forex currency trading

Many families today are feeling the financial pinch and are looking for ways to effectively deal with rising prices. Rising unemployment is an added concern. This can be a particularly devastating to those workers laid off especially...

Forex Currency Trading: How to Harness Today's Trading Technology

by David R. Jaymes

Self control and discipline can be nurtured and strengthened over time and are extremely valuable qualities to develop for trading Forex. In this article we'll talk about how these qualities relate to current and projected future developments in the Forex trading industry.

Manual Forex trading is a time-tested and market proven method for trading Forex. There is no doubt that manual Forex trading is here to stay. Many of the most skilled full-time Forex traders prefer this method. The key words here are "skilled full-time" Forex traders.

You see, manual Forex trading can be very time consuming. While the process of Forex technical analysis gets a bit easier and more efficient with practice in manual Forex trading it can never be completely eliminated. Manual Forex traders will always need to complete their technical and perhaps even fundamental analysis prior to executing their Forex trades.

As you know, fundamental Forex analysis has to do with looking at economic indicators within and between nations. Fundamental Forex indicators such as Consumer Price Index, Non-Farm Payroll, Gross National Product, Industrial Production, Producer Price Index, Retail Sales, Balance of Payments and Interest Rates are many of the most common fundamental Forex indicators traders seek to incorporate in their analysis.

Needless to say using both fundamental and technical analysis is quite complex and can be a very time consuming challenge. Except for "news" traders many Forex traders default to primarily using Forex technical analysis.

A prime example of "news" is the Non Farm Payroll announcement. This announcement normally takes place on the first Friday of each month at 8:30am Eastern Time. Forex traders who trade the news position themselves in the market to capture as many PIP's as possible during the market corrections that take place just after a "news" release. Forex traders who trade the news rely quite a bit on fundamental indicators in making their Forex trade decisions.

New Forex software programs that gather and interpret fundamental indicators have been around for a while and they will continue to improve their accuracy with time.

Speaking of software programs, one of the most rapidly developing forms of Forex software are "Expert Advisors". Expert Advisors (EA's for short) are software programs that operate within your trading platform. So far, the industry leading trading platform for EA's is the Metatrader 4 Trading Platform designed by ODL Securities.

There are several advantages to using an EA. Perhaps chief among these advantages is the fact that the "on-board" programming of the EA eliminates the need for the Forex trader to spend a lot of time doing Forex technical analysis. Once an EA is properly initiated, it will automatically trade a specified Forex pair, or pairs, using a predetermined strategy or trading approach.

This can be a huge time-saver.

With an EA the [process of technical analysis is handled by the trading logic programmed into the EA. The EA functions off of a set of predetermined "rules" which guide its operation. The EA enters the trade when the entry conditions are met and exits the trade when the exit conditions are met. Each EA has a different set of predetermined rules. Each rule is typically controlled by one or more user adjustable "switches". These switches are optimized at the time the EA is delivered to the user and can be saved as a switch settings profile. Once the default switch settings are saved, the user can make changes to the switch settings as they wish. It is important to remember that the best way to determine EA switch settings is through the back testing process.

Back testing is a process by which each switch or set of switches are methodically tested using actual past market data from your Forex trading platform. While back testing takes much less time than forward testing it is still a painstaking and time consuming process but the results can be very revealing and informative. This process will tell you such things as, for example, which time frame(s) and currency pair(s) are the most profitable to trade.

Back testing is absolutely necessary in order to optimize the settings for an EA and as such it is very valuable process but the process is not perfect. Data mismatches can occur during the back test process which can degrade the results somewhat. The source of these data mismatches is not known at this time but it is an industry wide problem and the solution to the mismatch problem is being vigorously pursued.

Even with its flaws the back test process remains of utmost importance when it comes to optimizing the performance of any EA.

The time saving nature of using an EA coupled with the stress reducing effect that it has on the Forex trader has boosted the popularity of this kind of Forex trade automation.

