you with trading ideas. If you are looking for a Best Forex Brokerfeel free to visit the CFD FX REPORT as they have recently researched all the broker on the markets and can point you in the right direction.
The above should help you when trading choppy currency markets, but they are no guarantees of success. If you don't feel comfortable with the trade don't do it. Remember the markets are open nearly 6 days per week and 24 hours per day so there is also going to be more trading opportunities.
History
It is more than likely the oldest technical analysis tool available to Forex traders, Japanese candlesticks. Japanese Candlestick charts were developed in the 18th century by a man named Munehisa Homma. Munehisa Homma developed candlestick charts to analyze the price changes of rice contracts. He traded these contracts and was considered the best trader of his time. He became a very wealthy man for the sole use of these candlestick charts.
So what is a candlestick chart?
In simple terms the Candlestick charts is the Japanese Candlestick Charts, are simply a way to show price movement.
The charts are both very simple and powerful and when used effectively are one of the most profitable trading tools available. They are similar to line charts but much easier to read and interpret. They consist of a body, with or without a wick at each end. The body shows the opening price at one end, and the closing price at the other. The wicks show how much the price moved above or below the close. The color of the body shows whether it was an up time period, or a down period. They are brilliant and use to use you can tell by a simple look, whether the price closed higher or lower than the open. While this alone is enough to warrant using candlestick charts over line charts, this is only the tip of the iceberg in terms of the power of Japanese candlesticks.
The Chart patterns of Japanese Candlesticks
As the price of the Forex Market moves up and down, it creates distinct patterns. These patterns can tell you exactly when to enter the market and exactly when to exit the market.
When the Japanese candlesticks are combined with technical indicators these patterns work together to become very accurate. There are hundreds of patterns, the more of these patterns that you know, the better your analysis will become. Now I have only touched on the very basics of the power of Japanese candlesticks. There are many excellent books that teach these patterns in detail, after using the patterns for a while it becomes second nature.
Forex Trading with Japanese candlestick charts
Japanese candlestick charts are especially well suited to using in Forex. In Forex trading it is just as easy to make a profit whether the price is going up or down. Candlestick charts predict upturns as well as downturns. Using Japanese Candlestick Charts will not make you successful all the time. You will have wins and losses. The candlestick charts will however give you the edge you need to succeed.
Japanese candlesticks are a fun and easy way to trade forex. The candlestick charts will also help you to become successful with any strategies you are currently using. They can be an excellent aid to you when developing your own trading system. No matter what your goals are or how experienced/inexperienced you are, candlestick charts will increase your profitable trades. They will also help you avoid losing trades. Japanese candlestick charts are the easiest and most successful way to begin trading Forex.
Elements of a Trading Plan
Here are some important elements of a trading plan.
1. Why am I trading? What are my goals?
The answers to these questions might seem obvious, but they usually are not. Take some time to ask them of yourself, and seriously consider the answers. You may be surprised by what you learn. And whatever the answers, you will have a clearer picture going forward of what this enterprise means to you, and that will help you survive any rough patches.
2. What markets am I going to trade and why?
It is often best to specialize, especially for beginning stock market traders. Many pros make a great living trading the same stock day every single day for years. Choose a market that is appropriate for your experience level and trading style. Consider other factors such as available margin, volatility and liquidity.
3. What is the concept or philosophy behind your trading methodology?
Your trading system must have a concept behind it. Whether you are a value investor like Warren Buffet or a trend trader like George Soros, you should understand why you are doing what you are doing, how your beliefs about the markets define what you will do as a trader.
4. What will be your specific method?
In other words, specifically how will you execute your trading ideas? Will you buy breakouts or pullbacks? Buy oversold or sell overbought? Or will you use specific technical setups such as moving-average crossovers or another indicator-based strategy? Under exactly what conditions will you enter? When will you know to exit?
5. How much money will you risk on any single trade? On trading in general?
This is critical. Of course, start small. But just as importantly, have a plan in place for how much you will risk, emotions don't cloud your judgment when the time comes. The key is to find an allocation that doesn't cause any stress but still makes the trade worthwhile financially. One of the biggest problems with newer traders is that they are trading way too big in relation to their account size. Like when you are forex trading. Trading forex at 100-1 leverage is like introducing your mistress to your wife. Yes, you can do it, but that doesn't make it a good idea. Normally they don't get along too well.
6. What will my trading rules be?
This is also critical. Your trading rules include entry and exit rules, rules governing maximum daily, weekly or monthly losses, maximum risk on any given trade, the maximum number of trades per week, etc., etc. These rules enforce discipline and keep you out of trouble. What stock price will enter at, what stock price will I will exit. Be discplined.
