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Posts Tagged ‘Markets’

One of the attractive things about trading the stock market is, that when looking at a chart of the stock, it is known to have reliable patterns which most of the time are good predictors of future direction. Whether it be a “head an shoulder” reversal pattern or simply riding the directional momentum on the basis that “the trend is your friend”, a good trader can do very well – and with the availability of leveraged instruments such as options and CFDs, can earn a very good living.

In fact, it has been said that one of the most profitable skills you can ever master, is the art of trading.

But every so often, the market does the unpredictable. It makes a strong move in the wrong direction, just when all the signs looked like it should go the other way. This is usually due to some news item that has been released and the market, in its usual efficient manner, reacts accordingly. If the news is sensational enough, the investing public can behave quite irrationally, driven by fear (if it’s bad news) or greed (if the news is positive). The momentum of the price move takes on a life of its own and continues until it either blows itself out, or in the case of a downward move, fear is replaced by the perception that a bargain is on offer.

While markets are moving in predictable directions based on well established and generally reliable price patterns, all seems well. It’s the unexpected moves that come out of left field that a disciplined trader needs to be prepared for.

So let’s take a look at the three most common mistakes traders make, which separates those who make a lot of money from those who end up losing it all.

1 – Bad Risk Management

It is critical before you even think about trading, that you have a risk management plan. You have a certain amount of capital to trade with and it is essential that you preserve it intact, otherwise you’re out of the game.

One of the most common mistakes is investing too much on any one trade. You might feel very confident that price direction will go as expected, but this could be one of those exceptions already mentioned. You either lose a large percentage of your available capital, or you get stuck in a trade, hoping it will turn around – and in the meantime, miss out on all those other opportunities that could’ve made you some great profits.

So it is essential to only invest a small portion – no more than 10 percent but preferably 5 percent – on any one trade. This is particularly the case if you’re using leveraged instruments such as options, futures or CFDs.

Losing 20 percent of 10 percent of your available capital traded on one trade is the equivalent to only 2 percent of your entire trading bank. Psychologically, this is easier to handle. But the law of averages will mean that you also have other capital available for other trades whose profits will far outweigh the loss on one bad trade.

2 – Staying in Too long

Once your trade has realized a target profit, it is far better to close out a trade and bank the money, than hold on in the hope that it will make a lot more. Too often, the good fortune will reverse without notice and your unclaimed profit will turn into a loss. You need to develop a mindset that, even if the trade were to blast off into stellar profits after you exited, that at least you can be content that you achieved some of it – and that the strong movers are more the exception than the rule.

The above is especially true with the likes of short term option trading. Better to take 30 – 50 percent profit on a good trade than be disheartened when your leverage turns around and works against you because you stayed in for too long.

3 – Not Having a System

When trading the markets you can’t afford to make emotional decisions. In the end, you must realize that it’s only a numbers game. The first mistake a lot of traders make is approaching the market without any plan in place. You must define the aim of your system. Do you want to trade the extremes of ranges, or do you want to catch trends – or both? What success ratio do you need to be profitable? In connection with this success ratio, what must your percentage profit be in relation to percentage losses on any one trade for your success ratio to work?

What indicators or form of analysis will you use? What time frame do you wish to trade – day trading or longer term? Once you decide this, what chart periods will you focus on – 5 minute, hourly, daily or weekly?

If you don’t have a plan of your own, it would be wise to follow someone else’s trading system, providing it is tried and tested over years and is known to achieve consistently profitable results.

Understanding which markets to trade will make your day trade strategy all the more stronger and with this, it will fuel your trading career to new heights. Looking at the stock market, there are more than 10, 000 stocks in the US alone for you to trade with. The amount might be staggering, but each stock has a potential to make money. Now, the stock market has a wealth of opportunities to give to investors and speculators, and all you need to do is to know which markets to trade in.

Now even when we cut away the illiquid and flat stocks, there are so many of them still available for you to trade in. There are so many routes for you to consider, and some of them include unit trusts and even diversified funds which have groups of several stocks within a single trading portfolio. This is all down to the technical analysis and trend investigating parameters that you have placed down as a trader and from there, you will be able to identify which stock has the most potential to profit.

