Forex Beginners Guide: Learn Forex Basics

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Why we Should Invest in the Forex Market?

Everybody likes to work less and make more. In fact there are thousands or millions of people who look for another source of income everyday. Why?

Their income is not enough.
They don’t like their jobs.
They spend so many hours everyday driving from home to work and visa versa.
They have problems with their colleagues and managers.
Their job is stressful or boring.
There are lots of competition and they have to spend so much money in advertising and finding new clients or customers.
Their job is not secure enough and so they are always worried about losing their jobs.

What is Forex?

Forex also known as the Foreign Exchange Market is the market where buyers and sellers complete transactions in foreign currencies. Investors strive to make money in this market according to the fluctuations in the values of different foreign currencies. It also exists to provide a way for banks and other institutions to have ready access to foreign currencies.

Why to invest in forex market?

Low Investment

You can open a trading account just by investing 0. So it is affordable online business. Once you become expert, you can invest more money.

Liquidity

Forex market is one of the most liquid market in the world. Huge amount of transaction are done on daily basis. So if you want to take out your investment at any time you can do it.

Low Risk

As compared to stock market, the amount of risk is minimal. You need a professional forex trader who provides good service. With the help of broker you can learn the basic of currency trading .To start currency trading, you will also need a trading account. You can also invest for long term as currency exchange rates my go high in the future with respect to one another.

Low Investment

You can open a trading account just by investing 0. So it is affordable online business. Once you become expert, you can invest more money.

Free Trading Signals

Many brokers provide free forex trading signals so that the investor can gain maximum profit with his investment. These forex trading signals are based on the brokers experience and some popular forex trading software's which generate forex trading signals automatically by observing the market. So with some basic knowledge of trading and with the help of trading signals; you can learn forex trading and can become a successful trader.

Free Demo Account

Many brokers offer a free trial or a demo account to learn forex trading online. So anyone can do practice before entering in currency trading.

Most people think that forex is a get-rich-quick program, but it is not. Forex is a business. But I strongly believe that it is much better than the other businesses. There are so many reasons for it.

It is true that 95% of those who trade forex, lose money but it is not because of the forex market. It is because they don’t know what forex is about. They simply don’t know that they should follow the market. They try to force the market to follow them and this is what the market never does. They think that forex is like all the other businesses that if they work harder, they make more money. But forex is a patience game.

To become a profitable forex trader who is able to make profit consistently, you should learn to follow the forex market. Forex makes money for you the way that it wants to, not the way that you do. It means you should wait for it to give you a trade setup. You can not force it to create a trade setup for you. All you need to do is learning a trading system (strategy) and then waiting for the trade setups. If you can do this, which is not too hard to do, you will become a profitable forex trader. You lose money in the forex market sometimes, but it doesn’t hurt if you keep your loss limited using a proper and reasonable stop loss.

You should start learning and trading forex. The sooner, the better. You can start doing it now. You will not lose anything. You will learn to generate a new source of income for yourself and your family.

How to Make Money with Forex?

What is online forex trading?

How can you get rich and powerful from online forex trading?

Who can do online forex trading?

Can you do online forex trading from any country of the world?

Online forex trading is the best kept "Secret" of the rich and powerful, international bankers, the money elite, who own and control all the banks, companies, corporations and foundations in the world. Until years ago, when the United States Congress passed a law and made it possible for the small investors and average citizen to participate in this online forex trading, only large banks, financial institutions, millionaires and billionaires were doing forex trading.

Online Forex trading is when you buy and sell the foreign currencies of different countries online. Through online forex trading, you can put your money to work for you like millionaires and billionaires do, instead of you working for your money. There is no large investment, hard work, technical training or big "risk".

Online forex trading investment enables you to use $1 to control an investment worth $200, and $500 to control $100,000 and $1000 to control $200,000 and $5000 to control $1,000,000 worth of investment. Online forex trading is the most profitable and attractive internet investing opportunity because you can do it from home or office and from any country in the world.

In online forex trading;

~You don’t need to do any marketing or selling or internet promotion to succeed.

~You don’t need to spend thousands of dollars to do any internet promotion.

~You don’t need any stocks or warehousing.

All that you’ve to do is open an account as little as $1.00. Then follow simple instructions to buy and sell the currencies. When the price of the currency is low, you buy. In a few seconds or minutes, the price may go up, and you may sell it and make a profit. By doing so, in a day, you can easily make $500-$1000 by just buying, selling and trading these foreign currencies for about 3 or 4 hrs!

And get this:

You don’t even have to be stuck sitting behind your computer buying and selling these foreign currencies. You can enter all your buy trades and specify the sell prices you desire and then log off. You can put it into an auto-pilot and forget it, and it will keep generating fast easy cash for you daily, 365 days in the year like an "ATM" machine.

You can do online forex trading and at the same time keep your day job, because in online forex trading, there is no work to do. In the future when you have made hundreds of thousands of dollars, you may then quit your job and just keep doing online forex trading forever and go on permanent vacation!

To understand the beauty of online forex trading, picture this:

In the morning, you get up from sleep at 6 am. You go to your bathroom and have your shower. At 7am, you hurry and eat your breakfast. At 7.20 am, you login into your online forex trading account on the internet and spend 10 minutes to buy about 3 or 4 different currencies, [for example British Pound, Euro, CHF (Swiss Currency) and Yen (Japanese currency).] You can specify the price that you wish to sell each currency.

Then you can log off.

By 9 am, you’re at work in your office or business place. You do your job as usual and by 5 pm, you’re finished and heading home. When you get back home around 6.30 pm, you login into your online forex trading account to see how much money you’ve made. Holy Molly, there in your account it says you have made $750! "Is this for real?", you wonder…

Yes, it is. (Your eyes are not deceiving you…). $750.00 in a day for just clicking your mouse twice and doing no work?. (Where as at your job, you work 8 hrs, but make only probably $150.00!). This is how easy it is to make money from online forex trading.

In online forex trading, you can choose how much money to invest, how much money to make and when to make it. You may make money daily, 365 days all year from online forex trading. Your computer can be transformed into an "ATM" machine that cranks out cash for you daily (without large investment or hassles) from online forex trading.

In online forex trading, you can choose what type of risk you can manage, when to invest and when not to invest. In online forex trading, you’re the boss. You may do as you please. When online forex trading is compared to other investment programs such as stock trading, bond trading, mutual funds, real estate and regular business, it is evident that online forex trading is the fastest and greatest way to make money in the world.

Online Forex trading is a 2-3 trillion dollars daily business and it is larger than all the stock trading in the world combined. These are some of the reasons why I believe that online forex trading is the best online investing opportunity. Perhaps from reading this article you’ll now come to know why online forex trading is the secret behind the greatest wealth on earth and why it has been kept hidden from the average people of the world and therefore little known to the masses.

No matter who you are, be it a salesmen, doctors, office clerks, accountants, carpenters, actors, stockbrokers, small business owners, policemen, firemen, musicians, soldiers, housewives, technicians, attorneys, nurses, students, traders, cab drivers, engineers, you can get rich from online forex trading.

