Forex Charts - Avoid This Common Deadly Mistake or Lose

If there is one basic mistake traders make and continue to make it's the one in this article and if you make it you will simply lose all your money and do it quickly, so here is the forex chart mistake to avoid.

The mistake is the forex prices can be predicted on forex charts.

No they can't...

Of course if you are predicting you are hoping and guessing and that won't get you far in any venture in life, let alone forex trading.

Of course there are many vendors who will tell you prices can be predicted with scientific accuracy and the naأ¯ve trader swallows it.

The most popular scientific theories are based around the works of - Gann, Elliot wave and Fibonacci.

These guys never made money with their theories and neither will you - because the fact that markets move at all, proves there is no scientific theory... If there were a scientific theory, we would all know the price in advance and there would be no market - common sense really.

Other forex traders predict but they don't believe in scientific theories - their just trying to buy low and sell high and this doesn't work either.

For example - a trader sees the price dip to just above support, assumes it will hold and executes his trading signal. Of course sometimes it works, most of the time it does not.

Rather than hoping guessing or predicting - you need to get the odds in your favour. Forex trading is a game of odds not certainties but get them on your side and you can make a ton of money.

The Way To Win With Forex Charts

Lets say you see prices dip to support you don't buy you wait for momentum to turn up (you can read about momentum oscillators in our other articles) this gives you advance warning of a shift in price velocity and shows the level is likely to hold.

You can also use momentum to follow a break of support and trading breakouts is very profitable.

It's a fact that most big bullish or bearish moves start from new market lows or new highs and by following the breaks with momentum on your side you can catch the biggest trends.

So remember:

The next time you see someone say they can predict market tops or bottoms with 90% market accuracy - you know their lying and that if you try and predict with your forex charts, you simply lose all your money and do it quickly.

Use your forex charts correctly. Trade the odds, confirm each move with momentum and enjoy long term currency trading success.

Forex Education - Vital Tips to Get the Right Education to Win

There is lots of forex education available free online and here we are going to give you some tips on finding the best that can lead you to currency trading success.

Here are your forex info sources to look up.

1. FREE Info

Most of what you will need can be found free on the net. Many of the e-books sold by vendors simply rehash what is found on the net and you can avoid paying for it by simply seeking out the right sources - search around and see what you find and you will stumble upon some good sources.

If you are your trading on forex technical analysis you can find everything you need to know about indicators and chart patterns to build your own trading system. For a novice trader this is the best way to trade, avoid trading news - it's simply stories that reflect the losing majority, so avoid it.

Your aim is to trade the truth and simply follow price trends and everything you need can be found free - you need something more but I will return to this in a moment.

2. Expert Systems

All over the net claiming they can make you rich with mechanical systems and most will lose. Why? Because - they rely on clever marketing copy and simulated track records done in hindsight. If you see an ad that looks to good to be true pass it by, it is - has never been traded and simply put together by a marketing company.

3. Forex forums.

I took a look around a few of the top forums before I wrote this article and my look confirmed by suspicion full of losing traders.

The guys giving advice are generally people who can't make any money trading forex and it makes them feel better and big to give out their wisdom.

I have been a trader for 25 years and never bothered using forex forums and don't think you should either.

4. The Edge

To make money you need a method and that's easily constructed from free info on the net which we touched on in point 1.

You can easily build a system based upon breakout methodology, support resistance and a few momentum indicators and win at forex - just one word of caution:

Discipline

You will have heard how it's essential in currency trading and it is but it's very hard to acquire that's why 95% of traders wipe out their equity quickly.

To ram home the importance of discipline, go to your local online bookstore and pick up some books by traders who have walked the walk, rather than simply talk the talk.

A few essential books are:

Market Wizards EDIT - Jack Schwager

This book interviews trading legends and lots of them and is one of the most popular investment books of all time and with good reason

The Way of the Turtle - Curtis Faith

This book tells the story of the turtles a group of 14 traders who became legends after learning to trade in 14 days and then earning $100 million in just 4 years.

The Disciplined Trader - Mark Douglas

A bit repetitive but rams home the importance of discipline better than any book I have ever read.

The three books above you can pick up for about $60.00 and their worth every cent.

They can explain far better than me my discipline is vital yet so hard to achieve.

