Ways to Lose Money Day Trading: 2009

Tuesday, December 8, 2009

Forex Trading Strategies

So you want to make money in the Forex market. Well to do so you need to come up with some strategies. As you now know you are not buying the actual physical currency - you are laying money on the movement of this currency. This is known in the trade as spread betting i.e. you are placing a bet that a currency price will move in the direction you want it to move in.

Currency movements are measured in "pips". So you believe that sterling is going to increase in value against the dollar. You bet your money on this outcome and lock in a price at which you have made the bet. The price of sterling rises 20 "pips" over the value of the dollar (from the time of your trade) - if you had bet $10 per "pip" then you would have a profit of $200.

There are two main reasons why most people fail in forex trading. Firstly they don't set themselves a budget for each trade and the second is that they lack discipline.

Before you make a trade, you should know exactly how much money you are prepared to lose and how much you wish to gain. Then if the trade goes against you and you are losing, you don't close out until you reach your losing marker. Most forex trading novices have no idea of how much they are prepared to lose - they don't enter the FX market to lose money. So when the trade goes wrong, they panic and bail out. Thus they miss the chance that the odds will turn and they could have made money with that trade.

By the same token, they have no idea how much they want to make from each trade so when they are on a "winning streak" they get greedy. The Pips are rising and rising and they can see their original $1 turning into $20 or $40 or $100 or whatever. They leave the deal going - they don't want to cash out now as they could make even more money. Well I have news for you - what goes up must come down! So at some point, the trade will turn and you will lose. When will this happen - well that is the million dollar question and nobody can tell you that point with 100% certainty. If they could, they wouldn't be here telling you!

The savy foreign trading strategist will quietly place his bet knowing exactly at what point he is going to quit regardless of which way the deal goes. He sets his own risk parameters and ignores what everyone else is doing. Yes he can miss out on a the huge price movements but over time he is banking mostly profits and so will earn more money than our novice investor.

So the moral of the story is................................. don't get greedy.

If you have made some profit then take some of these profits and bank them. One technique is to transfer an amount equivalent to your original stake (i.e. the amount that you started your trading career with) to your own bank account. In this way, any future trades are made using money you have already "earned". If you make a couple of bad trades, and this is a certainty it is only a question of when, the emotional affect will not be as bad as it would be if you had lost all your money.

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Forex Trading - Should You Invest

The trade of forex is entirely about exchanging your money in other currencies, thus you can attain the interest for the moment, the period of time or the commercial silver difference around. The trade of forex implies other assets with the money, but as you invest in other countries and other companies which deal with other currencies, the foundation for the money you made or lost will be based on the trade of the money.

The constant trade is made on the markets of forex because the time zones will be different and the marketplaces will open in a nation while another is closing soon. What occurs on a market will exert an effect on the other markets of forex in the different countries, but it is not at all times bad or good, from time to time the margins of the trade are close to one another.

A market of forex will happen when two countries are implied in the trade, and when funds are traded for services, goods or even a combining of these things. The currency is the money which trades with the shares of one with the other. Often periods, a bank will be the source of trade of forex, bus of the million dollars are bought and sold daily. There are almost two trillion dollars dealt daily on the market of forex. Do you have to become implied in the trade of forex? If you are already implied at the stock market, you have a certain idea about what forex trade really is.

The stock market entails to buy shares of a company, and you observe how this company made, awaiting a greater return. On the markets of forex, you buy articles or products, or goods, and you pay the money for them. Because you made this, you are gaining or losing, as the exchange differs every day from one country to another. To better prepare yourself for the markets of forex you can get information about trading and buying online, using a free "tool" like some software.

You will open a session and will create an account. Information entering on what your interests are inside and what exactly you want to get, in combination with the tool, will let you make purchases and trading, implying various currencies, thus you can then find out from firsthand what will be a profit or a loss. Because you continue this false account above you will see on the firsthand how to put together the right decisions based on your knowledge, which means that you must have knowledge for the changes of the market. The other option for you will involve taking brokers' information with a decent value and starting from there.

