Forex Trading

So what is is Forex trading you may ask? Forex is the exchange you can buy and sell currencies. For example, you might buy British pounds (by exchanging them to the dollars you had), then, after pounds / dollar ratio goes up, you sell pounds and buy dollars again. At the end of this operation you are going to have more dollars, then you had at the beginning.

The Forex market has much higher liquidity, then the stock market, as much more money is being exchanged. Forex is spread between banks all over the planet and as a result it means 24 hour trading.

Unlike stocks, Forex trades are performed with high leverage, usually it is 100. It means that by investing $1000 you can control $100,000, and increase potential profits accordingly. Some brokers provide also so called mini-Forex, where the size of minimum deposit equals $100. It makes possible for individuals to enter this market easily.

The name convention. In Forex, the name of a "symbol" is composed of two parts — one for first currency, and another for the second currency. For example, the symbol usdjpy stands for US dollars (usd) to Japanese yen (jpy).

As with stocks, you can apply tools of the technical analysis to Forex charts. Trader's indexes can be optimized for Forex "symbols", allowing you to find winning strategy.

Example Forex transaction

Assume you have a trading account of $25,000 and you are trading with a 1% margin requirement. The current quote for EUR/USD is 1.3225/28 and you place a market order to buy 1 lot of 100,000 Euros at 1.3228, expecting the euro to rise against the dollar. At the same time you place a stop-loss order at 1.3178 representing a maximum loss of 2% of your account equity if the trade goes against you, 50 pips below your order price, and a limit order at 1.3378, 150 pips above your order price. For this trade, you are risking 50 pips to gain 150 pips, giving you a risk/reward ratio of 1 part risk to 3 parts reward. This means that you only need to be right one third of the time to remain profitable.

The notional value of this trade is $132,280 (100,000 * 1.3228). Your required margin deposit is 1% of the total, which is equal to $1322.80 ($132,280 * 0.01).

As you expected, the Euro strengthens against the dollar and your limit order is reached at 1.3378. The position is closed. Your total profit for this trade is $1500, each pip being worth $10.

by Richard Goldie

Forex Avenue: The Road to Riches

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.

I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.

Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.

There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available — http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson.

While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.

by Scott Bianchi

Why Trade the FOREX?

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let's compare features of currency trading to those of stock and commodity trading.

Liquidity — The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times — The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage — Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs — Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment — You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Focus — 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution — In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

by Susan Walker

Explosive Profits: 7 Reasons to Trade Forex

There are many money-making opportunities out there and we've been involved with quite a few, namely property marketing, web development, residential construction security, multi-level marketing businesses etc.

We've come to a few conclusions with the help of some well-known properity coaches.

Often people with the income they desire don't have the time to enjoy it. Those that have time don't often have money. You don't have to sacrifice your life-style to earn an above-average income. If you focus on the for a few months you can make that dream a reality and create time and money to do what you REALLY want.

To earn a living money is given in exchange for a product or service rendered. It needs to be sold continuously otherwise your income stops abruptly unless it's a repeat type of product or service.

Money is a medium of exchange. There's no magical formula to possess it, you need to exchange something of value for it.

What if, you could have access to thousands of customers who are ready, willing and able to buy from you whenever you wanted? Wouldn't it be great to avoid any hassles like money collection problems (just had a delayed payment from my web business), keeping difficult customers happy (we all know what that's like), competition stealing your business without providing the same value etc.

All that is possible with . You can also trade from anywhere. Take your laptop with you, find an internet connection and away you go.

Another advantage is that you don't need experience to get started. Get a traditionally job involves accumulating specialized experience, having a well-polished resume and having the right contacts. With the right training course, you can get started straight away.

Here's 7 more reasons to trade :

1. It never closes. It's open around the clock, worldwide. Trading positions open at Monday 7am, New Zealand time and close 5pm New York time on Friday. During this time, you can enter or exit the market whenever you like. It's a continuous electronic currency exchange. This is great because you can trade whenever you have spare time.

