Affichage des articles dont le libellé est forex trading. Afficher tous les articles
Affichage des articles dont le libellé est forex trading. Afficher tous les articles
Basics forex trading
If you’re a beginner that just got into investing in currency, you probably don’t know yet what are the best ways to make money. Forex, or Foreign Exchange Market, is the biggest market in the world, it has the most liquidities and it’s available worldwide, not just in one single location. Since people from all over the world trade on it, the market is open 24 hours a day during the work week, making a pause only during the weekends. Forex trading is one of the most popular ways of making money.
Another name for it is FX and the market does just what it says, it allows investors and traders to exchange currencies for one another. While this is a market, there are no goods being traded here. The currencies themselves are the ones which are exchanged and the entire thing is more of a barter, not a trade. The Forex trading is done in currency pairs all the time and you’re basically using the purchasing power of one currency to get another currency. The exchange rate at the time of the trade decides just how much of the other currency you’re getting. You could trade USD for EUR, or you can use Japanese Yen to get Swiss Franks. The market gives you the possibility to sell or buy any currency in the world, as long as it’s a free currency, not a fixed one. Though there is a huge number of currencies which can be traded here, there are certain pairs of currencies which are preferred by investors, thanks to the power of the economies of the countries which issue them. The four biggest currency pairs which are traded the most on Forex are the Euro to US Dollar, the British Pound to US Dollar, the US Dollar to Japanese Yen and the US Dollar to Swiss Franc. Most of the Forex traders like trading in juse these currencies, to keep things simple. There are some though, which will analyze the market and will adapt, using whatever currency gives them the better chance at a nice profit.
Demand and supply is important here as with any other type of trading and since companies from all over the world need other currencies for their importing or exporting, they end up buying or selling currency at all hours during the day or night, depending on the timezone that they’re in. It doesn’t matter what time zone you’re in, you can trade on the Forex market non-stop, for five days a week. The only time when the Forex market closes is during the weekends.
The Forex market is the biggest one in the world and there is an astonishing number of trades being done on it every single day. This market is actually around 30 times bigger than the biggest financial markets. There is a huge number of trades being done and since you can trade with so many different investors, you will always find a good deal. Investors find the Forex market quite attractive and for good reason. This market can make you rich or it can make you lose a lot of money, depending on how good you are and how you can predict the trends of the exchange rates.
Besides the many opportunities, the Forex market has some advantages for investors, which other tools of trading don’t offer. One example would be that on Stop orders there isn’t any slippage when the Forex market is open.
If you’re looking to get started with Forex trading, you should pick a forex trading platform which is available online. You can use these online systems to help you get started, as they come with helpful tutorials and trading alerts which should make your job easier.
Strategies
As a beginner you need to decide what strategy you want to follow. Are you the type of investor which invests with a long term goal or do you want to get your money out as quickly as possible? Short or long term, is a decision you should make, depending on the money you have, your temperament and any other factors which might be unique to you. Both methods can be very profitable, so it’s up to you to decide which one will work best for you and your personality.
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trading forex
The safeguards of forex trading
To operate effectively in the trading environment, we need rules and boundaries to guide our behavior.
It is a simple fact of trading that the potential exists to do enormous damage to ourselves—damage that
can be way out of proportion to what we may think is possible. There are many kinds of trades in
which the risk of loss is unlimited.
To prevent the possibility of exposing ourselves to damage, we need to create an internal structure in
the form of specialized mental discipline and a perspective that guides our behavior so that we always
act in our own best interests. This structure has to exist within each of us, because unlike society, the
market doesn't provide it. The markets provide structure in the form of behavior patterns that indicate
when an opportunity to buy or sell exists. But that's where the structure ends—with a simple indication.
Otherwise, from each individual's perspective, there are no formalized rules to guide your behavior.
There aren't even any beginnings, middles, or endings as there are in virtually every other activity we
participate in.