If you, participating as an individual want to be implied in the trade of forex, must become firstly involved by the broker, or an institution financier. In Forex, individuals are also known as simply "viewers", even if you invest the money because the amount of money whom you invest minimal is compared with the million dollars which are traded by governments and banks at a given time.

This does not mean that you can't become a part of Forex trading. Your broker or adviser in investment will be able to give you more information about the way in which you can be implied in the trade of forex. In the USA, there are many requirements and laws for which can be handled forex trading rules, as well as buying and selling for citizens of the USA. If you seek the Internet for a broker that is to make sure that you read the copy and whole information on where the company is localized and if it is legal so that you make deals with this company.

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How To Open A Foreign Currency Account

A foreign currency account is extremely effective in shielding an individual from risks associated with fluctuations in foreign currency. Such accounts are extremely helpful for those engaged in the business of export and import, as they deal most with foreign. People involved in such businesses must open their foreign currencies account in the currency in which they make most of their transactions. By doing, this they can hedge themselves against fluctuations in exchange rates. They can continue to hold the money in their respective accounts until the arrival of a beneficial rate.

Thus, such accounts enable good financial management for he businessmen. They can manage all receipts and payments received from various transactions through these accounts while trading internationally. They save money, as they don’t have to pay the conversion costs.

Open Your Foreign Currency Account:

Management of a foreign currency account is similar to managing a standard current account. There are several banks offering foreign currency accounts, however, their eligibility criteria and processing charges differ. Opening foreign currency accounts with banks is subject to various procedures of a usual diligence.

Types of Foreign Currency Accounts:

Foreign currency accounts can be broadly categorized into two Customer Foreign Currency (CFC) Accounts and Foreign Currency Accounts (FCA) for Individuals. Both of them eliminate the necessity of conversion upon receiving money from overseas. Both the types can be used to meet short-term requirement for cash. The interest on credit through such accounts is calculated on a daily basis on the balance amount, except for the company accounts. The basic rate of tax is generally automatically deducted from the interest paid.

You can opt for a foreign currency account that offers you the facility of making payments through check. However, while using such a facility you must be aware of the fact that the person who receives the payment will have o bear high local banking charges. Today, most banks provide foreign currency accounts to individuals and companies, but opening such accounts with large banks is preferable.

Things to Remember:

Several factors need to be considered before using FOREX trading method. If you are a beginner, you may choose a broker to help you with such trades in the beginning. There are various accounts ranging from small to big. The smallest account is known as a mini account and ca be opened with only $300. The standard foreign currency trading, however, requires minimum $2,000 of initial capital to begin trading. It is the standard account that gives the users flexibility to trade with several leverages.
Besides these, there are premium accounts that need $5,000 to $10,000. It functions as that of a standard account but offers many additional services.

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More Winning Forex Trading Strategies

I don't know about you but I am always looking to improve my Forex trading. Often what kills experienced traders is their inability to keep up with the Forex market trends and movements. Even the most sophisticated Forex traders need to constantly keep up on the Forex market. Yes, Forex education is ongoing and as such I am always looking to get an edge. I am always looking for more winning Forex trading strategies. Here are a few winners that I thought I would share.

Fundamental Analysis.

Most people think of fundamental analysis and associate it to long term trading but this should not be the case. Fundamental analysis lends itself greatly to making big money in the short run. Using indicators such as the Non-Farm Payrolls, Consumer Price Index, and Purchaser's Managing Index, Forex traders can trade on the short-term as a result of reactions to news releases. Look to capitalize also on meetings that discuss issues such as inflation, interest rates, etc.. For anyone interested in trading this style I strongly recommend that you get an economic calendar in order to stay up on what and when reports are being released.

Technical Analysis.

This is the place where price trends are analyzed. Some great technical analysis tools are the MACD, Elliot Waves, Parabolic SAR, and trend lines. It is always a good idea to really learn the upside and downside of each technical analysis tool. I also strongly recommend using at least two or more indicators to confirm movement.

These are basic winning Forex tools and strategies that, if used properly can be a great advantage to the Forex trader.

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Monday, December 7, 2009

Avoid Most Forex Trading Robots

I have seen most of the online Forex trading robot systems. They all claim they have huge profits. Most of their track records have only been simulated their predictions in hindsight have never been traded only simulated.

