Successful Forex Trading

Some people say forex trading is easy. This is a complete myth. Forex has been given the nickname the meat grinder because it has a very high rate of burning out and bankrupting good traders simply because it is so volatile, leveraged and efficient. People who have the idea that trading forex is an easy task are in for a series of humbling surprises. Trading forex is not about gambling, but it is risky and involves complex analysis of price action within a particular market. If you are unable to discipline yourself to follow a strict system of analysis for trading forex, you will never be successful at doing anything other than giving other traders your money.

If you don't have the confidence and discipline to trade with a plan based on a strict set of rules, you will always get crushed in the currency markets. No experienced trader is trading on discretion, and those that do do not last long. The best thing you can do as a forex trader is to develop a system or borrow one from another more experienced trader and follow it to the letter of the law.

It may be difficult to follow the old rule of cut your losses short and let your winners ride out simply because people have egos and people have fears. When you are losing, it is easy to have an ego about it and say you are sure the loss will turn around when perhaps it won't and you will end up losing money. When you are making money, it is easy to have fear and exit the trade early because you are afraid it may turn around. Trading mechanically with a set of clearly defined rules will alleviate the pressure on yourself to make this decision, and will allow you to trade without discretion, but with method and technique.

In order to reach this point, it's important that every serious forex trader take on a student mentality. If you do not have the will to patiently learn from those who have accomplished more than yourself and are making more money than you are, then you will only succeed at losing money. Learn every single system you can and don't hesitate to purchase books or videos that can improve your trading ability.

In the beginning, it might be wise for forex traders to simply use one or two methods to trade on. This is because you may find yourself burnt out on trying to master eight or nine systems at once, rather than homing in on one particularly effective system. With that in mind, get a system and trade only with that until you are confident you have mastered it, then move on to another.

Keep these rules in mind, and you'll make money and might just live to trade another day.

Autor: Eric Conklin

-Eric Conklin
Blogger and Trader
http://www.tamingthemarkets.com

Added: February 9, 2010
Source: http://ezinearticles.com/

How to Trade ES Emini Gaps

There is not a lot of middle ground when comes to the trading of gaps; traders either swear by them or ignore them. Gaps are formed by a variety of factors, and come in two distinct flavors. Some gaps are formed by institutional traders, others are formed by retail and novice traders, and it is important to be able to identify each type of gap in order to trade it properly.

From the onset, let's characterize a gap as a significant break in the price action to the upside, or sometimes to the downside. Generally speaking, a gap will look like a missed bar followed by the resumption of the trading action at a significantly higher or lower level than the level of the gap origination. My personal favorite gaps are the ones formed at the opening of the trading of the day versus the closing price (I'm referring to the ES contract here) of the day before. Now I can hear the traders saying that the ES contract trades all night long, continuing directly into the next day. I give overnight traders little weight, as the direction of all night trading is not necessarily indicative of what the session traders are thinking at the opening bell. If there is a 10 point difference between the previously evenings close and the opening bell of the next trading session, there are some definite trading opportunities a trader should consider.

My first consideration when evaluating a gap situation is to decide whether or not the gap is the result of professional traders or amateur traders.

Here is my criteria for evaluating professional versus amateur gaps:

1.Professional traders are loath to jump on a bandwagon, which is to say they are not going to pile onto a stock rapidly rising or falling. Professional traders buy after prolonged wave of selling has occurred. Conversely, professional trade sell after a prolong wave of buying has occurred. (You might refer to my article about the NYSE tick to get a better handle on this phenomena)

2.Amateur traders buy into a prolonged wave of buying, and sell into a prolonged wave of selling. Quite simply, the want to jump on board a ride out any potential future gains. This is a dangerous strategy and one that I do not recommend.

The inevitable outcome of piling onto a rising ES contract is generally to lose money when the gap contract losses steam and then rapidly fades in the opposite direction. Never underestimate the ferocity or intensity of these fades as they can be dramatic.

As you may have already ascertained, gaps can be dicey business, and anyone who claims that any "gap will refill" may be only partially right. It takes careful analysis to trade a gap and non small amount experience to trade them properly.

And true gap traders go so far as to classify gaps into three distinct flavors.

1.Breakaway gaps usually occur when a contract has been trading in a tight range, or consolidating pattern. At some point it often breaks out of this range and gaps out of it consolidating range. These potential gap situations are among my favorite gaps to trade by simply initiating buys and selling 1.5 points above and below the tight trading range and simply wait for a breakaway or breakdown in the consolidating pattern. This particular strategy, especially when accompanied by tight stops represent a low risk gap trading strategy.

2.Exhaustion gaps occurs when the market simply begins running out of steam and makes a last euphoric stab at new highs. These gap formations have not been profitable for me as it is very difficult to time the last gasp, which is also followed by a sharp move to the other direction.

