forexbasicguide.com

November 7, 2009

Currency Swing Trading

Filed under: forex education — Tags: , , — admin @ 7:34 am

Definition

Currency swing trading is aimed at catching reactions within the major trend (either bullish or bearish) and seeks to take advantage of trades that can last anywhere from a couple of days, to around a week in duration.
In this respect it is a short term form of trading and is the only short term forex trading method that works.

Currency Swing Trading v Currency Day Trading

Forex day trading is attempted by many forex traders but simply doesn’t work, because the data is not valid and volatility can and does take prices anywhere in a day. Support and resistance is therefore not valid and day traders lose.
Swing traders are trading short term – but support and resistance are valid and make these moves tradable.

Spotting Swing Trades

Currency swing trading is normally carried out between support and resistance levels within the major trend. The forex trader will watch prices move into support or resistance and then take the opposite view and execute a trading signal in the opposite direction.

Confirming a Currency Swing Trade

As with any currency trading system, it is important not to simply take a position and hope that support and resistance levels hold – the trader should look confirmation. This means a waning and turn of price momentum, to confirm that support and resistance are likely to hold and then execute a trading signal.

Trading the Odds

By acting on confirmation in this way with a forex swing trading system, the trader is keeping the odds on their side and this is essential in any forex trading strategy, to win longer term.

Placing Stop Loss Orders

Stop levels are then placed behind the support or resistance level.

Taking Profits

Unlike forex trend following where a trader will place and trail a stop, a currency swing trader will operate using a target. The target will normally be just above support and resistance, that lies in the direction they are trading in and when prices approach the level, the trading profit is banked.

Volatility

Swing trading suits volatile, liquid currencies and the best ones to trade are:
Euro, Yen, British Pound, Swiss Franc, Canadian and Australian Dollar.
The euro and the yen are the two best currencies to focus on, as they offer great volatility and large volumes, which means forex brokers, offer tight spreads.
Any currency that does not have good liquidity, should not be swing traded. Liquidity is essential, for locking in profits quickly and just as importantly, limiting losses.

Commission Impact

In currency swing trading the cost of doing business adds up, as you are trading frequently and aiming for smaller profits, than you are in long term trend following. It is therefore essential to pick a broker that will offer you tight spreads (around 3 pips) to prevent the cost of doing business impacting on your profit.

Keep It Simple

Currency swing trading is very easy to learn.
All you need to use is support and resistance, a few momentum indicators and your all set. Resist the temptation to make your currency trading strategy to complicated, cram in to many indicators into your forex trading system and you will have too many elements to break and it will fail.
Swing trading systems should be kept simple, as simple systems tend to be more robust in the face of brutal market conditions than complicated ones.
All the best swing traders use simple systems and you should to.

Learn a Simple Method and apply it

If you keep your currency swing trading simple, you will understand the logic of it and it will be robust which, will mean that you will be able to apply it with discipline.
This is essential for currency trading success.
It should only take you a few days to learn a swing trading method and then you can look for profits in under an hour a day.
You don’t need to spend all day following the price action.
A good time to look for currency swing trading set ups, are at the end of the US trading day, when the NYSE closes.

Further info

Swing trading is ideal for novice traders and you can read why in our section swing trading for beginners for an idea of how to construct and apply a swing trading system for profits, we have given the basics of the way we do it in the section Swing trading in forex. Currency swing trading is a great way to build significant profits over time and is ideal for novice traders, as well as experienced pros.

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.

Live The Dream!

Filed under: forex article — Tags: — admin @ 7:13 am

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Use a  simple 5 step process to trade each currency.
Learn which currencies are about to produce mega moves with two little known indicators.
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Learn How NOT to get stopped out to soon so you can ride the big trends.
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Q: Do you trade and if so how long?

A: Yes unlike many people selling online, who are just marketing companies simply selling systems with simulated back tested systems – were traders. All our team has been trading for over 20 years and each day, we publish our view of the market so you can see how our system works.

Q: Can anyone learn to trade?

A: Of course. Everything about trading can be specifically learned. This was proved by Richard Dennis in 1983, when in just 14 days, he taught a group of people with no experience, to trade and they made him $100 million in 4 years. I am not saying you will earn millions but everyone has the potential to earn a lucrative income and enjoy currency trading success.

Q: If anyone can learn to trade why do 95% of traders fail?

A: Because most traders are naïve lazy or both. they won’t make the effort to learn the right forex education. Most simply buy an automatic system (with a worthless simulated track record) from a vendor and think they will get rich with no effort – that’s not real life. If you want to make money you need to do your homework, if you do you can make a lot of money.