Always keep in mind if you don't have the discipline to trade your forex trading system, you don't have one!

Trading looks easy yet few succeed - the ones that do build their own trading methods to get confidence which is the first step to trading with discipline.

Do the above get your method from free sources and the books above and you will have a head start on your way to learning currency trading the right way and get vital forex education, to help you win and win big.

Forex Education - The Scientific Theory of Market Movement

Human nature is constant and humans decide the price in any market and many new forex traders as part of their forex education look to follow one of the many scientific theories to help them predict market movement and enjoy currency trading success, let's look at them...

You will see lots of forex trading systems say they can predict market tops and bottoms with scientific accuracy but how accurate are they?

The major scientific theories are those based upon the works of Fibonacci, W D Gann and Elliot.

The above theories and any others that claim that markets move to science are wrong markets don't and cant by there very nature.

Why?

Because humans are not logical and do not conform to a universal ideal and this should be pretty obvious as if there was a scientific theory of human nature we would all know the price in advance and there would be no market.

It's a fact that if any of the so called scientific theories worked everyone would follow them and of course they don't. Fibonacci, Gann and Elliot made no money with their theories but that still doesn't stop the far out investment crowd claiming they work when they quite obviously do not.

Trade to Win By Trading the Odds

If you want to win at forex trading, don't look for something that doesn't exist and look at the right way to trade forex markets to win and that means trading the odds.

An essential part of your forex education should be that, forex is a game of odds NOT certainties. Don't let this dishearten you though - if you learn how to trade the odds and use a simple soundly based forex trading strategy you can win and win big.

The fact is markets move based upon the supply and demand fundamentals and human perception of them. At certain times greed and fear take hold and humans push prices to far from fair value and a price spike occurs.

These short term price spikes are easy to see on a forex chart and can be traded for profit. Sure you won't win every trade- but if you win more than you lose, keep your profits small and run your profits you can make huge profits.

Today science has enriched our lives and we marvel at some of the advances that are made. You can however only apply science in certain areas and forex trading is not one of them.

Keep It Simple!

Forex trading remains and always will be, odds based game and if you think about it 95% of traders lost 50 years ago and 95% lose today despite all the advances in science and forecasting.

Forex trading relies on a simple method and your ability to execute it with discipline through periods of losses to achieve currency trading success.

If you get the correct forex education and learn how to do this, you may not be perfect with every trade - but you will make a lot of money.

What Is The Hardest Thing A Stock, Futures Or Forex Trader Will Ever Have To Do?

Visit forums, join memberships, purchase tuition with member areas for support, read books, talk to fellow traders etc and you can be guaranteed you will come across many who will be struggling with a whole host of reasons why. Some will even appear as experts but beneath the surface are struggling with some aspect of their own trading system or style. But do you know what the hardest thing any trader will have to do is?

1. Learn the jargon - no way, this is easy and it just takes time.

2. Find a profitable trading system - there are hundreds of thousands of them, in fact many are just given away for free nowadays.

3. Back test and paper trade - c'mon, I know many people don't like hard work but you're way off here.

4. Learning to read charts - kids like reading charts as they look at the green thing and they say, "Hey that's going up", or if they see a red thing they say "that's going down".

5. Setting goals - important because if you don't have a goal, you're floating aimlessly; but not the hardest.

6. Thinking successfully - no matter who you are or where you are there is always something you are good at. If this is so you already know how to be successful.

7. Being true to yourself - knowing who you are is indeed a quality that sets one apart from the rest and is therefore one of the hardest things a trader will ever have to learn, but not the hardest.

8. Cut losses short - it is hard to do this for many but it is definitely not the hardest.

9. Logging trades - as we are lazy this is done by a very few, but this does not make it the hardest, not by a long shot.

10. Keep emotions at bay - trading without emotions is very hard, but as we are humans the proper definition is more like managing emotions; but either way it is not the hardest thing a trader will ever have to do.

11. Remain independent - listening to other's advice whether it is a newsletter, internet forum, or just your buddy next door is very easy to do as we like to follow other people by nature so to do the opposite is hard, but not the hardest.

12. Sticking to the rules of a plan or system - this is indeed hard but not the hardest, and the reason is because this is too general a statement; many people trade with only rules for analyzing or entering or exiting, but most never have a complete set of rules for all three.