This is an extremely important distinction with profound psychological implications. The market is like
a stream that is in constant motion. It doesn't start, stop, or wait. Even when the markets are closed,
prices are still in motion. There is no rule that the opening price on any day must be the same as the
closing price the day before. Nothing we do in society properly prepares us to function effectively in
such a "boundary-less" environment. Even gambling games have built-in structures that make them
much different from trading, and a lot less dangerous. For example, if we decide to play blackjack, the
first thing we have to do is decide how much we are going to wager or risk. This is a choice we are
forced to make by the rules of the game. If we don't make the choice, we don't get to play.
In trading, no one (except yourself) is going to force you to decide in advance what your risk is. In fact,
what we have is a limitless environment, where virtually anything can happen at any moment and only
the consistent winners define their risk in advance of putting on a trade. For everyone else, defining the
risk in advance would force you to confront the reality that each trade has a probable outcome, meaning
that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no
matter how good a trade looks, it could lose. Without the presence of an external structure forcing the
typical trader to think otherwise, he is susceptible to any number of justifications, rationalizations, and
the kind of distorted logic that will allow him to get into a trade believing that it can't lose, which
makes determining the risk in advance irrelevant.
All gambling games have specified beginnings, middles, and endings, based on a sequence of events
that determine the outcome of the game. Once you decide you are going to participate, you can't change
your mind—you're in for the duration. That's not true of trading. In trading, prices are in constant
motion, nothing begins until you decide it should, it lasts as long as you want, and it doesn't end until
you want it to be over. Regardless of what you may have planned or wanted to do, any number of
psychological factors can come into play, causing you to become distracted, change your mind, become
scared or overconfident: in other words, causing you to behave in ways that are erratic and unintended.
Because gambling games have a formal ending, they force the participant to be an active loser. If you're
on a losing streak, you can't keep on losing without making a conscious decision to do so. The end of
each game causes the beginning of a new game, and you have to actively subject more of your assets to
further risk by reaching into your wallet or pushing some chips to the center of the table.
Trading has no formal ending. The market will not take you out of a trade. Unless you have the
appropriate mental structure to end a trade in a manner that is always in your best interest, you can
become a passive loser. This means that, once you're in a losing trade, you don't have to do anything to
keep on losing. You don't even have to watch. You can just ignore the situation, and the market will
take everything you own—and more.
One of the many contradictions of trading is that it offers a gift and a curse at the same time. The gift is
that, perhaps for the first time in our lives, we're in complete control of everything we do. The curse is
that there are no external rules or boundaries to guide or structure our behavior. The unlimited
characteristics of the trading environment require that we act with some degree of restraint and selfcontrol,
at least if we want to create some measure of consistent success. The structure we need to
guide our behavior has to originate in your mind, as a conscious act of free will. This is where the many
problems begin.
See more article :
The dangers of trading forex
The psychology of successful forex trading part 2
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The psychology of successful forex trading
To these traders, losing money trading was the price of admission to
a fun and exciting game.
This was my first clue that making money is secondary to other considerations
with many people.
I believe that there are many other reasons why people trade. In the example
just given, the clients were more interested in the excitement of trading
than in the making of money. They wanted to feel that jolt of adrenaline
that comes from trading. They liked the high of having the account value
go up and perhaps even liked the adrenaline hit when the account value
went down.
In the lecture, I ask attendees how they feel when they have bought a
market and it is moving strongly higher. People in the audience said that
they felt great; they felt high! And they said that they felt terrible when they
were losing money.
It is common for people to equate the forex market to Las Vegas. People
know that they will lose money when they go to Las Vegas and yet they
still go because of the excitement and entertainment they receive. Except
for card-counters in blackjack, nobody goes to Las Vegas to make money.
Nobody plays roulette with the idea that they will make a lot of money or
will be able to make a living doing it. They do it for the action.
Many people trade forex to provide a diversion from their regular life,
perhaps because they feel that it is boring or not stimulating enough. They
could call their bookie or they could call their broker. It beats sitting at
home and watching TV.
