Why I Trade Forex Why Is A Mentor Necessary To Succeed At Forex Fx Currency Trading Better Understand Technical Analysis And Some Indicators Why You Should Trade Forex Over Other Investments
Many people ask me why I trade Forex, Well I think like most people when I was introduced to Trading I didn’t know about the Forex market. It was just natural to go looking in the stock exchange for trades. However, I found my trading was very limited, by the time I got home from work in the evening all the action was over.I moved to Forex mainly to take advantage of the 24-hour opening hours, I would often be found at my computer in the middle of the night waiting for the next bar to appear.
Unlike Futures, there are no trading exchanges as such. Trading is being done from major banking establishments around the world, With futures you are generally limited to trading only for a few hours that they are open, if major news breaks and the price starts going against you when the market is closed, you could end up losing big time while you are forced to wait for the market to open. With Forex you will always have an opportunity to trade 24 hours per day 5 days a week. As the sun wakes up each country on its journey it also wakes up the markets in New York, London, Europe, Asia, Australia to name a few.
The Currencies of the world are traded against each other, the most popular being the Euro the US and Australian dollar, British Pound, Swiss Franc and the Japanese Yen.
Because of 24 hour trading, it is rare to see large gaps in price like stocks have on the opening and you often see prices in currencies trending more than stocks.
There are many advantages in trading Forex rather than Stocks, expensive Data providers that you need with Stocks is exchanged for free charting software offered by many Forex brokers. With over $1.5trillion (that’s 46 times bigger than all the future markets put together!) being traded in a single day you are always sure of a trade, With Low transaction costs, no commissions or exchange fees is it no wonder more and more traders are turning to Forex.
Beware though, even with all these advantages trading is a high risk game and should only ever be trading with money you can afford to lose. With a good Trading Strategy and Money Management in place there is no reason not to join many Traders profiting from trading the Forex markets
Forex (foreign exchange) trading, which is buying one currency while concurrently selling another, is getting a considerable amount of press as an attractive alternative to trading on the stock exchange. Among the reasons of Forex trading becoming a popular alternative is that Forex provides a 24-hour market, lower transaction fees, and no one entity can corner the market because of its sheer vastness. The drawback is that it is not easy to learn Forex trading on your own. While it can be done, the lessons can be relatively expensive.
A Forex mentor will help you learn the ropes of Forex currency trading. With so many people out there offering the same service with different methods of delivery, how do you determine which method of learning is best for you?
With all the e-courses, videos, books, and seminars that are easily available online and offline for a price, it is difficult for you as the consumer to guess which one will be the one that clicks for you. You have to examine several options before purchasing one that works and some people go through several methods and never find one that actually helps them learn Forex trading. While this is not rocket science, it can be quite confusing and a little knowledge can be more dangerous and expensive than a true education.
I’m not saying that a four-year degree is necessary, nor are college courses in Forex trading, but a proper education is never a bad idea, especially when you’re putting your money on the line. Investing in books, videos and seminars is a great plan if those things work for you and you feel that you are prepared properly and adequately for Forex trading once you’ve completed the material. If this is the case, then it is money well spent. Most people, however, end up with more questions from these sources than answers.
This is why I suggest a mentor to assist you in the process of learning Forex. A mentor is a teacher, guide and companion on your journey. A Forex mentor is someone who will use his experiences in Forex trading to teach you the necessary skills to be successful. He will use his past successes and failures as examples to help you get started. He will help you identify your best method of learning and choose materials that will assist you according to what you need. A mentor will save you countless hours of research that will not help you as well as thousands of dollars purchasing ineffective material. You are also likely to find that you are making profitable currency trades much sooner than you would have been without utilizing the services of a mentor. ( Part II )
We’re focusing on technical analysis in this article with a description of some of the important indicators.
We could say, all wealthy traders use technical analysis but not all technical analysis traders are wealthy although T.A. is the most precise way of trading the Forex market. It’s also useful note that fundamentals play their part in indicating whether a price will move up or down. It gives you the edge over other traders.
Technical Analysis is so powerful because of a few reasons
1) it represents numbers. All information and its impact on the market and traders is represented in a currency’s price.
2) It helps to predict trends and the foreign exchange market is very ‘trendy’.
3) Certain chart patterns are consistent, reliable and repeat themselves. T.A. helps us to see them.
Here’s one way of putting technical analsysis into perspective (wish I had a dollar each time I said ‘technical analysis’). We all know that prices move in trends. Research has shown that those that trade ‘with the trend’ greatly improve their chances of making a profitable trade.
Trends help you become aware of the overall market direction and often rescue us from less then profitable entry points. I attended a 2 day course costing me over $2500 AUD and the biggest thing I learned from it was the need for discipline and emotional control. The content was so basic that within the next 3 or 4 articles, I would have covered all of it. So learning the ‘tools of the trade’ the technical indicators and their applications will help you to diagnose what the market is doing but even then you need to expect ups and down and trade with emotional control.