Q: So no one else can give me success?

A: Correct – someone can lead you to success by teaching you but you are responsible for your own destiny and that’s not just true in forex trading, that’s true in life generally. We can give you all the support and the tools but you need to apply them, it’s as simple as that.

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A: Firstly, it’s logical, easy to understand, easy to apply and it works. Secondly, we are traders and we will help you with daily newsletters and a dedicated advisor to answer any queries you may have. Finally, it gives you a trading edge, by a unique blend of technical analysis and sentiment analysis to generate high odds trades.

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Achieving Success

Filed under: forex article — Tags: , — admin @ 7:10 am

If you have read the other information we have provided on this site you will understand that – Forex trading is simple to learn, and anyone can acquire the skills to trade successfully.
So, the obvious question you may ask is why do 95% of traders lose money?
Many traders lose because they have poor methods, however many have good methods but still lose. The reason for this is – they lack the correct mindset to succeed.
If you want to win at Forex trading you need the right knowledge but you also need to have the right mindset, if you don’t you will lose.
Here we will take a look at how to adopt the correct mindset the millionaire traders have and you need too. If you can acquire them, you are on the way to achieving currency trading success.

1. Desire and Passion

If you want success in anything in life – including forex trading, then you must desire success. If you have  desire, then you’ll do what’s required to succeed. If you look at any of the legendary traders, they all had desire – and they loved what they did with a passion.
Currency trading success requires effort, as the rewards are immense – if you have the desire to succeed, you will acknowledge this and put in the required effort to succeed and make no mistake – the rewards for your effort can be life changing.
So if you have the desire and passion to succeed then chances are you will. Now lets look at how to channel this desire and passion, to become a successful Forex Trader.

2. Work Smart Not Hard

If you have read the Forex Education section – you will have read about “the turtles” – a group of people who had never traded before but learnt to do so in 14 days and went on to make millions.
They did this by working smart, NOT hard – and there is a big difference.
In many jobs you get paid for the effort you put in. When you trade FOREX you earn your reward simply for being right.
When you learn currency trading focus on working smart and acquiring the right knowledge and ignore all the Forex Myths which cause the bulk of traders to lose.
If you work smart, you can learn to trade in just a few weeks and in under an hour a day, you could soon be piling up big consistent profits.
The key to trading success is to have confidence in what you are doing – this leads to discipline and ultimate trading success. Let’s look at this in more detail, as most traders never acquire these traits and lose.

3. Confidence

You hear traders talk a lot about discipline being a key to success in currency trading – but you don’t hear them talk so much about confidence. However, confidence is a vital ingredient when implementing any successful forex trading strategy.
We are involved in Forex Education – we can give you the tools you need to be successful – BUT you need to learn them and have confidence in them YOURSELF.
To have confidence, you need to understand exactly how and why a forex trading strategy works and will continue to work.
This is essential when you hit a losing streak (all traders have them even the world’s best traders, so you need to be prepared for them) you need to have the confidence to stick with your forex trading system and trade it with discipline through losing periods, to ultimate long term trading success.
If you have confidence, you can acquire the key trait all traders need:

4. Discipline

Discipline is the key to forex trading success.
If you don’t trade your method with discipline – you don’t have a method at all!
It’s not as easy to trade in a disciplined fashion as many people believe, but if you take the time and trouble to learn a method and have confidence in it, then you will be able to trade in a disciplined fashion.
If you trade with discipline, you will be doing what 90% of traders don’t do and you will have a trading edge.
Discipline comes from all the points we have discussed earlier:
Desire, knowledge and confidence which give you the inner belief to follow your trading method and execute it in the correct manner for long term trading success.

Success From Within

People like ourselves can help you achieve currency trading success, by giving you the tools however, the ultimate person who will determine how much money you will make is you!
Fact: Anyone can learn forex trading and anyone can become a successful trader.
Forex trading is a challenge, its exciting, it’s fun and can offer you an income that other people only dream about so, Are you ready for a challenge and do you have the desire to succeed?
If so, welcome to the world’s most exciting business opportunity!

Our Strategies

Filed under: forex learn — Tags: , — admin @ 7:07 am

Proven Strategies For Bigger Profit Potential

My Forex trading strategy is based upon 25 years of experience trading at the sharp end. I have made mistakes, lost money, learned some hard lessons and tried just about every system and indicator out there and this experience has helped me formulate the trading strategy I use today, with my team.

A Simple Way to Build Wealth

It’s simple to understand, takes under 30 minutes a day, needs no intra day monitoring and can be used for: Trend following, catching big trend reversals or used for swing trading.

