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Essential Forex Money Strategy For Beginners

There is the stock market, and there is the foreign exchange market. The latter is considered the more significant opportunity if you know how it works and if you have the money to invest.

There are many reasons people are flocking to learn the ins and outs of forex trading.

But why get into forex trading anyway? Are there any truths behind the big profit boon we all keep hearing about? These points are the prime reasons why the forex market is so huge right now:

Boundless Activity

The foreign exchange market is open 24 hours on weekdays. Compared to other markets that operate at specific hours and days, the forex market is a buzz of activity and opportunities in the week. Investors can react to specific changes and trends that happen within the week, anytime.

Freedom

This also means freedom from regular office hours; traders can operate whatever time they wish. Naturally, this attracts people from different lifestyles, locales, and classes. If you have a laptop, then you can trade no matter where you are.

Less Cost

Add the purely liquid nature of the market and the electronic way of transacting in it; then, you would have a feature that will attract people: the lesser trading costs. We can do away with the traditional costs that add up to your bill and concentrate on only the spreads. The spreads here are usually smaller than the spreads in other markets, which would mean better profits.

Leverage

Unlike other markets where leverages are small, forex trading allows for bigger leverages, giving you the chance to trade up to a hundred times your investment. Brokers have features where they can give you a lot of leverage depending on the account. Of course, this also means a more considerable risk of losing money. Risk management protects you from this.

Stable Price

Since your trade is made immediately, chances are the prices you saw are what you will get—compared to other markets, where your transaction often ends in a span of a day or two, thus giving a chance for the price to slip and change. The stability and speed attract a lot of traders in this market. Your assets are not tied up for long periods, giving you more control.

Transparency

Being electronic in transactions and having liquid, movable assets is easier to analyze and manage. Your platform and laptop can access everything. You can execute your deals as per your viewpoint and strategy. This gives you a better feel of the market cycle, making your predictions more accurate each time you trade.

Stable Profit Chances

Since your trading involves two currencies and not other markets and trends, one always has the opportunity for profit. No bulldog is watching of rising or falling of markets, goods, and industries. Whether the market is bullish or bearish does not need to worry you. What matters is that you pick the correct currency to trade.

Forex trading is considered the perfect competition for logical reasons. Everybody is presented with an equal playing field. Even if the currency is falling, it just means that there is currency rising somewhere, and the opportunity for profit exists.

An unlimited earning potential, freedom, and even opportunity makes the foreign exchange market an exciting opportunity for anyone

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Aside from signals, you can use another equally valid instrument in forex trading. Options can mean a world of difference when used wisely.

What is an option? Essentially, an alternative is an agreement or contract that gives the power to trade currency at a pre-determined specific price. It is called such because this power is optional- the holder of the contract is not obligated to use it.

In the forex market, there are two kinds of options:

  • 1. Call Options
    Call options give the power to buy currency at a specific price. It increases in value when the underlying stock goes up. In a nutshell, you need to buy call options on a store when you predict its price is about to go up.
  • 2. Put Options
    On the other hand, put options are the power to sell the currency to someone else at a pre-determined price. You buy Put options if, in your prediction, the stock of that currency is about to go down.

Here is the point: you buy or sell the stock to make a profit by buying the options and then selling them, in turn, those options to someone else for a profit.

At the end of the contract, the value of those options will be what is indicated in that contract. Other than that, anytime the value of that option is the value in the current market, where the holder has deemed that he would make a profit. He has foreseen that his call options would go up and his put options will go down.

It may seem not very easy at first, but it will all make sense once you get the principle. Remember that call options go up and put options go down.

Now add the concept of leveraging to the idea of options, and the possibilities of profit would be staggering. Leveraging is the chance to borrow your broker’s assets to trade for currency. So in effect, if you can buy put options at the right time and sell them at the right time, your profits would be more incredible.

Companies also use options to lower the risk in forex trades. Think of it; you can buy without being bound by the rules of the current fluctuation in the market. It just adds a new dimension to forex trading.