It is just this kind of Forex trade automation that is helping to fuel the explosive growth of the retail Forex market. It is no longer necessary to stay glued to your computer monitor and "baby sit" your trades. Not only that but a properly designed EA can perform functions that even the most skilled and experience traders find difficult. For example, there are EA's on the market today that can trade multiple currency pairs simultaneously. Other EA's can trade multiple hedge trades at the same time!

We are in the midst of a quiet revolution toward increased Forex trade automation. It is safe to say that the trend toward Forex trade atomization is likely to continue and strengthen over the next several years. Because the advantages of using an EA outweigh the disadvantages, the popularity of using EA's is at an all time high and likely to set new records for growth in the near future.

Even though EA's are reducing the need for technical analysis they are not reducing the importance of self-control and discipline. It is common for Forex traders who are new to EA trading to have an urge to "manual" trade using the EA. This is a mistake, first of all it defeats the purpose of the EA and second it can result in preventable loses.

With EA trading the EA is your trading method. The EA trader is well advised to allow the EA to do its work without trying to manually over-ride it (Plan your trade - trade your plan).

If possible, examine the back testing and forward testing results of an EA before you purchase it. Always demo trade with a new EA to confirm its operation before using it in a live account.

EA trading is gaining in popularity by leaps and bounds. EA trading is part of a major trend toward increased automation in the world of Forex. This trend is expected to expand and strengthen in the years ahead.

Being skilled in technical analysis is always an asset but EA trading relies more on the trading logic of the EA than it does the technical skill of the trader.

Self control and discipline are equally important whether you are manual trading or EA
trading. Combine the personal qualities self control and discipline with using a well designed EA and you are on your way to profiting in Forex - the world's largest market.

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forex currency trading

by David R. Jaymes

In this article I separate fact from fiction and take an
objective look at how to understand the proper approach
to Forex trading in general, how to select an EA for trading
and how best to use your EA to capture maximum long-
term gains.

Far too many traders approach the Forex market with the
idea that Forex trading is about making money quickly.
Forex is not a get rich quick solution. It is vital that you
understand this concept well otherwise do yourself a favor
and don’t trade Forex at all.

You must understand that you can accumulate a great deal
of wealth by trading Forex but it will NOT happen over
night. If you are looking to make an over night killing, you
are better off buying a lottery ticket or taking your chances
at the casino

Take it from someone who has been around the Forex
‘block’ more times than he cares to remember: Use a
logical and analytical approach in selecting your EA for
trading. The key feature I look for is consistency.

Closely examining accurate back test results is one method
to use in evaluating the consistency of an EA. The first thing
to look for in the back test results is the percent accuracy of
the test itself. Look for a minimum of 90 percent accuracy.
Next, look at the number of wins and the average amount
won. Look next at the number of losing trades and the
average loss.

When comparing back test results between EA’s be sure
you are comparing apples to apples. Compare lot sizes
traded, percent accuracy and the results themselves.

It would be nice if you could find an EA that never lost a
trade. While I agree that such a ‘holy grail’ scenario is
seductively attractive it simply is not realistic and you should
beware of anyone promising such results.

Forex trading is all about numbers. The numbers that
matter most in selecting your EA are the number of winning
trades times the average win versus the number of losing
trades times the average loss. This ratio will help you gauge
the consistency of your EA.

Trust me, if your average win were to equal your average
loss then you can do extremely well in Forex if you win just
60% of your trades!

Let’s talk about two key money management dynamics that
can make you or break you in Forex. The first is the
concept of consistency. Being able to deal with changing
market conditions is a far more important trait for an EA
than some pie in the sky promise of winning every trade.
Winning consistently – even if they are relatively small wins
– is the real key to selecting an EA.

Small consecutive wins add up to a big bank account.
Trading is never about making a huge amount of money in a
short time. It takes time for an account to grow. Let me
repeat, if you are after big wins in a short period of time
then stick with gambling in the casinos and leave the Forex
market alone.