For the futures market, you need to wrangle with many things and some of them can include false breakouts and even flat trading ranges, all down to the settlement date and just how volatile the market is. The futures market is a little on the range for those not used to trading in that style but of course the one thing about the futures market is that you need to be strong in your money management skills if you are day trading there. There is always the promise of a high rate of return and the key to this is to concentrate on those stocks that seem to be slower moving than the rest. The thing that resonates about the futures market is that you will need plenty of discipline to move the kind of money you should be doing.

The options market is another one that you can look at , and it is one that places importance on specific stocks and futures. This is a little harder than normal, and you need to be sure of three things to trade in this properly, which is you need to know that you are trading the right stocks or futures, that you are well aware of its potential movements and your timing is bang on.

Once you have all these three elements in hand, you will be able to move in the right direction and make the kind of money you should be making. The common mistake that new traders do is that they sometimes miscalculate on their bid and ask price, and their spreads are far from pristine. What ever markets you want to day trade in, you need to know more and more about them as you go along and the information you see here is just 0.1% of what you need to know about each and individual market. Here, knowledge is power and the key to fortune.

If you have never considered trading energy markets then think again – Because they can yield fantastic profits as the recent bull move in crude oil has shown.

Here we will go through the basics and show you how to trade energy markets for maximum profit potential.

The worlds most actively traded commodity group

The energy markets are the world’s largest traded commodity group as they are literally the fuel of the global economy and are always volatile and offering opportunities for profit.

Standardized Contracts

Contacts are standard size and the main market is NYMEX in New York.

You can go both long and short as well giving you constant opportunities for profit and price information is freely available on the net.

Looking for opportunities

As they are always trending – The best way to trade them is via technical analysis and look for the long term trends not the short term noise of the market.

Focus on these trends and you can pile up huge profits if you catch them!

Each energy market has its own unique trading personality and a seasonal tendency. These seasonal tendencies make a great filter for trades as in many contracts their highly reliable.

For example, unleaded gasoline is used for cars and peak demand is the summer driving season on the other hand heating oil is needed to heat homes and demand is strongest in the winter.

Trading these spreads adds an extra dimension to trading to pinpointing low risk high reward trades.

There are many more and the really give you an edge when trading.

Intra commodity spreads

To cut risk even further you can trade these spreads.

These are simply the difference in prices of two different contracts, of the same commodity i.e August and October natural gas

The trick is to pick the contract that is expected to move the most and lay off some of the risk.

For instance, in energies it’s normally the nearby contract that moves the most, so you buy the near contract and sell the deferred This is known as a bull spread and is used by the real pro traders.

When using spreads its always important to take into consideration the general trend and price pattern of the spread before trading There great way to limit risk and maximize profits and that’s what we all want.

Vehicles

With futures you can also trade options to and these are great way to trade a volatile market as they offer unlimited profit potential linked to limited risk.

When buying options though make sure (and this applies to any market) you buy options that are at or near the money with plenty of time to expiry.

You get staying power and that’s a major bonus, in a volatile market like energies.

Instead of getting stopped out by the market “noise” you can remain in on the trade. Getting stopped out by volatility is a major reason traders lose They get the direction right but get hit on the stop.

Why energies are such a good market

They trend well (and are suitable for any long term trading methodology) they fuel the world economy so we know there is always going to movement and trends but you get something extra when trading:

1. Highly reliable seasonal spreads

2. The opportunity to trade intra spreads for better risk reward

Combine this with options and you will get the best risk reward with staying power to take advantage of these moves.

A word of caution

Don’t trade energies short term They are highly volatile and short term price spikes that will kill you You need top focus on the long term trends only.

Another important point is these markets have an ability to wrong foot the experts so don’t focus on the news Focus on what the charts are telling you.

You are looking for long term trends and the big trends only come a few times a year so you won’t be trading frequently. If you want to always be in on the action forget you will lose.

Long term trends are the way to go and there are plenty to focus on that can make triple digit gains. Take a look at these markets to increase your long term capital gains with one of the best commodity groups to trade.

Discover energy trading and get bigger long term gains!

Self-Employment is a growing career option for many people. Approximately 6.6% of the work force makes their living in this category or over 8.5 million workers nationwide. As a trader, you join the ranks of the self-employed, which is a terrific way to control your own destiny and take full responsibility for all you do.