Whether the underlying stock moves up or down, there is a possibility for profit. Add to that the power of leverage, and then we can make more profit. This only works if we can correctly call the movements of the currency stocks in mind.

And this is only the tip of the iceberg. The idea gets more complicated as we compute the intrinsic values of the stocks and how companies use options to protect themselves from risks.

The basic principle remains the same: by trading options instead of stock, bigger returns are likely. On the other side, leveraging can also put you at enormous risk.

Therefore you have to have a sound forex trading strategy first, and you are confident enough to call the movement of the stock values. Once you are ready, then the possibilities of huge profits will all open for you. Learn more about options and forex trading flow; they will be your prime weapons to attain market success.

Textbook Mistakes in Forex Trading

Novice and students of forex trading often overlook the obvious: many before them have made fatal mistakes. Making the same wrong decisions all over again makes little sense.

What a serious forex trader should do is to learn from them and up their game.

Relearning these assumptions and wrong steps will increase one’s chances of succeeding in the business. If you are inexperienced, then the experience of others can only enrich you. Always remember not to make these mistakes:

Wrong timing of Stops
While stops are certainly essential in forex trading, the wrong timing can topple your whole strategy. Sure, you might be thinking of putting a cork in your money leak, but the key to doing that is the right timing: the trade should still be leaning in your favor. Proper money management should be at play here. Risk should be at the minimum before placing a business. Calculate and research your options.

Underestimating the risks of leverages
Okay, you might be thinking of instant profit if you use a 300:1 leverage on trade. However, are you sure profit will come in? Many people think of leverages as free poker chips where the risks are higher. It is all about making sure you have a good solid hand. Even then, experienced traders are always careful to risk 2-3% of their investment balance on a trade. Assess your risks and gains, do not be dazzled with the money and the excitement.

Relying on signals and indicators too much
It is as if you are just a sheep following a trend. Signals and indicators are just that: assistants and cues that help you decide. Remember that your strategy and assets are unique, so technical indicators do not always apply. You still need to work. There is no magical formula or machine that can do the work for you.

Day trading
Some people might think that day trading holds no or fewer risks, which may be true to some. However, there is a reason long-term trading still holds: it gives you more time to wait out a position that will be in your favor, yielding more profits. Day trading can work, but only to a select few.

Getting sucked in by “miracle” software
There are dozens of so-called powerful platforms and software that can beat the system and reap huge profits. Some of them can help, but a lot of them are duds. The key thing to remember is that there is no sole software out there that is foolproof. It’s okay to get indicators and advice from a few, but it all rests in your insight. Before putting your money where your program’s mouth is, you better test it thoroughly.

The same thing goes for systems and strategy on paper. Even if you have back-tested it, would the conditions you have used to test that be the same conditions that will happen soon?

Getting overwhelmed with emotions
Forex trading requires objectivity, cool thinking, and the ability to make sound decisions. Be too afraid to risk, and you will not profit at all. Be too reckless, and you will lose your shirt in no time. Here is a smart thing to do: read up on forex trading psychology. Watch yourself and do not work obsessively. Have a life.

There is a reason forex trading is so popular, yet only a select few have built their careers over it. Many beginners have failed, but where they have fallen, pick up and do better.

So You Made a Mistake in Trading

So you have taken a loss. Okay, let us say you have taken an astounding loss. What now? It is not the end of the world. Now comes the part where you rise above the colossal mistake you have made in forex trading.

Owning up to it.

Know you have made a mistake, and it is a fact. Stop blaming anything or anyone else. Owning up to a mistake is the start. The sooner that you realize that mistakes can be made and will be made, then the sooner you will get back into the game.

Learn from it.

Now, what went wrong? Got it? Good. Every mistake is a learning experience. Even if the reason you realized is your own arrogance, greed, or some flaw in your calculations or in your strategy, there is something to learn.

At least you know what not to do next time. The forex market is not as unforgiving as you might think. It is a place of chance and opportunity.

Try a new path.