The Forex trader’s biggest enemy is greed. Don’t try to go
over the top. Trade a good system. Place small trades and
be patient. If you have selected your EA well then it will pay
off. I promise.

Far too many traders will purchase an EA, plug it in, and
trade it for a few days. The first time it loses a trade they
are back on Google looking for a new EA. This is a big
mistake.

In Forex, learning to control your greed is a prerequisite for
achieving great wealth. Take controlled risks, never let
your greed take over your decision making process.

Every EA has good times and bad times. Be ready to treat
the bad times just as you would the good times. If you have
selected your EA well then the good times will out weigh
the bad times and you will make progress. Does that mean
that you will never have any bad times? No absolutely not.
A losing trade will happen at some point in time.

Maybe not tomorrow, next week, or next month, but
eventually you will lose a trade. Your job as a trader is to
treat that loss with the same respect that you treat the
gainers.

Your job as a trader is to manage your money in such a
way that when the inevitable loss comes you stay in the
game and recuperate. Not to jump around and find another
so-called solution.

Remember the story of the tortoise and the hare: slow and
steady wins the race!

The key to long-term success in Forex is to include correct
money management into your trading. The bottom line is to
control your risk. Never, trade more than you can afford to
lose.

The key is to grow your account little by little over time.
Yes you will get losers but if the system you are using is
accurate enough those losers will be recovered. Again, this
is where patience comes in by not jumping from one
solution to the next.

The second, and even more powerful, key dynamic is
‘profiting on your profits’. In other words, compounding.

It is amazing how an account can grow when you begin to
profit on your profits and you are patient and disciplined.
That is the secret to winning the Forex game. Small
consecutive wins boosted by the profits on your profits
concept.

Forex trading is all about numbers. No more no less. As
long as your winners out weigh your losers you are on your
way. Start small - grow big.

Trading is not about making money quickly; it is about
intelligently growing your account over time with proper
money management. And compounding – profiting on your
profits. Taking controlled risks and being patient.

Finding a consistent EA is great but that’s not enough. Your
job is also to learn how to use the EA properly. It’s not
enough to just purchase the EA you have to be smarter than
the others in using it.

I hope I can bring you closer to what Forex trading is all
about. Forex trading can be very profitable so long as it is
done correctly and not perceived as a get rich quick
solution.

If you:

Apply good money management rules
Avoid the get rich quick mentality
Control your greed
And be disciplined…

Then you will be light years ahead of the competition. You
belong to that special top 1% percent group. The group
that looks at the ‘hares’ and understands how silly their
approach to trading really is

The name of the game is to grow big but at the same time to
be strictly disciplined. If you understand that the statistics
are on your side then you won’t let a losing trade deviate
you from your objective of making it big time in this exciting
game.

If you take to heart the concepts we have talked about here
today then you will surely get your fair share of the Forex
market - the largest and most liquid market on earth.

by David R. Jaymes

When we talk about the Forex Traders Mind set we are talking about the mental/emotional dynamics or the psychology of Trading Forex. Let's begin with a few "rules of thumb". These "rules' support the mental habits needed to achieve the Traders Mind Set. These rules have their beginnings in the world of manual trading.

"Manual" trading simply means that the Forex trader initiates all trade entries and exits from his Forex trading "platform" or "terminal". The advent of the personal computer has caused a phenomenal explosion in this type of "retail" Forex trading.

In traditional technical analysis the Forex Trader closely examines technical indicators. Such Forex indicators as candle sticks, trend lines, Bollinger bands, moving averages, stochastics, Fibonacci lines, etc. are used to make ones Forex trading decisions. The number of Forex indicators used and combination of indicators used is usually a matter of personal preference for most Forex traders. The approach the Trader is using at the moment many times will determine which and how many Forex indicators are used.