As you begin your self-employment, you will probably find it beneficial to talk with colleagues – other traders who went out on their own. Role models are extremely important if you’re considering this step into business. The challenges they have faced in getting their business off the ground and the obstacles they have overcome will be great stories to hear. Copying the success of others and avoiding the mistakes you see them make is normal practice in business.

Joseph Anthony, author of “Working for Yourself” recommends that those considering self-employment have a variety of skills, motivators, and attributes, for example:

• Having Self-confidence

• Sense of timing or business intuition

• Viewing security as a state of mind

• Willingness to invest in your savings

• Competitiveness

• Comfort with not receiving a regular check

No self-employed person will ever tell you it is easy. Sure, you can often work in your jeans and t-shirt, but most self-employed traders work well beyond the traditional 8-hour day. It requires a number of skills that those who work in a regular office do not need, including a strong sense of self-discipline and developing a new self-reliant mindset. As your own boss, you need to manage yourself, become self-motivated, perform well under pressure, and deal with setbacks.

The freedom that trading allows is highly motivating. While it may be stressful to some, seasoned traders relish their freedom. Every trader is on his or her own path. This individual journey can be a challenge, but for most seasoned traders, freedom is power.

In the mean time, Good Luck on your journey to success…

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AND for a Limited Time, you will also receive a FREE copy of a limited number of the amazing book “Trading In The Zone” which is jam-packed with daily trading ideas and psychological preparations to instantly improve your trading and investing performance.

How To Trade Futures Market

During my many years of day trading futures markets I have often wished I could get my PC to do my trading for me. Surely it should be possible to automate the process, saving countless hours sitting in front of a screen waiting for trading setups to occur. So, can it be done and, if so, how easy is it? The answer is yes, it is possible, but it is far from a trivial undertaking. Of course, much depends on the tasks you need to automate to implement your trading style. Good brokers offer order types which allow a fair bit of automation of your trading plan. How To Trade Futures Market

For example, say you want to BUY if the market drops to a certain level, you could enter an appropriate buy limit order before the market opens. What is more, you could stipulate that if the order is filled, a bracket order is to be created. The bracket order creates two sell orders, one a limit order at your target price, the other a stop loss order at whatever level you choose. When one of the sell orders is executed, the other is automatically cancelled. (Not all brokers offer this facility!).

Alternatively you may be able to submit your buy order with some kind of automatic trailing stop. The idea here is that after your order is filled, the system automatically submits a stop loss order at whatever distance you specify from your entry price. What is more, if price moves in your favour, the stop loss order is continuously adjusted to lock in some of the gains.

All traders should think very carefully about the type of orders which best implement their trading ideas, and look carefully at the types of orders offered by different brokers for the markets they want to trade. Some brokers only offer the limited set of order types provided by the trading exchange, but others offer a rich variety of order types over and above those provided on the trading exchange.

Generally the exchange only supports quite basic order types, so richer order types have to be implemented by brokers using software. As an example, the Globex electronic trading platform used by the CME Group, basically provides just market, limit and stop limit orders. If a broker offers more sophisticated order types, they have to implement them on their own trading platforms. The trading platforms are electronically linked to the Globex system, and translate the more complex orders into the simple order set supported by Globex. So, for example, if Globex does not provide a standard Stop order type, the broker can implement this function for its customers by monitoring market price in real time, and submitting a market order (supported by Globex) if the stop price is touched.

This is all excellent stuff, but over the years I have developed a trading style which requires me to watch the market charts during the trading session and recognize various patterns as they form around support and resistance levels. When I detect these patterns I enter the market with stop and target levels dependent on the patterns formed so far during the trading session. It is not terribly complicated, but it goes far beyond what can be automated using order types provided by even the most sophisticated brokers.

So for many years I have been resigned to watching the markets at whatever inconvenient times they may open and waiting to see if the setup patterns developed. If they did, I entered a trade and manually calculated the appropriate stop and target levels. I was then able to automate my exits by setting up my exit orders as an OCA group (a facility provided by many brokers which specifies that if any one order in the group is executed, the others are cancelled). So, in effect, my method used manual entries and automated exits.

