Free Forex Currency Trading Guide

How to trade gold -- or anything else, including forex

2011-12-05T12:39:00.001Z

Here's a story about a new trader and how he experienced a complete revelation when trading in a 'can't fail' market (you can scroll down for the simple lesson, but it's worth reading on).

He'd dabbled a bit, some forex here, some stocks there, but never really cracked it. Then, one day, the ever-escalating gold price became just too tempting.A quick little trade, just to make some extra cash he thought. The gold price was going up and up and up; can't lose. But guess what, he did, and not just once, he kept doing it.Trading is one of those odd money-making activities where you can be absolutely correct in your analysis, tread very cautiously and then still lose — and lose loads. It's not surprising, the more you lose, the more cautious you get. But that was the trouble — being cautious was almost guaranteeing the loss. That's what I mean about odd. Time after time, this intelligent person would place a winning bet, and lose his money.

After a few 'cautious' trades; everyone a loser, he stopped. Torn between accepting his painful losses, and keen to make amends, he took a step back to see what was happening.Each time, he'd bet that the price was going up, which it did, but each time he lost — how?Well, it's obvious of course. It's obvious in the cool, considered world that exists outside of a trade, but the fact eluded him and I'm sure eludes many others too when they are desperate to jump on to a winning situation.This price was going up for sure, anyone could see that. But — and here's the vital bit of information — it was spending quite a bit of time going down too. You've heard the expression: two steps forward, one step back? Well, that's pretty much how any market moves, even when they are moving very strongly and very definitely in one direction. Think about this: if you never had to exit a trade for fear of losing your money, you could just hang in there until the price moved a distance from your entry point, and then take your money. So what did he do next? He just assumed he wasn't going to lose, the gold price was not ever going to fall below $xxx, not in the present economic conditions anyway. So, he entered the trade, decided how many pips to take and set his sell order at that point. Yes, he knew that the trade would enter many losing positions before it got there, but in trading you never lose until you exit, so he just hung on and waited for his sell order to trigger — which or course it did.

So what was this revelation? Tight stops will lose you money, that's it.Why do you think spread betting companies are keen for you to place 'safe' stops? Because they know that virtually every tight stop you place will make them money.
This isn't an excuse for recklessness, but if you are confident in your analysis and enter a trade, let your trade breathe; if you don't you'll lose — guaranteed.

What is the trend?

2011-12-01T14:10:00.000Z

This is one of the most basic, but sensible tips in trading. It doesn't matter if you are trading foreign currency (forex), stocks, gold or oil. It's one of the most commonly heard nuggets of advice, but still many traders ignore it: The Trend is your Friend

What this means is that if the price is moving predominantly in one direction, i.e. up or down, you must have a very, very good reason to trade in the opposite direction: if the price is going up, you buy; if it is going down, you sell.

Sure, the market can turn at any moment. But, if it does, there will have been a reason for it. If the underlying reasons for its current trend remain, it will continue on that path. For example: gold is seen as a safe haven. In times of economic doom and uncertainty (like now), investors will be drawn to something with physical value, and that is precious metal. Yes, the gold price does fluctuate and wildly so, but the trend is up and has been for a long time. If you are selling it then, you either have strong evidence to support the fall, or you are taking profit.

A word of warning

2008-11-06T20:36:00.002Z

It's a is very tempting time right now and no doubt it will continue for a while.
Volatile markets present great opportunities, but they also present great risks.

It's very easy to open a trading account, study a few charts and leap in to take what looks like easy profits.
However, there are two main things to be aware of.
1. Although the markets may be moving very strongly in one direction, there will be plenty of contra-moves that will take out the unwary trader. Although a strong trend might be apparent, there will still exist a large degree of randomness.
2. High volatility means that safe stops will be triggered frequently -- usually before a trade has had a chance to make the required pips. And yet, if the stops are not in place, then losses can be crippling.

Today, the Bank of England announced a very rare and very surprising rate cut of 1.5%. Immediately the pound lost against the dollar in quite dramatic fashion. It seemed like an obvious play to jump on the bandwagon and sell the pound. Yet almost as quickly it regained all its losses. What seemed like a very predictable move ended up the complete opposite.
Time will tell whether the pound will revert to its seemingly predictable falling trend, but for a few minutes today it was very hard to call.
So, just because the markets move in a big way, don't assume it's easy to take the pips.
It really is a time to gain as much education and understanding as you possibly can.