13. Sticking to the rules for all three (analyzing, entering and exiting) - getting closer but still not there just yet.

14. Holding on to winning trades - BINGO!

If we look back to points 12 and 13, I made about sticking to rules for exiting, this should start to open your eyes to the hardest thing a trader will ever have to do - hold on to winning trades.

Why is this so difficult?

For one, most place more emphasis on seeking opportunities and rules for entering than on anything else to do with running a trading business. And this is exactly how the whole "trading" thing is marketed. Very few traders have rules for exiting.

But even those that do have rules for exiting, only a small minority will stick to them, and this is because we as traders can not get past thinking about the money. Money rules us as traders and probably rules us in our lives too.

If you go back over all the points above I can tell you that all of them contribute in some way to the most difficult thing a trader will do; hold on to winning trades.

For example, if you think you're a successful trader then why would you cut your profits short?

Because if you thought you were a success you would know yourself and where you need emotional management, you would learn any jargon and how to analyze, you would have a goal, and you would have a plan to go with it, which means you would have a system with rules for analyzing, entering and exiting, and you would have a fair idea how this system performs, which means you would have back-tested or paper traded it, and you'd cut losses short and you'd log all trades, you'd remain independent, and finally you'd stick to all the rules.

What a trader will face is the situation where they cut a profit short and take a look at what they made for that trade; this will send out a good feeling throughout their body. What will compound this feeling is if they look a little later on to see their decision was justified because the trade would have resulted in a loss if they'd not closed it out earlier.

The problem is this good feeling we are experiencing is encouraging bad behaviour whether it's breaking rules, trading without a plan or whatever. To continue on this path will lead you to having to find more winning trades because the trades you do get wrong will cost you more than what you make from the profitable ones.

Now here comes the litmus test: If you cut a profit short only to see it would have been a lot more profitable had you held on longer or used your exit rules then this should hurt - I mean really hurt, but not because of the lost opportunity but because you see it as a failure on your part. If it doesn't then success means very little to you.

All traders will go through the process of seeing themselves in a winning trade only to see it end up as a loss. This is inevitable. Apart from having someone look over your shoulder to prevent you breaking rules or cutting profits short, the only person who can do this is you! If you find yourself cutting profits short then look for your weakest links in your trading business. I have given you many here to ponder.

Learn Forex Trading From A Mentor

With Forex trading being such a lucrative business, more and more people want to get into it and require training in order to become skilled enough to trade. There are two main methods to learn Forex trading, traditional book learning and live training. Each has its good and bad points.

It's not impossible to learn Forex from books; it's just more difficult to translate that knowledge into the real world of trading. When you trade in a live market it's a very different dynamic.

The popular method to learn Forex trading is to buy an e-book, course or go to a seminar. All of these options will require you to learn to trade in a theoretical way. What I mean by this is, you will learn techniques, theories and tricks that do work but are still only theory until they are applied in the real market.

Learning from a book can be confusing if you have a tough time processing so much information all at once. Without being able to apply the techniques and strategies that you've read about, it is difficult to know which ones work best and whether or not they are still relevant, as books can take years to write and publish, and the Forex market is constantly changing and updating.

After you have all the theory under your belt, there is no better option than learning from a live trader. A mentor will be able to show you how to read the market, what effect news will have, what times to avoid, and many other hidden factors that are almost impossible to list in one publication. This is a process of learning Forex through osmosis

Trading in a live market, gives you the advantage of real world situations. But trading a live market alone, will probably leave you pretty stressed out. By using the services of a live mentor, you can avoid much of that stress, and more importantly avoid making costly mistakes.

This is simply a better way to learn Forex. You can trade in a safe way, knowing that help and advice is at hand whenever you need it.

Which method you choose to learn Forex will depend greatly on your learning style and preferences. If you find that books are an excellent way for you to learn, then go with a more traditional course. However, if you are one of many who find it hard to translate what they read into real life, the live trading method may be better for you.

You Can Learn The Forex Trading Holy Grail

This is a very special message to everyone searching for the forex trading Holy Grail system. I intend to reveal it in this article. Before I begin, I would like to say that anything worthwhile in life takes time and effort to master. Trying to learn forex is no different

It's quite common to find traders that don't make money even when there were plenty of profitable trades. How does this happen? The short answer is they trade through fear, and fear makes you lose focus of the bigger picture. The bigger picture is that you will have losing trades, and you will have winning trades. The fearful trader loses money because they tend to jump in on the loosing trade, get scared, stop trading, and miss the winning trades.