When I say "approach" I'm referring to whether the Forex trader is "day trading", "hedging the market", "swing trading", "trend trading" etc. An explanation of the various types of trading "methods" or "approaches" to trading is a subject for another Forex Trading Special Report. I bring up these methods to illustrate the fact that many Forex "indicators" and many "approaches" exist. The Forex Trader Mind Set is the central key to success regardless of which "approach" or set of Forex "indicators" one uses.

Before we get back into the "rules of thumb" let me say that one of the biggest attractions to trading Forex is the opportunity to earn handsome returns. Keep in mind that risk is the flip side of opportunity. In other words, the higher the profit potential - the higher the risk. Forex traders do everything in their power to manage their risk. Forex Risk Management is a topic for yet another Forex Trading Special Report but developing and maintaining the Forex Traders Mind set is the first step to successful Forex Trading.

I also need to mention that good Forex technical analysis skills are very important if one is to manual trade Forex successfully.

Forex Traders also spend a great deal of time developing effective trading "methods" and "approaches". We see how that ties into the Traders Mind set in just a moment.

Back to our "Rules of Thumb"…

Never trade Forex with your rent money (or any money you need for day to day living). In other words, only use money that you can afford to lose without affecting your lifestyle. It may sound pessimistic to be talking about losing your money but the reason this is important is you need to nurture a "sense of detachment". The more emotionally detached you are from the money that you are using to trade Forex trading the better your judgment and the clearer will be your decision making. (It's the same reason why Doctors are discouraged from operating on family members- too much emotional involvement clouds the judgment) Never trade Forex with borrowed money.

This is a key concept and I cannot over emphasize the importance of developing and maintaining an emotional detachment from the money you are using to trade Forex. It is quite common for your emotions to run high when you are trading Forex "live" and you you're your money in the trade. This is when it is very important to maintain your discipline and keep your judgment as clear as you possibly can.

Think in terms of capturing PIP's rather than making money (whatever your native currency is be it dollars, pounds, euro's, etc.) Thinking in terms of PIP's allows you to distance yourself a bit from the money in your Forex trading account. In addition, PIP's are the "universal Forex unit of measure" and as such can have different money equivalents depending on the lot size you are trading and your native currency.

If you get good at capturing PIP's then I guarantee that you can and will make money.

A word about discipline. You are likely to hear the word "discipline" used quite a lot in connection with Forex Trading. Perhaps the slogan "Plan Your Trade and Trade your Plan" best summarizes the practical side of discipline. To me, the real heart of the matter, when it comes to discipline, is the ability to do what is needed to be done at the moment rather than what may "feel" good to do at the moment.

Socrates once said: "The Key to living is always learning how to live." Applying this to Forex trading, we can say, "The key to trading is always learning how to be a better Forex trader."

Obviously having a Forex trading method that you have confidence in is vitally important to "Trading Your Plan" but beyond that one needs to resist the urge to do what "feels" good during your trading session.

There is an old adage that summarizes the mental side of discipline: "First conquer yourself and the world will be yours." In other words, discipline and self-control enable you to more easily and consistently reach your Forex trading goals (and goals in your life in general).

A word about goal setting. Try picturing yourself already having achieved your goal. Conjure up the feeling you have had in the past when you achieve a goal. Feel the satisfaction and happiness of having achieved your goal. Now project yourself from that place of achievement back to where you are now and along the way back to where you are picture each step needed to get to your place of achievement. Write these steps down. Make an action list from these steps. These steps are your "bridge" that will take you from where you are to where you want to be.

Now just do it… take action and complete the steps that you have listed. Give yourself a "pat on the back" as you complete each step and keep moving toward your goal. It's not the pace of your movement that is most important but rather the direction of your movement. Think like a tortoise: "slow and steady wins the race." Keep on keeping on. Be like a postage stamp: "Stick to it until you arrive at your destination." Before you know it you will arrive at your goal (and soon it will be time to set a new goal).