No matter which country that you come from, such as USA, Canada, Belgium, Denmark, Sweden, Finland, Germany, France, United Kingdom, Switzerland, Norway, Italy, Greece, Spain, Mexico, Peru, Venezuela, Ghana, South Africa, Kenya, Egypt, Israel, Turkey, China, India, Japan, Australia, New Zealand... you can create true personal wealth and success from doing online forex trading. Creating personal wealth on the internet from your home or office has never been this sinfully easy.

May these online forex trading insights open your eyes to the possibility of infinite wealth and success that can be yours from online forex trading.

Control your Hastiness, Greed, Fear and Emotions in Forex

This question can not be answered in just one article but here is some tips:

If you are a hasty person and this has made problems for you both in your life and forex, you have to practice meditation or maybe hypnotism to become able to control your hastiness.

In case your hastiness can not be controlled at all, you may have to see a doctor and check your endocrine hormones like Thyroid, Adrenaline and Noradrenalin.

To control your greed, you have to make a strict discipline for yourself and try to be stuck to it. For example do not make more than a limited number of pips everyday or in each single trade. Tell yourself that you are not allowed to make more than - for example - 20 pips everyday or 5 pips in each trade and as soon as you reach the limit, turn off your computer or close your trade even if the market is still hot and you can make more or your trade is doing well and going to your favorite direction.

To control your fear, you have to spend enough time on learning and practicing with the demo account. You have fear because you don’t have enough confidence about your trading skills. You have to make hundreds of trades on the demo account to make sure that you have learnt the methods completely. Then you need to start with the real account and trading with your money but with a very small amount.

You have to keep on trading with a very small amount of money for several months and when you see that you can make profit and the number of your successful trades is more than your bad trades, you can increase the amount of the money little by little.

Keep in your mind that Forex and stock trading are all the matter of taking risk. The only thing that you have control on is the amount of the money you put in every trade and also the amount of the money that you let be lost. The rest is not in your hand.

Is Forex for Everybody?

Forex is a really different business. To make money with Forex, you have to know the technique and have enough experience otherwise you lose more than what you make.

In other businesses like internet marketing, you can make some money even if you are not an internet marketing guru.

The good thing with forex is that you don’t have to be worried about competition. Unlike all other businesses that competition makes tougher conditions for everybody, the more people work on forex the more money everybody will make because it will make more volatility and movements in the market and volatility and price fluctuation is what we make money through it.

Forex is a good business but is it a suitable business for everybody?

To become a forex trader, first you have to learn it. It is not very hard to learn forex. There are enough free information over the internet. You just need to spend a few months to learn everything. But the more important part is the experience. You have to learn how to use your knowledge to trade and make money.

Forex is like driving. You can sit at home and read a lot of books about driving and know about it more than a driver who has a 30 years experience. But as long as you don’t practice and don’t drive, you will not become a driver. To be a good driver you also need to have a healthy body and mind otherwise you will make problems for yourself and the others. This is true about forex too. Not everybody who knows the techniques theoretically can be a good forex trader.

You have to have three things to become a good and successful forex trader:

1. Knowledge

2. Experience

3. Suitable mental and psychological condition

If you lose more than what you make in forex, you don’t have at least one of the above essentials.

As explained above, the knowledge can be gained easily and for free through the internet.

The experience can be gained through practicing with the demo account. Any of the forex broker companies offer free demo accounts that enable you to practice and learn to use your knowledge practically.

But what about the last factor? Suitable mental and psychological condition!

You can lose money in forex even when you have enough knowledge and experience. Why?

What kind of people, with what kind of personality, lose more in forex even when they have enough knowledge and experience?

Impatient people

If you don’t have enough patience when you work or when you wait, you will have problems in forex. Forex needs a lot of patience. Sometimes you have to sit at the computer and watch the charts for several hours. Those who don’t have enough patience, get tired very soon and start entering to the trades while there is no clear and suitable signal and it is not the time to get in a trade. Then they will have to close a wrong position while they have already lost a lot of money.

Greedy people

Those who are greedy are big forex losers. Greed cause you rush to enter to a trade when it is not the time because you think that the others are making money and you have to do it too. So you don’t wait for a clear signal and you just dive to a trade with this hope that you will make money whereas in most cases you will choose the wrong direction.

On the other hand, greedy people stay in trade for a long time and don’t end it when it is time to end. They keep the position to make more money but the market will change the direction suddenly and all the profit they had in their hand will be lost.

Fearful people

Fear is the biggest problems in forex trading and generally fear is the biggest problem and obstacle in all the businesses. Fear keeps people from taking risks and those who have a lot of fear can not use the opportunities because they are always afraid of losing. They wait and wait and wait and lose the opportunities one by one and then get tired and try to overcome their fear and so they enter to the wrong direction before proper market analyzing and finding good signals. What will happen then? They lose money.

Emotional people

If you are a person who makes his decisions emotionally and not wisely, logically, analytically, then forex is not for you because you will lose a lot. Forex is a technical and scientific business. It works according to the scientific rules and analysis. Forex traders use special indicators and signals to decide to buy or sell. They act only when they see proper signals and not when they feel that the price will go up or down.

Something you feel can be wrong and so if you trade according to what you feel, you lose.

Emotions are good but not in business, forex or stock trading. If you are an emotional person, you should not try forex trading unless you learn to control your emotions and use your knowledge.

Become A Professional Forex Trader

Ways to become a good and successful forex trader.

1. Knowledge

2. Experience

3. Suitable mental and psychological condition

A professional forex trader is not someone who makes money with each and every trade. When he loses in a trade, he tries to find the reason. If you lose your money as soon as you start working with the real account you should ask yourself that “Do I have enough knowledge? Do I have enough experience? Am I mentally and psychologically ready to trade with my money?”

If you answered no to any of the above questions, you should not trade with the real account.

You can learn everything about forex trading through the internet. Internet is full of free and invaluable information about forex. There are also free videos that you can watch and learn a lot. They all talk about trends, patterns, indicators, candle sticks, fundamentals and … and you can learn all of them word by word.

Then you sign up for a demo account and start trading. Sometimes your first trades are very good and it deceives you that you have learned everything and now you can trade with real money but you don’t know that forex market is like an ocean. Sometimes it is calm. Sometimes it is stormy and sometimes there is a Tsunami because of an earthquake. Someone who has experienced sailing when the ocean has been calm may think that he is a sailor but he is not aware that the storm is on the way and he is not experienced enough to face a real storm. He goes to ocean and becomes trapped by the storm.

Professional forex trader means someone who has built his confidence through enough practicing and repeating his success. Beginners should keep in their mind that a few successful trades with the demo account doesn’t mean that they are good traders and a few successful trades with the real account, doesn’t mean that they can increase the amount of the trades.