When you finally realize that your emotions are the cause of your losses, you will be amazed at how a small shift in attitude can turn a losing month into a winning month. You will also find that you can learn forex trading better when you are relaxed.

So the first holy grail in trading is: "if you are not in control of your emotions, your emotions are in control of you" and for the most part, our emotions are illogical. Ask Spock.

One important truth about indicators is that they are only designed to present price action in a different way. Price action itself is the absolute truth about what is currently happening in the market. Price action is what is happening to your bars, and what resistance/support levels are being reached/breached. If you can understand the driving force behind these moves, you can better understand the market.

When you trade, try to think about the other traders in the market. What are they thinking? Institutional players know how to gauge this sentiment, because beginner traders are very predictable. So learn to read the Forex market in this way. Never forget that price is moving because other traders are making it move.

"Never forget that it's the sum total of the actions of all the traders in the market that drives its movements."

Most people search for the "system" first and then try to trade it without understanding why and how it works. This is very difficult to do, as you will not have confidence in it. It is better to find a system that makes sense to you, and is closely related to price action.

When you learn forex trading, you can never ignore the other factors affecting the market. You must have a holistic view. Did news just come out that strengthens the dollar? Did price just reach the 200 ema on the 4 hour chart? Did a head and shoulders just form? is price hitting the top of a channel on the daily chart? It does not matter what system you use to pull the trigger, if you ignore everything else.

You don't have to be an expert on everything, but you do need to know what may spoil your trade. Most of my losing trades are due to something I missed, not the market.

"Learn how to take a holistic view of the Forex market, and keep track of the bigger picture"

It is very easy to overlook and dismiss the importance of this information. It is probably stuff you have heard before. While you learn Forex, you will see this advice repeated over and over again. There is a very good reason for that; all successful traders understand this information, and are successful because of it.

An Introduction To Forex Scalping

Scalping for quick small profits is a very popular Forex trading strategy, requiring immense discipline and focus. True Forex scalpers make between 10 and 100 trades each day. If a trade goes against them they get out of quickly rather than holding on and hoping that it will turn around. A Forex scalping system goal is to make 5-15 pips per trade.

The aim of a Forex scalper is to buy or sell a pair of currency at the bid or ask price and then exit the trade quickly when it's in profit by a few pips. Using this strategy of taking a small amount of pips out of the market at a time, can quickly compound into big gains as long as a strict exit strategy is used to prevent losing trades absorbing all profits.

Generally Forex scalpers use the 1 min, 5 min and hourly charts to locate trades that can make them a small profit. Because the Forex scalper is only aiming to make a few pips per trade it is essential to use a broker with low spreads and instant execution of trades.

A few things that can improve your chances of being successful as a Forex scalper are:

- Ensure that you know when news relevant to your currency pair will be released. - Write down the previous days Open, High, Low and Close. - Learn some basic candlestick patterns so you can identify them when they occur. - Draw in major trend lines, pivot points and support and resistance on both the daily and hourly charts of your currency pair. - Determine the major direction for the day, Bullish or Bearish, trading in the longer term direction will help trades to be more successful. - Move your stop to break even you are 10 pips in profit. - If the trade is taking to long to become profitable or you don't feel comfortable with it, get out.

An advantage of Forex scalping is that the small targets of 5-15 pips are easier to accomplish. One of the difficulties Forex traders have is when the trend reverses during a trade, because Forex scalper's get in and out of the market quickly this is less likely to happen. Many people have been successful with Forex scalping, so there is proof that it can be a profitable Forex trading method. A disadvantage is that the risk to reward ratio is lower than other Forex trading methods. As the gain per trade is so low, one losing trade can wipe out all the gains for a day. This means it is extremely important to set and move a stop loss.

There are a few traps that new Forex traders fall into when they begin Forex scalping. They may become hooked on making random profits, especially if they are initially successful. This can result in the trader taking more risky trades and not sticking to their plan. A second trap is trying to make up for the losses of yesterday. New traders often think about how they can win back the money they lost a previous day, this tends to cloud their judgment and may result in emotional trades that are doomed for failure.

