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Monday, July 6, 2009

Forex For The Small Speculator

Today was a banner day for me... trading the AUD/JPY with a return of more than 10% NAV. The market simply walked up and down my trend lines bringing me profits with every pass. How come this doesn't happen more often?

Anyway, as a small time speculator I thought I'd outline some issues that we face compared to some of the larger traders:
  • We trade in very small lot sizes
  • To make any meaningful revenue we may trade with a large percentage of our NAV.
  • Carry trading strategies may be meaningless
Each of these issues is something that we need to think about and potentially make some adjustments to compensate.

Small Lot Sizes
If you want to trade in small lot sizes you need to find a broker that doesn't charge you an arm and a leg for the privilege. I trade at Oanda and they let you trade with any lot size without any adjustment in spreads. I recommend them and I'd give a referral link if they had an affiliate program.

Trading Large NAV Percentags
There is nothing wrong with trading a large percentage of your NAV as long as you know what you are doing. It's a problem if you are trading this way because you keep acquiring positions as the market moves against you. It's okay if you take a measured defined risk because the market has entered a condition that you have decided represents an opportunity. It is very important to get out of losing positions once you know that your market position is unfounded.

Carry Trading Becomes Useless
If you only have hundreds of dollars in your Forex account, then there is no point trying to take advantage of carry trades. If the market didn't fluctuate so much it might be worthwhile, but in all likelihood you'll make a few bucks here and there and end up wasting your time. So what if you make 200% over a year, you still only have several hundred dollars in your account.

Concluding Thoughts
When you are trading relatively large positions relative to your account size, it can be exciting. You'll quickly win or lose tens of percentage points. If you are good you'll be able to build up a bit of a nest egg before too long and then start trading more appropriately for the size of the account you've built up. Quite simply, as your account gets larger the need to large risks dissipates.

Get out there, take your time, make sure the market sets itself up for you just right, and then stomp around and rip a few dollars out!

Getting A Forex Education - Forex Books

How many of us in the Forex market simply jumped in the market and started trading? I know that was my path. I tossed a few dollars in an account and figured losing it would be a paid lesson in how the markets work.

I can't say that this hasn't been a valuable path. I've learned some good lessons along the way:
  • it's important to let go of losses early so you have enough capital to sink your teeth into an opportunity that does work.
  • No indicator or strategy has all the answers -- stop looking for the holy grail of trading
  • The market can easily whipsaw you to tears if you aren't careful
  • If you place close stops they will often be taken out before the market goes your way
Really, the list of anecdotal learning is endless and difficult to put into words. However, I recognize that this isn't enough to make me a successful trader, though from time to time I'm starting to taste success. It's finally time for me to bite the bullet and learn more about trading.

No, don't worry, I'm not going to buy some stupid multi-thousand dollar Forex training course. That would be stupid. Forex trading is very related to trading in general and there is no shortage of information on either subject. To make a long story short I've purchased four books recently:
  • Currency Trading for Dummies
  • Swing Trading for Dummies
  • The 10 Essentials of Forex Trading
  • Technical Analysis for Dummies
All of these were available at a nearby bookstore -- so I didn't have to order something online and wait for delivery.

More importantly, let me list the credentials of the authors of the above books. Respectively, they are:
  • Mark Gallant: Chairman and founder, GAIN Capital Group. Brian Dolan: Chief currency strategist,
  • Omar Bassal, Head of Asset Management, NBK Capital
  • Jared Marinez, FXCHIEF and founder of The Market Traders Institute, Inc.
  • Barbara Rockefeller, International economist and trader
My advice? Never, ever, fail to look for the ideas of experts. Even if you don't agree with everything they say, which is appropriate, they should be able to increase your understanding and improve your own thinking.

I've had some days with a NAV appreciation of 10%, 20% or more. I'd like to have a lot more days like that... and I don't think that online sources created for the purpose of flogging affiliate commissions will do that for me.

A Winning Forex Trading Philosophy

I'm starting to believe that being successful trading Forex has more to do with your philosophy than anything else.

You cannot trade based on how much money you want to make. You cannot trade based on how much money you need to make. This means that you can't push money into the market, desperately searching for opportunity, risking a large portion of your net asset value in the process.