Beginners have to keep on trading with the demo at least for few months. The other thing is that they have to have a system. Trading with the demo account without an especial and well-described system is wasting of time. You have to know what kind of signals you should be waiting for before you buy and sell and you should know that you only buy and sell when you see the signals not when you think that you are seeing the signals. Like waiting behind the red light. You start moving only when you see the green light.

So you have to trade with the demo account at least for few months. You have to learn to get stuck to your system. You have to learn to control your emotions. You have to learn to control your fear and greed before you start working with real money.

Unfortunately some greedy brokers push the beginners to open real accounts. They are not smart enough to understand that they have to have long term traders not one day traders. Most beginners who lose their money, will never reload their accounts and so the brokers will lose them for good.

When you work with the demo account for few months, you feel a confidence in your heart. This confidence is not a false confidence because it is gained through practicing and experiencing. If you don’t feel a true confidence, keep on practicing with the demo account. It doesn’t matter for how long. One year or even two years. Nobody has determined a deadline for you. So don’t rush. The market is always there waiting for your money.

Then open a real account but please note that after opening a real account, you are at the BEGINNING of a new stage. Yes! Working with the real account is different from the demo account.

Why? Are the signals, charts, indicators, currency pairs and... different?

Absolutely not. They are all the same but something that is different is that you know that you are playing with your real money. The money that you have been working to the bone to collect. You don’t like to lose it. You want to increase it.

What will happen then?

You trade with more fear and greed. You don’t close the trade that goes against you because you don’t want to lose. You wait for the price to change the direction but it won’t and finally you decide to close your trade when you have lost a lot.

Or you keep a good trade to make more profit. You ignore the reversal signals and so you lose all the profit you had in your hand.

Sounds familiar, doesn’t it?

So what should you do? (Read more here..)

Understanding the Currency Pairs

Currency pairs are among the most popular questions I am always asked. Sometimes it surprises me how someone wants to trade forex while he/she still doesn’t know about currency pairs. But I should not be surprised, because we always focus on advanced topics like technical analysis, candlesticks and indicators and … that we forget about the basics. We do not consider that beginners may have difficulties in understanding the currency pairs that are the foundation of forex and forex trading.

What are the currency pairs in the forex world?

In stock market, you trade shares of companies. You buy and sell them. You pay money to buy stocks. But what if you wanted to trade or buy and sell a currency?

In the stock market, companies’ shares are commodities and the currency you pay to buy them is the money. It is the same in any other kind of trading. You pay money to buy a commodity. In forex or foreign currency exchange, you trade currencies. So again, you have to pay something to buy something else. You pay a currency to buy another currency. You sell a currency against another currency. To be able to do that, they have created currency pairs. For example EUR-USD is a currency pair. In each currency pair, the first currency is the commodity and the second currency is the money. In EUR-USD, the first currency which is Euro is the commodity and the second currency which is USD is the money. When you buy EUR-USD, in fact you pay USD to buy Euro. No matter in what currency your forex trading account is. You can have a trading account in USD, GBP, CAD or any other currency. When you want to buy EUR-USD, your broker changes your trading account capital into USD and then pays that USD to buy Euro. This is how it works. Any trade in forex market has to be done through USD. US dollar is the main currency and is the axis of all transactions in the forex market. Any currency pair that you buy or sell has to be done through USD. However, all of these process will be done automatically and you just need to click on the buy or sell buttons.

Lets get back to our example, EUR-USD. I told you that when you buy EUR-USD, in fact you pay USD to buy Euro or you buy Euro against USD. In forex market it is possible to sell EUR-USD even before you buy it. How? Let me give you an example. You borrow my car for two weeks. Suddenly you see someone wants to buy the car from you with a good price like $5000 above the real price. You sell my car. But you have to return my car after two weeks, right? When it is time to return my car, you go and buy the same car exactly, but with the real price which is $5000 lower than the price that you sold my car. You return my car while you have made a $5000 profit.

This is what we do when we sell a currency pair before we buy it. You sell EUR-USD high and buy it low. You sell it low and buy it lower.

When you buy a currency pair, you take a “long” position and when you sell a currency pair, you take a “short” position. Long and short are just the terms we use in forex and stock market and they have nothing to do with the length of anything. They are just terms. Of course usually it takes longer for the price to go up and shorter to go down. That’s why when you buy, they say you have a long position because it may take a long time for the price to go up. And when you sell, they say you have a short position because it may take a shorter time for the price to go down.

Anyway! So when we say we go long with EUR-USD it means we buy it and visa versa.

Forex Market: Cross Currency Pairs

As a forex trader, if you check several different currency pairs to find the trade setups, you should be aware of the currency pairs correlation, because of two main reasons:

1- You avoid taking the same position with several correlated currency pairs at the same time and so you do not multiply your risk. Additionally, you avoid taking the positions with the currency pairs that move against each other, at the same time.

2- If you know the currency pairs correlations, it may help you to predict the direction and movement of a currency pair, through the signals that you see on the other correlated currency pairs.

Now I explain how currency pairs correlation helps. Lets start with the 4 major currency pairs: EUR-USD ; GBP-USD ; USD-JPY and USD-CHF.

In both of the first two currency pairs (EUR-USD and GBP-USD), USD works as the money. As you know, the first currency in currency pairs is known as the commodity and the second one is the money. So when you buy EUR-USD, it means you pay USD to buy Euro. In EUR-USD and GBP-USD, the currency that works as the money is the same (USD). The commodity of these pairs are both related to two big European economies. These two currencies are highly connected and related to each other and in 99% of the cases they move on the same direction and form the same buy/sell signals. Just recently, because of the economy crisis, they moved a little differently but their main bias is still the same.

What does it mean? It means if EUR-USD shows a buy signal, GBP-USD should also show a buy signal with minor differences in the strength and shape of the signal. If you analyze the market and you come to this conclusion that you should go short with EUR-USD and at the same time you decided to go long with GBP-USD, it means something is wrong with your analysis and one of your analysis is wrong. So you should not take any position until you see the same signal in both of these pairs. Of course, when these pairs really show two different direction (which rarely happens), it will be a signal to trade EUR-GBP. I will tell you how.

Accordingly, USD-CHF and USD-JPY behave so similar but not as similar as EUR-USD and GBP-USD, because in USD-CHF and USD-JPY, money is different. Swiss Franc and Japanese Yen have some similarities because both of them belong to oil consumer countries but the volume of industrial trades in Japan, makes JPY different.

Generally, when you analyze the four major currency pairs, if you see buy signals in EUR-USD and GBP-USD, you should see sell signals in USD-JPY. If you also see a sell signal in USD-CHF, then your analysis is more reliable. Otherwise, you have to revise and redo your analysis.

EUR-USD, GBP-USD, AUD-USD, NZD-USD, GBP-JPY, EUR-JPY, AUD-JPY and NZD-JPY usually have the same direction. Just their movement pattern sometimes becomes more similar to each other and sometimes less.

What do I prefer?

