Fx Currency Trading

Archive for September, 2009

Consistency is very important to have in your trading routine because it allows you to truly measure how successful you are as a trader. If you have a sound trading system but always break your rules, how can you ever really know how good your system really is? Your trading plan will keep you on target. Read it every day and stick to it.

Trading is a business and successful businesses ALWAYS have plans.

I have never seen a successful business not start out with a plan. Do you honestly think Walmart was just created on a whim and then magically became successful? Or what about McDonalds? I’m sure almost anyone can make a better hamburger than McDonalds, but the difference between them and the individual is that they have a successful business plan that guides them to success.

In the same way, you can relate the McDonald’s story to your trading career. Whether it’s by luck or experience, everyone can make money in the forex. However, the difference between a losing trader and a successful trader is the PLAN. If you have a good trading plan and you are disciplined enough to stick to it, you will be successful!

Trading plans can be as simple or complex as you want it, but the most important thing is that you actually HAVE a plan and you FOLLOW the plan. With that said, here are some of the essentials that every trading plan should have.

A trading system

This is the heart of your trading plan. This system should be one that you have thoroughly backtested, and have traded for at least two months on a demo account.

Include all the necessary information about your system such as: time frames you use, criteria for entries and exits, how much you risk during each trade, which currency pair(s) you trade and how many lots you trade.

Example: I am an intraday trader and I trade off of the 10 minute charts. I enter when there is a moving average crossover and all my indicators support the direction. I only trade the EUR/USD and I risk no more than 2% of my account on each trade. For now, I trade 5 mini lots and will increase my lot size according to my 2% money management rules.

2. Your trading routine

This is a crucial part of your plan because it will determine three very important things: when you will analyze the market and plan your trades, when you will actually watch the market to take trades, and when you will evaluate your actions during your trading day.
3. Your mindset

Ask any trader out there and they will all tell you that one of the hardest things to do when trading is to take out your emotions from it. This section of your trading plan will describe what frame of mind you will be in when you are trading.

Example:

* I will see what is on the charts and not what I want to see.
* No matter how biased I am towards a direction, I will make sure to trade only what my eyes see and not what my feelings tell me.
* I will not get “revenge” on the market if I lose on a trade.
* I will not beat myself up if I make a losing trade. Instead I will take it as a learning experience and move on.

4. Your weaknesses

Yes, we all have our weaknesses. We just don’t like talking about them. But ask yourself this, “How will you ever get better, if you don’t admit to what you need to work on?” This section will be an objective way to keep track of things that you need to work on in order to become a better trader.

Example:

* I tend to overtrade. Whenever I lose on a position, I get upset and immediately try to get “revenge” on the market.
* I tend to exit early on trades.
* I don’t stick to the rules of my system every time
* I don’t stick to my money management rules every time

5. Your goals

“To make a lot of money” is not a good goal. Sit down and really think about what you want to accomplish as a trader. Do you want to trade for a living? How much return can you realistically expect from trading based on your knowledge and experience? Your goals don’t even have to be about making money. Maybe you would like to be more disciplined or gain more confidence. These goals can be personal. What do YOU want to get out of this? Use these goals as your motivation when times get tough. These goals will be your vision, and you must always keep your eyes on the prize!
6. Your trading journal

This will be a valuable tool to helping you become a better trader. Make sure you log all your trades and why you took them. Later down the road you can look back and evaluate your trades and see how you are progressing. I’ve looked back at my trade journal and have seen just how much I’ve grown as a trader. My first entries were very basic and as I’ve progressed, my trades make more sense to me now. I’ve gained a lot of confidence throughout my career and by looking back at my trades, I’ve really been able to evaluate myself and see if I am getting closer to my goals. This tool will help you tremendously in the long run, so take a few minutes each day and log your trades. You’ll be happy you did!

Babypips

The bull market in equities continued this week, with the key US indices pushing out to year-to-date highs each day through Thursday morning. Fed Chairman Bernanke added fuel to the fire early in the week, telling an audience at the Brookings Institution …

Equities rose in the premarket as buyers stepped in following the previous day’s hiatus, but equity indices sagged back to yesterday’s closing levels after the open. Before the open, Morgan Stanley Chief US Economist Berner told CNBC the…

The bull market in equities continued this week, with the key US indices pushing out to year-to-date highs each day through Thursday morning. Fed Chairman Bernanke added fuel to the fire early in the week, telling an audience at the Brookings Institution …

Equities rose in the premarket as buyers stepped in following the previous day’s hiatus, but equity indices sagged back to yesterday’s closing levels after the open. Before the open, Morgan Stanley Chief US Economist Berner told CNBC the…

This was done to forecast the wants of the market and stabilise demand and supply during poor crop seasons.

Like products and services, the contracts themselves shortly became seen as valuable. A grocer chain, for instance, might need to bid on such a contract to make sure that they, and not their competition, have fresh strawberries in the winter. One. Two. Playing The Futures Market When a stockholder plays the commodity market, the products are not vital and there is not any expectancy of a genuine delivery. In fact, locusts or the parts of nature could destroy the crop.

As such, the value of the contract itself changes daily according to the valuation of the commodity. How Transactions Work A futures contract has a buyer and seller. The contract cites the purchasing price, a number of products, and an end date. By locking in costs at a set rate, you guarantee that you’re going to still get that price years from now, shielding against price raises. On the opposite side of the coin, if the value of the commodity drops, the producer will make cash. Four. How Is Profit Made? In the final analysis, financiers expect to profit from the daily fluctuations of the market. This way, they can buy low and sell high. Or, those wanting to sell their products can offer short term contracts if they think the value of those items to go down.

Five. The currency market Foreign exchange is trading in currencies. Therefore it’s awfully liquid in nature - you may never get stuck with 200 boxes of strawberries that need to be sold inside two weeks or they are going to go bad and youll lose lots of cash. Far, a lot less slippage happens in the foreign exchange market compared to the commodity market. Slippage is a term that pertains to you losing cash. Six. Always Open While most futures exchanges can happen seven hours in any given day, Currency exchange is open twenty-four hours per day for trading. This makes futures much more liquid, ready to use trading opportunities as they arise. 7. No Commission Traders pay a fee for each exchange they enter into rather than having to pay commissions to brokers. There’s a really large volume of trading Foreign exchange transactions are nearly straight away executed.

Traders returned to their desks this morning to find various asset classes breaking out of their August ranges, led by gold, which remains above the $1,000/oz level and has its sights set on the March 17, 2008 all-time high of $1,032/oz. Skyrocketing spot…