2. Leverage. Standard $100 000 currency lots can be traded with as little as $1000. This is mainly because of the ease with which you can buy and sell, some brokers will leverage up to 200 times, so with $100 you can control a 200 000 unit currency position. It's the best use of trading capital around, even banks lending on property investments don't come close.

3. Accurately predict the outcomes. Currency prices generally repeat themselves in predictable cycles so you can see what the trends are. 'Technical Analysis' helps to see these trends and profit from them.

4. Low Transaction Cost. In other words, you mistakes won't cost you a fortune. Good brokers won' charge commissions to trade or maintain an account even if you have a mini account and trade small volumes.

5. Unlimited Earning Potential. has a daily trading volume of over 1.5 trillion, the largest financial market in the world. It dwarfs the equities market (50 billion daily) and the futures market (30 billion).

6. You can make money in any market conditions. Each market is one currency against another, so when you buy in one, you're selling in another so there's no biase towards either currency moving up or down. This means it's up to you to choose which currency to buy or sell with. Yu can make money going up or down.

7. Market transparency. This is an advantage in any business or trading environment. It means you can manage risk and execute orders within seconds. It's highly efficient and allows you to avoid unexpected 'surprises'.

I hope you're now convinced that is the best investment and income opportunity around.

by Sorna Devadas

Forex The Future Investment

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

by Mike Pachuta

Investing in Forex

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

by Joe Clinton

Advantages of the Forex Market

What are the advantages of the Forex Market over other types of investments?

When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.

The Forex market is also very liquid. When trading Forex you have full control of your capital.

Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control

Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.

The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.

by Heather Redmond

Are you looking to make money? Have you thought about trading on the forex?

Are you looking to make money? Have you thought about trading on the forex?

If you answered yes keep reading. Maybe you have thought that forex trading is just for people with a lot of knowledge and experience with traditional type of investments such as stocks, bonds and commodities.

The true of the matter is forex trading is for anyone. Forex traders, are made up of a large group of people. Ranging from everyday people to large corporations. The foreign exchange market offers you, as an investor the potential to make a lot of money. I don't want to miss lead you but, with any investment there is also a chance to loss money. So do bet the farm, educate yourself and get all the proper tools that you need be a successful forex trader.

I have come up with a few good reasons why you should start trading on the foreign exchange, which is commonly referred to as the forex or FX. More and more well informed, individuals and entrepreneurs are diversifying their traditional investments like bonds, stocks & commodities with FOREX

Here are some good reasons to start trading on the FOREX.

1) As a forex trader you will be trading in the world's largest financial market.
The FX market typically involves one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market is the largest and most liquid financial market in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global forex and related markets is continuously growing and has been reported to be over $4 trillion US.

2) The FX market is open 5 days a week / 24 hrs a day.

The stock market has set business hours and closed on banking holidays and weekends. The forex market is 24 hrs a day except on the weekends. The hours of the FX are 22:00 Coordinated Universal Time (UTC) on Sunday until 22:00 UTC Friday. As one market is opening, another countries market is closing. This is appealing to traders because it gives them the flexibility of when they want to trade. This allows forex traders to trade before or after their daily obligations. Most forex traders are using automated forex software applications. The forex trader enters the data into the application and then lets it run. Amazing!

3) The FOREX market is never a bear or a bull.

As a forex trader you can have access to an array of currencies. When you trade on the forex you are trading currencies "pairs". For example, US dollar vs. CHF (Swiss franc), one side of every currency pair (for example, USD/CHF) is constantly moving in relation to the other. When you make a forex transaction you are buying a particular currency, but at the same time you are selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value and other will decrease in value.
The key it is up to you to choose the correct currency to be long (the currency you bought) or short (the currency you sold).

4) The FOREX market offers a great amount of leverage.

You are permitted to trade foreign currencies on a highly leveraged basis sometimes up to 400 times your investment (400:1) with some brokers. The mini FX accounts allow you to trade with just 0.25% margin. This meaning, $25 allows you to control a 10,000-unit currency position. Now that's leverage. Futures traders, who are accustomed to margin requirements generally equal to 5%-7%-8% of the contract value. They will instantly recognize that the FX market provides much greater leverage. The stock trader, who must post at least 50% margin, there's no comparison. If you're looking for an efficient
market to trade in look no further, the Forex Market is the place.