If I find a sell signal with EUR-USD and GBP-USD and a buy signal with USD-JPY, I prefer to take the short position with one of the EUR-USD or GBP-USD because downward movements are usually stronger. I will not take the short position with EUR-USD or GBP-USD and the long position with USD-JPY at the same time, because if any of these positions goes against me, the other one will do the same. So I don’t double my risk by taking two opposite positions with two currency pairs that move against each other.

How to use the currency pairs correlation to predict the direction of the market?

When I have a signal with a pair, but I need confirmation to take the position, I refer to the correlated currency pairs or cross currency pairs and look for the confirmation. For example I see a MACD Divergence in USD-CAD four hours chart but there is no close support breakout in USD-CAD four hours or one hour chart. I want to take a short position but I just need a confirmation. If I wait for the confirmation, it can become too late and I may miss the chance. I check a correlated currency pair like USD-SGD and if I see a support breakout in it, I take the short position with USD-CAD. Now the question is why I don’t take the short position with USD-SGD and I use its support breakout to go short with USD-CAD? I do it because USD-CAD movements are stronger and more profitable. I use USD-SGD just as an indicator to trade USD-CAD.

It happens that you take a position with a currency pair, but it doesn’t work properly and you don’t know if it was a good decision or not. On the other hand, you don’t see any sharp signal on that currency pair to help you decide if you want to keep the position or close it. In such cases, you can check a correlated currency pair and look for a continuation or reversal signal. It helps you to decide about the position you have.

Sometimes, some correlated currency pairs don’t move in the way that they are supposed to move. For example EUR-USD and USD-JPY go up at the same time, whereas they usually move against each other. It can happen when Euro value goes up and USD value doesn’t have a significant change, but at the same time JPY value goes down, because of some reason. In these cases, you can use the below table to find and trade the currency pair that its movement is intensified by an unusual movement in two other currency pairs. In this example, if EUR-USD and USD-JPY go up at the same time, EUR-JPY will go up much stronger (see the below chart).

Or if EUR-USD goes up and AUD-USD goes down at the same time, EUR-AUD goes up strongly.

Another important example: If EUR-USD goes up and GBP-USD goes down at the same time, EUR-GBP goes up strongly. Maybe this is the most important case that we can trade based on this rule. It happens many times that EUR-USD and GBP-USD move against each other and that is the best time to trade EUR-GBP. Now you know why EUR-GBP doesn’t move strongly most of the time. It is because EUR-USD and GBP-USD move in the same direction most of the time. For example they go up at the same time and so EUR-GBP doesn’t show any significant movement because when both of the currencies of a currency pair go up or down at the same time, that currency pair doesn’t show any strong movement and direction (I hope you know why a currency pair goes up or down. It goes up when the first currency value goes up OR the second currency value goes down. For example EUR-USD goes up, if Euro value goes up or USD value goes down. If this happens at the same time, then EUR-USD goes up much stronger).

The below chart includes almost all of these unusual movements and their results on the third currency pair.

Best Currency Pairs for Forex Trading

The best currency pair to start trading is a currency pair that has a small spread and sharp and strong signals. So EUR-USD is the best. Most brokers charge 2 pips when you buy EUR-USD and recently I have seen some brokers that charge even less than one pip.

GBP-USD is so similar to EUR-USD but it has a higher spread and greater volatility. You can try the GBP-USD only after few months that you have been working with EUR-USD but if you are happy and comfortable with EUR-USD, forget about GBP-USD.

USD-JPY and USD-CAD are completely different from EUR-USD and GBP-USD because they are dependent on two different countries, Japan and Canada with different economy and situation from Europe, GB and USA.

Canada is an oil supplier and the price of oil has a direct impact on the value of Canadian dollar. So the price of oil can work as a leading indicator for USD-CAD. When the price of oil goes up the USD-CAD goes down because the value of Canadian dollar goes up.

On the other hand, Japan is an oil consumer country and so when the price of oil goes up they have to pay more and so they have to increase the price of their product. So there will be less demand for their products and the value of JPY will go down. When the value of JPY goes down, the USD-JPY can go up but in this case, as the value of USD has been going down too, it will be a little harder to use the oil price to predict the direction of USD-JPY.

CAD-JPY is the currency pair which has a stronger relation with the oil price because Canada is an oil supplier and Japan is an oil consumer. So when the oil price goes up CAD-JPY goes down strongly and when visa versa. Of course countries can control the value of their currency through different ways and methods like increasing and decreasing their interest rate. It means a country like Japan doesn’t let its currency value goes down very much because of the oil price.

AUD-USD has a good relation with the gold price. When the gold price goes up the AUD-USD goes up too. So if you follow the gold price and also the economy of USA, you can predict the direction of AUD-USD.

Most Important Forex Trading Tips

Do not trade forex if you have to make money. Emotions have a strong impact on forex trading and if someone has to make money, he will have more emotions than someone who likes to make more money, but doesn’t have to. If someone is desperate to make some money to pay his bills and mortgage, he loses money in forex, because he trades when there is no sharp and confirmed signal. You can become a full time forex trader and you can trade forex for a living later when you learn it properly and completely. At the beginning, you should have another source of income that covers all your expenses, otherwise forex will not have any good result for you.

Do not compete with the other traders. Any trader has a different trading style and strategy and so traders pip and money results are different from each other. While someone doesn’t like to take more than 2% risk in his trades and he is happy with a 5-10% profit every month, another trader may like to take a 20% risk and he likes to double his account every month. It takes a while until a new trader finds his own style and when he does, he should never even ask how much the other traders make. Trading is like walking on a tight rope. You lose your balance and fall down if you try to walk faster than what you can.

Trade the signals not the trades! After having a few successful trades and growing your capital, you may think that you can take a little more risk and also take the signals that don’t look good and strong enough. Then you will lose all you had made in your good trades. Whatever that your previous trades are, winning or losing, it doesn’t matter. You should forget them. You should only focus on the signals that form in front of your eyes. Do not risk more than usual, both in lot size and in signal quality, just because you have been successful in the past few days and you have more money in your account. You can lose all the profits you have made in a few minutes.

Break your rules and you get burned. If you have become a disciplined trader after so many months or years of practicing and learning, you should keep in your mind that if you break any of your trading rules, you will be in trouble and you will lose again. Forex market doesn’t know you. It doesn’t know if you are a new trader or you have been trading for several years. If you make a mistake, you lose. No matter how experienced you are. Here are some of my trading rules that make me lose (or lose more) whenever I break them:

Moving the stop loss: Each position should have a reasonable stop loss. Let your stop loss to be triggered. It is there to take care of your capital. Do not move your stop loss when it is about to be triggered. I lost more whenever I did it.
A tighter or wider stop loss: As I said, each position should have a reasonable stop loss. A tighter or a wider stop loss means bigger or more frequent losing trades. Whenever I broke my stop loss setting rules, I lost more.
I lose whenever I take a position that has no strong and sharp signal. When any of my system rules are not met and I take a position, that position will be a losing position.