Another reason that many people like to invest in forex is because they
like to solve the puzzle of what makes the market go up and down. They
want to be able to predict the market.
It’s interesting to note that nearly all the articles and books written
about forex trading are about entry and exit techniques. Yet trading techniques
developed by Richard Donchian in the 1960s have been shown to
make money for every year since then. We already know techniques that
make money, yet 90 percent of traders lose money. Odd? Yes! It is clear
to me that it is more important for many people to continue to figure out
what makes the market tick or to figure out new entry and exit techniques
than to make money. Rather than use the old tried-and-true techniques and
make money, they prefer to try to figure out new techniques.
There is a common desire in many to want to figure out puzzles. The
market is a very challenging puzzle to be solved and attracts many people
to do just exactly this. They are fascinated by the puzzle. They want to find
a new way to beat the market.
Many traders believe that there is an underlying truth to the market
or perhaps a powerful underlying pattern or force. They, therefore, believe
that they should spend a tremendous amount of time trying to understand
that underlying force. For example, many people spend countless hours
and days trying to understand Gann or Elliott on the assumption that if
they can just crack the code they will become rich beyond their wildest
dreams. Or that if they just study harder they will understand the teachings
of the guru that they are subscribing to.
These traders focus on trying to unlock the secrets of the universe as
the way of making money rather than go directly to the subject of making
money. They end up spending a tremendous amount of time on the study
of esoteric theory and not on trading the markets. When they do trade the
markets, they often stop trading after just a few losing trades because they
assume that they do not understand the secrets of the universe well enough
and should go back to studying.
Take a look at the popularity of the literature and lectures about trading
systems. The basic concept behind trading systems is that there is a
mathematical model that will create profits. I agree that this is true. The
continuing success of Donchian’s basic systems, mentioned earlier, shows
that trading systems can make money. However, many people like to invent
their own systems or modify other systems that they have bought or read
about. One problem with this is that they spend all their time trying to perfect
the system rather than make money. They often become obsessed with
fine-tuning their system rather than simply using an imperfect system. Of
course, no system is perfect so they end up spending all their free time on
the system instead of making money. The chase of the system is more important
than making money. The perfection of the system becomes much
more important than the point of the system, which is supposedly to make
money.
A number of years ago, I had the opportunity to train traders from
Korea. I had six months to turn them into profit-making traders. They each
had $100,000 to trade. I had three groups of six traders for each six-month
period.
I decided to give the initial six trader-trainees a liberal arts education
about trading. I taught them everything about trading under the sun. I even
had guest lecturers teach them about subjects that I was not an expert in,
like Elliott Wave.
One of the guest lecturers was a good friend of mine who was an Elliott
Wave fanatic and had been trading using Elliott Wave for about eight years.
I left him with the students while he gave the lecture. At the end of the
lecture, I came back in and started to ask him some questions about his
trading that I thought would be informative to my students.
I asked him point-blank, “Why do you use Elliott Wave?”
He said, “There is no greater feeling in the world than to have analyzed
the wave structure of a move and to buy right at the absolute bottom of
Wave Two!”
the first part of lesson :
The psychology of successful forex trading
from : forex trading
The psychology of successful forex trading part 1
It is a well-known fact that roughly 90 percent of forex traders lose
money, about 5 percent break even, and 5 percent make money. Why?
And what can be done about it?
The answers to these questions may be the most critical for any forex
traders. This chapter explores these issues and attempts to highlight ways
that traders can become profitable in their forex trading. The psychology
of trading is the most important factor for determining the success of your
trading.
There are numerous trading systems on the market that are profitable.
There are numerous trading advisors and newsletters that have had longprofitable
track records. Yet the average speculator is a losing trader. The
average speculator, when handed sound advice, will still lose money.
I have been writing on this subject since my book Commodity Spreads
(John Wiley & Sons) was published in 1982. I feel that understanding
the psychology of trading is vitally important for myself as a professional
trader and for you, the intelligent reader of this book.