Automating my exits like this meant that I gave up the opportunity to trail my stop loss orders. Rather than trail by fixed amounts, I prefer to trail behind support or resistance levels, and no order types provide this function automatically. So, if I were to trail my stops, I would have needed to watch the trade for its entire duration.

I have enjoyed this form of trading, but it does have drawbacks. If you live in an awkward time zone, as I do, it involves getting up in the middle of the night to trade. Even in less awkward time zones, trading times can clash with other daily activities. Markets move quickly at the open of trading sessions, so it is very easy to make mistakes when you enter trades manually. A few mistakes can make a huge difference to your returns. Psychologically, if you enter a trade manually, it is difficult to walk away from it even if you have automated your exit. So you often waste hours watching each tick of the market to see how the trade turns out. What is worse, you can easily be tempted to change your plan in the emotion of the moment, and not following their trading plan is one of the main reasons traders fail.

So the question became how could I automate the more complex decision making process required to implement my trade entries and determine optimum target and stop levels? It turns out that there are a few systems available which are geared towards setting up trading rules to automate trading processes, but when I looked closely at them they never seemed to be able to do just what I wanted. In the end I decided that the only way to get exactly what I wanted was to write my own software. How To Trade Futures Market

To understand how this can be done, you have to be aware that some brokers publish what is known as an API (applications programming interface) for their trading platforms. This is a defined set of protocols which a programmer can implement to connect to and utilize functions of the trading platform. So, for example, instead of logging onto the trading platform and manually entering an order, you can write a program which connects via the API and enters the order for you. This is not a task to be undertaken lightly and it should only be undertaken by an experienced programmer. Anybody unfamiliar with good programming and testing techniques could end up making some very expensive mistakes. Even with an IT background, I set off down this path with some trepidation.

It took me the best part of two to three months to get up to speed in the particular programming language required and to come to grips with the intricacies of the API provided by the broker. At that point, I wrote a pilot program that implemented a greatly simplified strategy and, after very careful testing, I traded it live for a month. It worked brilliantly, and motivated me to continue. A few months later I had a program that implemented all aspects of my strategy, entries, trailing stops (if required), and exits.

At first, I just used to alter program code if I wanted to trade differently. (For example, if I wanted to use 1 minute charts instead of 2 minute charts.) However, this was inconvenient and, while it was OK for me, it was not practical for anybody else using the program. So the next step was to define a control panel which allowed me to alter any of the system parameters without going near the program code.

I have been using the program for some time now, and I would find it very difficult to go back to trading manually. Some of the advantages are obvious. I can set up the PC for a trading session a few hours before the market opens, and leave it to trade automatically without my being present. (Because so little effort is involved, I have started trading two markets each day instead of confining myself to a single market, as I did in the past.) The program executes my strategy perfectly every time. Sometimes, I find myself looking at a chart wondering why it took a certain action, but I inevitably find it acted exactly as it should in the circumstances. If I had been trading manually, I would probably have made a mistake. (You have to have done a lot of testing before you gain this degree of trust!)

I firmly believe that trading success depends on consistently entering trades using a method with positive expectancy. By automating the trading process, I am achieving a level of consistency which was sometimes missing when I traded manually. No more errors due to time pressure, fatigue or inattention.

There are other benefits too which were not so obvious when I started the project. For instance, I am much less exposed to problems arising from internet connection problems than I was before. This may seem surprising, but it arises out of the different way I implement my entries. When trading manually, I use stop entry orders to get me into a trade quickly as soon as support or resistance breaks. This is fine, except for those rare occasions when I put in the order and then lose my connection. That engenders a frantic period trying to reestablish the connection, all the time wondering if the entry order has executed without my being able to put a stop loss order in place.

In contrast, the automated program operates so quickly that it is not necessary to use the stop entry method – it simply enters a market order to open the trade as soon as a break of support or resistance is detected. Then the stop loss and target orders are entered in a matter of milliseconds, as opposed to the minute or two required to enter them manually. So, unless I am immensely unlucky, the worst that can happen is that I miss a trade, if connection is lost before the trade signal occurs, or the program is unable to trail stops if connection is lost after the trade is open.