Is Bird Watching still the one to read?

2007-07-20T20:14:00.000Z

Interested in financial trading? Especially foreign currency trading or forex? Then you might have subscribed to the odd newsletter or two.
Maybe you use some financial sites and have registered your details there too.
Or perhaps you are just interested in business opportunities or earning a part-time income.
Whatever your own reasons or circumstances, if you have given your email address to any of the above or similar then there is a fair chance that you will have received details on forex trading strategies, systems or education.
In the past, on this site and the Neesh Enterprises site I have written about the excellent Bird Watching in Lion Country by Dirk du Toit.
The book has been around for a while now and so we have to ask the question, 'how does it compare to the range of courses on offer today?'
Well, to be honest I haven't checked out everything that is on offer, but I do read the publicity material and a lot can be gleaned form that, especially if you know what you are looking for.
I have to say, still, that although you do not have to spend a fortune on learning about forex, you do need a balanced view.
There are many forum sites out there and they have huge expanses of trading info, but they can be a minefield.
Why? Because what works for one person will not always work for another.
I'll reiterate that point because it is vital. A wining strategy is not always a winning strategy. Obviously the markets change from day to day and what worked yesterday may not work today, but, aside from that, we all trade in different ways -- it's no good holding a winning hand of cards if you fold them too soon.
So what has that to do with Bird Watching in Lion Country?
What made that book good was that it taught a common sense practical approach to trading. Not so much a strategy as a style. And if you have a winning style you'll make money.
So I'd say yes, it is still the one to read, but do reinforce it with some more general knowledge and all of that is available free of charge from the web.
Pay two or three thousand for a course if you must, but don't expect it to make you a successful trader. Read the book and do some homework instead.

What to do When You are Losing

2007-02-14T10:47:00.000Z

It's not always plain sailing.

Regardless of your skills, there will be times when whatever you do, you lose. I went through such a period. When I looked back at my trades, I could see no reason why I shouldn't have made those trades. And yet, if I'd made the exact opposite trades I would have been on a strong winning streak.
Making analysis discoveries like this can severely dent confidence. We like to think of ourselves as knowledgeable traders. We have a pretty good understanding of the market, and importantly, we know that we cannot be winners all the time. We know that with the wins there will be losses. But, that's OK, it is all part of the game, and if you can't take the losses, then don't play the game.

That is why, when we make the wrong calls consistently, it makes us think that our whole concept of trading is faulty. We thought we had knowledge, maybe it was luck after all. Maybe we don't know anything of value at all. Has this happened to you?
If it hasn't, I would guess that you've not been trading very long.

It certainly happened to me, and the consequences are dire.
Once the confidence goes, more bad trades follow, only adding to the misery. What do we do though?

If we truly believe that we do have a pretty good handle on the markets then we must accept that sometimes they move against us for reasons that we just don't understand.

Let's look at a simple analogy: the complete randomness of tossing a coin. We know that it is always a 50:50 game. We have absolute understanding that there is an equal chance of one side up or the other. So, if someone were to offer an ongoing bet even slightly in our favour, for instance 52:48 then we'd be mad not to take it. But, what happens when the coin toss goes against us for 6 times? What do we do on the 7th. Our decision can tell us a lot about our trading attitude.

Some people, would carry on regardless, and obviously get back on an even keel. Others might see this as an opportunity 'It can't possible go against us again' so they increase their bet, safe in the knowledge that they will win this time and recoup all their losses. Others may change their decision making process to support these results and change their bet accordingly. Then there will be those who just don't understand what is going on and take a little time out until things settle down.
It is quite easy to see looking at this coin toss example how foolish some of those decisions would be. Just because the coin has fallen the same side six doesn't increase the chance that it will change on the next toss; it is still 50:50 -- it could still catch you out.

So the best decision would seem to be carry on regardless.
Nevertheless, being on the receiving end of such inexplicable losses can play havoc with our state of mind and consequently our ability to make sound judgements. There is also, a very small chance -- just a small one -- that the person tossing the coin knows something we don't. Perhaps he's discovered a way to influence the results, perhaps he's learned a special way to flip it in his favour. Either one of these two reasons would suggest to us that it is prudent to stop playing for a while, so that -- at the very least -- we can re-enter the game when we've got a steady head on our shoulders.

