Ninja Trading

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The Forex market has been available to individual traders for nearly ten years now. In the past, it was only available to large financial institutions, such as banks, big companies, multi-national corporations and top currency dealers. However, now that it’s open to individual traders, it’s become a hot topic that many new traders are eager to learn more about.

So what is it? Forex is short for foreign exchange. Forex trading is trading in the currencies of the world through the Forex market, which is the largest financial market in the world. In fact, it generates trillions of dollars of currency exchanges everyday.

In addition, it operates 24 hours a day, seven days a week, making it the most liquid market in the world. Though trading starts in Sydney and ends in New York, Forex trading is not centralized in a single location. This means you can trade in Forex market whenever you wish, regardless of the local time. A big advantage for traders, especially for those in search of optimal liquidity.

Trading in Forex requires trades to done in pairs. When you purchase a currency, you sell another currency at the same time. The most commonly traded currency pairs in the Forex market are: USD/GBP, USD/JPY, USD/CHF, and GBP/USD. As you can see, each currency is represented by three letters. USD is the United States dollar. GBP is the British pound sterling. JPY is the Japanese yen. CHF is the Swiss franc.

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The first three letters of a currency pair represent the currency you used for the investment, while the last three letters represent the currency in which you invested. For example, USD/GBP means you used United States dollars to purchase British pound sterlings.

To get started in the Forex market, you’ll need a computer with a high speed internet connection, a funded Forex account, and a trading system. Most individual Forex traders will also use a broker, an individual or company that offers assistance to the trading process.

A broker earns his money off a small commission from your trades. In addition, although he’ll be trading your funded account, all decisions will remain yours, assuming that’s your wish. Here’s what else a Forex broker can do for you:

- Offer you advice regarding real time quotes.
- Offer you advice on what to buy or sell based on news feeds.
- Trade your funded account basing solely on his or her decision if that’s your wish.
- Provide you with software data to help you with your trading decisions.

Many experts say that you’ll never really understand how Forex works until you’ve traded in the market. To help you gain this experience without having to risk your money, you can set up a demo account at many of the Forex educational sites available on the Internet. You can also invest a modest amount for a Forex simulator, which allows you to explore a never-ending variety of market conditions and see the impact they’ve had on currencies in the past.

There’s no question Forex offers the trader the opportunity to earn a boat load of money. However, as with any other form of trading, and particularly because this is such a liquid market, it does have its risk. No trader will make money on every trade, and even seasoned traders can get caught and face substantial loses if they aren’t careful and wise.

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Sponsored by online fx trading

Forex trading can be a good fit, but it’s not for everyone. You have to take many things into account, and of course, you always risk losing money. If this isn’t for you, don’t worry. A lot of people aren’t cut out for it. However, if you are considering jumping into forex trading, read on. Following are some traits that successful traders share. If this is you, you just might be a success. If not, perhaps forex trading is not for you.

You have to have discipline. Successful forex traders work on establishing their own trading system and then keep with it. They do not try to “trade on the fly” or do hit or miss trading.

You have to be able to accept risk. Although many will tell you that forex trading is not particularly risky, this is not really true. Just like any type of trading, you can lose money. You have to be willing to accept that this might happen to you.

Be willing to fail. Even the best forex traders lose money sometimes on some of their trades. This happens to everyone and is simply the nature of forex trading itself. However, unlike the average forex trader, successful forex traders don’t focus on failing. They accept what has happened, learn from it what they can, and then move on to the next trade.

Have confidence. To be a successful forex trader, you have to be competent in your knowledge and in your ability to make trades that succeed. Don’t doubt or second-guess your trades.

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Be willing to be wrong. Remember that no one is perfect and you’re going to make mistakes. There will be times when your analysis just doesn’t hit the mark. However, don’t stay in trades that have gone bad just because you don’t want to be wrong. Cut your losses, get out and then look for the next opportunity to succeed again.

Have patience. If you’re smart, you’ll follow your system and wait for a good opportunity to present itself. You don’t have to have your positions open at all time. You can go a day or two without any trades being made at all. Don’t trade just because you think you need to. If you think this way, you’re likely to make many more mistakes than you have to and many more bad trades than you need to.

Know when you should get out. As with any successful trading, you don’t just need to know when to get in, but you need to know when to get out as well. Many traders have gotten greedy and wanted to stay in a trade too long; when they do this, their profits can be wiped out by a sudden trend downward. When you’ve got your trading system established, listen to it. It will tell you when to get out.

Know what your financial limitations are. Don’t over-leverage yourself. Don’t trade with money you can’t afford to lose. If you trade with the mortgage money for next month, you’re in trouble. You risk losing everything you have and ending up on the street. Make sure you only trade with money that you can afford to lose. It’s okay to start small, with just a few hundred dollars if you need to. Don’t risk losing more than you can afford to.

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Sponsored by online fx trading

A common question asked by retail currency traders who are new to the forex trading business is that of the commission charged for trading. Whilst there are some Forex brokers that to charge a small commission on the trade, a common practice amongst the forex brokers is to charge what is known as the spread, which is where a forex broker makes his money.

A pip is the smallest price increment, usually the third or fourth decimal place after the unit price. For example, a change from 1.9456 to 1.9458 is a change of two pips. The spread can be described as the difference between what is known as the asked price and paid the price, which refers to the price at which a particular currency is bought or sold at any given time. So if you’re given a quote of 1.9456 as a sale price or bid price and 1.9460 as the buy price or ask price, that is a difference of four pips or a four pips spread.

When you execute the trade, you will start off with a deficit of four pips which is the forex brokers spread. Therefore, each time you trade, you will need to make up usually between two and five pips in order to start going into profits and making money in Forex.

Some people evaluate the broker based on the spreads that they charging across a particular pair or a selection of currency pairs. It is important to check whether the spread is variable fixed because during particularly volatile times in the market, for example important economic announcements/news a variable spread will make it near to impossible to make money during these times.

A forex broker may advertise itself as being under the auspices of a large bank, institution or lending organisation. This is because of the large amounts of money that are involved in trading on the forex markets. If the forex broker is in America, the Commodity Futures Trading Commission is the regulatory body dealing with merchant registration.

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The author finds that in addition to evaluating the spread offered and whether or not it is fixed or variable, bearing in mind that one should be finding trades that way outperform what is required to be spread anyway, it is useful also to test a demo account, so that the platform that the broker offers, it additional features and functions, the speed of execution and other factors can be gotten used to. Two weeks should be sufficient time to evaluate the platform.

As stated, and majority of forex brokers do not charge a commission but instead learn from buying and selling, interest on deposits, converting and holding currencies and fees for overnight rollover, i.e. they are active as currency dealers, and this is where their renumeration comes from.

The forex dealer broker acts as a middleman between the retail investor and the interbank markets. As previously stated, the spread is where the broker “makes his bones”. There is arguments amidst disgruntled forex traders on the markets that some Forex brokers are Forex scams and do not operate in a fair manner, so it is important to choose wisely.

Because Forex operates 24 hours a day, your broker should offer 24 hour telephone support. Telephone support is important because the Internet is not completely fail proof and therefore if there is a problem with either your platform or your system and you need to take action on the trade that is currently open, it’s important that you are able to use the telephone brokering to manage your trade in an emergency.

Sponsored by online fx trading

Sponsored by online fx trading

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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