Forex Trading Strategy - Why You Cant Predict Currency Prices!

A fatal mistake made by many novice Forex traders is they think they need to predict where prices will go to win in there Forex trading strategy. You don’t have to predict to win and if you try predicting you will lose – let’s examine why in more detail.

If you are predicting the future you are simply hoping or guessing – know one knows what will happen.

Let’s look at a common example in currency trading.

A trader sees a support level and wants to buy a dip into support so he waits for the price to dip to the level and executes his trading signal.

What he is doing is doing what many currency traders do - buying a dip but he is simply hoping the level will hold.

The professional forex trader knows that predicting is a waste of time and money and acts on confirmation only.

Use Momentum To CONFIRM

Rather than buying into a support level and hoping it holds they wait for proof that it has held by watching momentum indicators – when the prices turn up above support they enter.

They are not predicting they are trading the reality of price change and this is what you must do to if you want to win with your forex trading strategy.

Great momentum indicators to put in your Forex trading strategy are: The Relative Strength Index and the Stochastic. If you don’t know how they work look them up.

Scientific Theories

A common myth in currency trading is that you can predict the future. Step forward all the scientific theories that predict such as WD Gann and Elliot wave.

They don’t work and the reason is pretty obvious – if prices could be predicted we would all know the price in advance and there would be no market. It is the uncertainty and different opinions that make a market.

When you are trading currency markets you can’t predict as although human nature is constant it is also un predictable and this makes trading an odds game.

If you are trading the odds then you need to act on the reality of confirmation NOT Hope or guess.

So if you have been simply buying dips to support and not getting proof that it will hold before trading look up how momentum indicators work now!

By: Monica Hendrix

Forex Advice - Simple Tips For Getting The Best Advice

Today with the growth of online trading there are more vendors offering forex advice than ever before and they all claim they can lead you to currency trading success. The reality most of it will just see you lose. So use this factor when judging it:

It may sound obvious but a real time track record of profits.

The bulk of advice over 90% is not worth the money and you can get better advice on the net for free.

Most vendors simply make up track records and produce a hypothetical track record that is done you guessed it in hindsight – Knowing the closing prices! Well that’s hard.

You will also get testimonials but these are normally made up friends or traders who had a lucky trade.

If you ask for the real time track record you know the vendor has had success himself and while this doesn’t mean you will win it at least shows they have confidence to trade their own system.

Finding good advice

You can get a lot of good research for free:

From banks and brokers and a lot of it is very good and you can get ideas – You shouldn’t follow it blindly and you should always compare it with your analysis but for ideas its great place top start.

While a lot of the vendors who sell advice will give you a system it is normally of little use as it doesn’t have a real time track record and you should ignore it - all you need is on the net and it’s free.

Here is what you need to do.

1. Look up technical analysis and learn how and why it works and learn the concept of support and resistance

2. Then you need to learn the concept of breakout trading how and why it works

3. What you want to do is to trade against support and resistance and you need to get the odds in your favour, so you need some momentum indicators to help you.

Go to a good free chart service such as futuresource.com and learn about stochastic and the Relative strength Index and how to use them.

You can then trade support and resistance and use these indicators to time entry.

The above will give you a perfectly robust system you can apply for profits. All the information is free and to help you we have written numerous articles on building forex trading systems so look them up.

There is some advice worth paying for and you can get that from Amazon.com

Two essential books are:

1. Market Wizards by Jack Schwager that interviews some of the top traders of all time. These are traders who don’t just talk the talk they have walked the walk and made millions.

2. Also get “Way of the turtle” by Curtis Faith – He learned to trade in just 14 days in a famous experiment devised by legendary trader Richard Dennis to prove that anyone could learn to trade.

These traders known as the turtles went on to become some of the most successful traders of all time, all learned to trade in just 14 days and all had no previous trading experience.

Curtis Faith made $30 million and was the most successful turtle of all and this is a great book for anyone wanting to know what you need to do to become a successful trader.

So your system you can get free on the net and the two books above will give you a good introduction to the mindset of the successful trader.

By: Monica Hendrix

Building a Forex Trading Strategy

Your chosen Forex trading strategy will drive the trading decisions that you make in the Forex trading system. If you are new or a novice to Forex trading systems, you will need to develop an appropriate strategy that will evolve over time. The following steps outline the approach to building a Forex trading strategy that may be adapted and tailored to your needs.

Develop a Forex Trading Plan - A Forex trading strategy should never be considered absolute or complete. Part of having a Forex trading strategy is incorporating a plan for making adjustments to the strategy. You will need to be able to make adjustments without completely revamping your strategy. Though you may consider your trading strategy to be more technical than fundamental or vice versa, you should take advantage of any available market data in making your trading decisions regardless of which discipline it falls under.

Initiate a Forex Trade - You must decide on the currency pairs that you which to trade and the number of units to trade. You must establish either a buy or sell position. You are then ready to initiate a trade as either a market order or a limit order. A market order initiates a trade at the current market price while a limit order permits a trade to be executed when the market price reaches a limit that is predetermined by you. As a safeguard for online trading, particularly with limit orders, you should also establish limits to take profits or stop losses. Take profit and stop loss limits become particularly important with online trading when your Internet connection is loss. In the time it will take to reestablish a connection, the market price may change and fall outside of any established limits. Your trading platform may be able to calculate a suitable set of limits. Limits are set as either the percentage of the trading range or as distance from the market entry price. If you have established an open position, you may adjust these calculated values to suit your needs.

Determine When to Exit a Forex Trade - If a trade moves in favor of your established position you must evaluate the move. In a long position, a move is considered significant if it is in the range of 15 to 20 pips. In response to such a move, it would be advantage to raise your stop-loss limit above the market entry price and your take-profit limit by about 20 pips or the number of your choice. If the trade continues to move in your favor you should continue to raise the stop-loss and take-profit limits. This aspect of a trading strategy allows you to continue to generate profits while the market is working in your favor. Unless, for some reason, you feel you need to manually exit the trade, you should not exit the trade until the market reverses to trigger your stop-loss order. A take-profit limit should not be used to signal an exit from the trade. If a trade moves against your established position, you have two options. You may manually exit the trade before your stop-loss limit is reached or stay in the trade until either the stop-loss or take profit limit triggers an end to the trade. It would not be beneficial to lower the stop-loss limit with the expectation that the market price will reverse for a short period of time. While such a reversal is possible, the odds of this type of market action are low and your Forex trading strategy should not depend on this type of anomaly.

By: Andrew Daigle

Online Forex Trading Strategies

Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.

Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.

This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex trading

The leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.

Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.

An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.

All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading.


By Oliver Turner


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