7. How will I record and evaluate my trading performance?
Allow me to repeat myself: This is critical. In fact, this might be the most important element of trading for new traders in the stock market. A new stock market trader who evaluates his trades, winners and losers, in an effort to learn what works and what does not, will make quantum leaps forward in terms of ability and profitability. If you have a working trading plan and evaluate every single one of your trades after you have closed it you have already beaten 95% of the competition.
8. What are my rules for managing profits?
What's the problem with profits? Well, believe it or not there is one, and it's a serious one. It's called euphoria, and it clouds the judgment perhaps more than any other emotion related to trading. Start piling up the profits for the first time and it won't be long before you are convinced you are king of the world. About 30 seconds later you'll be broke, following a series of unwise and exceedingly risky trades. So have a plan for protecting closed profits when you have reached your goals for the week or the month. Don't give them all back.
9. How will I reward myself for following my trading plan?
Don't leave this out. Following your trading plan will bring rewards in the form of profits, but you should also consciously reward yourself for doing so because it is such an important part of successful trading. So if you finish the week or the month (or even the day) without having broken any of your trading rules, find a way to reward yourself. You deserve it. You are in rare company.
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Successful Stock Market Trading
A stock market trading plan will not guarantee your success in the markets, but a good plan will enable you to work methodically toward your stock market trading goals while reviewing on a regular basis what is working and what is not. It will act as a roadmap for your trading journey. It will enable you to respond positively and constructively no matter what happens with your individual trades. And, most importantly, it will help you control the only thing a trader can control: his or her own actions.
Finally, stock market trading is a business. It can be a fascinating and sometimes thrilling business, but in the end it is a business. A trading plan helps you treat it as a business.
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FOREX Knowledge
With the dawn of further FOREX retail traders in the market, competition amongst brokers has led to a multiplication in platform flexibility and features. Therefore, every broker over the preceding few years has tried to provide a better and easier way into the foreign exchange market in support of the beginner. I will pose various of the more obvious questions you need to find out from or ask your broker.
First and foremost are 'spreads' and how the broker deals with them. Spreads are valuable as the beginner needs to minimise his chance and reduce any expenses when entering and exiting a trade. Frequently, spreads are quoted by the broker as being 'fixed' or 'variable' for every currency pair. I have noticed that these days, spreads are continuously 'variable' and few brokers offer really fixed ones. Although they may say EUR/USD has a 3 pip spread, what they mean is so as to this is the minimum spread. You can be guaranteed that in times of high volatility, as prices are moving quickly, the spread will expand. Note furthermore, that some brokers boost their spreads if the 'lot' size is lower - see the types of account beneath. This seems a bit odd as this certainly will not promote new business for the broker!
One point to bring up is that although this point is valuable for the beginner trader, as you get extra experience, spreads turn into less of an issue while choosing a broker as they become less important and more skilled traders will point out other features over spreads when taking into account what broker to pick out. Here are lots of websites listing broker details such as http://www.etoro.iwow.us so do your homework before choosing!
The next entity is whether the broker offers all three of the 'standard' accounts - regular, mini and micro. Regular accounts deal with full 'lots' ($10 loss or profit for each pip movement in the currency, if trading a USD pair) and therefore require the principal amount of opening capital of around $5000. Although mini accounts ($1 loss or gain for each pip movement) are now abundant and ordinary, they still require a certain amount of capital to open so as to may be further than some new traders. Micro accounts (Only 10c loss or gain for each pip movement) deal with such small sums of money that they are better than trading demo, but the chance is low when it comes to losing capital. Consequently, they require the smallest amount start-up capital in the region of only a couple of hundred dollars.
Various checks will be made when you open an account, and if the company is based in another country, you will need to fill in various tax exemption forms such as a W-8BEN previous to the account will be opened, don't let this put you off!
A further check you could wish to do previous to considering a broker is to check their performance at the Commodity Futures Trading Commission website www.cftc.gov to ensure they are listed and have the vital minimum turnover and liquidity. Any sizable court cases will also be listed.
If you expect to carry out 'position' or 'swing' trades, such that you will be holding overnight positions, you might want to check what rates of interest will be paid/debited from your account. This is now and again hard to find on some websites, but can be very informative as generally brokers offer poor 'carry' interest if you are in a trade for a lenghty period of time.
Check to ensure what currency pairs they offer - again, generally companies offer most of the most commonly traded pairs but it's nice to see how 'established' they are by seeing if they offer other trades such as gold, S&P, futures etc.
Unfortunately, something you can't check is the kind of service the broker offers. Mainly will be 'discount' brokers, which basically means that they offer no trade advice or all-purpose help and if you address to anybody on the trading floor about your trade, they will be usually be brief and 'to the point'.
Try to find a broker who has downloadable free software that you trade from on your computer. The other way is to trade 'live' from a website, but I discover this inflexible, especially if you constantly need to click between screens as this usually requires the loading of a new webpage and makes everything quite 'clunky' even if you maintain a fast broadband connection.
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