5) Predictable Cycles and Trends.

Currency prices in the FX market generally repeat themselves in relatively predictable cycles, creating trends. The trends that foreign currencies develop are Advantageous for traders who use the "technical" analysis verse the " fundamental" analysis. It is my opinion that both methods should be used. But, as a technically trained trader, you can easily identify new trends and breakouts, to enter and exit positions.

6) Forex brokers commissions and FX liquidity.

There are none of the usual fees, which futures and equity traders pay. FOREX transactions are traded over-the-counter (OTC), via a global electronic network. When a FX transaction takes place, what you see on your trading screen, is what you get. Thus, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage. But in the equity and commodity markets, you must pay both a commission and exchange fees. The OTC structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.
Like all traded financial products, over-the-counter currency (OTC) trading involves a bid/ask spread. This spread represents the prices at which your counterpart is willing to trade. The broker receives a part of this bid/ask spread. What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast
for any investor from any country. Because the currency market offers round- the-clock liquidity, you receive tight, competitive spreads both intra-day and night. As you can see the FX market can be a very profitable market.

As a forex trader you do not need a degree or any special training. But you do need to educate yourself and be aware economic factors that relate to FOREX. Using an automated software application will help you get the ball rolling.

Questions, answers and a tip: Trade the eurgbp

1) Can the US Dollar Actually Go Up during this crises and soon?

Yes indeed! The fact that traders should realize is that this is a global crises. Its a contraction of confidence around the world. Just look at the GBP and the EUR and how its behaving. Britain and the Eurozone have their own problems as well! The DXY ( US Dollar Index is actually right in the middle at .78 2 points off its Sept 15th low and 2 points off the 9/11 high of .80. Thats telling you something.

2. What other signs are there that are dollar positive?

Well, its the fact that its bad everywhere. New Zealand is in a recession. Australia is slowed down. Asian markets are down fearing global slowdown. So its a set up soon for a rebound.

3. With all of this dollar turbulence is there a way to trade the currencies that we should know?

Actually, its a great time to look at Crosspairs. Look at the EURGBP in particular.With both the EUROZONE AND THE POUND STERLING facing major pressures, one of the best trading currencies is the EURGBP cross pair. It is in a great sideways range and bounce trades off Resistance and Support is now a high probability trade.

4. What is the best pair to trade in response to FEAR in the US markets.

I have stated that the USDJPY is behaving incredibly in sync with the S&P. Also look at the GBPJPY pair.

Sources: Learn Forex Trading Secrets

Start Today Earning Thousands as a Successful Forex Trader

Everyone is talking about the Forex. The foreign exchange rate has changed dramatically or the last ten years. The change has taken place due to the internet and technology. As a forex trader you can trade 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday). The trading can be done anywhere there is an internet connection.

Sounds to good to be true you are thinking. The Forex is great place to trade. But, you do need to educate yourself with some basic knowledge. You don’t need any special degrees or diplomas to start training on the forex. There are a lot of great sites on the internet with forex tools that will help you to start your training \ education.

You will need some basic knowledge in the economic arena.

1.Payroll \ Unemployment
Strong job creation is a good indication of economic growth, as companies must increase their workforce in order to meet demand

2. The Discount Rate \ FOMC Interest Rate Decisions
The Federal Open Market sets the discount rate, which is the rate at which the Federal Reserve Bank charges member banks for overnight loans.

3. Trade Balance
The balance of trade measures the difference between the value of goods and services that a nation exports and the value of goods and services that it imports.

4. CPI – Consumer Price Index
The CPI is a key gauge of inflation, as it measures the price of a fixed group of consumer goods.

5. Retail Sales
Retail sales is a measure of the total goods sold by a sampling of retail stores. It is used as a gauge of consumer activity and confidence as higher sales figures would indicate increased economic activity.

This data is public information and easy obtained via government websites, newspapers and online resources.