In forex trading, over-confidence is more dangerous than having no confidence. Someone who has no confidence, doesn’t do anything. There is an advantage in it. He doesn’t lose any money. But someone who becomes over-confident after a few successful trades, will blow up his account in one trade. A few good trades don’t mean that you are a professional and advanced trader. Like a few bad trades that don’t mean that you are a bad trader. Over-confidence is something that you will experience several times while you are still learning. You will learn to recognize this dangerous emotion after having some losses promoted and motivated by it. Anytime that over-confidence causes you to lose, you lose your confidence and feel more fear. If you don’t give up and keep on practicing, you will gain your confidence again, but you will become over-confident because you forget the problems it made for you the last time. So you lose again. And this cycle may be repeated for several times until you learn to recognize and control your emotions. Of course if you do not totally give up during this up and down. Monitoring your behaviors, emotions and thoughts help you to pass this stage sooner and easier. It is the most important stage in forex trading and most people give up at this stage. Those who come to a balance will become profitable traders. They are not over-confident and so they do not ignore any of their trading rules and they analyze the market properly and precisely to find the best trade setups. At the same time, they have no fear because they are confident enough. This is the balance.

There is nothing more important than experience in forex trading. Sometimes you see a trade setup, but your experience tells you not to enter. This experience can be gained through practicing. There is no magic formula in forex trading that can be given to you and make you a profitable trader overnight. It takes time and needs practice.

Do not take any position just because someone else has the same position. Novice traders are used to exaggerate about their success and hide their failure. Whenever they make a good trade, they talk about it with a lot of excitement, but they are not used to talk about their losing trades. This may make you think that some people are the best traders of the world and so when they say they are long or short, you take the same position just because they have the same position. This will not make any money for you, nor makes you a trader. A professional and profitable trader is humble, because he knows that Forex market breaks the bones of a bold and stubborn trader who knows himself as the best trader of the world. Market is stronger than all of us. Nobody can defeat it.

Do not try so many systems. I takes your whole life and you are still trying. Some people have a researching spirit. There is nothing wrong with it. It is even very good. But when it comes to Forex trading, researching spirit does not let you make money, because it causes you to spend all your time and your life to try and compare different systems and methods. After a while of trying, a rational beginner will come to this conclusion that the secret is not in trading system. The secret is in discipline and controlling of the emotions. So he stops trying, chooses a suitable system and starts making money through it. Whereas other beginners keep on testing, trying and comparing and will finally give up after wasting a lot of time and money.

Keep it simple. A Forex trading system does not have to be complicated to work. In contrast, simple systems have better results.

Take a break every now and then. You do not have to work hard to make money through Forex. In contrast, spending too much time in front of the computer and trying to take all the movements will make your mind and body too tired and then the chain reaction of bad positions will be triggered. You can not force the Forex market to work for you. It will not. As I said earlier, it does not know you and it has no mercy for you. YOU have to take care of yourself and your capital. Forex market does not do it for you.

What is Forex Trading Discipline Mean?

Everybody has a different definition for discipline. Most people think that discipline means seriousness in doing something. This is true but discipline has a wider meaning when it comes to forex trading.

In forex trading, discipline means following your trading system rules exactly and precisely. Over 95% of forex traders lose, not because they do not have a good trading system or they have not learned the techniques. They lose because they fail to follow their trading system rules. They lose because they have no discipline. When you ask them about the techniques, indicators and systems they use, they explain very well, but when you ask them about their performance and results, you will see that they are not profitable yet.

Do you trade without setting a proper stop loss?
Do you make your stop loss wider when it is about to be triggered by the market?
Do you trade everyday, even when there is no strong trade setup?
Do you insist to take a position whenever you sit at the computer?
Do you try a different trading strategy, time frame, indicator and… everyday?
Do you take a position when you hear that someone else has the same position or some people say that a currency goes up/down against another currency?
Do you close your positions before they hit the stop loss or target?
Do you take too much risk?
Do you overtrade?
Do you overanalyze?
Do you take a position because you need to make money?

If the answer of any of the above questions is positive, it means lack of discipline is your problem and you will keep on losing as long as you do not change yourself and you don’t trade like a disciplined trader. And finally you will give up and you will lose the chance of making money through forex trading for the rest of your life.

Who is a disciplined trader?

A disciplined trader…

Has a well-developed and at the same time simple and practical system.
Trades only when there is a strong and perfect trade setup. He doesn’t mind not to trade for several days. He is like a hunter. He doesn’t waste his bullets when he knows that the prey is not close enough.
Doesn’t look for new trading systems everyday, because he has come to this conclusion long time ago that his own trading system is the best for him and he has the best result with it. He also knows that there is no Holly Grail system and “grass is not greener on the other side”.
Sets a proper stop loss for each of his positions and never makes his stop loss wider when it is about to be triggered by the market.
Never lets a profitable and nice trade to be converted to a losing position because of maximizing his profit and breaking the others’ records. He knows where he will be out as soon as he takes a position.
Never tries to make a huge profit by taking too much risk. He is always loyal to his Risk/Reward and money management rules.
Never gets upset when the market hits his “reasonable stop loss”.
Never regrets when he misses a strong movement just because the trade setup that was formed before the movement, did not look strong and perfect enough.
Doesn’t get overconfident when he achieves several winning trades or even several winning days, weeks, months and years.
Doesn’t lose his confidence when he has a losing position, day or even week or month.
Doesn’t take a position just because the others have the same position or he has read or heard from somewhere that a currency will go up/down against another currency.
Doesn’t take any position based on his thoughts. He trades based on the signals that he sees on the charts.
Doesn’t overanalyze.
Doesn’t overtrade.
Doesn’t see beyond obvious. He just sees the signal which is in front of his eyes.
Is not greedy.
Has no fear.
Doesn’t exaggerate about his success.
Is humble and helps the novice traders to find the right way easier. He never misleads the other traders, specially the novice ones. He is aware of “Karma”.

Are you such a person and trader or you are trying to make money through forex trading while you have not reached to such a level of confidence, discipline and personality?

Day Trading Versus Swing Trading

If you are a novice trader, this should be one of your important questions that if you should be a day trader or a swing trader. It is a little hard to decide at the beginning and sometimes even after two years of practicing you still don’t know if you like to be an intraday trader or a swing trader.

What is day trading?

Day trading or intraday trading means taking positions during the day, closing them by the end of the day and not leaving any open position before going to bed. It means whether you make or lose money, your positions are all closed before you go to bed or at least you move your stop loss to where the profit you have made is protected and you just want to make some extra profit, if possible.

For day trading, you mainly have to use small time frames like 30min and smaller and it is not possible to trade intradaily using big time frames like daily or even 4hrs.

What are the day trading advantages?

The first and most important advantage of intraday trading which is also the most important reason of choosing this trading method by many of the new traders is that in intraday trading you do not leave any of your positions open at the end of the day and when you want to turn off your computer.

Most novice traders can not have any open position when they go to bed. They cannot tolerate the stress. One reason is that they take too much risk, or they do not set a proper stop loss, or they trade with the money that they can not afford to lose. So if the market goes against them while they are asleep, they lose a lot and that is why an open position ruins they comfortable sleep. And of course the other reason is that they are not experienced enough and forex trading is still stressful for them.