Now you know the flaw in your strategy, reassess if you would change that part alone or totally try a new path. Failure gives us the chance to look at our plan from afar, to give us a bigger picture.

If the problem seems to be your fear of losing or a system that does not fit you, you can easily see a better and new approach once you open your mind to them.

Assess the effects of the mistake.

What are the changes from your previous situation? You may find that you are not that worse off after all. You might be overacting a bit about the situation. However, if the mistake really has far-reaching effects, then better to list them.

This way, you can assess which effects can be remedied and which you can do nothing about. For example, you may have lost some investment, but if you can see a chance of recovering it, you will discover if it is feasible or not by listing the pros and cons.

Systematize more.

Perhaps you lacked discipline before. Then now is the best chance to wake up and make a solid system where you will base all your decisions. Learn the tell-tale signs of the errors you have made so you can avoid them. Not only will a systematic approach make you more confident in making trades, but it also lessens the work you normally do.

Rise up.

I know it is easier to say, but the really best thing to do is be stubborn and get back in the game. They do not call forex trading the perfect marketplace for nothing.

If there is currency dropping somewhere, then there must be a rise somewhere too. There is always a chance for profit. Think that if your tread the balance of taking the right risks and being conservative at the right time, then success is not too far.

As a last thought, think about the fact that you are not alone. Somebody else somewhere has made a mistake before you. In fact, those who have tripped are probably the ones enjoying success now.

They have learned their lessons from failure. They have shrugged off the stigma of a loss based on just one fatal mistake. Forex trading is difficult and challenging, yes, but you are always welcome to try again and again.

Seven Factors for a Perfect Fit Forex Broker

Forex brokers are a dime a dozen. What really sets them apart from one another is the services and information unique to each one. How to distinguish a good one from a bad company? What are the major factors that come into play?

What you should consider in choosing one for you all depends on your trading strategy and several factors.

These seven points will help you narrow down that perfect fit of a broker that will help in your fare in foreign exchange trading:

  • 1. Types of Account. Many forex brokers offer different accounts depending on the amount of capital you will put in. This is important to know, especially if you are a novice or a conservative trader. What you need to do here is to research what kinds of accounts your target forex brokers have and what options each account will bring you.

  • 2. Demo Accounts. Some brokers offer demo accounts or accounts where you may trade by trial so that losses and gains will not reflect in your investment. This is useful for trading beginners so that they can get used to the conditions of the trade.

  • 3. Leverage. In a nutshell, leverage financing is the opportunity to borrow that broker’s money to make a profit if. Your small investment may multiply into bigger gains, but there is also, of course, the risk of losing money. Different broker firms have different leveraging practices, so information on what they could offer would be useful for you.

  • 4. Software and Platform. The more elite brokers offer up the more sophisticated technology to their clients. The platforms where you monitor your numbers, get love quotes and compare charts are essential in modern-day trading. Know whether the broker you are eyeing can deliver the same features and more. Most traders consider these useful platforms essential in the business.

  • 5. Spread. The spread varies from account types and brokers. A lower spread instinctively means a higher profit for the investor. This is where your profit would come from, so it is logical to research what types of spread, whether fixed or variable, are featured by the broker.

  • 6. Fees. Fees like rollover fees for held positions are pretty much standard for most forex brokers. There are also many fees that you do not know about. The good news is that some brokers cancel these fees away on special accounts if requested.
  • 7. Support. When there is a feature in the software you cannot access or a flaw in the platform you must fix, a forex broker’s technical support may just win your loyalty as a client. Assistance in whatever you need, whether it is software, hardware, or even sound advice, is a prime asset of a good broker company. It is what keeps the clients in.

Of course, there are lots of other minor considerations and features that distinguish one forex broker from the next. These seven points will give you a basis, while your trading strategy and specific needs will dictate the rest.

Research and scrutiny will point you to the right decision of who gets to handle your investment and gets your loyalty in the long run. Forex trading is a working partnership with your forex broker, and a long-lasting relationship can only benefit both sides.