Another unexpected benefit is the ability to vary system parameters in ways which were impractical, or too error prone, when trading manually. A simple example is the time period of the chart bars monitored by the program to detect trading patterns. In the past I used 2 minute bars, because that was one of the time periods provided in my charting software, and also because if I used a shorter time period, my error rate increased. Now I am not confined to chart periods available in my charting software, and the entries are executed perfectly even with very short bar periods – if I wish to use them. How To Trade Futures Market

Eighteen months ago every newspaper and blog was running stories on the financial meltdown. Today, in general, it looks like we have avoided any such crisis. Many countries did enter recessions but the vast majority of those are now seeing growth again albeit rather fragile growth.

US jobless claims are improving, although there are still the odd unexpected rises to remind us of the fragility of economic recovery. At the same time Greek Debt is rarely out of the headlines. We also have China’s economy growing at 10% and the problems that such fast growth can cause, especially when coupled with the knock-on effects of trying to reduce that rate.

Each piece of news is providing investors with both pitfalls and opportunities. It is common for investors to have their own trading strategies but all too many ignore the importance of risk management.

Here are a few of the more sensible and frequently used risk management tips.

1) Plan every trade you make trade. Ensure you are only speculating on markets that you have fully researched. Understand at what point you want to close your trade if it goes wrong and the profit level you are looking for. This will help you close your position and also help you control any greed factors.

2) Stick to the companies and markets that you are most familiar with. If you are unsure about the US equities markets and have a good appreciation for the UK equities markets then naturally you should trade the UK equities markets.

3) Reduce your risks and use a Stop Loss. If you are trading the markets through a spread trading account then you can trade Forex, Stocks and Commodities from the same account. That is very convenient but more importantly note that with spread trading firms like City Index you can also add a ‘Stop Loss’ order to your trades. If a market moves against your position you will start losing on your trade. However, when the market hits your stop loss level then your trade will be closed. In other words it will stop you losing any more money. Note that not all stop losses are guaranteed.

4) Acknowledge that you won’t win on every trade. Also accept that after you lose money on a trade you might be tempted to ‘chase your losses’ ie place some poorly researched trades in order to recoup your capital. These new trades are more likely to lead to a further loss of capital.

The above four tips are all obvious but you would be surprised how many investors ignore them. Many forget that trading is as much about risk management as finding a winning trade. You may not be able to spot the Greek Debt issues or blips in US employment data but you do need to protect yourself from these ‘expected-unexpected’ events.

So it looks like we have avoided a 1930’s style depression however the current forecasts still suggest slow growth and a difficult time ahead. So what should you do in a difficult environment with your own finances?

If we were to be honest with ourselves, then we should probably accept that we can improve on at least a couple of the following; tax efficient investments, long term investments, actively reviewing our existing investments and looking at new opportunities that the financial markets are currently providing

I am sure we all appreciate that we could benefit from planning more. That is not to say everyone is simply sitting on their hands. Many people actively trade stocks and shares.

The increase in the popularity of spread betting is understandable. A few of the attractive benefits include the fast nature of placing a trade and the large variety of global trading options on offer.

Naturally, as with all types of investment, be it on Stocks and Shares, ETFs, pensions etc, there is a negative side and with spread bets you need to be careful because you can lose more than you initially invested.

If there is a risk to your capital then why should you contemplate spread betting as part of your investment strategy? Spread betting can be beneficial on a number of fronts, from tax efficient investments* to ease and speed of making a trade.

There are many benefits. For example, spread betting profits do not incur capital gains tax*. You are not actually buying and selling any assets or stock or shares. You are simply speculating on the future price or value of a particular financial market.

As discussed, investing does have its risks. Nevertheless, there are things you can do in order to reduce your downside. Adding a Guaranteed Stop Loss Order to your spread bet helps reduce your risks. If you start to lose on a trade and the market continues to move in the wrong direction but hits your Stop Loss then your trade will be closed and you won’t lose any more money.

In order to spread bet you do not take possession of any assets or stocks. You are just speculating on the future value of a market. This allows you to place trades quickly and with little fuss, an important feature in fast moving markets.

Where to trade? A number of spread trading firms offer the usual benefits of letting you trade thousands of international markets as well as letting you trade outside normal market hours. Companies, like Capital Spreads and FinancialSpreads.com, will also let you trade markets like Crude Oil, Gold, the German Dax and the UK FTSE from Sunday evening all the way through to Friday evening.