The other thing is that most novice traders think that if they work with the smaller times frames, they will have more trading opportunities and they can make more money. They do not want to miss any of the market ups and downs and so they work with the small time frames.

There is nothing wrong with intraday trading if you do not take too much risk, set a proper stop loss for your positions and trade with the money that you can afford to lose. But if you make these terrible mistakes, even the smaller time frames that provide more trading opportunities cannot help you to make money and you lose all the money you have in your account. Money management is the most important aspect of any trading method that you can have. If you do not follow the money management rules, you can not survive in forex jungle.

Swing Trading

In swing trading, traders use the bigger times frames like 4hrs, daily and even weekly and monthly. Naturally sometimes you will have to leave your positions open for several days or even weeks. Most of the experienced traders prefer swing trading. First because they have already tried all other kinds of trading methods and they have come to this conclusion that they are more comfortable with the bigger time frames and trading with these times frames makes enough profit for them. They have become able to control their greed and so they don’t want to take all the market ups and downs. They believe that small times frames may give them some more trading opportunities, but more trading opportunities doesn’t necessarily mean more money. Sometimes it means more losses.

On the other hand, they do not like to sit at the computer the whole day. They have learned that it doesn’t make more money for them, or even if it does, they are happy with less profit that comes through several hours of less working and struggling.

What about you?

If you are an experienced trader, you have already chosen the way that you are comfortable with. But if you are a novice trader, you still need some time to make your decision. You have to go through some stages. You have to become a little more experienced and try different methods and time frames and see how they work. You also need to learn and follow the money management rules. You need to learn to control your greed and take a proper risk in your trades. Then you can decide if you like to be a day trader or a swing trader.

Become a Successful Forex Trader

People often misunderstand what it actually means to be successful. According to an average guy, a successful trader is the one with a lot of money who can lead a dream lifestyle without having to look at the price tag! But that isn’t what it means to be a successful forex trader. A successful trader on the contrary is the one who has built enough wealth to create enough cash-flow every month, to cover his or her expenses for the rest of his life. So basically a successful trader is the one who is on his way to create assets that he can survive on whether he works or does not. Money will be flowing in perpetually.

Creating assets should be the main objective of a forex trader. A good trader knows how to align all his assets in a way that they will provide him with a steady monthly income. A successful trader or an aspiring individual who wants to make forex trading his long term career will not look at a paycheck because he will be working towards creating a steady income for himself. So if your assets make more than enough money to cover your expenses, consider yourself a successful trader. Building wealth and investing it wisely will last forever. Short term gains won’t.

A smart and successful forex trader will make his money work for him. He will probably invest into bonds, stocks, businesses, gold, or real estate, so that it’ll make more money in future. Once a trader learns this little secret he will never need to really worry about having a job, if things do not work out because he will never need one if he is focused and clear about his goals.

Majority of forex trading individuals are the people who became successful and rich and weren’t born with a silver spoon in their mouth. It took them hard work and dedication to become successful.

When we are in middle and high school, we’re taught that we can make money by getting a good job. Since this is so deeply set in our minds and we are conditioned that way and as a result majority of us get addicted to the idea of a job or an hourly wage. We have not programmed out mind for anything other than that. We think of hourly wage, monthly paychecks, yearly bonus, jumping jobs, corporate career etc and do not contemplate doing something unique that will help us build more wealth and will make us many times more financially and emotionally secure as compared to keeping and going on with a drab job.

I am hoping through this article I am making some sense to the readers that will make it easy for them to tell when an individual is successful and rich or not. If a person’s assets produce enough money every month to cover his or her expenses, then that person is successful as a forex trader.

Ways in Which Individual Investors Can Benefit From Forex Trading:

There is little doubt that all these years’ only large multinational and individual banks and major financial institutions had been dominating FX trading but the changing times have given way for a paradigm shift in the nature and type of investing. Forex trading has become accessible and has been on an upswing amongst fellows from all walks of life so much so that these days’ start-up firms are competing directly with financial institutions to serve investors in the new technologically driven economy. And in this entire hullabaloo the real winner is the customer. Internet has empowered the individual investor to take control of his own investment strategy in forex trading.

Now as we already know that like in the past, foreign exchange trading is no more limited to large banks and institutional traders. With recent advancements in technology even small traders are taking advantage of the benefits of forex trading with the help of online trading platforms. Forex trading is on 24 hours a day and 5 ½ days a week. Online trading has revolutionized the currency markets by making it accessible to the small and medium sized investor. Investor is jumping at the rooftop all excited. It’s an opportunity for him to build wealth if he learns to make use of it with his mind and eyes open.

The forex trading is perhaps the largest financial market in the world. Forex trading is about simultaneous buying of one currency and selling of another. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example EUR/USD or USD/JPY or USD/INR etc.

In the new millennium, the forex trading has become accessible for an individual investor or small group of investors. Forex traders have been seen to reap many benefits from forex trading as compared to stock market, e-mini futures and such other trading.

Today mostly traders are choosing forex trading in comparison to stock trading because while there are around 4,500 or may be more stocks listed on the New York Stock exchange, and 3,500 are listed on the NASDAQ. In spot forex trading, you have 4 major markets, 24 hours a day 5.5 days a week. You are more likely to do well in terms of finding good trades in forex as currency pairs are limited and fixed. Forex trading is easy and hassle free as compared to stock/future market.

Not only is it an accessible, easy and less capital-intensive business opportunity, but it is much more cost efficient too to invest in the forex market, in terms of both commissions and transaction fees as compared to Stock or other forms of trading. Commissions for stock trades as generally observed range from $7.95-$29.95 per trade with on-line brokers to over $100 per trade with traditional brokers. When you compare these notes with stock trading the stock commissions are related to the level of service the broker offers to its members. Traditional brokers offer full access to research, analyst stock recommendations, and so on. Online Forex brokers on the other hand charge significantly lower commission and transaction fees.

So if you want to build wealth do it through forex trading. I am not saying it is easy. I am saying it is a possibility if done with the right attitude.

Losing in Forex? Study Your Mistakes

Forex traders lose money in currency market for many reasons. They may not have the right methodology to trade with. They may not have clear understanding of how the market works, key indicators, key numbers, and ideal times to trade. Risking too much per trade and not being mentally prepared for the ball game.

Whether it’s the result of unexpected market events or simply a poor trade idea, losing money invariably leaves one with a miserable feeling. Worst still if it is happening over and over again- a trader also feels loss of confidence and right attitude.

Some of the most common consequences of losing in Forex could be that the trader gets into frenzy and makes haphazard trades without a pre-plan and as a result losing even more, or the second outcome could be that he may be so scared of incurring any more losses that he starts to avoid trading.

Real traders are those who don’t lose mind and fret over losing trades for too long and take the message in the right frame of mind. They normally resort to studying the mistakes they made along with the prevailing market conditions to the time the losses occurred.

