July 15, 2011
What is the secret to successful forex trading?
By Planet Wealth
Can anyone tell me Secret to success in currency trading
Topics: trading tips | 8 Comments »
8 Responses to “What is the secret to successful forex trading?”
Comments
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July 15th, 2011 at 3:09 am
A complete newbie to forex trading, I am having difficulties figuring out where to look for information, but also what exactly to look for. Commodities? Bank quarterly results?
So, you want to learn how to trade currencies in the forex market? The process of trading currencies appears very straight-forward on the surface, but there’s more to it than meets the eye.
Currency trading tutorial is about to receive here will give you a basic thought of how things work. But, it should be noted that this tutorial is only scratching the surface. The Forex market is complex, quick and requires more seriously if you want to trade successfully.
Now that we have that the waiver form, let’s start by examining the fundamental unity of all those involved in trade: the "currency pair.
What are currency pairs?
Currency pairs are units of two currencies involved in forex trading. For example, if you want to sell U.S. $ to buy euros, which would be in the exchange rate quoted for the EUR / USD. Or, if you wanted to sell Euros to buy U.S. dollars, which would be in the exchange rate quoted for the USD / EUR currency.
You may reckon, "Are not they the same thing?" Well, most are, but we must look to the right partner, in the right order, based on the currency you are buying.
There are two reasons for this:
First, it is simpler to calculate the results of their exchange in terms of how much of the base currency can be bought with the currency of your ‘date’. Your base currency is the currency you intend to buy, and the quote currency is the currency you intend to sell for the base.
When quoting an exchange rate, your broker will list the base currency for the first time the couple and the second currency quoted.
This means that when you see a pair like EUR / USD, which is seeing the cost of 1 euro in U.S. dollars. A listing of the exchange rate of EUR / USD = 1. 4436 means that 1 euro costs U.S. $ 1.4436 Dollars.
Similarly, the USD / EUR pair indicates the cost of U.S. $ 1 in euro terms. An exchange rate of USD / EUR = 0.6834 means that one U.S. dollar costs 0.6834 euros.
The second reason to observe the right buy / sell ordered pair is that you want to know the difference between the "bid price" the (exchange rate) and the selling price (what the market makers want to currency).
The difference between bid price and the price they question what is known as "diffusion." Forex traders are subject to spreads when opening or closing operations in the buying. In other words, they are always subject to a margin when they buy, whether to open or close the trade.
Open buy – Dissemination>
Near sell -> no spread
Open sell -> no spread
Close to shopping – broadcast>
Say you want to buy the EUR / USD. The bid price is 1.4436. The price may be something like 1.4440. You must pay the spread of 0. 0004 to make the trade.
Those are the basics of currency trading, but there are other factors to consider. In order to make a profit in the foreign exchange you should also know how to calculate the cash value of exchange rate fluctuations in terms of "points" – or, in the jargon of the currency – ‘pips value.
This currency trading tutorial does not cover the values of pips, but it is a concept that should be investigated further if you want to master the basics of trading in the forex market.
July 15th, 2011 at 3:09 am
Preliminary Self Knowledge: This pretty much applies to any endeavor you take upon yourself in life, especially one that comes with such high risk. Before you trade even one pip on the Forex market, it is imperative that you know yourself. What does this mean? There are endless methods of trading, so before you start this journey, choose your method. But, do not choose it randomly. Define your small and long term goals, determine how you intend on reaching those goals, and choose on your trading method based on your personality. Each trading method has its advantages and disadvantages, and its own risk profile, so when choosing one, choose it based on the kind of person you are. For example, only you can know if you are capable of going to sleep with open Forex positions with the hope that they will bring you profits in the long term. If you are not this type of person, it will lead to a raise in your anxiety levels which will inevitably lead to future failures.
Compatible Forex Broker: Once you determined the type of Forex trading that suits you, you need to find the Forex broker that suits your method. Do not rush into this. This might be one of the largest decisions you will make when it comes to trading Forex. You can be sure the Forex broker you choose will have the largest effect on your success or failure as a Forex trader. Choose a broker as if you are choosing a car. No one just goes into the first car dealership and buys the first car they see. You need to read up on the various brokers, each one’s advantages and disadvantages. You need to do an extensive comparison of the large number of available brokers. Once you have narrowed down your selection to a few brokers, you should compare their platforms based on the method you chose in step 1. If you believe you are more of a small term trader for example, make sure the broker you choose offers comprehensive tools to support this method as part of their platform. Make sure the broker you choose meets your every need from their customer service all the way to their headquarters location.
Methodology Selection and Application: As we mentioned above, there are two primary schools of thought when it comes to analyzing the market and predicting future trends. The technical analysis school of thought is based on the well-known sentence “The trend is your friend”. They basic assumption is that the market has some sort of consistency and logic in its movements. If it went in this direction today, there is no reason it wont go the same direction tomorrow. There are various types of Forex charts to help you analyze the market and its trends, as well as indicators, and levels. Then there is the fundamental analysis school of thought that what really gets the market moving is the news of a specific country. This method will tell you to focus less on what was yesterday in the charts and more on what was yesterday on the news. Like many things in life, neither method is perfect, and a excellent trader makes use of both. But, before trading, you must choose which methodology is going to be your primary one, and be consistent with it. If you reckon fundamentals play a larger role than trends, focus your preparation and analysis watching the news and not analyzing the charts. Consistency is the name of the game.
July 15th, 2011 at 3:09 am
Successful Forex trading skills are not too different than any other trading skills. They are, in this order;
1. Psychology (yours and the markets).
2. Trading money management (risk control).
3. Technical &/or Fundamental Analysis skills.
There are many books that will answer your question in depth. They are interviews of already successful traders;
Millionaire Traders, Kathy Lein and Boris Schlossberg
Market Wizards, Jack Schwager
(are two among the best to start with)
July 15th, 2011 at 3:09 am
Hi Jimmy.
I place up an small web about trading for FREE, check it out. I hope it can help you. I place the web on sources.
The most vital thing is that you know CONTEXT in markets and what trading is all about..
Cheers, Dan
July 15th, 2011 at 3:09 am
Focus and Practice.
Focus: you should feel and believe that there is nothing other than forex trading. you shouldnt do anything else like commodity, options, futures, stocks nothing else except for forex.
Practice: enter with small capital, if you are incorrect then you wouldnt get stuck or loose much. you will have more capital to enter again. Thats how you can enter and exit many times, and the more you repeat it the more you will practice. If you enter with a huge capital then you will get stuck or you will exit with huge loss. Such a huge loss will disappoint you so much that you wont have patience to learn from the mistake.
July 15th, 2011 at 3:09 am
In my opinion, it’s using proper money management (i.e., trading conservatively, not risking too much). Forex traders are tempted to trade too much % of their account, especially after a winning streak of trades. As a result, once they hit a losing trade, their account experiences a major drawdown, sometimes blowing up their account to a near-zero balance.
So the key to success is to always trade conservatively, with small wins that add up over time. Just reckon about the well-known tale of the race between the tortoise and the hare.
Most traders are like the hare, but you want to be like the tortoise, who wins over time.
July 15th, 2011 at 3:09 am
yeah – NOT doing it
July 15th, 2011 at 3:09 am
Want to know the secret? Look in the mirror and you’ll find it.