Now that you have some basic knowledge of economics your next step is to open up a demo forex account. You will need to purchase an automated forex trading software application. Look for a forex software application that has a demo account. Using a demo account is a great place to start it is free. Who doesn’t like free. When you feel confident and ready to start trading you can open up an account and start making money.

The mini forex is a good place to start for people just entering the forex market. The mini forex allows you open an account that is at a reduced amount. It requires a smaller capital compared to regular forex accounts, a minimum of $300. With mini forex trading, you can control a $10,000 currency position. The key here is leverage. Because of leverage, a trader can trade in a commodity more than the money available in his account. Say with a $250 deposit, one could trade a maximum of 5 mini lots. This kind of leverage is greater than stocks or day trading. Of course, it is recommended to start with a manageable leverage that allows greater flexibility in transactions.

Now that you have started trading on the mini forex if that is the route you have taken there are few other concepts to learn. They concepts are moving averages, Fibonacci levels and Bollinger Bands. These are ratios and measurements used to determine the highness or lowness of the price relative to previous trades. You just need a working knowledge of these concepts. Your automated software will handle all the mathematical calculations for you.

Now that you have a good knowledge of these concepts, there is one other thing we must consider. Fear, which can be the worst enemy of the Forex trader. To become a profitable trader you must leave fear aside and stick to your trading plan.

In conclusion, the key to being a successful forex trader is to have the knowledge and proper psychological preparation.

Tracy Lenyk

The Forex Market Can Be A Lucrative Market But Don’t Obsess

Have you ever thought about making money trading in the stock market or in the forex? If you aren’t living under a rock you have heard about the stock market. But have you heard about the FX. The foreign exchange (currency or FX) market is where currency trading takes place. FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another.

With the easy access to the internet many people are getting involved with forex trading. With in the last few years the forex market has really taken off. The forex market is 30 times larger than the US stock market. In order in trade in the forex you don’t need any special degree, license or diploma. What you need is to educate yourself, have money that you are willing to invest and even willing to loss, an internet connection and a forex software application.

How big is the FX you ask? The forex market is the largest in the world. With so many countries involved the daily turnover is 1.5 million dollars. The FX is extremely liquid which makes it very desirable for traders. The FX has long trading hours: 24 hours a day except on weekends. The hours are 22:00 Coordinated Universal Time UTC on Sunday until 22:00 UTC Friday. This is a great benefit for the fx trader. You can make you trades after, before or inbetween your daily obligations.

As a stock trader the market is only open 8 hrs a day. Any event over night can cause a stock to go up or down. But with the forex there are no gaps in time during the week. Forex traders and day traders find this appealing.

As a forex trader you always trade in pairs and usually against the US dollar. There are 7 major currencies which are; EURO (EUR), The British Pound (CGP), Swiss Franc (CHF), Japanese yen (JPY) Australian Dollar (AUS), New Zealnad Dollar (NZD) and the Canadian dollar (CAD). You can enter these pairs into a currency calculator.

Currencies are always going up and down and you can trade in either direction. This course that the currency takes is due to how the world perceives the value of a currency. Economic factors of a country is a real key. You don’t have to be economic guru but you should know where to get the information and be familiar with the data. When you make your forex trades your forex software application with be able to take over. The application is a mathematical program you put in a few setting and it takes over.

Sorry to bust your bubble but there is a downside to Forex trading. The forex is a great place to make money but it can also be a war where you loss your money and confidence. You must be wise with your money and trades. The great and famous military leader, Sun Tzu once said, “the obession for victory is a state of mind that benefits the enemy” These wise words are applicable to the FX trading arena. There is nothing more damaging to a trader or for that matter any business owner than the obsession of winning or victory. Making a profit is always sweet but there will be times when you lose as a forex trader. You must be aware and realistic about this as a forex trader.

Don’t trade with the mind set that you must never close a trade until you turn a profit. It is my opinion that you should never obsess with forex trading, be wise with your stops and forex indicators. Good luck and happy trading.

FX Psychology For The Successful Trader

Taking responsibility of your capital
It is amazing how many people are happy to place their hard earned savings in other peoples hands, accept the losses as its easier to blame someone else than to take responsibility of those funds ourselves.