Types of Forex Trading Orders

To trade the Forex market, traders must understand the different type trading orders. The following are some of major types of orders that can be found on most Broker trading platforms if one would to trade Forex.

Market Order - A market order is an instant order to buy or sell a currency pair at the current market price and is used to enter or exit the market quickly. Under normal market conditions without any major news release, market orders are executed instantly. When a market order is placed, what the trader means is simply to buy or sell the currency pair at whatever price it is traded now. Under extreme volatile market conditions, especially during major news release, it is possible for a trader to get re-quoted. This means that when prices are moving very rapidly, the price requested may have already changed by the time the order is received by the broker. If this occurs, the broker will immediately provide the trader with a new quote price. The trader can then choose whether to execute the re-quoted price. However, it is important to note that under no circumstances will a market order be filled unless the trader agreed to it.

Limit (Entry) Order - A limit order is a pending order placed to buy or sell a currency pair at a specific price to enter the market. The order essentially contains two variables: price and time. The trader specifies a price at which he is willing to buy or sell a certain currency pair and also specifies the time that the order should remain active. A limit order can be entered either as GTC (Good till cancelled) or GFD (Good for the day). A GTC (Good till cancelled) order will remain active in the market until the trader decides to cancel it. The broker will not cancel the order at any time. It is the responsibility of the trader to remember that he or she possesses the order. A GFD (Good for the day) order will remains active in the market until the end of the trading day. As the currency Spot market is an ongoing market, the end of day will normally be 00.00 GMT on the broker trading platform.

Stop (Exit) Order - A stop exit order is a pending limit order placed to buy or sell a currency pair at a certain price in order to exit the market. The order contains the same two variables, price and time. The difference between a limit order and a stop exit order is that stop order is used to exit the market whilst limit order sole purpose is for entering the market. In Forex trading, Stop exist orders are used for various reasons. To exit the market once a trade loss has occurred. Use to exit the market when the trader profit target is reach.

Trailing Stop Order - A trailing stop for a sell order sets the stop price at a specified number of pips below the market price.

OCO (One Cancels the Other) Order - An OCO order is a mixture of two limit and/or stop orders. Two orders with price and time variables are placed above and below the current price. When one of the orders is executed the other is automatically cancelled.

Most Forex Traders will normally use either one of these 2 methods or both methods for their trades.

Fundamental analysis focuses on the theoretical models of exchange rate determination such as purchasing power parity (PPP) and the theory of elasticity. Fundamental analysis also concentrates on other major economic factors such as Gross National Product (GNP) that measures the economic performance of a nation economy. Other economic indicators include Gross Domestic Product (GDP), which refer to the sum of all goods and services produced in a country. Consumption spending, Investment and government spending are all very influential due to their sheer size and have great impact on a nation economic performance.

Inflation Indicators such as Producer price index (PPI), Consumer price index (CPI) are closely watched by traders to measure inflationary activity. For the Federal Reserve, the method of choice to flight inflation is to raise interest rates. And higher interest rates tend to support the local currency, in this case, the US dollar.

For the fundamentalists, this approach to examine all the factors will determine the real value of a currency. This is normally referred to as the intrinsic value. A fundamentalist believes that if the intrinsic value is below the current market price, there is a good opportunity to long or buy the currency. And if a currency current market price is higher than its intrinsic value, there is higher probability that the currency will falls, hence, opportunity to short or sell.

Technical analysis is the study of market action, mainly through the use of charts and indicators to forecast the future movement of a currency.

There are a few principles that a technical analyst applies. The price is a compressive reflection of all market forces.

To a technical analyst, regardless of what the fundamentalist are saying, the price you see is the price you get. Price moves in trend - up (bullish), down (bearish) and flat (sideway) until the trend is broken and a reversal takes place. The time duration of the trend may be long intermediate or short. The historical trend will repeat itself.

The tools of the technical analyst are indicators, chart pattern and system. Moving average, Bollinger band and Stochastic Oscillator are some of the indicators. Trend line, support and resistance are some examples of chart pattern.

Forex Trading Education - How To Trade Price Consolidations

Trading on price consolidation breakouts is a popular choice among Forex traders. In this article, I will present to you one of the most effective and simplest ways to trade consolidations.

What Is A Price Consolidation?