Make changes to your Forex trading method between trading sessions (using your demo account) not during them. It is sometimes a real challenge to let your Forex trading method "play itself out" when you are trading live. This is where discipline comes in. Discipline requires that you "Plan your trade and trade your plan". Avoid the mistake of trying to "Plan" during your Forex trading session. Emotions usually run quite a bit higher during live trading and this can impair your judgment. Don't make the mistake of devolving into "knee jerk" reactions during your live Forex trading.

Let me emphasize the value of using your demo trading account. Your demo trading account is where you can test out your strategies and Forex trading methods. This includes Forex trading methods that you acquire from others as well as those you develop on your own. Make liberal use of your demo trading account. Get comfortable with your Forex trading method before you trade "live" with it. If you know what your Forex trading method can and cannot do then it is far easier to "hang in there" during live trading. You will need to learn to trust your Forex trading method during the "heat of battle" of live trading. This is why it is so important to work out your Forex trading method(s) in demo testing before going "live".

Stay as calm and "centered" as you possibly can during your live Forex trading. If you are doing a succession of trades such as day trading for example, take a moment to compose when you sense the need. Stop and take three full breaths (inhale fully, then exhale fully - do this three times in a row). Get in the habit of doing this at the conclusion of each trade. This is important whether your last trade was a gainer or loser. If it was a loser then you need to "shake off the sting" and regroup for your next Forex trade. If your last Forex trade was a gainer, you need to come down a bit off of your "traders high" and get ready for your next Forex trade. The bottom line is: you need to posses your emotions not the other way around. Forex traders that have come to grips with this Rule have found themselves much closer to achieving their Forex trading goals.

No one ever went broke earning a profit. A profit is a profit no matter how small. Learn to deal with a variety of market conditions before you try to go after the "big ones". You know, the "big ones": the big movements in price that crash through support or resistance into huge returns. Work your way up to the "big ones" if you wish. But, keep in mind that slow and steady can win the race.

You don't have to capture huge percentage gains in order to survive in the Forex Market. Consistent small gains can really add up over time. If you earn just 1.8% a day after 1 year you will have increased your account 103 times! In other words, if you begin trading with a $500 account earning 1.8% a day, after just one year you would have $51,500. This is the slow and steady power of compounding.

Combine the power of compounding with The Forex Traders Mind set and you are well on your way to winning in the Forex Market - the largest market in the world.

forex currency trading

by David R. Jaymes

These days the rising costs for everything from housing, fuel, and food have become a fact of life and many of us are considering taking a second job in order to make ends meet. The costs for gasoline and diesel have reached new highs lately and this has driven up the price for just about everything else. Higher fuel costs mean higher transportation costs and these costs are passed on to you each time you make a purchase.

Many families today are feeling this pinch and are looking for ways to effectively deal with rising prices. Rising unemployment is an added concern. This can be a particularly devastating to those workers laid off especially if you are the primary bread winner in your family. With over 463,000 layoffs in the US alone so far this year, an ever increasing number of us would be glad to have any job at all.

The double whammy of rising costs and a sluggish economy has put many of us in a financial bind.

Getting a second job may be an option for some to get out of their personal financial tight spot but not everyone is in a position to take on a second job. Single parents are especially hard hit because the cost of providing care for their children while they are at work many times cuts too deeply into their paycheck to make taking a second job worthwhile.

Some would say that you could always start your own business. This may be true but starting a business takes a great deal of time and usually a considerable amount of money and there is still no guarantee that the business will survive let alone become profitable. Besides, you need money right now, not three of four years from now or whenever your new business happens to become profitable.

Several options are commonly considered. One such option is to seek a pay raise at your existing job. This option can work if you have positioned yourself at your current workplace as having earned a raise and your company is in a financial position to grant your request. Not all companies have the financial resources to offer pay raises due to the tightening economy in general. As a matter of fact, an increasing number of companies are actually reducing their workforce and laying off workers.