3.Continuation gaps occur during a strong move, or trend, in and advancing price. Again, these can be tricky, but nowhere as treacherous as exhaustion gaps.

There are many windy books written on how to trade gaps, many which contain very specific parameters in which to initiate a gap-related trade. For my money, though, I look at gaps as follows:

1.If stocks start to accelerate upward after a significant period of buying, look to short. Usually amateurs are the driving force in the drive upward.

2.The exact opposite is true on the short side, if stocks begin a rapid move downward after a significant move down, look to go long.

As you can see, I would rather match wits with the amateurs than the professionals. Futures trading is a zero sum game and experience is everything, I don't try to tangle with experienced traders, it usually isn't very profitable.

Autor: David S. Adams

I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It's an awesome product that will have you well on your way to success. Plus, it has a money back guarantee...you have nothing to lose and thousands to gain.

Added: February 8, 2010
Source: http://ezinearticles.com/

5 Trading Statements That Make You Sound Stupid

Investopedia recently did an investing article that I enjoyed, yet like most of the content on Investopedia I'm only really with it about half of the distance it goes. It was called '5 Investing Statements That Make You Sound Stupid'. I decided to create my own version of it only with trading. Trading is more or less the same as investing, only no one in trading is looking to hold onto assets for more than a few months to a year at a time. There are a lot of people out there who say stupid garbage that pisses me off about trading, and the funny thing is I used to find myself saying the same things and well, I learned. So, without further ado, here are the top 5 trading statements that make you sound stupid...

1."If I just follow this guy's proven system, I'll make tons of money!"
Okay, even I say that one sometimes, and the truth is there are a lot of good systems out there to put to work. The problem is, most of these novice traders just don't understand that anyone can screw anything up no matter how foolproof the system claims to be. Even so called trading robots can crater your account if you don't adjust trade settings correctly, so the idea that there's any sure thing you can use to trade is just folly. A smarter thing to say might have been "If I work hard at utilizing this system, I can turn a tremendous profit assuming I don't screw it up."

2. "This time it's different"
I actually commented on this the first time I posted on this blog. The whole this time it's different mentality is just an excuse to remain in a position for longer than you are due and it ends up creating a position of risk due to lack of knowledge about the natural corrections of the market. A smarter thing to say would be, "This is a great trend, but like any other trend it will reverse some time."

3. "This indicator can basically predict future price action."
No technical indicator can predict future price action. The truth is they are just indicators like the instruments on a plane. They can tell you a lot about the altitude and position of the plane, but you have to actually look out and see where the plane itself is headed. Systems of analysis based on these indicators can predict future price movement to a limited extent, but not any indicator or group of indicators alone. Here's a smarter statement to make: "When I use this indicator in conjunction with my analysis method, it's a leading indicator of future price action."

4. "Is this FDIC insured?"
No. You're an idiot. Don't ever trade. A smarter thing to say would've been "I should punch myself in the face."

5. "There's no risk in this trade."
There is ALWAYS risk in a trade. You can control it, limit it and stop it out when it attacks you, but you cannot eliminate it, and it will always be there. Anyone who says this about a trade probably doesn't fully understand the risks involved in the financial markets. A smarter thing to say would've been, "I've minimized my risk in this trade."

Autor: Eric Conklin

For more tips and articles just like this one, be sure to check out my full site at http://www.tamingthemarkets.com

-Eric Conklin
Blogger and Trader
http://www.tamingthemarkets.com

Added: February 6, 2010
Source: http://ezinearticles.com/

How to Find Hot Penny Stocks That Will Make You a Fortune Overnight

Finding small gains on penny stocks is as easy as reading a chart and watching for a breakout of a technical pattern, but if you are looking to find the next explosive penny stock that could skyrocket into the mid or large cap stock range, you are going to have to look at a number of factors and determine scientifically if this stock is prepared to explode.

Word to the wise: don't get carried away in anything anyone might refer to as a sure thing. Real traders know that there is no such thing as a sure thing, so hedge against failure by diversifying your trades well enough that one trade will not seriously injure your account. If you put your life savings into a penny stock that ends up losing money, you will feel about how you should've felt from the very beginning of the ordeal: stupid. So be excited that you have the opportunity to multiply your investments, but don't put up the entire nest egg in one trade or you could most definitely end up losing it.

Here's just a couple of the most important factors you want to look for when trying to pick the next explosive penny stock:

-Increasing Revenues and Earnings

Companies that are publicly traded typically release an earnings report every quarter to illustrate their financial performance. Keep track of this on any stock you believe has the power to transform in value and look for a trend of increasing revenues and better earnings for the company. This means the company is growing, even if the stock is not yet going up.