So, when you find that whatever decisions you make are wrong, just take a step back. Perhaps paper trader for a while, but don't risk any more money until you feel confident again. There's no harm in that. It is a sign that you are in control and that you will not be adversely affected by whatever the market throws at you.

How Much Money Do You Need to Spend on Learning to Trade?

2006-08-16T10:28:00.000Z

There is no doubt that trading currencies successfully is fantastically exciting and very lucrative.
But, contrary to what a lot of people proclaim (especially those selling to you), it isn't easy -- simple maybe, but not easy. It's very simple to trade currencies, either directly or using spread betting. It is also very easy to lose all your money.
A very high proportion of currency traders fail; less than 10% are successful. Nearly all of the successful traders started by losing a lot of money. Even when you think you've got it licked, the markets can turn against you and this is when they are that there most dangerous. A winning streak usually leads to complacency and a subsequent increase in stakes. Result? The loss is greater than the initial win.
There are those who argue that a painful lesson can be avoided by taking education. In recent years it has become so very easy to trade online. Consequently, there has been an explosion in the amount of education available to those who want to learn about the markets.

Personally, I have spent in excess of $4,000 on one course alone. Was it really necessary?
I have to admit, no. What I learned on that course was very well presented and explained. But what was on offer was basically one strategy that had worked very well -- historically. There was nothing wrong with the course, but it was built on a system that has become slightly outdated. The currency markets are very liquid, and I don't mean in the financial sense, but rather, that they are constantly evolving. The way the markets moved a year ago is not the same as the way they move today.
A lot of the courses available are good, don't get me wrong, but most are extremely overpriced.
The prices seem to be based on the rewards the seller thinks the buyer could enjoy. And that is very often they way they are sold. 'By this course and become a millionaire in 12 months'; if only it were that simple.
There are some hidden gems though. Publications that acknowledge that we live in the real world, and that teach the whole subject rather than a system or strategy -- you'll find a couple that offer real value for money in the link section here. Both teach a whole lot more than that $4000 course and can be bought for a very small fraction of that price.

The question given as the title of this article is, of course, impossible to answer universally. Some people (very, very few) will buy a cheap book in the bookshop and that will be enough to get them on the road to earning real money through currency trading. Others may well spend thousands on a course, then go on to lose even more when they start trading -- how much has their education cost them?
For most of us the answer lies somewhere in between; we could do with a helping hand in the form of books or manuals, but costing hundreds or thousands? I think it's not necessary.
We must always remember though that we never stop learning, and that the markets always have that nasty little lesson up their sleeve for when we forget.

One Very Valuable Trading Lesson

2006-08-15T22:14:00.000Z

During the time that I have been forex trading -- with varying degrees of success -- one lesson that I have constantly been reminded of is the almost complete randomness of the markets in the short term.

What do I mean short term?
Well, I'm sure we all know this scenario: looking at a live chart, we see the price begins to move in one direction, and it keeps going. We are thinking, this is looking like a good move, I'll just take a few pips and I'll exit as soon as it turns against me.
We execute the trade and almost instantly the move reverses. Just a blip we think, and give it 10 pips to breathe. Fifteen pips down we exit only to see the original move rekindled and keep going.
Yet again, we made the right call, had the trade in the right direction -- and lost the money.
Why?
Because we've still not learned one of the most important lessons: short term -- and we are talking less than a couple of minutes -- the markets are random.
Such trades can be very dangerous because they encourage the "get even" tendency. So we go in again, just a few pips to win back, we'll soon be back level for the day. You know the rest, another 15 pips down the pan.

What should we do to avoid these costly trades?
Simply step back. Take a look at the bigger picture. Study the chart and look at the way it moves.
Ask a few questions. How often is a 10-pip move continued without a minor correction? How big are these corrections? Once we get an idea of the movements, we should get an idea of how much breathing space we need to give our trades.
Although it will take a while, this form of study will be very worthwhile. Do remember though: what you learn about the movements of one particular currency cross is not necessarily applicable to another.