So whilst there are a good number of positives, it is important to understand the negatives.

Spread betting carries a high level of risk. You should only speculate with money you can afford to lose. Like the adverts say, before you trade, ensure that spread betting matches your investment objectives, make sure you familiarise yourself with the risks involved and, where necessary, seek independent advice.

What else should you consider when trading?

In the numerous chat rooms and internet forums there are many trading tips and theories. Some are fairly sensible, some less so. The following includes some of the more common principles.

It is worth having a look at a spread trading practice account. These are free accounts with virtual funds. If you are less familiar with this form of trading then a little practice should help you understand the positive and negatives as well as the various types of bet you can place.

Greed can be your worst enemy when trading. It can be tempting to trade lots of positions in lots of different markets. Personally, I tend to trade 0-5 markets at any one time. I have no idea how anyone can fully research and make informed decisions on 20 open trades, especially if they start moving against you.

* Since you are placing a bet rather than buying an asset or share, it is treated like a bet by the UK and Irish tax authorities which means your profits are tax free. Tax laws can change.

Day Trading Forex Currency

What if I was to tell you that day trading forex could potentially be the most dangerous and unprofitable activity for you and your portfolio. Honestly, there are better ways to trade forex than day trading, and easier ways to trade with much higher odds, but first let me explain these wild claims… Day Trading Forex Currency

Not only am I about to share with you the truth about forex day trading, I believe I will change your expectations and move your thinking towards trading higher timeframes with the aim of taking advantage of slightly longer term moves over several days of trading activity.

Let me begin by asking you how many successful day traders you actually know or have ever met? Do you really believe beyond doubt and with complete evidence that you can point out a day trader who makes serious money consistently in the forex market? If you know of one, then I am happy for you go and learn from that trader, however if you are yet to meet a genuine day trader in the flesh, or if you’re struggling to find a genuine strategy to day trade forex, it’s likely because day trading is the rarest and most difficult form of speculative short term trading. In fact, the term “day trading” was invented in the hype of the 1980′s bull market mania and has survived the modern tech boom and commodities booms into was has become a sustained euphoria of lies regarding glamorous trading lifestyles and quick easy money. This giant industry wide hype continues to pass through each generation of novice and aspiring traders, making it now a widely accepted false reality for many financial market educators and retail traders.

So heres where I give you a big reality check, the one you needed.

Facts prove, almost 99% of day traders lose money using a common day trading strategy and the brokers promote it as this is where they make the serious money. They basically rely on market addicts and losers to make money from high frequency day traders, ever heard the word bucket shop? This pertains to firms that offer leveraged trading with small deposits, these firms don’t even hedge your trades in the real market, they simply take the other side of your trade, and most often they win because you’re stuck in the cycle of losers playing around as a ‘wanna-be’ day trader, go figure…

Day trading forex has a low win rate and low strike rate

Let me share with you something very important. Shorter timeframes allow for a high margin of error and require a high win rate and low risk reward, this makes the task of day trading extremely emotional, stressful and almost impossible. The reason is simply this; high volatility on small timeframes makes it easy to be stopped out of trades. It’s ironic isn’t it?, because day trading requires a high win rate since the risk reward available is so low. Remember, the lower the potential risk reward, the higher the win rate must be. This entire concept alone creates a casino situation which creates a genuine “houses edge”, where the house being the broker, and the trader being the gambler.

Intraday forex trading computers work against humans in this tightly controlled yet massive market. It’s a market with huge players, banks and large companies who you play against every day, so what makes you think you can truly ever beat them, after all they own the market, not us small retail traders. Day Trading Forex Currency

Why day trading is most likely going to cause you financial ruin.

I come back to my statement on trading short time frames intraday.

The shorter the time variable the more random chance there is in the event, the more volatile it is, the harder it is to predict. That’s why I have moved my trading on to larger timeframes as they offer a more predictable and more cumbersome slower moving market signal to work with,.

Moving to higher time frames with your forex trading is the key to profits

As a 8 year veteran of the currency markets, if you choose to take my word for it, I will share with you something important, but pay attention.

