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November 7, 2009

Swing Trading for Beginners

Filed under: forex analysis — Tags: , , — admin @ 7:32 am

Swing trading for beginners is the subject of this section and we have already covered some basics of this already in currency swing trading so check it out.
Here we want to outline why swing trading is an ideal form of trading for novice traders and those who lack patience.
Many forex traders look at long term trend following in forex and think that it’s the most lucrative way to make money, after all the big currency trends last for weeks and months and if you can lock into and hold them, then you can make stellar profits.
The problem is:
Most traders are not mentally equipped to do this and cannot get the right mindset to trend follow. Swing trading can be just as profitable and for beginners in particular, swing trading is the better place to start.
Lets look at why.

Long Term Trend Following V Currency Swing Trading

The hardest form of trading to master not from the point of view of method – but from the point of view of adopting the right mindset is long term trend following as we have just stated.
If you look at any Forex chart, you will see Forex trends that last for months or even years yet, only a small minority of forex traders have the discipline and correct mindset to hold these trends and milk them for their full profit potential.
All traders want to make big gains but capturing them is the hardest bit.
If money is important to you, (as it is to most forex traders) then your emotions will be present and they will play havoc with your discipline, in you in your quest to hold these trends.
When counter trend moves come, they will reduce your open equity profits (sometimes by thousands of dollars quickly) and the losses in open equity can frighten you to take profits early.
Most traders get excited and nervous when they get a profit and the bigger the profit gets; the more tempted they are to bank it before it gets away. Most forex traders end up banking early and getting a small or marginal profit, when they could have had a huge profit.
That’s why swing trading for beginners is the best strategy to try first – it requires less discipline and is less demanding, in terms of your mindset and attitude.

Swing Trading for beginners Advantages

The aim is to catch reactions within major trends which normally last around a week and profits can be taken quickly.
Swing trading forex trends is exciting, there are plenty of trades and you know if you are right or wrong quickly – this makes it easy on the mind and psychologically better for most forex traders especially novice traders.
Swing trading is the best form of short term trading that works. Day trading sounds great in theory – but in practice doesn’t work as the data is not valid, whereas it is in swing trading.
We have all ready given the basics of what swing trading for beginners is and in this section why it is a great method to trade and can be very profitable part of your forex trading strategy.
Next we need to design a forex trading system for swing trading and this is simple:
You can get a swing trading system together in a few days – that’s robust, offers great risk to reward and is easy to understand, so you can execute your trading signals with confidence and discipline.
Now we are going to look at building a swing trading for beginners system – so click the link here swing trading in forex and let’s get started.

Forex Trend Following

Filed under: forex analysis — Tags: — admin @ 7:04 am

Big Profits are Made Trend Following the Currencies

How To Get Your Share!

If you are a Forex Trader than you need to liquidate losing trades quickly and run profitable trades to pile up big long term profits. Many traders don’t know how to do this and this section will give you some basics to follow and advantages and disadvantages of various methods.
Forex trend following can be done in various different ways and here we will examine the merits of each and how they can bring you currency trading success.

Day Trading

More novice traders try to catch trends in daily time frames than any other method however, this method of trend following is doomed to failure.
Fact: The data within a day is totally unreliable and support and resistance levels are meaningless. Volatility can and does, take prices anywhere and all daily movements are random.
You can’t get the odds in your favour and you can’t win – PERIOD
There are countless millions of traders, trading trillions of dollars daily and it’s laughable to think that you can trade in such a short term time frame and win.
So why do so many traders try it?
Well, it’s a good story and many vendors appeal to the greed and naivety of investors and try and sell them forex trading systems or courses, but they don’t trade them! They make money from selling their product – they win by selling their product and the trader loses in the market.
Don’t fall for the myth of Forex day trading!
Advantages: None!
Keep in mind: You are guaranteed to lose, as you can never get the odds in your favour.

Swing Trading

Swing trading is perhaps the easiest way for novice forex traders to learn a Forex trading system. The aim is to catch reactions in major trends which normally last a few days to a week.
Swing trading has the advantage of there are plenty of trades to go for and you know if you are right or wrong quickly. Forex swing trading is easy psychologically, as you have obvious stop levels, small loses and profits are generally banked quickly.
The key to successful swing trading is to spot valid areas of support and resistance and then use momentum indicators, to execute trading signals in line with shifts in price momentum. For example, traders would wait for a test of support and for price momentum to turn up away from support and then trade to the long side.
The key with swing trading is always to CONFIRM With momentum indicators – before executing a trading signal.
EVER simply hope a level will hold or try and predict as you will lose.
Advantages: Easy to learn, its fun, there are lots of trades, it can be very profitable and it’s easy psychologically.
Keep In Mind: Make sure you don’t just guess or hope with swing trading and you use momentum indicators to confirm your trading signals.

