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 Forex Trading Strategy Education    
 
 
 

The first thing someone needs when beginning in the Forex Trading market is a well thought out Forex trading strategy. This is because those who do not have a good Forex trading strategy usually end up failing miserably. Of course those who are also in it just for a quick buck will invariably end up losing in the long run. Those without a clear Forex trading strategy will either lose constantly or just break even.

A lot of times the Forex trading strategy will be different depending on different Forex traders. This is because different kinds of Forex traders needs require different kinds of Forex trading strategies. A Forex trading strategy for a Forex day trader will reflect their need to be concerned with day-to-day fluctuations than long-term data. This means that someone who is deciding to become a Forex trader needs to first decide what kind of Forex trader he or she are going to be. Once they decide which kind of Forex trader they are going to be they will better be able to plan their Forex trading strategy.

A very important aspect of every Forex Trading strategy is to be able to lessen any losses or eliminate them altogether. This part of the Forex trading strategy is one that needs to be followed strictly or it can make things a complete mess. Someone who is a Forex day trader will most likely make smaller stops. On the other hand a Forex swing trader will have stops that are less limited. These are both different kinds of foreign exchange trading strategies, but can both lessen losses immensely for either kind of Forex trader.

Another part of a good Forex trading strategy is to plan the size of Forex transactions. This allows many different Forex trades to be made at any time instead of just one huge Forex transaction. This will lessen any loss, by dividing the Forex trades, so not all are affected. This also brings in more discipline to the equation.

Following the Forex trading strategy that you plan out requires discipline and following it to the letter, because the Forex market does not always lend itself to the best opportunities in Forex trading. In the Forex market it is mostly about timing, if not all about timing. Understanding this and incorporating it into your Forex Trading strategy is how you will benefit the most from it.

A few other things that need to be incorporated into a good Forex Trading strategy is first of all acquiring accurate knowledge about the way it works, different things that can affect Forex trade and what various Forex software and services that are available to meet their needs for Forex charting and such. One last thing that needs to be included of course is what other Forex traders are doing, allowing the Forex Trading strategy to be planned accordingly.

There are many tools available to help analyze and understand the market movements and patterns. As a beginning FOREX trader you should study each tool independently to develop a good working knowledge of its function and use. As you master each tool you can continue to use it while you educate yourself on the next tool you want to learn. Since many of these tools are similar you will find that the time it takes you to learn a new tool continues to drop as you become familiar with more of them.

You will find many Forex trading strategies are based on "support" and "resistance" levels. The support level is what is considered the bottom price for a currency; the currency will drop to this level and then eventually rise again. The resistance level is just the opposite this is the top price that the currency will reach but does not normally exceed. Once it reaches this point it will eventually drop again. It is normal for support and resistance levels to gradually shift over time.

If a currency suddenly moves beyond it's normal support or resistance levels then it is expected that the currency will continue to move in that direction for a time. A currency is considered to be "bullish" when it is moving up, if a currency becomes bullish and breaks through its normal resistance level it is expected to continue moving upward for a time.

You need to study Forex price charts to determine the support and resistance levels for a currency. You study the charts looking for an unbroken pattern of high and low prices that the currency does not exceed. The longer time span you use for your charting the more accurate and dependable your final analysis will be. You can then use these levels to determine at what point you want to enter and exit a trade.

This just one Forex Trading strategy that a Forex trader can use, this one is based entirely on Forex technical analysis. To be truly successful a FOREX trader needs multiple Forex Trading strategies that they can employ based on market conditions.

Forex Trading Strategy and Economic Indicators

The promise of "Easy Money" captures the interest of many beginning Forex traders. You can find offers all over the Internet claiming, "risk free trading", "low investment", and "high returns". While there is some truth in these statements you will find that they are over simplified and the reality of FOREX trading is a little more complicated.

It is very tempting to dive right in and start Forex Trading as soon as you open your FOREX TRADING account. Doing this will most likely lead you to make the two most common Forex Trading mistakes of beginning Forex investors. These are trading based on emotions and trading without a philosophy or Forex Trading strategy. While watching the movements of a currency pair you may feel that you are letting an opportunity pass by if you don't get involved. So you buy only to see the price start moving against you, in a panic you sell at a loss, to then watch the price recover.