If your like most people we need actual facts on a trade and we need them to be strong and secure in order for us to even think about working with a Forex robot.

No one wants to lose their equity into something that could be dangerous if used. So why are there so many trading robots in the market place? The answer is pure and simple, they are there only for the sale and some don't even test them out in the real exchange.

If your in the market for a Forex robot be very careful on which one you buy. Go to the website see if they have made trades personally. Make sure all the t's are crossed. By all means make sure they have money back guarantees on the products. When I buy and test out any Forex robot, I make sure they have at the very least thirty to fifty days money back guarantee if i am not satisfied with system.

I will leave you with this, in all your money making ways you have a gut instinct for everything you come across. Follow that instinct, if it says yes, wait a day to really feel it. If it says no, back off immediately and continue on your way.

Most success is made from the gut instinct.

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The Best Forex Trading Software, Presenting Forex Funnel

One of the newest automated trading systems at the moment is Forex Funnel. It has risen in the ranks and is now considered one of the best Forex trading programs around. But how good is it really? Let`s take a look...

When it comes to currency trading, most people will feel very nervous about jumping in. And they would be justified in feeling that way since the Forex market is notoriously complex and newbies can easily be burned.

Not everything stays the same, and lately there has arisen a new breed of programs that have steadily become some of the best Forex trading tools around. Costing under a hundred Dollars they are a tenth the price of their bigger brothers which will set you back over two thousand Dollars. So software like Forex Funnel is really a steal!

Automated trading software works by predicting profitable times to trade. The best Forex trading decisions can only be made by quick decisions, this is facilitated more so in computerized systems than anywhere else. Changes are measured in what`s known as pips, and no, it has nothing to do with the ones you find in fruit!

Released only a few months ago, Forex Funnel got me all excited. Having bought a copy I was eager to see how it performed. The same developers that are behind Forex Tracer are behind it, so I naturally expected some juicy profits. The main interface has been improved, a good start.

From the moment I started a demo account I had a good feeling about it. One of the best Forex trading attributes in an automated trader is speed in signal generation. This little beauty didn`t fail in that department.

Trading on a real account is exciting and especially so when you win your first trade. It really does feel like an achievement and you can invest even as little as $50 if you want . Of course, you won`t make thousands on smaller amounts, that will come with bigger investments.

So, all in all I can recommend Forex Funnel to anyone who wants an automated trading system that can bring in substantial amounts of cash with smaller investments. Keep in mind to exercise good decision making, you are still in control of the trading!

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The Best Forex Trading Course Period!

So many Forex courses make great boasts and don't back it up. I am sure my experience is shared by many of those familiar with Forex trading. Is it really possible to just find a Forex trading course that provides sound Forex trading advice without all the fluff and bull? I believe the answer is yes but first lets take a look at what makes for a really good Forex Trading Course.

1. Provides Real Time Trading Signals.

Who needs an e-book that regurgitates the same old bull? If I come across one more "Make Millions on Forex" book on eBay I will totally lose it. It really does get annoying because most of these sellers are not even putting their own money into currency trading. They just ramble off a bunch of theory that does not work. A real effective and valuable course will not only provide valuable and original material but teach you how to analyze and find real trading signals that translate into consistent winnings.

2. Proven System of Winners.

Does the course you are interested in have a real track record of winners? There should be an abundance of testimonies and they should provide results of ALL their past trades not only a select few from the winning column while ignoring all the bad trades. I personally like to see videos of people that have done well with the course. I also want to hear from the head of the organization by way of video if possible. The bottom line is that the best forex courses provide real proof that they have done and will do what they promise.

3. Reasonable Price.

Some of these charges for so called winning Forex courses is mind boggling. It is my opinion that should not have to pay exorbitant fees for a valuable Forex course. In fact, I would not pay for a monthly membership for a Forex trading course but that is just me.

In conclusion, I applaud you for wanting to better yourself as a trader and this motivation will ultimately pay great dividends. My only word of caution is to really shop around, there are some valuable courses out there.