Price consolidation occurs when there is no obvious uptrend or downtrend in short-term time frames. Ranging markets are not considered to be consolidating because prices are still fluctuating up and down. In a true consolidation, market prices don't fluctuate and typically stay within a 10 to 15 pip range.

What Time Frames Should I Trade?

Consolidating prices don't usually last very long. That's why you'll usually trade using intraday time frames (i.e. hourly charts or minute charts). Occasionally, daily charts may show flat prices as well! but these are more the exception rather than the norm.

How Do I Trade It?

Most people enter into a trade when prices break out of the highest price (or lowest price) of the consolidation. If prices break upwards, they buy. If prices break downwards, they sell. The decision to trade on breakouts is based on the assumption that the momentum of the break will be strong enough to push price further in the same direction.

How Effective Is It To Trade Breakouts?

In my experience, breakout trading can yield rather consistent profits. This is because they usually follow through. The hard part is deciding when to exit your trade once it's in-the-money, because breakouts sometimes reverse directions quite quickly.

What Should Be My Profit Target?

Usually, a profit target of 30 pips is good enough. Sometimes, you may want to try for 50 pips. I don't usually hold breakout trade positions after I'm in-the-money for 50 pips because then the price action will usually turn erratic.

Forex Trading Education - How To Trade The Trend

If you haven't heard of the phrase "the trend is your friend", you're either new to trading, or have been living under a rock. Trend trading is one of the most popular methodologies used by most people today.

What Is Trend Trading?

As the name suggests, it simply means trading in the direction of the prevailing trend. You buy in an uptrend, and sell on a downtrend. It's a simple concept.

However, the specifics of this way of trading are often overlooked by amateur traders. Also, there are some complications about trend trading that they don't know about. In this article, I hope to be able to explain to you a little bit more in detail about how to trade trends.

When To Buy/Sell

I've known many people who enter into trades at the wrong time while trend trading; and I found out that the reason for this is because they listen to the advice of so-called online "experts".

Here's what these "experts" tell you: in an uptrend, buy on a downward retracement. Although this piece of advice is probably well-intentioned, it's actually quite dangerously misleading. The people who follow this advice often end up finding themselves right at the top of a reversal.

The RIGHT Way To Trade Retracements

When trading a trend retracement, you should first identify significant support/resistance points where the retracement is likely to end, such as at Fibonacci levels or at pivot points. Wait for the retracement to hit that level.

Next - and this is the part most people ignore - you must wait for a confirmation candle/bar before you enter into the trade. This means that on an uptrend retracement, you should wait for a green up-closed candle to form before you enter. Never enter into the trade before the candle/bar is completely formed!

The reverse is true for downtrend retracement.

Forex Trading Education - 3 Aspects of Confident Trading

When you open up your trading charts each day, do you feel calm and confident or do you feel uncertain and nervous? Many traders often find themselves feeling the latter.

To be a successful trader, you'll need to constantly feel confident about the happenings in the market. Good traders are certain about whether it's a bull market, a bear market or a ranging market. They either understand what they're seeing in the trading charts today, or they don't. They're confident about their opinions, and aren't afraid to say that they're uncertain when they are.

Gaining Confidence

One of the best ways to start each trading day with confidence is to keep to a concise, carefully-considered 'plan of action' just before you begin bring up your trading charts. Here are 3 aspects you should consider to include in your 'plan of action'!

Aspect #1: Monitor the market with a check list

Have a list of news websites and analyst reports where you can find out the latest happenings all over the world. This is helpful in alerting you of world events that occurred while you were sleeping. The Forex market runs around the clock and doesn't go to sleep at all, except on weekends. You'll thus need to have a handy list of news sites to update you on the events that you've missed out on.

Aspect #2: Be an expert of few setups

Most new traders spend too much time trying to learn all the different trade setups in the hopes that they can have the most money-making opportunities. Unfortunately, they usually get mixed signals and mess up their trades. You should instead strive to master two or three types of trade setups and become an expert on them. Don't worry about the lack of trading opportunities; the market is large enough and you'll find usually be able to find good trade entries at least once every week.

Aspect #3: Money Management

It's almost impossible to over-stress the importance of this aspect. A reliable money management system will make it almost impossible for a trader to feel scared and uncertain. It's your safety net. Never trade without one.