You must have a rational Forex Trading strategy and not base any decisions on emotion. Undisciplined Forex trading like the scenario described above will only lead to losing money in the Forex trading

You have to be well educated in Forex market movements to make rational Forex trading decisions. You must be able to read Forex Trading technical studies and Forex Trading analyses and use that information to plot out entry and exit Forex Trading points. You must be able to use the various types of Forex trade orders available to maximize your Forex Trading profits and minimize your Forex trading losses.

The first thing you have to do is to understand the market and the forces that move it and affect it. Learn who trades on the FOREX market and why do they do it. Who are the successful Forex traders and what do they do that makes them successful Forex Traders. By doing this you will be able to identify the successful Forex trading strategies and use them to help you develop a Forex Trading strategy of your own.

Banks, Corporations, Governments, investment funds, and traders are the major groups of investors in the foreign exchange market. While they all have their own objectives four of these five all have one thing in common. They have external controls; these are rules and guidelines that control the Forex trades that they make and the basis that they can be held accountable to. The exception to that is the individual Forex traders, they are accountable only to themselves.

A  Forex trader that enters the market with out rules and guidelines is setting himself or herself up to lose money. The "big boys" and the well educated Forex investors all approach Forex trading with strategies, if you want to play on the same field with them and be successful Forex trader you will have to play by the same rules. You absolutely must have a Forex trading strategy, and you will need to be disciplined and follow it.

Money management is a critical part of every Forex trading strategy. Along with knowing which currencies to trade and how to recognize Forex trading entry and exit points as successful Forex trader must has to manage his available resources and make money in the Forex trading.

Forex Trading Strategy Tips

If you want a successful FOREX trading strategy, you should incorporate the following tips into your existing Forex Trading strategy you should then become a profitable Forex trader. The aim is not to just to make money, but to make big profits consistently.

1. Get a Forex Trading Method you have Confidence in

You need to have total confidence in your Forex Trading method - so you can follow it with discipline. Pick a simple, Forex Trading technical method – simple Forex Trading methods work best, as they’re more robust in the face of brutal market conditions - complicated Forex Trading methods tend to break. Just use a few rules and parameters, and they should work across all markets – a technical Forex Trading system should work on ANY market that trends.

2. Don’t Trade Forex Frequently

The good Forex trades only come around a few times a year, so focus on them. Many traders think there is good opportunities everyday - there aren’t. There’s no correlation between how often you trade Forex, and how much money you will make - if you want to make big Forex profits, you need patience.

4. Only Focus on the Long Term Forex Trends

Forget Forex day trading, and focus on the longer-term Forex trends only - how can you make big profits in a day? - You can’t. Don’t forget you have to cover your losing days as well. Always remember – Forex brokers interested in making the maximum amount of commission, perpetrate the make money by day trading myth. Forex trends last for months or years - focus on them, and milk them for all they’re worth.

5. Trade Forex in Isolation

Don’t discuss your Forex trading with anyone - the only way you’ll make big money is by doing it by yourself. Have confidence in your ability and don’t let anyone put you off - this is an essential character trait of all great Forex traders.

6.  Work Hard not Smart

Many losing Forex traders think the more effort they make with their FOREX trading strategy, the greater their Forex trading skills will become – this is not true! You can learn a Forex Trading method in a short period of time, and if you have a simple robust Forex Trading method, you can do your Forex Trading analysis in about 30 minutes a day - and that’s it!

7. Trade Forex pairs, not currencies

Like any relationship, you have to know both sides. Success or failure in Forex trading depends upon being right about both currencies and how they impact one another, not just one.

8. Knowledge is Power

 When starting out online Forex trading, it is essential that you understand the basics of this market if you want to make the most of your investments in the Forex Trading.

The main Forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their Forex positions and subsequently miss out on some of the best Forex trading opportunities by waiting until the market calms down. The potential in the Forex Trading market is in the volatility, not in its tranquility.

9. Unambitious Forex trading

Many new Forex traders will place very tight Forex Trading orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small Forex trades than when you make larger ones.

