Archive for April, 2011

Identifying Trends


27 Apr

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An essential part of any trader’s currency trading education is learning to identify trends. This is your signal the market is making a sustained move, either up or down, and you can profit from it by opening a trade.

Using trends to benefit from currency trading may seem just about too easy. Yes, it’s a straightforward strategy, but it works. Provided you can tell the difference between an emerging trend and a mere fluctuation. That is where the talent, experience and tools come in. But truly it’s a extremely simple method and you shouldn’t try to complicate it.

There are several other ways of identifying a trend using either technical research (charts and indicators) or market knowledge (fundamental analysis). You can identify triangle patterns which will foretell a breakout in one direction or the other, and check these against other indicators like the MACD crossover. Check hourly against daily charts etc .

There is no have to know all of the different strategies for spotting a trend. Remember that all strategies have their successes and their screw ups, and it is the overall profit or loss over the long term that counts. Do not be put off by one failure, and control your risk so that a couple of losses in a row will not have a big effect on your funds or on your confidence.

What is Slippage?


15 Apr

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In case you are thinking of attending a foreign currency trading seminar, there are some things that it is best to know earlier than you begin out. It would be a waste of time to turn up at an costly trading seminar and never perceive a single thing since you had not mastered the fundamental terminology of forex trading.

One in every of these terms whose meaning any beginning foreign exchange dealer needs to know, is slippage. So what precisely is slippage?

Briefly, it’s the distinction between the worth that you would see and click on on in your dealer platform software program, and the price that you just really get. It could seem that there should not be any difference, but there is, as a result of the worth can change within the second or two that it takes you to make the decision to click on, click, and for the knowledge to be transmitted over the internet.

It is not long, but it may be lengthy sufficient to make an enormous difference within the price if the market is volatile. That is particularly true at instances of big developments in the market equivalent to news bulletins or an economic crisis. Theoretically, slippage may work in your favor, but that doesn’t usually seem to occur in practice. Extra often, it really works towards the dealer, and in some instances can wipe out nearly the whole revenue from what should have been a successful trade.

Slippage can depend upon the broker. Some brokers may assure the displayed prices, however maybe freeze buying and selling at sure occasions to guard themselves. First, get to know your broker’s trading platform thoroughly using a demo account. If there is no slippage in demo, keep in mind that your system is prone to be rather less profitable when you use it for actual, for this reason. Second, choose your dealer carefully, after checking feedback from other shoppers on a foreign exchange discussion board or at a foreign currency trading seminar.

The Trend Is Your Buddy


14 Apr

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If the price is actually not going anywhere, then the lines that you draw thru the highest highs and the lowest lows will either be horizontal and parallel to each other, or they’ll be converging (drawing closer together) or diverging (drawing apart). If they’re horizontal, you could use them as support and resistance lines in the same way. If they’re diverging, it isn’t a good time to trade. Wait for a trend to form.

If the lines are converging, they might point to a breakout. So if the price breaks above the higher line you would buy, expecting it to resume that way for some time. Equally, if the price breaks above the lower line, you would sell. There is always a chance of trades going against you, so you should check your signals against other indicators and always use stop losses. These steps will help you to develop a successful currency trading strategy.

Best Currency Trading Systems for Money


12 Apr

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It’s going to be no surprise to hear the best currency trading systems are the ones that make money! The issue is simply the easiest way to identify which of them those are, and in particular, the easiest way to pick which system will be the best for an individual trader, i.e. You. First let’s rule out some systems that never make money for anybody, at least not in the long run. They involve varying the chance according to whether the last trade won or lost. The concept is if your last trade lost, then your next is more likely to win, so you take a larger position. Gamblers lose their shirts on these systems and it would be crazy for a foreign exchange trader to utilize a system like that.

So with that rant out of the way, let’s take a look at how to identify a lucrative system. To do that we’ll introduce the concept of edge. Edge is the measure of a system’s returns over a period of time. It’s a straightforward calculation but you do need a fair number of results to determine it from. Back testing is a good technique to get those results. Demo testing is even better as it is closer to the genuine situation, however it can take a long time to gather enough results from demo testing so most of the people use back tests which are faster. Results are worked out after subtracting the spread and any other per trade costs.