You must trade lightly.

When you trade lightly, you simply let the market give you the returns that it is willing to relinquish to you. Quite simply, it is not a process of taking.

If you can change your mindset it will give you a lot of peace compared to the level of stress that many generate. Dip your toes into the market, following your strategy, with a level of investment that simply cannot begin to raise your blood pressure.

A little bit of market wisdom, developed with experience, combined with an appropriate philosophy will generate profits. I know that this is difficult to consider or even believe in today's rational calculating world, but the only way to win is to not fight the market. It is way too big for you.

Stop trying to generate winning positions and simply let the market give them to you.

Part Time Currency Trader

As I've written before it is quite easy to become a currency trader. The harder part is being a currency trader that doesn't lose money. You see, according to the scuttlebutt on the forums, about 90% of new traders end up losing their money to the market.

Are you thinking about trying your hand?

I'm not here to talk you out of it. I myself am a part time currency trader. By day I work at my office job and by night I fight crime with a mask and cape. Wait, no, that's not right. By night I trade online when family duties allow me to squander a chunk of time.

Trading part time has it's challenges. You will see endless market movements that you did not participate in. You will miss opportunities to open or close a position even though your ideas about what would happen next were proven right. In fact, a very large part of trading well involves being able to deal with the psychological aspects of trading, whether part time or not.

If you read other posts in my blog, such as this one on trading philosophy, you'll see that I recommend working with very small trades. If you take larger trades, relative to your available capital, you'll find the emotional stress greatly magnified. It is very difficult to make good decisions as you watch your capital evaporate before your eyes.

Nothing will drive you from the market quicker than watching your capital shrink, panicking and saving what little you can, and then watching the market reverse leaving you without a stake. Or, perhaps worse, you do get back in after seeing a healthy rise, only to watch the market reverse yet again and wreak havoc on your capital once again.

It happens. I'm sure it happens a lot.

Did I mention that I'm not trying to talk you out of becoming a currency trader? It certainly isn't impossible to trade successfully but you really have to understand that there are many different ways to be unsuccessful. One very easy way to fail is to enter the market during a period in which it is easy to understand market behavior, think that trading is quite easy, and then have the market turn upside down and brutally fleece you.

Let's see. Yes, another painful lesson is developing the discipline to set stops and then have them tripped trivially, while the market does in fact go in the direction that you expected. Of course, this sets you up for the opposite, hanging on to a trade endlessly expecting to go as you expected, while it sucks up more and more capital.

My advice, do become a currency trader. Take your time. Learn with a practice account. Eventually, switch to a micro or nano account and trade with very small amounts of money. Continue to play with very small capitalizations until you have blown up your account once or twice -- this happens when you get a margin call and all your funds (except active margin) are forfeited.

Take the long view. There is always going to be another opportunity. No currency pair moves only up or only down. When trading part time you must either make accurate predictions or tread softly enough that the market can't move far enough to cause a margin call.

Anyway, to get into some information you can act on, if you are totally new to the game you'll want to know the following:
  • Most, if not all, companies that offer online foreign exchange trading provide free forex demo accounts. These practice accounts are the same as live accounts except of course that you don't trade real money.

  • A currency trading platform is simply a fancy name for what is usually branded currency trading software. This software will let you view charts for various currency pairs, add indicators and execute trades

  • Forex trading is global. You can trade starting on Monday moring in Asia until Friday night in New York. Trading is 24 hours a day during this period though each trading session will offer differing market volume and behavior.

  • If you are looking for a place to open your first forex demo account I'd suggest Oanda. To ensure that you don't think I'm compensated to say that I'll ask you to search Google to find them. They are a reputable company that allows you to trade with very small amounts -- which is great for starting out.
Good luck my friend, I wish you every success.

How To Become A Currency Trader

If you are anything like me, you probably imagine that it is difficult to become a foreign currency trader. Perhaps there are rules, regulations and other hoops that have to be jumped through. Maybe you need large amounts of cash in order to get started.


Becoming a Forex currency trader is incredibly simple!