Ever thought that these bucket shop brokers make the industry this way to earn brokerage on the pip spreads?, Maybe they need you to lose to make money from your losses?, or maybe the majority of this crooked industry is just simply out of their mind and have no idea?, that’s the more likely answer. I rarely come across anybody who has any idea what it takes to be a trader nor do I ever see a truly efficient trading platform, which aims to make trading simpler for the client, its all part of the plan they have to siphon off your money. I never see brokers promoting longer term strategies, you know, the stuff that truly works, they want to hide that from you, they want to hide the stuff that is easy to understand.

Trading is not about following momentum and trading break outs, it is certainly not about using indicators, and it is not about trading news and economic data intraday, it is something unrelated to any of these, yet your unlikely to ever discover it amongst the hype of the brokers and the market education bandwagon.

So what’s the path to currency traders rehab?

Let’s firstly change your trading mindset altogether and move you into trading higher timeframes, period! Let’s take your existing day trading mindset and throw it in the garbage and start from scratch. Lets get you to start following daily timeframe charts, and remove all your indicators and magical systems from the charts.   This article is designed to wake you up and get you to start exploring the other side of this industry, the position traders, the longer term approach in which we aim to capture multi day moves from the volatility of these great markets. The swing traders of this market make the largest profits, so it’s time to learn how to get on board these multi day and multi week price moves, we must learn to tail ride the the hedge funds, the interbanks and the multinational companies all whom work together.

I hope that wets your appetite so far  and has gotten you very excited about what may lie ahead for your trading if you’re prepared to change your mindset and jump the fence from day trading to position trading with a simple set of price action strategies, ones which I can help you discover. Day Trading Forex Currency

Day Trading Forex Currency

What if I was to tell you that day trading forex could potentially be the most dangerous and unprofitable activity for you and your portfolio. Honestly, there are better ways to trade forex than day trading, and easier ways to trade with much higher odds, but first let me explain these wild claims… Day Trading Forex Currency

Not only am I about to share with you the truth about forex day trading, I believe I will change your expectations and move your thinking towards trading higher timeframes with the aim of taking advantage of slightly longer term moves over several days of trading activity.

Let me begin by asking you how many successful day traders you actually know or have ever met? Do you really believe beyond doubt and with complete evidence that you can point out a day trader who makes serious money consistently in the forex market? If you know of one, then I am happy for you go and learn from that trader, however if you are yet to meet a genuine day trader in the flesh, or if you’re struggling to find a genuine strategy to day trade forex, it’s likely because day trading is the rarest and most difficult form of speculative short term trading. In fact, the term “day trading” was invented in the hype of the 1980′s bull market mania and has survived the modern tech boom and commodities booms into was has become a sustained euphoria of lies regarding glamorous trading lifestyles and quick easy money. This giant industry wide hype continues to pass through each generation of novice and aspiring traders, making it now a widely accepted false reality for many financial market educators and retail traders.

So heres where I give you a big reality check, the one you needed.

Facts prove, almost 99% of day traders lose money using a common day trading strategy and the brokers promote it as this is where they make the serious money. They basically rely on market addicts and losers to make money from high frequency day traders, ever heard the word bucket shop? This pertains to firms that offer leveraged trading with small deposits, these firms don’t even hedge your trades in the real market, they simply take the other side of your trade, and most often they win because you’re stuck in the cycle of losers playing around as a ‘wanna-be’ day trader, go figure…

Day trading forex has a low win rate and low strike rate

Let me share with you something very important. Shorter timeframes allow for a high margin of error and require a high win rate and low risk reward, this makes the task of day trading extremely emotional, stressful and almost impossible. The reason is simply this; high volatility on small timeframes makes it easy to be stopped out of trades. It’s ironic isn’t it?, because day trading requires a high win rate since the risk reward available is so low. Remember, the lower the potential risk reward, the higher the win rate must be. This entire concept alone creates a casino situation which creates a genuine “houses edge”, where the house being the broker, and the trader being the gambler.

Intraday forex trading computers work against humans in this tightly controlled yet massive market. It’s a market with huge players, banks and large companies who you play against every day, so what makes you think you can truly ever beat them, after all they own the market, not us small retail traders. Day Trading Forex Currency

Why day trading is most likely going to cause you financial ruin.