I have given lectures on this subject mainly to futures and forex traders
though the years. The first thing that I do is ask how many people in the audience
have made significant money over the prior two years. I have had
only one person raise their hand in the hundreds of people who have attended
the lecture. I then ask how many had made significant money over
the prior year. I get a few hands. The point: The vast majority of traders
don’t make money.
I have often wondered why. After all, the vast majority of the people at
the lectures are successful people in their businesses. It costs about $500
to attend the conference, and the attendees may also be paying for travel
and hotels to attend the conference. It takes a certain amount of money to
spend a minimum of $500 to gain some insight into trading.
There are few people who attend these conferences that are not very
successful people. Why is it that they can be successful doctors, lawyers,
and business owners yet cannot trade forex? What is it about forex trading
that is so hard?
WHY DO YOU TRADE?
I ask the audience members why they trade. Of course, the answer is to
make money. I ask them if they are really sure. By this time, they are starting
to second-guess their first answer. But, in the final analysis, they stick
with their answer: that they are trading so that they can make money. I
think that that is completely wrong. I think that people trade for tons of
other reasons and that making money is a relatively minor reason. Nobody
really knows why each individual person trades but there are many reasons
other than making money.
I first discovered this about 20 years ago. Back in the 1970s, I managed
futures money with a partner. We offered two different accounts to our
prospective clients. The first account traded only commodity spreads and
was making 200 percent per year while the second account traded only
outright positions and was making about 100 percent per year (please note
that these returns were so high because I didn’t know as much as I do
now about risk and money management and we were simply taking far too
much risk).
Of course, everybody opened up a spread account because it was
making 200 percent per year. Within six months, nearly everybody had
shifted their account to the outright program in spite of the fact that it
returned only half as much! This stunned us because we always assumed
that people invested in futures to make money. In fact, they were involved,
I believe, for the action. They would call us up when they were invested in
the spread account and ask how their account was doing. We would
respond that they made $12.50 the previous day because a back spread
in the corn market has moved one-quarter of a cent. On the other hand,
they would call about their outright account and we could say that the
value of the account had moved $1,000 because of some big move in the
bellies.
The point is that they wanted the action of the futures markets, not
the profits. Their primary motivation was action and making money was
secondary. It’s okay to pay to see a movie because of the entertainment value.
from : forex trading
forex trading The Basics of Foreign Exchange Trading
Foreign exchange( or forex trading) is the most traded instrument in the world. Roughly
$3 trillion is traded on any given day. Some days, volume can reach
as high as $7 trillion per day. This volume completely swamps the
global stock market.
It is not hard to understand why forex is traded the most. Nobody
needs to buy stocks but we must all deal directly or indirectly with the
foreign exchange (forex trading) world. Global trade is huge. Every time a barrel
of oil is bought, dollars must also be bought by everybody but Americans.
Japanese must change their yen into dollars to buy oil since oil is priced in
dollars. Every time an American buys a Japanese car, dollars are swapped
for yen to buy the car. Every time a kid watches a Disney movie in Poland,
dollars are demanded. Cross-border capital flows for investment contribute
another massive quantity of foreign exchange transactions.
Perhaps the largest component of daily volume is speculation. This is
mainly done by banks and other financial institutions around the world.
Every day, banks trade among themselves looking for speculative profit. In
addition, major banks try other strategies to make money. For example, a
bank will try to find another bank that doesn’t know the correct price for
a currency and make a purchase. Perhaps a large order had come into a
bank that was large enough to change the price of the currency. This piece
of knowledge could create additional profit opportunities for the bank that
knew about the order. This will be discussed later in this chapter. Let me
assume that you know something about investing in general, perhaps in
stocks, and focus on how the forex market is different from other markets.
from : Forex trading
see more article :
Forex trading : Forex versus exchange markets
Forex trading : Forex participants
Forex trading : Achieving Consistency: Simple Steps Every Trader Can Take
Source : Forex trading