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7 Essential Tips For Successful Forex Trading

Unlike anything else in the financial world, the Forex market cannot be controlled by any single event or individual given its speed, volatility and sheer size. It is therefore known as the closest market to "a perfect market" by many economists. The highly speculative nature of the Forex market infers an increased risk but also translates to potentially higher profits.

Having a solid foundation of knowledge is vital in Forex trading. The following tips offer critical advices and tips for significantly reducing risks of Forex trading, and increasing your chances of making profitable trades.

1. Demo First!
Never invest money into a real Forex account until you practice on a Forex demo account for at least 2 months. Studies has shown that 90% of beginners fail to succeed in the real money market ONLY because of the lack of knowledge, practice and discipline. The remaining 10% of traders who are successful had been sharpening their skills on demo accounts before entering into the real market with confidence.
2. Get the Bigger Picture
Always take a look at the time frame bigger than the one you have decided to trade. For example, when trading in 20 minutes time frame, take a look at the 1 hour chart; trading hourly would require obtaining a picture of daily or weekly price movements. If a trend is hard to spot, choose an increasingly bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers typically only need to know what is happening in the market within the past 5-10 minutes time frame.
3. The Stop-Loss, Take-Profit Rule
As a general rule of thumb, traders should set Stop-Loss orders closer to the opening price than Take-Profit orders. By following this rule, a trader needs only to be right for less than 50% of the time to be profitable. However, a Stop-Loss order should not be so tight that normal market volatility would trigger the order. Take-Profit orders should reflect a realistic expectation of gains based on the market's trading activity and the length of time to hold the position.
4. Not Moving is a "Move"
Not trading is a perfectly valid position. When in doubt, stay out. If it is not clear where the market will move, do not trade. Saving present capital is definitely a better choice than risking and losing money.
5. Zero Stucked Money
Learn to use protective stops and stand by them. Hoping that market will turn in your direction can be a very delusive hope. By moving a Stop-Loss threshold further and further down, a trader effectively increases his chances of ending up with a much bigger loss. In the mean time, invested money is stucked for an unknown period of time and therefore cannot be used for opening new positions. Money not working is money wasted.
6. Choose the right day to trade
This tip is often ignored as "Optional". Yet, choosing the time to trade can make a difference between successful and hopeless trading. It is proven and highly recommended not to trade on Mondays, when the market has recently awaken and is making its first steps to form a new or confirm a current trend. It is also not recommended to trade on Fridays afternoon, during the huge volume of closing trades. The best trading days are Tuesdays, Wednesdays and Thursdays.
7. Success is not about winning every trade
Learn to measure your own trading success by the end of the day, week and then month and year. Do not judge your trading success by a single trade. To be successful, traders do not need to win every trade. They also do not need to become rich with just one trade. They simply need to be profitable in the long run.

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Wednesday, October 21, 2009

Day Trading Stocks

When it comes to day trading stocks there is a mixed notion amongst the investors as well as common people who are contemplating of getting into stock trading. Day trading is basically a type of short term trading that is completed within a day’s time. That means you have a few hours to buy and sell the stocks and hence day trading stocks are essentially considered to be the forte of the experienced stock market investors. As you get only a few hours to make up for the loss, if there is any, the risk factor of day trading is higher than conventional long term share trading. But as there is more risk involved you always get more profit from day trading if you consider the time span of the investment that you make for buying the stocks. S0, the bottom line is there are pros and cons of day trading and here we are trying to focus on some of them.

Positives of day trading –

Day trading gives you the freedom of working on your terms. You Cando by yourself the trading online and get the result on that very day. There is no waiting and long-term risk factor involved.
As you get back the money each day after the market is closed you can always start fresh the next morning. So, with day trading you can try wide range of stocks and benefit from definite and short time gains and tips that too with significantly little money in your account.
Stock trading companies offer the day trading facilities in significantly lower brokerage rate. Especially online stock brokers charge really little brokerage for buying and selling stocks online. So, while dealing in day trading stocks you can make more profit if compared to long term trading where the brokerage rate is relatively higher.
Moreover, with lower brokerage you have fewer burdens and can take quick decisions after the stock is moved upward, while in long term trading you have to wait to sell the stock until it gets you profit after meeting the higher brokerage.
While doing day trading you can always make profit from stocks that are not so promising but showing steady progress however small amount it is. While in case of long term trading you cannot really depend on such stocks that do not have long term potential.