Useful Currency Trading Tool

2006-07-31T20:46:00.000Z

Here's a quick little post to give you a really useful currency trading resource.
You'll probably know that there are two kinds of currency traders: fundamentalists and technical analysts. Actually there’s a third type who is a mixture of the two (they are very often the most successful).
Anyway, the fundamentalist, who by the way is not the member of an extreme political or religious movement, uses economic and political data to form an opinion on what direction currency values will take. The Technical Analyst, sometimes called Chartist, looks at a graphical interpretation of past prices to form his (or her) opinion. This graphical interpretation is also knows as — you’ve guessed it — a chart.
Charts only show past prices. This is a very important point. They cannot tell you where a price is moving, even in the very short term. It is very tempting to assume that a price that has been heading down steadily for the past hour is going to continue in that direction; it is random. It’s like saying that if a roulette wheel has turned up red for 5 times then the next colour that little ball selects will be black; we’d all be millionaires by now, wouldn’t we?
Having said that, a chart can be a very useful tool in the right hands. Charts can show price movements over a very wide range in time periods: one-minute intervals, yearly intervals, or anything in between. A one-minute chart spans a very short period, whereas a yearly chart delves deeply into history.
New traders are often lured into the excitement of the one-minute chart or maybe even a tick chart than can hop about by the second. However, due to the short-term randomness of price movement, these very short-term charts are of limited use to the average trader.
So, where can we get these charts? It is very easy to find financial data providers who charge by subscription for their info. Fortunately, for us, one of the very best charting applications is completely free of charge and readily available. It is extremely easy to use, very adaptable and easy to customize. It will satisfy all your charting needs and more; it doesn’t unfortunately come with a crystal ball though. It’s called the Meta Trader Client Terminal. Sadly it won’t work on a Mac so you’ll have to do what I did and buy a cheap PC to run it on (PCs are quite useful sometimes).
Later we shall look at how to use Meta Trader as well as delve into the magical world of Technical Analysis.

Bird Watching in Lion Country

2006-07-27T17:05:00.000Z

Here's something that could save you a small fortune.
It could also get you well on your way to trading in a profitable way.
The book, written by Dirk du Toit (a trader with many years experience), contains more information on currency trading than many courses costing thousands.
It gives a thorough background to the markets: how they work, why they work, why it is so easy to end up in financial ruin.
Contained within the book is fantastic advice on trading strategy and examples of how to play the markets for maximum gain and minimum loss.
Read more about Bird watching in Lion Country

The Most Important Post

2006-05-18T23:46:00.000Z

If there was just one post on this site, this would be it. It's short, but ignore it at your peril.

Foreign currency trading can provide an exciting, satisfying and large income.

Gains can be swift, a lucky trader could double their money in a minute. But, the same trader could lose the whole lot the very next minute. The vast majority of new traders will lose their account, it's a fact.

Don't play the markets with your rent or housekeeping money, and don't feed a losing habit.

The risks are huge; end of warning.

Trading Psychology - Consecutive Loses AND The Trading Psychology Spiral

2006-05-15T23:23:00.000Z

Author: Barry Lutz

I think of a trading psychology spiral as the surge in emotions from a series of consecutive trading losses.

You go long and the market immediately goes down - you go short and the market immediately goes up. That's 2 consecutive losses, and you are getting a little 'anxious' so you don't take the 'next' trade. Of course, this trade is a winner. Now to make the situation worse, you then 'chase' the move, and as soon as you enter the trade it immediately reverses, thus giving you another loss – this is now 3 in a row. Ok one more ‘try’ - this can't happen on every trade can it?
This time though, you will be real clever. You have noticed that the market is in a range, and it's the bounce from the low/retrace from the high that is causing all the problems. So this time, the next trade you take will be a range extreme fade AND the hell with your trading method. The market is at the range low, and per your new ‘on the fly’ trading plan, you go long. Instead of bouncing again, the range immediately breaks out to the downside. Not only does this give you consecutive loser 4, but the loss occurred from trading against one of your ‘best’ method trade setups, and becomes a trade which is giving enough profit to pay for the previous 3 losers, and make you net ahead.

Now what are you supposed to do – QUIT? AND to be sure that there is no more temptation – your throw your computer out the window, and dive out right behind it. You are in a trading psychology spiral.

WHAT is a Trading Psychology Spiral?

I think of a trading psychology spiral as the transition from trading losses that you have accepted both as a part of your trading method, and as something that is inevitable in trading, into a surge of emotions that continually builds to a point where you can no longer accept anything. As this eventually ‘spirals’ out of control – trading method becomes completely ignored, and is then replaced by emotional responses and decisions for everything that is done. Even if quitting was really the only viable thing to do at the time, the trading psychology spiral can cause an emotional response where this isn’t even considered, until the situation becomes so desperate, that the trader can’t take it any longer AND does have to quit.