MM and ECN: Making A Killing with the Right Forex Broker

If you have already figured out your forex trading strategy by now, you are not in the clear yet. Now comes the part where you get to choose the type of brokerage firm that will fit in seamlessly with your plan.

A forex broker is the one that will monitor the markets for you and acts up as your partner in setting up your orders.

There are two major kinds of forex brokerage firms. Knowing their differences is important on your way to dominating the market. Not understanding the advantages of each can set you back a lot of time and/or money.

MM: Market Makers
What is important to understand about Market Makers is the fact that they are the ones who set the asking price and the bid price. As your trading partner in buying or selling, you grant them authority in handling your money.

An MM institution acts as an exclusive liquidity provider, giving services that are otherwise not found on any other brokerage set-ups. In simple terms, they sell for you as well as buy for you. Think of them as a place where they do all the work for you.

Understanding how MM makes a profit is simple. When you finally decided to buy, you buy from them. They will go to other brokers and buy at slightly better rates to sell to you.

The difference in rates is their profit. Think of it as the exchange from the work they have done you would have otherwise done yourself.

The advantages of MM:

  • 1. They have set spreads, freeing you from the anxiety of the fluctuations in the market.
  • 2. Since they work for you as a partner, your orders are assured.
  • 3. They are usually user-friendly, easy to access and understand. Software and platforms are easy to get.

ECN: Electronic Communication Networks
Electronic Communication Networks place your order in a bid and list all the asking prices for it. The asking prices come from many market participants if their sell order matches your order.

If there is no match, then your order will not push through. ECNs are not obliged to fill your orders; rather, it is up to you if you will agree on the other ways’ bid/price.

The advantages of ECN:

  • 1. Prices are more aggressive, so scalping is ideal here.
  • 2. You can also take the role of an MM and mediate between trades, making a profit for yourself in the differences in rates.
  • 3. Because there are many sources, bid/ask prices are better and more diverse than MM prices.

Choosing which one to put your focus on depends entirely on the strategy you have, whether you plan to trade conservatively or aggressively. Different brokers fulfill different demands, and the services they give set them apart. These two are just the major kinds, and now you can seek that broker that leans on the type you consider will best work out for you.

The advantages of the two help a lot of diverse-thinking forex traders apply their strategies. Most of them maintain a powerful account of both in order to maximize the potentials they have. Learning to play in both fields is a step closer to bringing about a successful career in forex trading.

Is Forex Scalping For You?

Forex trading takes in all styles, different methods, and unique strategies from its diverse number of traders. One mode of earning in the forex market hits a popular and buzzing note- forex scalping.

What exactly is forex scalping, and can it work for you?
Forex scalping is, simply put, a method of earning profit in day trading by taking small earnings regularly. This accumulates to a big amount in the long run. Usually, it is done by day trading. The problem is they do not work. This is considered to be just a big scam by others.

However, why is it so popular?
Because a lot of people are promoting it on the net, promising huge returns with minimal effort required. They support this with impressive track records that appear on their sites. This is the reason why they are so popular: marketing organizations promote their site on search engines, making it look like that a lot of people have already profited from it.

Another reason why it is so popular is the fact that many people motivated by greed and easy profit are naturally attracted to this proposition. Of course, when they join, they lose money. Not only do they lose money when they buy the system, but they also lose more when they trade with a faulty strategy. That is what creates the buzz.

Why doesn’t it work? We can simply explain that prices and rates in day trading are very volatile. There is no assurance that you will profit. It is only made so by the stories of those who want to sell their mock software and plans. These just simulated and hindsight plans did not really happen and, in turn, did not really earn some money.

Scientific theories are just that- theories. If they have been proved, then they are no longer theories and hypotheses. Experienced traders have learned not to listen to them. Take a cue and follow suit.

Here are some tips to avoid getting caught in this scam:

  • 1. Trade longer-term and forget about day trading. In the longer term, the profits are stable. You can also practice short-term trading, which differs from day trading in terms of time frames. The key is to understand that rates per day are too volatile to rest our investments on them.
  • 2. Know that if it is too easy, then probably it is not true. If scalping works, then nobody would try to sell the method, right?
  • 3. Get a full understanding and education of how forex trading works. Simulate first and try to mock up trading. Learn and understand how the market works.