The first step in any financial success is to believe in yourself and your own abilities. Have you ever notice how the experts on stock exchange get it so wrong to often. It is a real boost to your ego and confidence level when you grasp the trading concept and acquire a real solid forex education.

With this new found knowledge and confidence you can often outperform many professionals with years of experience.



The forex market moves several times faster than any other financial market and with leverage, the rewards and losses compound many times. The best way to overcome the thought of using your own money and the volumes you will be trading is to think in terms points and not in dollars, rubles or pounds. Don’t calculate your profit and losses in terms of hard earn currency talk in terms of profits and losses in points. If you implement this psychology from the beginning it will feel as if are trading a demo, a mini or 10 contacts of a full account.



It is common practice for FX traders to refer to gains and losses as points. We don’t refer to the currency as the benchmark of our own performance. We reference our losses and gains in points and measure our performance against this.



When trading via a forex demo account most people do very well. Why? Its psychology 101 they are trading without fear. When the real money comes into play; even on mini forex trading account they suddenly find themselves not thinking clearly and trading with fear. The outcome can be many missed opportunities and accumulated losses. They quite simply loose their nerve and give into fear and greed. I have seen this happen to forex traders when they step up from a mini account to a full account. Same thing can happen for a forex trader when they decide to stop trading single contracts and start trading multiple contracts.



Easier said then done, stop thinking about how much money you may gain or loose. Think points not money no matter how many contracts you are trading. Try this approach in a demo account.



Cut your losses and run with the profits.


Simple concept but is one of the most difficult to implement for most forex traders. It can also be the demise for most forex traders. Most traders violate their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position. These same people will easily sit on losing positions, allowing the market to move against them for hundreds of points in hopes that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favor once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more then a predetermined amount! The mistaken belief is that every trade should be profitable. If you can get 3 out of 6 trades to be profitable then you are doing well. How then do you make money with only half of your trades being winners? You simply allow your profits on the winners to run and make sure that your losses are minimal.



Another good forex strategy is to move stop losses (the point the trade will be sold if it goes the wrong way) behind the trade to a level where a pull back can be accommodated but a reversal will lock in at least some profit.



Self-discipline
Use discipline when trading. Ask yourself this question. If my next retail purchase is over $400 how much research will I do prior to making the purchase. If you take your shopping serious take your trading seriously. The point to be made here is be sure that you have a plan in place before you start to trade. The plan must include stop and limit levels for the trade, as your analysis should encompass the expected downside as well as the expected upside.



Information over load



Keep your trading simple. Most traders start out with a simple trading strategy that is successful. But later on find themselves trying to find a better and more profitable system. They also allow themselves to be influenced by other opinions and too much fundamentals. It is not too different from going to a race track where everyone has a sure thing or the information available becomes so confusing you can no longer see the wood from the trees. Trading the stock market is often similar in this regard. Have a simple forex trading strategy, stick to it and keep it simple. The golden rule here is to keep it simple…don’t allow yourself to become confused with too much information and if you’re not sure or not in the right emotional frame of mind, don’t trade.



You are not married to your trades
The reason trading with a plan is so important is because most objective analysis is done before the trade is executed. Once a trade is in a position don’t analyze the market differently in the “hopes” that the market will move in a favorable direction. Look at the changing factors objectively that may have turned against your original analysis. This is especially true of losses. Learn from your mistakes. Forex traders with a losing position tend to marry their position, which causes them to disregard the fact that all signs point towards continued losses. Don’t take more trades in the hope that the market will turn in your favor. Your losses will accelerate.



Do not bet the farm
Would you over pay for a retail product? So why would you over trade. One of the most common mistakes that traders make is leveraging their account too high. They start by trading much larger sizes than their account and they don’t trade prudently. Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only requires $1000 as a minimum forex margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 5% of your account at any given time. Forex currency trading is not easy. If it was everyone would be trading forex.


Now that you have mastered the psychology of forex you will need a good forex trading software application to start making money. Some of the best forex software application are; forex auto cash robot, forex autopilot, forex killer and forex loophole.