This isn’t a discussion about emotions and trading, and the various fears and issues that keeps a trader from trading to begin with; as we know, emotions are an inherent part of trading – you learn to control them OR you can’t trade. This is a discussion about emotions that are typically controlled well enough so that you ‘can’ trade, but then something happens where the trader loses that control, and their emotions spiral. A series of consecutive losing trades, especially those caused by deviating from the trading plan, are a root cause for this happening.

This also isn’t about something that happens only to inexperienced and unprofitable traders. There are going to be those times where nothing a trader does will work, and that result is going to be a series of consecutive losers. So the situation is the same, it’s the reaction that may be different. For instance, traderA may go into a panic causing them to spiral out of control, losing all self-confidence and self-trust, and ultimately more money than was intended. On the other hand, traderB may go into a period of revenge trading, coupled with an increase of their trading size, as they are ‘sure’ that each next trade is going to bring them back to even. Also, a spiral out of control, and the losses continue – AND also a loss of more money than was intended. WHAT does traderC do?

Controlling The Trading Psychology Spiral
Consider: each time a tpsych spiral occurs AND you go out of control - the quicker the next spiral is going to occur, and the faster you will go out of control when it happens. This is going to continue, until trading becomes too painful, and you will not be willing to trade any longer.

Consider: it is better to work through the emotions instead of quitting. Quitting is too easy, and this provides no solution or aid in preventing this from coming back and intensifying each time you have a rough period. As well, you have lost the ability to 'count' on yourself when you need to do so the most. To control a tpsych spiral, before you go out of control, is a tremendous win in and of itself. Do this, and get your trading back on track, and you will have made gains the value of which you can't imagine, as you will know that you may have losing periods BUT you can trust yourself to remain in control, and not magnify the damage.

In light of this, take what you believe to be your key trading issues, write them on an index card, and stick them on to your monitor. The objective is realization and awareness, thus making these issues available to your conscious as a reminder, instead of only available to your subconscious as a problem. As you make your notes BE SURE that you are writing short non-judgmental notes - DON'T let the 'solution' make the 'problem' worse.

For instance, consider the combination of a build of emotions coming from consecutive losses which are also occurring during congestion - write notes similar to these on your card:

a build in emotions may come from a series of quick consecutive losses
quick consecutive losses often come from trading inside of congestion
are your losses 'base' congestion method trades OR are you overtrading
there is nothing wrong with 'base' method trade loses
your trading results are fine when you 'base' method trade

Now consider the same situation BUT different notes:

don't be a stupid idiot and overtrade congestion like you always do
you are going to lose your ass and end up with another losing day like usual
you do this same crap every day and the same thing happens
you have no reason to even trade if this is all that you are going to do

Remain Neutral
Remain neutral - another note for your index cards.

Another approach may be to write notes that include the things you can remember yourself doing or feeling as you transition from acceptable emotion to tpsych spiraling, for instance: shortness of breath - sweating - squirming in your chair - unable to sit down. AND as the spiraling becomes more intense: cussing - screaming - throwing things - breaking things. UNTIL the spiraling is out of control: panic - desperation. Clearly, there is a whole list of physical responses to uncomfortable emotional situations; realizing them as they occur may be a step in controlling them before they ‘take-over’ and lead to spiraling.

Be Aware
I want to know the potential for the spiraling situation. It is VERY important to acknowledge that you have emotions, and not try to ignore them or hide from them as a solution to the problem OR because you perceive them to be a sign of weakness. This actually will just make the situation worse. You are human - humans have emotions - emotions become more intense in more difficult situations. So, I don't need to know how I am going to have responded as I go out of control. I do need to know, and have something to remember, and/or think about, that can keep this from happening - that can keep me as neutral as possible, in what would be the more difficult trading periods – something that will 'push' me back to tmethod AND 'away' from tpsych.

WHAT does traderC do?
traderC is the trader who remains the most neutral in winning and losing; the most neutral in all situations. It's this neutrality that becomes essential in keeping the emotions from becoming a trading psychology spiral, as the trader can 'accurately' evaluate their losses in terms of method. This trader will only trade their most 'base' method setups after any difficult period AND IF these lose, so be it, that possibility has already been accepted. Go on to the next method trade – it probably will be a winner.