Will forex scalping ever phase out in the forex trading market? It probably will not be for a long time. They can repackage the system and presentation to lure other inexperienced, lazy would-be traders. Remember that if you are trained properly and understood how the market works, then there is no danger of falling into their trap.

The bottom line is ditch forex scalping. Forex trading was built on tested principles and unique strategies in predicting the closing rates and watching closely how the market flows.

It is not some naïve market where you could bully your way to success with some scientific theory and fancy software platforms.

Forge Your Forex Trading Strategy

So you think you have the winning strategy for forex trading. Have you tempered and tested your winning formula yet? What you do not know is that their things you must take note of before fully placing money on your strategy.

These are points tested and tried by those who have come before you. Understand the principles behind them, and you may well be on your way to trading success.

Think twice before day trading.
So few get to be successful at day trading. Most experts firmly believe that it does not work because the volatility in such a short term varies a lot. You will be better off with long-term trading ventures where chances of profit are dependable.

Fundamental or technical?
Are you a fundamental or technical trader? Where does your strategy lay? It is hard to be both; combining the two paths and method are near impossible and at most difficult. It would be easier to start with a technical aspect of trading in your strategy. Not only would it take into account human psychology, but it will also be easier to work with.

Throw scientific theories away.
We all know forex trading needs and objective points of view. Nevertheless, when it comes to your personal strategy, it must fit with your assets, investments, and plans. That is why it is difficult to rely on scientific theories alone. If there was truly a successful one, then why isn’t everybody a millionaire?

The objective part of the equation should be the trading signals you need to use in determining your next move. Now you see that there is balance in the tempering of your strategy.

Discipline
You work with your strategy. Are you both discipline in your tasks? Ego might get in the way of a successful and fair trade. What you think about the market affects the design of your trading plan. Be fair and reasonable, and you will profit; being over your head and thinking greedily will get you nowhere but down.

Confidence
Lastly, do you have absolute confidence with your unique plan? Testing and backtesting with present parameters are essential to get that confidence. You may even want to start with a small amount first, testing your strategy with as little risk as possible. When it works, resist the urge to change it drastically. Do not overcomplicate your details.

Hypothetical track records are unreliable.
These kinds of track records are just keeping up and expecting the norm of currency track records. This is simply just too naïve. Playing it safe will not always make you safe. Forex trading is much more difficult than choosing which currency record is safer. In the end, you have to make money, right? Not make sure bets and not losing, but end up not gaining anything either.

Is your strategy designed to use stops conservatively?
Stops are there to your advantage. Use them. Most people place them immediately after a trade. If you think to hesitate a lot, you will end up taking more losses.

Simple and work reasonably.
The design of your forex trading strategy should be simple and requires a reasonable amount of input and work from you. Too complex a plan, and you might lose sight of your own unique technique. Too much work will take its toll on you, clouding your judgment more.

Make Forex Signals Work for You

In forex trading, watching the market for entrance and exit points is the brunt of your work. Traditionally, you monitor the progress of currencies by feed reports. Either by watching the news or guarding the numbers on your laptop.

Here lies the problem- who would want to spend the rest of their day plastered to their laptops? Forex trading seems to be a perfect business ground for everyone: opportunities are near equal, and you could trade anytime, anywhere provided you have internet access.

The answer to this is to get a service that provides forex signals. Simply put, forex signal services are paid subscription services where they monitor and interpret the market to your liking. Your set of specifications, what to watch out for, and when to alert you. They send you results by email or directly to your phone.

Forex signal services are very popular nowadays. You may even refer to it as an indispensable tool for any trader. Brokers even provide their own unique platform that will cater to your information requirements. When you sign in with them for an account, they give you this service with a fee or even free.

What usually happens is that they give you signals for known or popular currency pairs. For instance, you may be intent on watching the changes in Euros and American dollars, Japanese Yen, and Singaporean dollars.