Like any good thing in life day trading also comes with some negatives and here are some of them along with some effective solutions to these problems.

Day trading gives you only a few hours to make the corrections. Simply because the lifespan of the day trading is shorter, you run the risk of losing on a certain stock that falls after you have bought them. The situation worsens if there is no sign of betterment even at the end o the day. But you can even make up for the loss by buying the same stock in lower price on long term basis and waiting for the stock to regain. It’s simply buying time for your investment.

Sudden news can affect the stock market that have a deeper impact on the day trading as you cannot wait for the market to get better. Then this is true for any form of stock market trading and it is not a typical problem for the day trading. To avoid such situations you need to have comprehensive knowledge of the industry and keep regular watch on the stock market.

Sunday, September 6, 2009

5 Ways to Lose Money Day Trading

Defense wins championships. A good defense gives your team a chance to win; it keeps you in the game. To put this in trading terms, your game plan should keep your losses manageable while waiting for an opportunity to build a position. When you trade with this mindset you will always be in the game and ONE trade could turn around your entire day or your week.

Too often we see trader after trader trying to earn their entire month by gambling big on every single trade instead of seeing the big picture and earning your pay by the month.

There are literally stores and bookshelves filled with trading books and videos about how to earn money in the stock market. If I was forced to put a number on it I would say that 98%of them focus on telling you what to do to be successful as a trader.

We are going to discuss some of the things you can AVOID to give yourself the best chance of netting money on a regular monthly basis.

1. Using maximum leverage all the time: Most retail traders who make the venture into full time trading have a very common belief; "if I had more buying power I would make more money." So when they actually make the jump to a professional firm they can't wait to "load up" a position. All they can see is the dollar signs of what they will earn as the trade moves in their favor. It is just not possible for every trade you take to be one where you should increase your leverage. Placing maximum share size on your initial entry requires you to be amazingly accurate with every entry. Think about that, maximum share size all the time forces you to be perfect. Is that possible?

2. Not using enough leverage: There are however certain times of the day, week and month when you will have the market condition to increase your position size. Keep in mind this will occur on average around 30% of the day, week, and month. Think about that; 70% of the month will NOT be optimal conditions for max share size!! How often does the market, sector, your stock, market internals and volume all line up for this perfect storm?

3. Trading the entry signal instead of the trend: One of the most exciting things to do when trading is obviously getting into a trade, that's what gets your blood pumping. Unfortunately because the entry is so exciting that is where most new traders put most of their focus during the trading day; on the entry signals. This is equivalent to going to the beach and watching the small splashes of water around your ankles and thinking those splashes move the ocean. It is the other way around and that should be your focus. The big picture first and THEN the smaller time frames to enter or exit. Don't even look at the smaller entry time frames until it looks good on the higher time frames.

4. Guessing when a trend will end: When you remove the ego based desire to pick tops and bottoms you will immediately become a better trader. This will add to your net profitability than any other advice you will receive. One of the first mentors I had said it the best; "it is what it is until it's not." In other words assume the order flow the buying or selling pressure is intact until you see a heavy volume pause or exhaustive volume.

5. Trying to scalp AND position trade: Pete Rose was not a home run hitter and Barry Bonds was not paid to hit singles. They both knew very clearly before they went to the batters box what they were trying to accomplish. This is a very important concept to understand before you begin trading for the day it will affect how you manage a position and how you get shares for a trade. If you are a "singles hitter" as a trader you will be trading full size on both entry and exit. If you are a trader who holds positions you will be building a position as the stock moves in your favor and scaling out as well. It is very difficult to scalp and to be a position trader; you will constantly be mixing business plans. This is a quick road to the poor house. Pick a style that fits your personality and trade it like you own it. This will make it much easier to replicate your success.

Spend some time during lunch or after the close and see how many of these five you can remove from your daily trading.

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Ways to Lose Money Day Trading