Barry Lutz has been trading, as well as teaching others to trade since 1997, through his firm Tactical Trading, LLC., http://www.tactrade.com/. He also writes a daily trading teaching lesson called the Trade Journal, which can be found, along with other resources on trading psychology and trading method at The Tactical Trader, http://www.tactrading.com/.

Article Source: http://www.article99.com

Forex Trading — Five Tips to Make Money Fast!

2006-05-15T21:51:00.000Z

By Stephen Todd

This article is all about FOREX trading to make you rich - and we’re going to give some alternatives to conventional investment wisdom. Why? - Because most traders in FOREX follow the norm and make average gains - while this article is about making spectacular gains from FOREX Trading and making money fast!

The Aim

Here we are going to assume you know how to trade, and you have a methodology for FOREX trading you are happy with, and can apply with discipline.

What we are going to show you here, is how to change your system from making average gains, to making spectacular gains, with simple changes in trade selection, money management, and mindset.

FOREX trading offers the opportunity to make money fast -- so lets see how it can be done.

1. Accept Volatility and Risk Cheerfully

All good FOREX trading systems incorporate volatility.

You can't have a profitable FOREX trading method without taking calculated risks, and taking losses -- if you can’t accept risk, then don’t trade.

Many traders back away from a market because it’s too risky -- however, risk also means reward! If you are a trader who doesn’t like volatility, then go and find something else to do.

Drawdowns are part of trading; it’s volatile markets that make FOREX trading fun and highly profitable.

To the well-informed FOREX trader, a drawdown is not something to fear, but something to enjoy.

Remember: volatility = big opportunity!

2. Trade Infrequently

Many traders trade frequently and always like to be in the market. They think that in FOREX trading if they are not in the market, they will miss a move, or that by trading more frequently, they will make money -- wrong!

The big moves in FOREX trading, with the best risk to reward, come a few times a year, and you should trade infrequently.

Focus on the trades that make the really big gains

3. Don’t Diversify

Diversification is an accepted wisdom, believed by most investors in Forex trading, but it won’t make you money fast -- it will do the exact opposite.

4. Money Management

So far, you may think that we are being a little rash, but this is not the case.

We are focusing on the BIG opportunities that allow us to make meaningful gains, and this is actually, where money management becomes so important.

If you are taking risk, you need to control it -- risk as much as 10% per trade, but increase your chances of success by:
1. Buying options at or in the money, to give you staying power -- and prevent yourself from getting stopped out.

Many traders lose, not because they were wrong in market direction -- they just were stopped out by a volatile counter move -- and options will give you staying power.

2. Many traders start trailing their stops too close, they then get stopped out – but the trade runs on to make spectacular gains. Don’t fall into this trap -- keep your stop in its original position -- until the move is well in profit, before moving it up.

You’re looking to make money fast, and you’re trading selectively -- so have the guts to go for a trade when it looks good -- and milk it for all it’s worth.

5. Understand the Power of Compound Growth

IN FOREX trading the way to make money fast, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and FOREX trading info. Visit our web site now and grab your CD http://www.tradercurrencies.com

How to Achieve Currency Trading Success: Part 2

2006-05-15T14:09:00.000Z

How to Achieve Currency Trading Success: Part 2
By Stephen Todd

Choosing a Trading Method

While there are many ways to achieve currency-trading success, all methods have the following salient points in common:

1. Simplicity

Most of the best trading systems are simple.

There is no correlation between how complicated a strategy is and how successful it will be.

In fact, the simpler a system the more likely it is to be robust in the face of changing market conditions.

Some of the most successful systems of all time have been extremely simple and you don’t need much mathematical knowledge to understand them.

2. Liquidate Losers Quickly and Run Big Profits:

The basis of any successful trading systems that deals in leveraged products is:

You need to be able to run the big profitable trends and exit losers quickly.

All good trading methods do this, and use strict money management rules, to ensure preservation of equity.

3. Understand your Method

This may sound obvious, but you need to understand your trading method, and the logic behind it, so you can execute it with confidence and discipline.

4. The Importance of Discipline

Currency trading success is rooted in a successful method applied with discipline. This means a trader has a method and follows it. This however is much harder in practice than many traders believe.