The traders try and take a micro view of the factors that resulted in price movements. These in-depth analyses done inside out will help these people to develop better and more realistic trade strategy for the next time similar situation crops up. A trader should make it his habit to review his trades whether they are winning or losing deals. This ongoing process of studying his trades and mistakes will help him to improve his trading strategy and system. This will help him gain perspective that works. He will be able to bring down the number of losing trades over a period of time as he will be learning new market patterns and adapting to them.

The process of learning can be broken up into three phases: Analyzing the trade itself, reviewing, and innovation. Let us first look at the act of analyzing the trade. Analyzing your trade irrespective of the final outcome, whether the trade resulted in loss or profit is the first step towards building a career as a successful and professional forex trader.

Next comes reviewing or feedback. A trader should remember at all times that he is not in a position to watch himself as he trades. In such a situation it becomes important that he takes a third-person’s point of view, keep a note of every aspect of his trade from his thinking pattern, to market movements, and based on the facts he can analyze if what he did was right or wrong.

After you have kept a record of what and how you’ve traded, the next step for the trader is to incorporate changes, bring amendments, and rectify the mistakes wherever required. If during the second phase of reviewing some lacunas were found they have to be taken care of at this stage. It could vary and cover any aspect right from changing currency pairs to market timings to changing the trading system or spending some more time on demo account. By taking this exercise up a trader can compete and develop his skills much, much faster.

The impact of the recording, reviewing and making adjustments and re-aligning the procedure turns the trading deal into an experience you can learn something from which indirectly speeds up the learning process. And come to think of it, it is not difficult at all. It’s simply a matter of forming a habit and sticking to it.

A wise trader will also try and steer clear of the psychological pitfalls. He will make sure that greed to make a quick buck, or extreme fear of losing money in trade will not get better of his sensibilities and market realities. A Forex trader will make sure he does not overtrade and his money management skills are in place.

Being in a hurry or indiscipline is another major pitfall for a trader. When a trader is on a losing spree one after the other he tends to throw the trading plan out of the window and soon thus abandons some perfectly good trading methods. A trader should understand that every trading method has its time and situation frame within which it succeeds. At other times it could perform below average. A sensible trader will realize that no matter how good a trading base be, it cannot perform, at peak efficiency under all types of market conditions. If you want to become a successful trader in the long run you will have to inculcate the discipline to stick it out through the hard times without losing the focus.

To become a successful trader, you have to stay composed, be rational and emotionally detached. These traits are generally found on new traders. Experienced traders are far cooler and composed and have learnt over time that you’ll win some and you’ll lose some. An experienced trader trades with enough money to allow for a buffer when losing deals come. You should be ready to handle the losses, because they are inevitable and are bound to be there. A trader learns to control his emotions after wins. Learn to take winning in your stride. Automatically you will learn to handle losing deals too.

So that is that. Lose money. Do not lose the lesson. Do not let learning stop.

Forex Course or Mentoring Program Cover?

It’s indeed a great thought - if you are planning to take a course or join a group of Forex Trading Professionals with an objective of learning Forex Trading.A good trading course or your Forex Coach/ mentor will help an individual to acquire trading & analytical skills, and knowledge to become a successful trader in the foreign exchange market. In ONE SENTENCE, Forex Trading is about making pips and keeping them over and over.

A good mentoring program will teach you to identify trading opportunities, predict the future, time the market with smart guessing skills, and to take profits and close a trade.

Any course you take or mentoring program you join will take you through the basics of Forex trading to begin with. Here the course should ideally cover trading aspects such as what is Forex, What is traded on the Forex, which currency pairs are traded in the market and when, the currency symbols, what is spot market, OTC Forex Market, Reasons to trade Forex, Risks of Forex Trading, Tools to trade Forex and cost involved in terms of initial capital investment, course fee, and so on.

Next lesson moves beyond basics. It throws light of TYPES OF TRADING & ANALYSIS based on which trading is done. That is - Technical trading & Fundamental Trading. A good course ensures that both these aspects are discussed in-depth along with a comparison chart to make the students understand which type of analyses is better under which market conditions or trader’s personalities. An experienced mentor will teach you to combine both instead of relying on just one. A trader here learns the theory to balance the use of both of them; because it is only then that he/she can get the most out of his/her trading.

A good Forex mentoring program will also cover various candlestick patterns along with reversal patterns. Support and resistance is one of the most widely used concepts in trading. A good trading course should also include Support and Resistance Levels, Trend Lines and Channels. Plotting Support and Resistance, how to know if support or resistance is broken.

Fibonacci Ratios are next in line. The Ratio is named behind the famous Italian mathematician Leonard Fibonacci who discovered a series of numbers that created ratios describing the natural proportions of things in the universe. Fibonacci Ratios are highly used elements in trading and there are many different studies of Fibonacci with different names. However a standard course should cover the main two, retracement and extension.

The Forex trading course should also cover various moving averages like Simple Moving Average and Exponential Moving Average and their comparison which helps a trader to get a deeper insight into it. Moving average is basically a way to smooth out price action. A good trading course will teach a trader to use moving averages by plotting different types on a chart to ensure that you can see both long term movement and short term movement. Then come some common chart indicators like Bollinger Bands, Bounce, and Squeeze. A quality course or Forex mentoring program will also include MACD, Stochastic, Parabolic SAR, Relative Strength Index, etc.

Once trader finishes learning or familiarizes himself with various chart patterns the next phrase of trading course begins. The previous steps covered a lot of tools that help traders to analyze charts and identify trends. The first lesson in new phrase covers Oscillators and Momentum Indicators which are about streamlining the use of these charts. Traders will learn about Leading and Lagging Indicators. Oscillators are leading indicators.

Momentum indicators are lagging indicators. Forex mentor will tell you how while the two can be supportive of each other, they’re more likely to conflict with each other. Practical tips and insights like these will help a trader to see things from a different perspective.

Then comes the main Chart Patterns and Pivot Points. This aspect of course will teach a trader about basic chart patterns and formations. When correctly identified, chart patterns often lead to a huge breakout. Understanding and predicting chart formations will help a trader to spot conditions where the market is ready to break out.

Then there is the pivot point’s lesson that helps the trader to identify support and resistance levels. Pivot points are especially helpful for short-term traders who aim to earn from small price movements.

The advance Forex trading course will cover topics like Time Frames, including multiple time frames, Elliot Wave Theory, Creating your own trading system, Market hours, Money Management, Making a Trading Plan etc.

Then finally the course that covers basic, elementary and advanced level Forex trading course should also cover issues like psychological barriers and personalities disorders, market news, market sentiments, myths, and so on.

Now the question is if you join a forex trading course that covers all the above topics, will you become a consistently profitable trader?

The answer is NO.

When you want to start learning forex trading and you want to trade forex and make money, you should know about all the above topics, like chart patterns, candlesticks, moving averages, Fibonacci and… but it doesn’t guarantee that you become a trader. To become a profitable trader there are a few important things that you need to have and unfortunately in most of the forex courses, even the best and most expensive ones, they do not talk about these important things. The reason is that the instructors are not traders. They know a lot theoretically, but they are not traders.