I come back to my statement on trading short time frames intraday.

The shorter the time variable the more random chance there is in the event, the more volatile it is, the harder it is to predict. That’s why I have moved my trading on to larger timeframes as they offer a more predictable and more cumbersome slower moving market signal to work with,.

Moving to higher time frames with your forex trading is the key to profits

As a 8 year veteran of the currency markets, if you choose to take my word for it, I will share with you something important, but pay attention.

Ever thought that these bucket shop brokers make the industry this way to earn brokerage on the pip spreads?, Maybe they need you to lose to make money from your losses?, or maybe the majority of this crooked industry is just simply out of their mind and have no idea?, that’s the more likely answer. I rarely come across anybody who has any idea what it takes to be a trader nor do I ever see a truly efficient trading platform, which aims to make trading simpler for the client, its all part of the plan they have to siphon off your money. I never see brokers promoting longer term strategies, you know, the stuff that truly works, they want to hide that from you, they want to hide the stuff that is easy to understand.

Trading is not about following momentum and trading break outs, it is certainly not about using indicators, and it is not about trading news and economic data intraday, it is something unrelated to any of these, yet your unlikely to ever discover it amongst the hype of the brokers and the market education bandwagon.

So what’s the path to currency traders rehab?

Let’s firstly change your trading mindset altogether and move you into trading higher timeframes, period! Let’s take your existing day trading mindset and throw it in the garbage and start from scratch. Lets get you to start following daily timeframe charts, and remove all your indicators and magical systems from the charts.   This article is designed to wake you up and get you to start exploring the other side of this industry, the position traders, the longer term approach in which we aim to capture multi day moves from the volatility of these great markets. The swing traders of this market make the largest profits, so it’s time to learn how to get on board these multi day and multi week price moves, we must learn to tail ride the the hedge funds, the interbanks and the multinational companies all whom work together.

I hope that wets your appetite so far  and has gotten you very excited about what may lie ahead for your trading if you’re prepared to change your mindset and jump the fence from day trading to position trading with a simple set of price action strategies, ones which I can help you discover. Day Trading Forex Currency

Let’s just clarify what is meant by the term trader, sometimes called retail trader or day trader.

This is an individual who trades the financial market whatever they may be using their own money. They may or may not be dependent on the results of their trading for their income. This does not include professionals who work for institutions or who manage other people’s money. It does not include anyone who gives advice that is charged for.

One of the reasons that I want to make this point clear is that many new traders that I have met fall into the trap of listening to too many people who have never traded their own money.

Many institutions have what they term trader’s working for them. The reality is that these people are often no more than someone executing an instruction given to them by the client.

They don’t have any analytical capabilities other than what is provided to them by their employer.

Unless you have experienced winning and losing your own money based on your own decisions you will never fully appreciate what the retail trader is going through.

It’s sort of the difference between being the manager of a company and being the owner of a company. For those of you have experienced the difference you will know exactly what I am talking about.

I don’t mean to take away anything from the many professionals out there who offer excellent services and have long and distinguished careers in the industry. I only wish to point out that there is a great difference between the mindset of the two groups.

Someone working for a large institution who is called a trader is very far removed form the guy sitting at his computer all day making decisions that effect his bank account.

You will only ever be successful as a trader if you rely on your own judgment to trade. At the end of the day it’s your money. I would go one step farther and divide day traders into three groups:

1. Individuals who have a small amount of money and have read or listened to someone who has told them that there is lots of money to be made trading.

2. Individuals who have a fair amount of money and want to try something new. They may look at trading as another business venture and expect to have to invest for a return on their money

3. Wealthy individuals who are looking for ways of increasing or diversifying their portfolio. They may be looking at ways of earning more money from their money with less investment e.g. leverage.

Traders come from all walks of life, everything from company directors to bricklayers. Some trade full time and others trade part time whilst holding down full time jobs.

Generally they would have taken some courses on technical analysis or some technique that someone was selling and founded their decision making process on that.

They would then allocate a part of their house or office for this purpose, set up a computer and away they go.

Many, as I did, paid thousand of dollars for courses only to find out that the method they paid for didn’t work.

The problem is when you start trading: you don’t know any better and will usually pay for the course with the best marketing not the best content.