Long Term Trend Following

The most lucrative form of trading and also the toughest way to trade.
If you look at Forex trends you will very often see trends that last for months or even years yet, very few traders have the mental discipline to hold these trends and milk them for all they’re worth.
Forex trend following requires patience, to wait for and enter these trends when the risk/ reward is at its best and then have the mental discipline to follow them.
Why is it so hard to do?
Because most traders are not mentally prepared to accept big gains.
The above may sound odd – as surely all forex want big gains?
The answer is yes they do, but accepting them is another matter.
The problem is – if money is important to you (as it is to most traders) then counter trend moves, which eat into your open equity, can tempt you to bank a profit early.
Most traders get excited when they get a profit and the bigger it gets the more tempted they are to take it, before it gets away. As volatility eats into open equity the temptation becomes too great for most traders and they bank early.
They end up taking an average profit or mediocre one, when they could have had a huge one.
If you are long term trend following you need the courage of your conviction and tremendous mental discipline to ignore counter trend swings and keep your eyes on the bigger prize.
Forex trend following is tough mentally but the rewards are immense, if it is done correctly and you have the right mindset.
Advantages: You can make huge profits!
Keep in mind: You need to be patient when timing entry levels and you also need to be able to psychologically handle short term severe dips in open equity. You need to keep your eyes focused on the end prize – not the short term swings against you. It’s not easy to do but very lucrative.

New Trends & Turning Points

It is the dream of most traders to be able to catch important market tops and bottoms.
Catching these turning points offers low risk and high rewards, as you are in at the stat of a new trend and these turning points normally see profits piled up quickly.
Catching turning points is satisfying, very profitable and its not has hard to do as many traders think.
If you use sentiment tools such as % bullish and Net Traders Positions, you will with a little practice, be able to spot these turning points forming. Then you can time entry with on your forex charts.
The key is to WAIT for clear confirmation of a trend change – before getting on board.
These moves don’t come around very often but if you look out for them, they will give you some great profits coupled with low risk.
Advantages: Great risk to reward, it’s a lot easier to do than many traders think and it gets you in at the start of big trends which, normally see big profits emerge quickly.
Keep in mind: You need to be careful in timing your entry and enter at the right time furthermore; these trades only come around a few times a year, so you have to be patient and wait for the right opportunities

Final words

You can make money with all the above methods of trend following (except day trading) and the method of Forex trend following you choose is down to personal preference.
You can focus on one of the above – or combine all of them together in your forex trading strategy and seek big profits in the worlds most lucrative and exciting investment market – Good luck!

Technical Analysis

Filed under: forex analysis — Tags: — admin @ 4:40 am

For Bigger Profit Potential

If you have read the section how and Why Prices Move you will understand that knowing the fundamentals does not guarantee currency trading success – You need to be able to measure trader psychology as well.
Forex technical analysis helps you see both and gives you the overall picture.
Many traders don’t fully understand the advantages of technical analysis – and refuse to believe that it works here, we will show you how Forex technical analysis gives you the complete picture to help you trade successfully.

What is Forex Technical Analysis?

It is simply defined as the study of price action through the use of charts – for the purpose of identifying price trends and if used correctly – it works.
Forex technical analysis uses the following equation:
Market Perception (trader psychology) + Fundamentals = Price Movement
All Forex technical analysis does is assume that all known fundamentals are quickly reflected in price action (and in the 21st century with instant communications this is truer than ever) – so it simply concentrates on following price action.
Price action reflects all the fundamentals, and more importantly, how all the participants in the Forex markets perceive them.
Traders who study fundamentals claim technical analysis can’t work – because you need to know and study the fundamentals, to know where prices are going – this is simply not true.
Some of the largest price moves in history, have occurred with little or no change in the fundamentals.
It’s a fact that markets ( not just Forex Markets ) are most bullish at market tops and most bearish at market bottoms.

Why?

Quite simply human psychology was at work – and Forex technical analysis studies this and the fundamentals together.
Learn to use technical analysis, and you will see the reality as it is – rather than listening to the opinions of others or letting your emotions get involved.
You are in effect trading the truth and the truth is:
The market price itself is the correct true price – not what you or anyone else thinks it should be.
Forex technical analysis makes the following 3 assumptions:

1. Markets Discount

All fundamentals show up quickly in the price action, when you use technical analysis.
You are therefore studying the fundamentals, as they are – and of course, you are seeing how the participants perceive them at the same time.

2. Trends Persist

This is obvious by simply looking at any Forex chart.
Forex technical analysis also assumes that a trend in motion is more likely to continue than reverse.
Your aim is to lock into these trends and trade them for profit.

3. History Repeats

The core belief of Forex chartists is that technical analysis works because what has happened in the past, will happen again.
Human behavior repeats itself – as human nature never changes Price patterns simply reflect shifts in human psychology, we can therefore assume that certain patterns and trends will repeat themselves – time and time again.
Trading the Odds with Currency Technical Analysis
In gambling, the aim is to get the odds in your favor – and in trading; your aim should be to trade only when the odds are in your favor.
Just like the successful gambler you won’t win very hand – but you will win more than you lose and by constantly trading the odds you will achieve currency trading success.
If you have read the section Forex Myths you will understand that technical analysis is an art rather than a science.
You need to devise a Forex Trading strategy that uses technical analysis the right way to enable you to build long term wealth.

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