Let me give you an example. When you want to learn to drive, you should read and learn about the car’s different parts, the way it moves and stops, the driving rules and signs and… but knowing about all these things can not make you a driver. To become a driver, you should practice driving while a professional driver who is also a good instructor sits next to you and tells you what to do under different conditions. He/she should teach you how to control your emotions and be patient and drive wisely and confidently. It is not only about the knowledge. There are a lot of things that can not be learned from the books.

To become a good forex traders, you should have the knowledge, but you should have a trading system (strategy) that tells you when/where to buy and sell exactly. Then you should have the patience to wait for your trading system to show you a trading opportunity. You should stick to your strategy rules and trade only when your strategy shows you a sharp and clear entry point. This is called discipline.

I have not made the above story to invite you to join any forex trading program finally. The things that I explained are the facts that you should know. If you go and learn forex through joining different courses, you will learn a lot, but you will always have something missing: You can not trade profitably.

In most cases you can not find out where the problem is. You know a lot but you still lose. The reason is that you have not learned to be patient and disciplined.

Important Success Rules in Forex

Knowledge, experience and proper mental and psychological situation are three important things that all traders should have. As a trader, if your losses are still more than you gains, you should analyze yourself and see where the problem is placed. You should know if you have enough knowledge and experience or not. If the answer is yes, then your problem is in controlling your emotions. You can have the knowledge but you do not trade based on it. You trade based on your emotions.

Some people spend several years in learning and practicing. They read as much as they can and they test a new trading system everyday. It is good to learn more, but to become a good forex trader, you do not have to spend so much time on learning. All you should know is the general things about the forex market, currency pairs, the trading platform (like MetaTrader), technical analysis and chart patterns, candlesticks, some important and useful indicators like Bollinger Bands, MACD and RSI and few more things (see this page). It will not take you more than 3 months to know about all these things.

Then you should choose a trading system based on what you have learned. You should stick to your trading system and do not try a new one everyday or every week. You should keep on demo trading with your trading system until you find yourself experienced enough with it. You should become able to distinguish the strong and sharp signals from the false signals. You should be able to see the exact entry points and the proper place for your stop loss and target. And all these things means that you should be able to trade profitably for a few months in a row. That can be considered as the end of your demo trading stage.

Then you should open a live account and start trading with it. But keep in your mind that as soon as you start trading with you hard earned money, you will experience some new kind of emotions. Although they are still categorized as fear and greed, they are stronger and harder to control. Therefore, you should start trading with a small amount of money, until you see yourself in a level that your live and demo trading has no difference for you, because you merely see the signals. This is a great progress. It means emotions have no role in your trading and they are already controlled. Now you can trade with a larger amount of money.

If you have enough knowledge and you have been practicing for a long time but you still lose, the problem should be in your emotions. You may not know what your emotions are and how they can be controlled. You click on buy/sell buttons but then you will see that you have made another mistake. Your mind makes you see a signal while there is no signal at all or there is a signal but it is not strong and reliable enough. You may have no patience to wait for a trade setup. This is another big problem that many traders have.

And this is the most important rule for everybody: You should wait for the trade setups to form. You should not form the trade setups in your mind.

Different Forex Strategy

Forex trading systems are nothing more than a set of rules that traders use to arrive at their entry & exit points. Developing and using trading systems can help traders to earn consistent returns and limiting risk at the same time. Let us look at different types of trading styles in this post.

Automated Trading: Automated trading systems are created by converting trading system’s rules into code that a computer can understand. The computer then runs those rules through trader’s preferred trading software, which looks for trades that adhere to the rules set into the system. Finally, the trades are automatically placed with the help of Forex broker.

Carry Trading: Carry trading is one of the simplest strategies for currency trading where a trader buys a high interest currency against a low interest currency. For each day that he holds that trade, the broker pays the trader the interest difference between the two currencies, for as long as he happens to trade in the interest positive direction.

Day Trading: Day trading is about buying and selling currencies over a very short period of time, typically one day.

Swing Trading: A style of trading that involves earning profit from short to medium term swings in trend. Swing Trades can last from few hours to several days, weeks or even months.

Discretionary Trading: Discretionary trading relies on a person’s intuition and judgment to enter and exit trades. Discretionary trading uses subjective experiences and is the opposite of the mechanical trader.

Fundamental Trading: Fundamental trading is an effective technique that helps a trader to decide when to enter or exit a trade based on market news because financial news are often the trend-setters in the short term.

Technical Trading: It is a style of trading which is about analyzing of the price chart for technical patterns and signals.

Scalping: Scalping trading relies on more frequent and short-term trades than any other Forex trading strategy. Scalping is the single most vivid piece of terminology in the Forex world. Most experienced traders do not recommend it, because usually you have to have a wide stop loss and tight target and one bad trade can eat the profit you have made through several good trades.

Range Trading: Range trading is simple with defined risk reward parameters. It focuses on price movements and congestion points on the chart, and allows traders to ignore news-flow and instead concentrate on well defined areas of support and resistance.

Trend trading: Trend traders are those who wait for the market to form a trend. Usually market trends in 30% of the cases and it ranges most of the time, but the good news is while market is ranging on a big time frame like daily, it trends on the smaller time frames like one hour or 15min. So trend traders can always find a trend to trade. Of course most of them prefer to wait for the bigger time frames to form a trend because either they can not trust the smaller time frames or they don’t have enough time to sit and trade using the smaller time frames. By the way, trend trading is one of the most recommended methods. It is highly recommended that traders follow the trends and do not go against it. Those who are used to ride the trends, usually make reasonable profit, whereas those who always wait for reversal signals to go against the trends, usually suffer from big losses.

Continuation and Reversal Trading: This method is also related to trend trading. If you are a continuation trader, you wait for the market to form a trend. Then it forms a reversal signal and then it starts following the trend direction again. It is the time that you should enter. Reversal traders however wait for the reversal signals, usually because they like to hit the bottom and top. This goes back to the uncontrolled greed. Just please think about the below sentence for few minutes and try to understand what it means. It teaches you more than a $4000 training course by a trading guru. It is a very famous saying among traders, but usually a very low percentage of the traders know what it means exactly and how they can trade based on it:

Trading is not about buying low and selling high. It is about buying high and selling higher!

What does it mean? One meaning is that you should wait for the market to form a trend. To do that, market should start moving toward a special direction strongly. Then it starts following the same direction again, after it has moved against it for a limited time. In general, it means you should wait for the market to start a trend. Then you should wait for a continuation signal to follow the trend. To do that, the market should go up for a while (in case of forming an uptrend) and then goes down a little and then it starts following the upward direction. So you buy when that market has started going up long time ago. So you buy high and you will sell higher :)

It makes a lot of sense, doesn't it?

Now the question is how you can distinguish the beginning of a profitable trend. It is a million dollar question. We learn to find and locate the reversal signals but they mainly learn to follow the trends using the continuation signals.

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