Ninja Trading

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Forex trading is not as simple as it sounds. When we hear about people making so much money in this area , we always wonder if we could do likewise. What we may see or hear are the success stories. Very seldom people want to talk about failures.

The forex is a huge market and it is an knowledge based industry. Like any other profession , education is one of the most important and also the first step to take. Many people dive into this market without much preparation , and eventually they pay to the market. Invest in learning before you invest a single cent in the forex market. There are many successful forex strategies out there that you may want to consider. They either come in the form of online coaching or physical seminars that you can attend.

End of the day , a system is a system. It may or may not fit you. Back testing and paper trading is the only way to find out if the trading system fit you , without having to pay to the market.

Always start with paper trading , which does not involve real money. Practice makes perfect. Upon successful paper trading only then you may go “live” , trading with real money.

Once you started trading with real money , you will find that your emotions and psychology is so much different compared to paper trading. As we can see , it is important to trade with your personality.

Trading is an Art and also a Science. The Science only teaches you the steps and procedures to trade. The Art involves your emotions as well as your personality …

Realistically speaking – the weakest link in the trading system is not your computer , it is not your trading strategy , and it is rarely your broker. It is You , the trader, who is responsible for your losses or , even more so , for your profits. Trading forex involves emotions and psychology.

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Trading systems prosper or fail as a function of consistency in implementation or execution. And consistency in implementation is a direct function of the trader. Everyone of us has different emotions and personalities. We all need to trade with our personalities.

Over the couple of years , behavioral experts have studied the role that personal psychology or personality plays in trading. Understanding some of the common mistakes traders make can better help you avoid these mental traps .

Self-confidence – In any trading , there is a very thin line between bravado and stupidity. A trader must be careful not to over estimate his or her abilities and knowledge. Traders should always review their strategy and search for alternatives views and feedback. Stay humble and keep an open mind is the key to success.

Trade rationalization – A major issue in Forex trading is the vast amount of available information. Researchers have found that investors look for information that supports their trading views while ignoring or discounting evidence that runs counter to their positions. We need to avoid information overload.

When all of the researches or back-testings are over , when the perfect trading systems have collapsed, when market theories have been dashed on the hard rocks of market realities, and when confident traders have failed and given up , the only thing that remains still intact is trader personality and his psychology and what it can teach us about ourselves and others.

Sponsored by online fx trading

Sponsored by online fx trading

When your broker buys or sells currency for you, he or she is “executing” an order.

You can place different types of orders with your broker, depending on what you want to do, your situation, analysis and goals.

These are the most common types of orders your broker can place for you:

Market Orders

This is the simplest kind of order and is the most common type used in day-trading. Simply, a broker places a market order to buy or sell a currency at the current market price. A trader places a market order by determining what type of currency pair he wants to trade, plus the number of lots he wants to trade.

For the most part, you should be able to execute very quickly, just by clicking your mouse. Your order should go through almost instantaneously, at the price you requested.

Limit Orders

You use a limit order to buy or sell currency when the currency reaches a particular price. For example, you might see that USD/JPY is currently trading at 117.50, with the price on a downward trend. Your analysis shows that it should go to about 117.25 and then start coming back up.

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Instead of waiting for it to drop to 117.25 and then placing the order, you can place what’s called a “limit order” at 117.25. What will happen is that the order will be placed when the currency hits that price, automatically and without your having to sit around and wait for it to drop there.

Now, if your analysis is off and the price only goes to 117.30 before it starts coming back up, the trade will not be executed at all. It must hit 117.25 before the trade executes, with this type of order. In this case, the order is usually canceled at the end of the day if it does not execute.

Stop-Loss Orders

Experienced traders usually use stop-loss orders to help minimize losses.

If, for example, you expect the price of a particular pair of currencies such as GBP/USD to go up, you can place a buy order at 1.8255 and a stop-loss order at 1.8235. However, if your analysis is incorrect and the price goes to 1.8185,a stop-loss order can protect you by automatically selling at 1.8235. Therefore, instead of losing 70 pips, you only lose 30 pips.

OCO

“OCO” stands for, “One order cancels the other order”. What this means is that two orders are placed with prices both above and below the current price. When one trade goes into play, the other cancels.

For example, if the price of USD/CHF has been staying around 1.2435 for some time and you have a feeling it’s going to change soon but you’re not sure which way it’s going to go, you place an OCO order to buy at 1.2445 or alternatively, to sell at 1.2455. This way, your trade takes off as soon as the currency goes one way or the other. One trade is canceled as soon as the other is executed.

Sponsored by online fx trading

Sponsored by online fx trading

You might not know that you can actually make a lot of money doing forex trading. Forex trading combines margin leverage and a low minimum investment amount; this can be ideal for small investors.

However, in spite of its immense potential for profit, most forex traders lose their money within a year.

The reasons for this, I have found, can be summarized thusly:

1. Investors have unrealistic expectations.

Too many beginning investors read about how easy it is to make money doing forex trading, so that they can easily jump in and lose everything before they realize what has happened.

In fact, forex trading is not a way to get rich quick. You can indeed get rich, but you need to work hard and do a lot of research to be successful. Even then, every trade will not be profitable. Even experienced traders lose on some trades. What’s most important is that you know when to cut your losses and get out of something where you’re losing money, while you focus on what’s making you a profit.

2. Investors don’t do enough research.

It’s easy to learn forex trading, but hard to really become expert at it. Even though experienced traders can make it look easy, predicting currency prices can be complex. If you are a small investor, you are at a disadvantage because large financial institutions can access resources you can’t. They might have an entire staff just to analyze the most recent economic indicators. You, however, are on your own with your own expertise. Expect to spend a lot of time learning before you can expect to really profit from forex trading.

3. Forex trading is meant to focus on investing; it’s not gambling.

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Don’t expect to beat the market without doing research. You can’t simply operate on hunches and pick your currency trades that way. Most people who operate this way usually pick an occasional successful trade but lose everything over the long haul.

4. New investors don’t focus.

Although it depends somewhat on the broker you use, you can likely trade in dozens of currencies. However, when you’re just starting out, pick just a few to focus on that you can become familiar with. These include the Japanese Yen, the US Dollar, or the Euro; focus exclusively on them while you are learning. The more you know about them, the more data you have to analyze and spot trends, which will increase your chances of success.

5. New investors don’t have a trading system.

Even though there are many, many trading systems available, many investors fail to pick one and then stick with it. Many, in fact, are free, which means you don’t even have to risk any capital on it when you start out. Pick one that is right for you and what you want to accomplish. This will give you a much better chance of success.

6. New investors don’t stick with their trading systems.

If you don’t have a trading system, get one, and then stick with it. You have to follow it no matter what else is happening. Although this is easier said than done, you can’t get greedy or nervous and ignore what it tells you. Follow what your system tells you to determine both when you should get in and when you should get out. If you ignore your system, you risk missing out on making a big profit or risk incurring a substantial loss.

The best forex traders know that it’s just as important to know when you should get out of a trade as it is to know when you should go in.

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