If requested on your account, they can provide you with signals on less known pairs. Whatever your strategy and currency trade are, they can fit their services for your needs.

How do they do this?

Well, forex signal companies use computerized systems to monitor pairs and make some analysis for their subscribers. Understand that they do not decide for their subscribers, mind you; they are just signals, tools to help you make a decision. Once you make a decision right away, your broker and software can even make the trade right away.

However, there is a catch: they are not a hundred percent accurate. They only provide leanings or advice on what decisions traders should make.

The best signal service companies have good track records of providing great recommendations and near accurate signals. The service will cost you, but if you are a serious trader upping their game, then signals are a must.

Here are some tips on how to make the most out of your service:

  • 1. Ask about the features of your service provider. If the service comes from your broker, then consider if they are effective for you. Some are packaged into the type of accounts.
  • 2. List down what are the things you need to monitor. You might save money on services by getting a less costly subscription that just gives what you need.
  • 3. Invest in reputable forex signal service companies. Their excellent service might be just what you need to gain an edge.

In the end, what you should remember is that forex signals are just instruments that help you. They are not meant to replace your decision-making process. You alone should decide the trade you have to make.

After all, you would not risk all of your money based solely on a machine. You and your strategy must still take control. Forex signals make forex trading more manageable and more enticing to other people.

Avoid Characteristics That Will Make You Lose Your Shirt

The world of forex trading is one of big money and high risks. Everybody sees this market as a promised land, an opportunity to earn a fortune. Seasoned analysts and traders alike have paid the price by being disciplined and knowledgeable; they know that certain ways of thinking will only help them leak out money faster.

Beware, novice trainers, if you ever want to be successful in forex trading, avoid being these kinds of people:

The Irresponsible
You better learn how to own up to your mistakes and to decide on what to do so you can reach that goal. Responsibility includes learning the ropes of the trade, doing proper research on your assets and brokers, and ultimately knowing that your own success lies in nobody else but yourself.

The Sheep
Sheep follow the majority and takes all of their cues from the experts. While going with the flow is not a bad thing always trusting on expert opinion has proven to be the wrong move for countless traders. A trader must develop his own style of strategy and thinking that will work for his plan and investments.

The Thrill-Seeker
Let us get one thing straight: forex trading is not a game. Serious traders do it because they want to make money. Having fun is not a feature. Sure, there is a satisfaction to be earned from the market, but anyone not serious about it has no place in the business.

The Impatient
While the action is certainly part of the market, most of it is a waiting game. An impatient trader will jump the gun on a bid/price even though he knows the chances of a better figure will come.

Many have succumbed to the impatience and recklessness of having money now instead of investing it long term. Profit from trading comes from staying updated with the current flow, knowing when to wait and when to go for it.

The OverThinker
Some forex traders think they are a cut above the rest with complex ideas and dazzling theories. Most of that lot has failed. Keeping your strategy simple and clean-cut works best in the long run.

While some traders have the tendency to overcomplicate their plans, reasoning that new times call for new ways, keeping track of profit and how you got it should help you to not overthink your strategy.

The Over Emotional
Giving in to anxiety clouds judgment because you start to be afraid of losing money and taking risks. A lot of people forget that forex trade involves risks, and it is part of the job. The ability to stay positive and being able to bounce back also makes a sturdier, more confident trader.

The Undisciplined
The biggest mistake to make out there in the market is to invest money lacking in discipline. So many traders have lost their fortunes just because they want an easy way to profit minus the hard work and study to attain it. Forex trading requires attention and understanding of the market, and such dedication to learning requires discipline.

Perhaps the most important character trait to throw away is half-heartedness. Forex trading requires a cool head, objectivity, and the ability to make those hard decisions that will certainly come your way.

To enjoy the fruits of your hard work, you must earn them by being a man of the trade who definitely understands what he is getting into.

Essential Forex Money Strategy For Beginners

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Essential Forex Money Strategy For Beginners

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