-Decreasing Debt to Equity Ratio

Companies that are preparing to break out of a shell and transform into a wealthy multi-billion dollar conglomerate are typically very good at handling and reducing debt. A company that can quickly and easily pay out its debts and start building equity in the markets has a very bright outlook for the future and should attract value investors from around the world.

-Competitive Advantage

The company you are looking at should have a competitive advantage in the markets. A particularly promising way to insure this might be to look for a company that has a niche in the market no other company is effectively filling. This usually can be translated into some form of technology no other company has refined or a style of business no other companies are mastering.

-Industry Conditions

Take a look at the overall market and find what the most promising industries for growth based stocks are. If the sectors with the current highest levels of growth are the same as the sector in which your penny stock is located, it's a good indication that this stock has potential.

-Price/Earnings Ratio

A company with good earnings is a company that does good business, but if a company does good earnings and is underpriced, you are looking at a great opportunity to buy! A low price to earnings ratio at or below 15 can mean that no one else is aware of just how valuable this stock is, which makes it a perfect buy for a value trader.

Autor: Eric Conklin

For more strategies and insight into how you can be a part of the next penny stock rally, be sure to check out my blog at http://www.tamingthemarkets.com

-Eric Conklin
Blogger and Trader
http://www.tamingthemarkets.com

Added: February 5, 2010
Source: http://ezinearticles.com/

Some Rules to Online Day Trading

A day trader is one trading stocks, options, commodities, or futures on the web. Many times new day traders ask the difference between stock/options trading vs. futures day trading. This question comes up many times in our user's camp. Now, if the rules are overlooked unintentionally (or knowingly), let's discuss what they are and what happens if violated.

This article only debates online day trading as it relates for stocks and options vs commodities and futures. Commodities and Futures have similar online day trading rules.

If you have been part of trading for any time, I'm sure you have heard of the 431 Rule. It is defined as a ( Margin requirement ) for any customer who performs four or more same online day trades inside any five successive business days. Further, your online day trading activities are greater than six percent of your total trading activity for that same 5 day period ( from FINRA site ). Having a margin call is no fun and must be answered if violated. As a day trader trading stocks are options with less than $25,000 in your account, you must be aware of trading this money more than 1 time in the 5 day period.

Day trading futures and commodities does not have this type of margin requirement. Margin requirements when day trading differ in you can make multiple trades in a given day and there are no limits to how frequently you can trade your money.

Rules for a Online Trading

The equity in your trading account must be retained over $25,000 to be in a position to trade and not run into issues. If not, say you trade $5,000 and cash out of your position within 10 min. That $5,000 can not be traded for 5 days. Strange rule I know, but that is the rule.

Trading futures and commodities, margins can be as low as $500 and once cashed out of a position, the same money can be traded again with no wait time.

Only three trades in a week ( 5 trading days ) are permitted or you'll be given a 90-day suspension of all trading activities if you still engage in trade on the 4th day.

A day trader can transact many times in a day with no limitations.

Hence, in my opinion, day trading is a better path to take if your taking multiple trades in a day.

When stock trading the amount of $25,000 equity should be maintained in your trading account. During buying and selling similar stock/option in the same day, do not go into a new trade where the funds from the sale of the stock just sold will be used to acquire a new position. If you have purchased a position from cash from a previous same day sell, it is best to save that position overnight.

The trading rules I have offered here are the ones I have run across thru all the years i have been doing trade. You can get all-encompassing info by exploring the online network for online day trading and pattern day trader. Wikipedia can be utilized to get such info.

I have traded a number of years in accounts with less than $25k and have never had a 90-day suspension canon applied, but have had more than a few alerts about a trade that will prompt the ninety-suspension canon. When this takes place, I just do not perform the trade and will pause till next day. Good luck in your trading...

Autor: Jonathan Ingram

3 FREE Trade Setups:
Day Trading Futures
Day Trading System

Added: February 3, 2010
Source: http://ezinearticles.com/

Learn Day Trading and Escape the Rat Race

There are many folks in the world who would like to learn day trading and start being super full-time traders. These adults would perhaps love day trading for a job if possible, as one with a trading account can trade futures, commodities, the currency exchange, etc. I am positive any person would savor index futures day trading for a the bread and butter day trading from the cheer of the traders own SOHO office.

To become a successful trader, learn trading or online trading, and make a living from trading, an individual must be ready to put in the complicated work, effort and time needed to succeed as a trader. A trader has to defeat all the capabilities required to be successful. The most vital talent to be mastered is in the shape of feelings and it is maybe the hardest of all to come and master. An instructor is always the preferred route compared to just reading some books on trading or buying a black box system. One should have a good system. The training received from an instructor can be pricey but helpful at the same time. One must always glance at the background of the trading mentor before choosing one.

It is always a sensible concept to start trading with cash a day trader can afford losing. A trader must always use risk capital to be successful at trading as a living. Using money kept aside for fast daily costs or money borrowed from a credit card is a recipe for disaster. Scared money never defeats trading futures.