When money is on the line all traders emotions come into play and unless they can maintain discipline, currency-trading success will elude them.

Let's look at some ways to maintain self-control and discipline when making trading decisions:

Firstly, you must be confident in your trading method. You should know exactly what you are going to do:

· When a signal indicates that you should enter a trade

· When a signal tells you to exit

You must execute your trading method in a disciplined fashion; if you don’t, you won’t have a method in the first place!

Secondly, and perhaps the best way to maintain self-control and discipline, is to feel confident in your trading method from the start.

If you have confidence when you execute your trades, you will "know" that over time they will be successful - even if you are suffering a string of short-term losses.

You must execute the buy and sell signals with confidence - these signals will lead to currency trading success in the long run, as you rigidly adhere to your method.

You need to stick with your method through good and bad times, and confidence in the underlying logic, will help you remain disciplined.

The more disciplined you are in trading, the more profits you will make longer term.

You should not underestimate the need for discipline, if you want long-term currency trading success.

If you read Jack Shwager’s Market Wizards, and the New Market Wizards, where he interviews the top traders of all time, you will see how all of them place an influence on discipline.

Currency trading success relies on a number of factors and these are:

Robust trading method + discipline = currency trading success.

Remember, when trading any method, it will be of little use to you, unless you have confidence in it and can execute it with discipline.

There are a number of variables involved in longer-term currency trading success and the above are the salient points to keep in mind when deciding how to trade currencies.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and currency trading success. Visit our web site now and grab your CD http://www.tradercurrencies.com.

How to Achieve Currency Trading Success: Part 1

2006-05-12T21:08:00.000Z

How to Achieve Currency Trading Success: Part 1

How to Achieve Currency Trading Success: Part 1
By Stephen Todd

Currency trading success can be achieved by anyone, as everything about trading currencies can be specifically learned, by any trader wishing to put it in the time and effort to do so.

Trading currencies successfully is a combination of two factors:

Firstly, you need a successful trading method for long term currency trading success to predict market direction and these systems fall into two categories:

1. Fundamental analysis

A currency trader who makes trades based upon fundamental analysis, will look at the supply and demand situation relevant to the particular currency studied, and try and predict the impact of such factors as:

· The health of the economy

· Interest rates

· Balance of payments

· Employment

· Trade deficit

· Other factors

In today’s markets with the all-fundamental information available in seconds anywhere in the world, fundamental news is quickly reflected in the price.

Traders therefore, can have difficulty acting quickly enough to position themselves in the market in relation to breaking news.

In light of this, more traders looking for currency trading success are using a technical approach to the markets.

2. Technical analysis

Technical analysis is the study of a currency, based strictly on using only the price history of the currency.

Technical analysis uses no information about the currencies supply and demand situation - it simply focuses on price action.

The common belief is that the currency price reflects all the known information about the currency as it is immediately discounted in price action.

Technical analysis however does something more - it indirectly studies human psychology.

Since price patterns reflect shifts in human psychology, one can assume that certain patterns, cycles and trends, will repeat themselves again, as human nature has remained constant over time.

Technical analysis takes into account both the fundamentals and the market participants psychology and this gives us a simple equation:

All known fundamentals + human psychology = Price action

The fundamentalist studies the cause of market movement, while the technician studies the effect.

For currency trading success, you need to catch the longer-term trends that yield the big profits. The technical trader does not care how and why these trends develop; all they want to do is make money from them when they occur.

Look at any currency price chart over time and you will see long-term trends and many of them last for years.

The secret of currency trading success is using technical analysis to spot them.

Long Term or Short Term Trading

For long term currency-trading success, is it better to be a long term trader, rather than a short-term trader.

While traders can, and do make money with short-term methods of trading, the fact is, currencies trend longer term and these are the trends that yield the biggest profits.

The reason for this is obvious:

Currencies reflect the underlying health of the economy.

These cycles of expansion and contraction, tend to last for many months or even years and a long term position trader has huge profit potential, if they can lock into and hold these longer term trends.

The choice between long term, and short term trading is subjective, but generally the longer-term price trends tend to be easier to predict, and offer better risk / reward, so a long-term approach is the one to focus on.

New! A valuable FREE Currency Trader CD containing 9 critical trading reports, tips, strategies and currency trading success. Visit our web site now and grab your CD http://www.tradercurrencies.com.

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