Get A Demo Account
As I beginner I'd suggest you sign up with Oanda. Not only do they have a good reputation but they offer other advantages for a beginning trader as well:
  • You can sign up for a live account with very little initial capital.

  • You can execute trades of just about any arbitrary (small) size.
Of course, you can start with a free demo account before getting a live account. Just about everyone will recommend you do so, including me. However, at some point you need to trade with real money to learn about the psychological aspects of trading.

So, that's what I did. I started with $100 in my account and was off to the markets. Sweet, I'm a forex trader!

Learning To Trade Foreign Exchange
If you have a demo account, enter some trades. See what happens. Then, after the results come in, search for information about what happened. You'll find some helpful advice in blogs, such as mine, as well as various tutorial and forum sites. I would suggest that you buy a book or two on forex trading, technical analysis and perhaps something concerning the attributes of successful traders. I've listed some books that I found helpful on this blog post about getting a forex education.

Trading With Real Money
Don't rush to trade with real money. One of the most important things to realize is that there is always another opportunity -- there is no need to let the fear of missing out intrude on your good sense. In fact, the issue of psychology is immensely important in trading and once you move to real money trading you'll realize this very quickly.

Frankly, though I counsel otherwise, I wasn't be able to trade realistically while not actually risking my own money, so I started trading with a tiny account, funded with $100, almost immediately. Personally, with a few dollars on the table, I found that my interest level, formality and trading style were all upped a notch.

Trading Sessions
Except for weekends the markets are open all the time. However, different period of time often have different characteristics. This is because of trading in currencies generally follows the business day around the world from timezone to timezone.

Account Safety
Oh, I should mention, these days Forex trading with a reputable company (such as Oanda) is quite safe. While there are large risks and large rewards, my risks are essentially limited to the capital that I have put into my account. With wise strategies I can limit risks further, but as a beginner it is comforting to know that I can't lose more than I let sit in my account no matter how foolish a beginner mistake I might make.

I should stress that you could lose all the capital you put in your account, so do not start out with a large account with the idea that you will only conduct small trades. At the very least, create some sub-accounts and keep the majority of your capital out of harms way until you have blown up your play money account, learned a few lessons, and know how to protect your capital.

What You'll Learn
Above and beyond the simple mechanics of opening an account and executing trades there are tons of things you'll need to study to become a successful trader. These include:
  • Reading candlestick charts.
  • Interpreting indicators.
  • Support and resistance levels.
  • Fundamental economic analysis.
  • National economic news events.
Each of these issues can span multiple chapters or perhaps an entire text depending on the depth of information being presented.

I also invite you to read my blog. I started out from scratch and can address issues in a way that can be helpful for a beginner. Please feel free to ask questions and I'll do my best to point you to useful information if I can't give you a good answer myself.

Monday, June 1, 2009

2 forex_usdjpy_090519_bollinger_002

2  forex_usdjpy_090519_bollinger_002 by chucho_chevere., estrategias forex, cursos forex, manuales forex, seniales forex, software forex, mercado forex, Ganar Dinero con Forex, robots de forex, forex, forex killer, forexautopilot, metatrader4, street smart forex, Ea, Expert Advisors, Asesores Expertos, Sistemas Automaticos de forex, inversiones en forex, ganar pips, bolsa, rentabilidad, trading forex, finanzas forex, dinero, ifcmarkets, Crisis Economica, systems forex, tecnoforex,

EUR/USD Rises for Third Day as GM Goes Bankrupt

Euro continued to advance sharply against the U.S. dollar today as the U.S. are witnessing their biggest bankruptcy case in history. Economic indicators that came out from the United States today (other than GM bankruptcy) were better than expected. EUR/USD is now trading near 1.4209.

Personal income rose by 0.5% in April after decreasing by 0.2% in March (revised up from -0.3%). Personal spending decreased by 0.1% in April, following 0.3% drop in March (revised down from -0.2%). Forecasts for both indicators showed -0.2%.

Construction spending at seasonally adjusted annual rate rose by 0.8% in April after 0.4% gain in March (revised up from 0.4% growth). Median forecast by the analysts pointed at 0.8% decline.

ISM in manufacturing sector rose from 40.1% to 42.8% in May — almost the same as expected (42%).