Confidence & Discipline

Any trader can understand it, apply it and make big profits from it.
To follow any Forex trading system with discipline you need to have confidence in it and this means knowing why the method works and will continue to work.
This method will give you confidence, as when you see how it works you will realize – it can NEVER go out of date and will continue to be effective.

Personalize It

You can customize it to your own trading personality and make it high or low risk depending on your trading personality.

Trading the Odds

Our Forex trading strategies use standard indicators but generates a “trading edge” by the way we combine them TOGETHER – to generate trades with the best risk to reward and the best odds of success.

See How They Work RISK FREE!

If you want to know more about our strategies and news of a trade that’s shaping up RIGHT NOW and could make in excess of $10,000!

Increasing Profitability

Filed under: forex learn — Tags: , — admin @ 7:05 am

Making Money Fast In Forex Trading

If you are trading Forex and making mediocre or average gains and want to improve your overall profitability, then this section is for you.
The ways to improve profitability enclosed in this section are simple and they have worked for us and will work for you. These are simple yet powerful tips any Forex trader should consider.
A good place to start is with a timeless classic investment book – the Zurich Axioms by Max Gunther it’s a book any trader should read.
The wisdom is simple, timeless, unconventional, funny, exciting, and is one of the most inspiring investment books ever written.
The 12 major and 16 minor Zurich Axioms in the book are a set of principles, providing a philosophy, to incorporate in your Forex trading strategy to help you manage risk and increase profitability.
Several of the Axioms fly right in the face of accepted investment wisdom – however the Swiss investors who wrote them became very rich, while most investors who follow conventional wisdom do not and keep in mind 90% of speculators lose so being in the minority is not such a bad thing!

“Resist the allure of diversification”

Diversify your investments is accepted as a way to make money longer term and reduce risk – but all it does is dilute your potential profit and in many instances increase your chances of losing.
You will read a lot about risking 2% per trade and spreading your trades – but if you are like most Forex traders and trading a small account of under $10,000 you won’t make much risking $200.00!
The Zurich Axioms encourage you NOT to diversify for small gains, but to look for the big potential winners and risk more. This does not mean you are being rash – far from it, you are simply risking more on the high odds trades and ignoring the ones that don’t have good profit potential.
Many traders simply trade to much but in Forex trading you don’t get paid for how much effort you put in – you get your reward for being RIGHT with your trading signals – PERIOD.
So cut down the amount of trading signals you execute and only focus on the really good trades that have the best profit potential.
The Pareto 80 / 20 Rule
The above philosophy is related to famous the 80 / 20 rule or Pareto principle.
The rule states that 80% of your results come from 20% of your activities – and this is true in many areas of life in sales, business and trading Forex.
The rule postulates that by concentrating on the best investments, and ignoring the others, you can improve your profitability dramatically – by simply searching and acting on the 20% of “good trades” that yield the really big profits.
By only focusing on this 20%, you will see bigger gains. This is really a common sense rule, yet very few Forex traders know it or use it.
Most Forex traders are obsessed with trading to often, they think if their not in the market they will miss a move. Other traders try trading in ways that simply offer them no chance of success like Forex day trading.
I know traders that make triple digit annual gains and only trade once a month and I know other traders who trade all the time and lose.
Keep in mind – the aim of Forex trading is to make money nothing else matters, so don’t trade often and when you trade the best opportunities and risk more.

Accept and Enjoy Risk!

The major reason traders don’t win is they are so frightened of risk; they actually create it and lose. Does this mean you should take unnecessary risks, or act in a rash and cavalier manner?
No it doesn’t – but to make big gains you have to take calculated risks when the time is right and a good trade presents itself.
The Zurich Axioms show you how to confront risk in a positive way, manage it, and enjoy the challenge – the speculators who wrote the book enjoyed risk and the challenge of making money – If you don’t enjoy the challenge of risk, then you will lose.
Lets look at two of the Axiom’s on risk which compliment the one above on diversification – which tells us why most traders lose.

1. “Worry is not a sickness but a sign of health…If you are not worried, you are not risking enough”.

How often are you told only to risk what you can afford to lose in investing – when you know you should risk more?
You then see the gains you could have made – but you didn’t have the conviction to go for the trade and then you were left wondering about what might have been?

2. “Always play for meaningful stakes..if an amount is so small that its loss won’t make any significant difference, then it isn’t likely to bring any significant gains either”.
If you don’t risk much, you won’t gain much as we have already stated. If however you load up the high odds trades then you will increase your profitability.
If you have a sound Forex Trading strategy you have confidence in then the above tips are common sense and will increase your FX profits.