10.Over-cautious Forex trading

Like the Forex trader who tries to take small Forex Trading incremental profits all the time, the Forex trader who places tight Forex Trading stop losses with a retail forex broker is doomed. As we stated above, you have to give your Forex Trading position a fair chance to demonstrate its ability to produce. If you don't place reasonable Forex Trading stop losses that allow your Forex trade to do so, you will always end up undercutting yourself and losing a small piece of your forex trading deposit with every Forex trade.

Many of the above Forex Trading tips are not conventional wisdom - but keep in mind that 90% of Forex traders don’t make big Forex Trading gains – and they follow the herd.

Forex Trading Strategy Tips to Avoid Forex Trading pitfalls

1. Take it like a man

 If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your Forex trading loss and wait for tomorrow to try again. Sticking to a bad Forex Trading position ruins lots of Forex traders - permanently. Try to remember that the Forex market often behaves illogically, so don't get commit to any one Forex trade; it's just a Forex trade. One good forex trade will not make you a Forex trading success; it's ongoing regular performance over months and years that makes a good Forex trader.


2. Focus

Fantasising about possible Forex Trading profits and then "spending" them before you have realised them is no good. Focus on your current Forex Trading position(s) and place reasonable Forex Trading stop losses at the time you do the Forex trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.

3. Don't trust Forex Trading demos 

Demo Forex Trading often causes new Forex traders to learn bad Forex Trading habits. These bad Forex Trading habits, which can be very dangerous in the long run, come about because you are playing Forex Trading with virtual money. Once you know how your Forex broker's system works, start trading forex with small amounts and only take the risk you can afford to win or lose in the forex trading.

4. Stick to the Forex Trading strategy

When you make money on a well thought-out strategic forex trade, don't go and lose half of it next time on a fancy; stick to your forex trading strategy and invest forex trading profits on the next forex trade that matches your long-term goals.

5. The clues are in the details

The bottom line on yourforex Trading account balance doesn't tell the whole story. Consider individual forex trade details; analyse your forex trading losses and the telling losing forex trading streaks. Generally, forex traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term forex trading.

6. Simulated Results

Be very careful and wary about infamous "black box" Forex trading systems. These so-called Forex trading signal systems do not often explain exactly how the Forex trade signals they generate are produced. Typically, these Forex trading systems only show their track record of extraordinary Forex results – historical Forex trading results. Successfully predicting future Forex trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these Forex trading systems provide significant retrospective Forex trading systems, not ones which will help you trade Forex effectively in the future.

7. Get to know one cross at a time  

Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.

8. Risk Reward

If you put a 20 point Forex trading stop and a 50 Forex trading point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the Forex market gives you.

9. Trading for Wrong Reasons

Don't trade Forex if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no Forex trade to make in the first place. If you are unsure, it's probably because you can't see the Forex trade to make, so don't make one.

10. Zen Trading

Even when you have taken a Forex Trading position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring forex trading losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade forex in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.

11. Determination

Once you have decided to place a Forex trade, stick to it and let it run its course. This means that if your Forex trading stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.

12 Short-term Forex Trading Moving Average Crossovers

This is one of the most dangerous forex trading scenarios for non professional forex traders. When the short-term forex moving average crosses the forex longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish forex trading indication, so don't fall into the trap of believing it is one.

13. Stochastic

Another dangerous Forex Trading scenario. When it first forex trading signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This forex trading approach means that you'll be with the trend and have successfully identified a positive forex trading move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).

14. One cross is all that counts

EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous forex trading. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.

15. Wrong Forex Trading Broker

A lot of FOREX TRADING brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your Forex Trading broker. you can also visit our directory page to find some forex trading brokers or visit http://www.forextradings.biz ask about them before you choose a one.

16 Too bullish

Forex Trading statistics show that 90% of most forex traders will fail at some point. Being too bullish about your Forex trading aptitude can be fatal to your long-term Forex Trading success. You can always learn more about trading the markets, even if you are currently successful in your forex trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.

17. Interpret forex news yourself

Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.

 
 
 

 

 
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