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Category Archives: Other Forex Related Information

How To Enter A Forex Trade. Don’t Chase Trades

Don’t chase trades.

This is a good tip for you if you are struggling, don’t chase trades. The pros do not chase trades. When you start chasing a trade you pay more to get into the trade, and you tend to get out at the wrong time as you are trading emotionally. Set up your trade in advance so you are ready to go when the price comes to your entry, you can then trade with less emotion, and you are more likely to exit the trade at the right time, as your head is clear of emotion.

Emotional traders have a real hard time making consistent profits from Forex trading. You have to trade as mechanically as you can. If you see a set up you take it, its as simple as that. Don’t force trades either. If a set up is not there don’t trade. I have seen a few good trades pass me by in the last couple of days as i have been busy with other stuff, and i have been itching to take a trade, but i just compose myself and be patient and wait for the right trade to come along.

Some Forex traders will take 20 or 30 trades per day. This in my opinion is just gambling, you can’t possibly have 20 or 30 good set ups per day. This type of trading is very stressful and can be very costly. I much prefer a laid back approach to trading.

The correct way to enter a trade in my opinion is to do your analysis, set up your trade and wait to get filled. Jumping into a trade because you think you are missing something will cost you big time. You may get lucky and jump on a good trade, but long term you will lose with this style of trading. Also when you are in your trade try to manage it correctly and try and find a logical exit for the trade rather than just going for 10 pips, or 20 pips. If you can find a logical exit at 14 pips take it. 4 extra pips can add up to a lot of money over the course of a week.

Day Trading Verses Trading Daily And Weekly Charts

Day trading verses trading daily and weekly charts.

Some traders have different ideas on what day trading Forex is. I qualify day trading as trading anything less than a daily chart.

If you are trading 4 hour charts, 1 hour charts, 15 min charts or less, then you are day trading.

I am a day trader most of the time, but i can, and do trade longer time frames. The set ups that i use are better suited to day trading, but do work very well on the longer time frames.

The main benefit of trading longer time frames, daily and weekly charts is time. You can spend an hour or so every day analyzing the charts and set up your trades in advance. This style of trading is very good if you are in full time employment, or have other business commitments, or you just want more time to enjoy your life.

Day trading requires you to be at the PC for most of the day, looking for trading opportunities and set ups. Day trading is more exiting, but can also be more stressful. How you decide to trade is entirely up to you and each style can be equally rewarding.

This may come as a shock to some people, but the charts work the same way in every time frame from the 1 min chart right up to the monthly chart. Some trading strategies only work on certain time frames, but a good trading strategy should work equally well on any time frame. The smaller time frames are more volatile and set ups can be less reliable. You are also more likely to be stopped out of a trade if some price sensitive news comes out, but your stops are tighter on the smaller time frames, so you are protected to a certain extent.

I personally don’t trade anything less than the 15 min chart. I occasionally use the 5 min chart to manage a trade, or to get a better entry on a trade, but as far as set ups go its more likely that i will be trading 15 min, up to 4 hour time frames.

I like to trade everyday and if you are trading the longer time frames you sometimes have to wait for a few days sometimes a week or so before you get a good set up. I enjoy trading very much, and if i had to wait for a week for a trade it would drive me crazy, but each to their own. 🙂

If you are new to trading you have to decide what type of trader you want to be. Do you have the time required to sit in front of the PC and day trade, or do you prefer to take a couple of trades per week and have more free time? You can do both of course.

I teach people to trade any time frame so it makes no difference to me what type of trader you want to be, i can teach you either or.

For more information on my Forex training and mentoring program please click on the link.

Which Forex Pairs Should I Trade To Make The Most Money

Which Forex pairs should i trade to make the most money?

When i first started Forex trading i only traded Euro Dollar. I traded that pair because it has the tightest spread, the best liquidity, and it consistently produced good moves on a daily basis. Euro Dollar is still my favorite pair to trade but i also trade Cable, AUD, and EJ. AUD don’t move as much as the Euro generally, but the spread is nice and tight. EJ moves well, but the spread can be a little wider. Cable moves very well, but the spread on Cable can get as large as 3 pips, so i will only trade Cable if i see a really good set up.

If you are new to trading i would recommend you start by trading Euro Dollar as i did. When you trade only one pair, you get to know how it moves over time, and that will help you with your trading entries and exits. Some traders only trade one pair, and do very well indeed. Specializing in trading just one pair can pay big pips, but you don’t get as many potential set ups when you trade only one pair. This is the main reason i trade 4 majors, and occasionally CAD. CAD don’t move that much, but you can get some good set ups on that pair, so its worth keeping an eye on.

The set ups that i look for work on any currency pair, and on any time frame so i am not limited to certain pairs, so i generally go for the pairs with the tightest spreads. If you are trading pairs such as Cable AUD and Euro you are trading against the Dollar, so if the dollar is weak all those pairs will rally, and if the dollar is strong the reverse will happen, so it does not really matter which pair you trade against the Dollar, so go for the one with the tightest spread. You can trade them all if you want, but the more pairs you trade at the same time, the more balls you have in the air so to speak. Its a lot harder to manage multiple positions, so i would not advise that you open multiple positions until you are a competent trader.

Fundamental Analysis V Technical Analysis

This is a big point of conflict for a lot of Forex traders. Do you follow the news, which is fundamental analysis, or do you follow the charts, which is technical analysis.

If you have a background in trading and investing in shares, then you will probably be very comfortable with fundamental analysis. Its very easy to get hold of fundamental information for a company, and therefore, easier to make a decision to invest, based on how good a company looks fundamentally. But there are so many variables to fundamental analysis of currencies, it is not very easy to trade currencies based solely on that. If Ben Bernanke gets out of the wrong side of bed, it can affect the price of the dollar. Yes this is an extreme example, but you get the idea. Some traders only trade on fundamentals, and would not thank you for a moving average or a trend line, but i am not one of them. I am purely a technical trader, and 90% of my trading decisions are based on charts rather than news. I do pay attention to the news, as this can affect my decision to enter or exit a trade.

For example, if i know that there is market moving news about to be released, i will generally not enter a trade, or i will close out of a trade if i am already in one. The reason for this is the fact that the market can move very erratically when news is released, and the technical analysis aspect generally goes out of the window when that happens.

I do pay attention to the fundamentals of currencies, as its in my interests to do so. For example, its seems like forever that the Euro has been fundamentally weak, and although i have taken many short term long positions on Euro Dollar, i would be very reluctant to invest heavily in a long term long position on Euro, because the majority of traders are shorting it, so i would be bucking the trend. Bucking the trend is not always a bad thing, but in the case of the Euro i have a bearish bias, as do most traders, so opening large long positions in Euro Dollar is not a good idea in my opinion.

Fundamental analysis and technical analysis are both time based indicators, but technical analysis is much more flexible in my opinion as it can be applied on a much shorter time frame. For example you can trade technicals on a 1 minute chart, but you cant really trade fundamentals that way. Fundamentals are generally traded over a longer time frame, weeks to months rather than days. As i am a day trader technical analysis gives me far more flexibility than fundies, and are by far my favorite way to trade.