Keeping record of all day trades in a traceable record book will help an index trader to learn day trading. This diary must be refreshed on an everyday basis. This shall benefit the Mini S&P trading considerably as he will be trained from his blunders and continue to continue working on getting a better trader. Doing do, he should intentionally select his/her index futures day trading software, broker and his/her ISP. Proceed from other index traders or internal inclination can have repugnant bottom line on the Emini Futures trader in addition to his trading account. It is always much better to day trade vigorous as specified by the rules set out and come back to trade a different day than lose everything in one trading session.

It's achievable to make a living at trading and learn trading if all of the formula that are established in a trading system by the index trader and followed to the tee by the index futures trader.

Autor: Jonathan Ingram

3 FREE Day Trade Setups:
Learn Day Trading
Online Day Trading

Added: January 31, 2010
Source: http://ezinearticles.com/

Do You Have Firm Control on Emotional Factors Which Effect Your Trading?

Most traders suffer from the mistaken notion that if your learn a good day trading system you will make big money day trading. Of course, nothing could be farther from the truth. One of the few topics that most day traders are reluctant to talk about is market psychology and trading psychology. Yet, when I sit down and trade with a new day trader, I can usually ascertain the emotional issues he will encounter after the first hour.

Some day traders believe that good traders have some sort of intuition into the functioning of the futures market. Here is the rub, when you are trading; your ability to control your emotions while you trade will, in large part, determine your success. Can you simply turn your emotions off and continue to trade on just the facts?

The overwhelming response I receive when this question is posed is "of course I can!" Most day traders do not want to see themselves as weak or deficient, yet when they trade these deficiencies are nearly always present. Your emotions betray you when you trade, and the secret to trading is to have firm control over how you think at the emotional level. It is easier said than done, too. While confidence in trading is important, over confidence is an account-buster. The markets will humble you before you get a handle on what went wrong. Taking a respectful approach to the markets and the risks involved in trading will serve you far better. I tell myself several times a day "the market is right, you are wrong."

When I trade, my goal is to trade what I see on the chart. I don't trade the news, I don't trade on rumors. I don't trade the economy. No, I have a specific methodology for trading the chart on the screen and it does not include outside influences. I am not interested in what market pundits have to say about trading on a given day. For many traders, that is a tough pill to swallow.

Here are some of the measures I use to control my exposure to emotional roadblocks.

1. I don't watch television when I trade. Most of the networks have an agenda in their announcing style that is not objective. Some networks are eternal optimists in the face of contrary facts, and other networks are overly pessimistic in the outlook. I depend on my own analytical skills in reading charts and arriving at my conclusions.

2. I generally play classical music when I trade, as I find this music emotion neutral. Some rock n roll affects me at the emotional level, which is to say the music is psychologically stimulating and I have found I am too aggressive in my trading. As you can see, I have thought some about this issue.

3. I never look at a chat room while trading, and usually don't frequent chat rooms at all. Why? Most chat room posters are doomsday types. The sky is not falling, and I am not chicken little, and I do not want my trading influenced by spurious information.

4. I sometimes listen to a radio station when I trade, but it is usually a talk sports station and nothing more than banter. This does not seem to effect my trading unless they talk about the Chicago Cubs, then I am usually irritated and turn the radio off. (yes, I am a long suffering Cubs fan)

So outside influences can, in fact, be an issue; but there are even tougher influences to conquer, and that is the psychological point of view within yourself.

Your own outlook on the world can influence your judgment, regardless of the outside influences to which you expose yourself. Emotional considerations like greed can cause you to trade recklessly and outside the parameters of your trading system. Greed? Yes, there have been several books written in the last 2 years that compare the hormone levels after a very successful trade to pre-trade hormone levels, and found your body's physiological response was to release large amounts of endorphin, resulting in temporary euphoria. (See "It's Not What You Think, It's How You Think," Larry Pesavento, author) Temporary euphoria is not a good state to trade, and may result in terrible losses.

In summary, there is good evidence to suggest that your state of emotions is a determining factor in day trading success. Anecdotal and scientific research has brought this consideration to the forefront in recent years. It is important to realize the detrimental effect your emotions can have upon your trading and take action to minimize outside influences, especially those involving greed, euphoria and overconfidence. And finally, trading psychology is one of the least understood facets of trading and will likely stay that way, because of traders aversion to talking about their feelings in the trading environment.

I know for me it's simple; anytime I think I know what the market is going to do, I need to remind myself... I don't know what the market is going to do, and I need to simply trade the chart in front of me without bias. It's easier said than done.

Autor: David S. Adams

I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It's an awesome product that will have you well on your way to success. Plus, it has a money back guarantee... you have nothing to lose and thousands to gain.

Added: January 23, 2010
Source: http://ezinearticles.com/