Another option commonly pursued is to take a second job in hopes of gaining ground in the face of rising prices. This option can work if you have the time and energy to follow through with this plan. Naturally, you would need to locate an employer able to offer you gainful employment. In our presently tight economy the pool of such employers looking to hire part time workers is rapidly shrinking.

Taking a second job for a great many workers simply is not possible due to the limitations of time, personal energy, or family obligations. Caring for younger children or older family members takes time and paying for these services many times costs as much or more than what can be earned through a second job.

What is an honest person to do?

Answer: Shift your thinking.

Consider this: Right now, if you have a job chances are you are trading your time and energy for your paycheck. In other words you are trading time for money. In most cases the more hours you work - the more money you have coming in.

But there is a rub.

You only have a fixed number of hours per day to work. You are limited as to the maximum number of hours you have available to trade for money. Especially if you currently working full time.

What I suggest is a shift in the concept of trading time for money.

In other words, what you need is a method to increase your income that does not require you to punch a clock and trade your time for money.

Sound impossible?...

No not at all…

Introducing the world of Automated Forex Trading. Automated what?...

Forex… Forex is short for Foreign Exchange. The buying and selling of international currencies. Forex is no longer just for wealthy capitalists and institutional traders. The days of treating Forex as the exclusive domain of the super rich investor are long gone. Nowadays, anyone with a few hundred dollars and access to a computer can trade Forex.

The real beauty of Forex is that it is the ideal recession proof opportunity.

Let me explain…

Your ability to make money with Forex is independent of the condition of your native country's economy. The reason for this is simple. In Forex, currencies are paired together. If one of the paired currencies goes up in value then naturally the value of opposing pair must go down.

Picture a child's see saw for a moment. When one end of the see saw goes up - the other end of the see saw goes down right? Basically this is what happens in the Forex market.

There is a natural volatility to the Forex market. This volatility coupled with the see saw effect gives rise to the situation where there is always a Bull Market in Forex. What this means to you is that potentially profitable Forex trading opportunities are plentiful. In other words, you can do quite well in Forex trading in spite of the fact that the economy of your native country may be sluggish or in a down turn.

This is great news for thousands of people who would not otherwise have a method for improving their financial lives.

Forex Traders participate in literally the world's largest market. Current estimates are that between 1.5 and 3 Trillion Dollars a day are traded on the Forex. Let me repeat, that's a daily trading volume in the Trillion's. That's Trillions with a "T".

Isn't Trading Forex complicated and difficult?...

If you are trading Forex manually then you will likely need very good technical analysis ability as well as a sound understanding of the economic forces that drive world currency markets. This takes skill and time to develop.

On the other hand, what we're talking about here is using a software program known as an "Expert Advisor" to evaluate trading opportunities and place your trades automatically.

Here's what I'm talking about…

Thanks to recent advancements in computer and Forex trading technology, we now have available what are known as "expert advisors" (EA's for short). In Forex, an expert advisor is a software program that runs inside your Forex trading platform. A well designed EA looks for a predetermined set of market conditions. When those Forex market conditions are met, the EA places Forex trades Automatically. Once the Forex trade is placed, the Forex trading software then waits for a selected profit point to be reached then closes the trade. This process is repeated over and over endlessly unless, of course, you tell the software to stop.

What this means to you is that you can basically set up the software on your computer and let the software trade Forex for you while you do other things. Go off to work, spend time with the family, or just plain goof off.

This is how you can break out of the confines of trading time for money - Trade Forex for Money!

A note of caution: Not all EA's are the same. The ease of use and effectiveness of EA's varies widely and you need to demo trade and/or back test each EA you are considering using before you go live with your own money.

If you would like to save yourself a lot of time and energy plus skip the expensive trial and error of evaluating EA's then just click here for the whole story on how you can put some of this industry's top performing EA's to work for you…