Stay with the trend, follow the price.
Find the price of the currency pair. If EUR/USD is 1.4224 and moves to 1.4180 then 1.4090 then the market is in a down trend. Concern yourself only with what the market IS doing not what it might do. Listen to the markets and the indicators will backup what they are telling you.
Tell you the price at a given point of time over a defined period of intervals. They are called moving because they give you the latest price while calculating the average based on the selected time measure.
They lag the market so to give you an indication of a change in trend, use a shorter average such as a 5 or 10 day moving average. By combining a shorter term and longer term M.A. you can detect a buy signal when the shorter term crosses the longer term moving average in the upward direction. Or a sell signal if it crosses in a downward direction. For example, you could use a 5 day versus a 20 day moving average or a 40 day versus a 200 day moving average.
There are simple moving averages, linearly weighted which gives more importance to the recent prices or exponentially weighted. The latter is a favourite because it considers all prices in a time period but emphasizes the importance of the most recent price changes.
Based on moving averages, a MACD plots the difference between a 26 exponential moving average and a 12 day exponential moving average, with a 9 day used as a trigger line. If a MACD turns positive when the market is still plummeting it could be a strong buy signal. The converse also works.
Bollinger Bands (sounds like an elastic band)
Prices tend to stay between the upper and lower bands. They widen and become more narrow depending on the volatility of the market at the time. A sell signal would be when the moving average is above the Bollinger bands and vice versa for a buy signal. Some traders use it in conjunction with RSI, MACD, CCI and Rate of Change.
Describe cycles found throughout nature and when applied to technical analysis can find shifts in the market trends. After a climb prices often retrace a large portion sometimes all of the original move. Support and resitance levels often occur near the Fibonacci retracement levels.
Relative Strength Index measures the market activity to see whether it’s overbought or oversold. This is a leading indicator so helps to indicate what the market is going to do (awesome!). Ahigher RSI number indicates overbought (so expect a bearish shift) and a lower number indicates oversold.
Successful traders will generally use 3 or 4 signals to provide a more conculsive signal before entering a trade.
Always remember, “If in doubt, stay out!” . Technical analysis doesn’t factor in political news, a country’s economic profile or fundamental supply and demand.
Technical Analysis helps us figure out how much money to risk on a trade. How and when to enter the market and how to exit the trade for profit or to minimize loss.
I sincerely hope you found this article useful.
Everyone has heard of stocks and shares, probably even the futures market, but trading the FOREX (Foreign Currency Exchange, or FX) market is a relatively new phenomenon. Until recently, FOREX was the domain of the banking fraternity (large banks can trade billions of dollars daily), and the elite in financial and business circles. But now it is possible for the average person to be a part of this incredible – and very profitable – way of making a living, thanks to the personal computer and an internet connection. All done electronically and considered an over-the-counter (OTC) market, trading is far easier and less risky than either the futures or the stock markets. Money can be made both on a rising and falling market, unlike the stock market, which relies on shares increasing in price to create profit.
More and more astute internet entrepreneurs are shunning the traditional financial markets and turning to FOREX trading. They know that it is possible to earn a full-time income from part-time effort – if you’d like to make $200 to $3,000 for as little as ten minutes’ work, and with minimal risk, then FOREX is for you.
FOREX, the spot (cash) market for buying and selling currency, is the largest financial market in the world. Every day more than $1.5 trillion (yes, trillion) is traded globally and, unlike the stock market, which has fixed hours, it is a market that never sleeps. Somewhere in the world, at any time of day or night, FOREX is open for business, six days a week. The market starts each day in Sydney and moves around the globe as other FOREX financial centers open: first to Tokyo, then London and New York.
In simple terms, currencies are traded in pairs, for example the Euro and the US dollar (EUR/USD). The first currency – in this case the Euro – is known as the base currency; the second currency (here, the US dollar), is the counter-currency. All trades result in the simultaneous buying of one currency and the selling of the other. Thus, in this example, if you place an order to buy the EUR/USD, you are buying the Euro and selling the US dollar. If you were to sell the pair, you would be selling the Euro and buying the US dollar. There are many other currency pairs, such as USD/JPY, GBP/USD, EUR/GBP, USD/CHF and so on.
What makes trading FOREX an incredible way to make money online, is that price movements are highly predictable, creating trends that can be anticipated when it comes to decide when to buy and sell. Contrasting with stocks and shares, FOREX trading through brokers is commission free. It is also possible – and definitely recommended – to open a demo (practice) account with a broker first, where you can learn to trade and gain experience before you part with a cent of your own money.
Do you want financial freedom? With huge advantages over other more conventional money markets, why not experience the excitement of pips, rollovers, leverage, lots, long and short positions, limit orders etc. and start to trade FOREX. Good luck!.
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