Risk Reward & You

The major mistake most Forex Traders make is they think that they can restrict the risk of Forex trading to minimal levels and still win – this is simply not true.
If you try and restrict risk to much by placing stops to close you will simply guarantee you will be stopped out by normal market volatility. It may look like it’s less risky but its guaranteeing you will lose so it’s actually very risky!
Volatility and leverage creates both risk and opportunity in online currency trading, you need accept this risk and then spot the trades that offer the best odds of success and go for them.
If you do, you will actually decrease your risk and increase your profits dramatically.
If of course you don’t like taking risks then you shouldn’t trade currencies as you will lose.

Forex Charts

Filed under: forex chart — Tags: — admin @ 7:02 am

5 Simple Steps To Big Profit Potential

If you have read the section on Technical Analysis then you will understand that you can build substantial long term profits – but you need to use Forex charts correctly.
Using Forex charts is an art not a science.
Here we will outline how to use for Forex charts in the correct way and the basics for building a successful Forex Trading system.

1. Keep It Simple

Many traders think that the more effort they put into their Forex trading strategy and the more complicated it is – the more they will make in terms of profit.
The above view is totally incorrect.
It’s a well known fact that a simple Forex trading system with just a few indicators, is more likely to be successful than one that is to complicated.

Why?

Quite simply, a simple system will be more robust in the face of ever changing market conditions, as there are fewer elements to break.

2. Trade Valid Data

You need to trade data that is valid and can be used on your Forex charts to increase your odds of success.
The biggest error a forex trader can make is to try Forex day trading – it doesn’t work as the data is to0 short to be reliable.
Forex day trading causes traders to lose because volatility in short term time frames is totally random and can and does take prices anywhere. Support and resistance levels are meaningless and you cannot trade them.
Stick to either long term trend following or swing trading depending on which suits your personality.

3. Support, Resistance & Breakouts

All successful traders use support and resistance levels to enter and exit the market.
While traders like to buy into support and sell into resistance i.e. “buy low sell high”,
most traders ignore a strategy that can be even more profitable which is buying a break of resistance.
If you want to make money in Forex trading you need to buy these beaks.
Traders like to “buy low and sell high” when they miss a breakout, they wait for the pullback to get in at a “better price” but the price doesn’t pullback and they miss the move.
The fact is that most of the biggest currency trends start from new market highs NOT market lows.
If you want to catch the really big trends then remember that – “buy high sell higher” is very profitable – although its uncomfortable psychologically buying a new market high – it is a proven high profit Forex Trading strategy.

4. Use Momentum Indicators

If you want to win at forex trading you need to learn to trade with price momentum.
One of the biggest errors traders make is to think that they can predict Forex price direction. If you try predicting forex prices, you are hoping or guessing and that is not the way to make money in any business – especially forex trading.
Rather than relying on hope – trade with price momentum.
For example, if you wanted to buy into a support level – you would wait for a test of the support and price momentum to accelerate away from support and enter with momentum. This means you are trading with the odds in your favor and not relying on hope.
All the worlds top traders use price momentum as part of their forex trading strategy and you need to as well.

5. Be Objective Not Subjective

When using indicators to execute trading signals make sure you are as objective as possible. Avoid indicators that involve subjectivity and stick with ones that are objective.
For example, subjective indicators such as cycles, Elliot Waves, Seasonals etc and use indicators that fit objective rules. This will help you stay disciplined and Keep your emotions out of your trading.

6. Back Testing & Curve Fitting

Many traders like to test their systems on back data and they look for perfection and end up “curve fitting” which sees the system profitable in back testing but lose in real time trading.

So what is curve fitting?

Curve fitting involves tweaking rules and parameters so that they fit the data, making the trading system profitable.

A good analogy is:

Shooting at a barn door, a then afterwards drawing a bulls-eye around every shot!
In forex trading, traders try and get or improve profitability by tweaking the system rules to fit the data. They add unique rules and parameters, for different market conditions and different currencies.
Of course, the forex market will move differently in the future and you can’t bend going forward so, the system collapses.
If a system is based on sound logic, it should work regardless of the market conditions or the currencies traded and should contain very few rules or parameters.
Don’t try and bend the rules of any trading system to fit the data – it will not work going forward.

Obey the Rules of the Market

The market is all powerful and you need to obey its rules to enjoy success.
It’s similar to being the captain of a ship – your charts can help you navigate the ocean and earn a living but you need to be careful! If you use your forex charts incorrectly and break the rules you will lose.
Respect the Forex market, use forex charts in the right way and you can pile up big long term profits.

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