Forex Market - Forex Experts Network

Friday, 7 February 2014

Discretionary Trading vs. Robots

I have been trading for more than 15 years now.

When I first started, in 1994 as far as I remember, there wasn’t a lot of softwares on the market and of course we didn’t talk about forex yet.

But, “magic systems” were already spreading over the web. You were finding different kind of gurus selling their black box that only professionals use, of course, promising you a fortune in a matter of days or even hours…

One after the other, the gurus disappear leaving place to others.

Today, you can find thousand of “wonderful” systems if you type “trading system” on any search engine. You may read numerous articles promoting the success of such expert advisor or trading robot.

Speaking of robots, it’s amazing how people believe in automatic trading. They think they can go to work in the morning, leaving behind them this wonderful robot catching pips on the forex market all alone. Have you been given the chance to get this ultimate trading system only used by banks or institutionals ? Just be patient, a smart guy will soon propose a good one, maybe the best.

I use an ironic tone on purpose because I am tired to see all this disillusion from people who still believe in Santa Claus. Get back on earth, my friends, there is no easy way to earn money on the financial markets. Most of the traders, living from their activities, won’t share their work with you.

The good news is you can learn to trade by yourself. Today, you can get very good trading courses on the web, free or not. You have access to valuable ressources if you take the time to select websites.

Now, what are we supposed to do with all these trainings and advices, you might ask?

Well, if you want to be successfull in trading, whatever the market, you will have to learn to become a trader. You will have to develop your system, or trading approach, and adopt a good attitude through a back-tested money management (the one you feel confortable with and which works).

So, as a summary:

learning the trading basics from books or online ressources (technical analysis etc.)
develop you own trading system which could be as easy as efficient
use a money management system which is a necessary condition to make your trading system profitable
learn how to behave properly while trading (have you heard of the emotions control…)

When I use the word “system”, I don’t make reference to any automatic trading or robot. Besides the fact I can’t stand automatic systems, it has been proven that systematic trading doesn’t work on the long term.

Why is that ? We know that patterns always repeat themselves cycle after cycle so we could imagine a easy way to benefit from this repetition. The answer relies in the human being behavior on the market. Traders are filled with emotions like greed or fear. Even if most traders now recognize the usual patterns and knows how to follow a trends, most of the time they let themselves overwhelmed by emotions when the market doesn’t react like it should…

That leads this question: why discretionary trading works?

Dicretionary approach consists in following a trading system (because you always need some king of system) through the human eye. A trader, controlling his emotions and analysing the market with objectivity, has the ability to understand the market crowd represented by all the traders. He will be able to understand the excesses and adjust his trading accordingly.

A robot will enter a position as soon as a resistance or support is broken or when a 38% fibonacci retracement has been reached etc. Of course a trader would initially adjust his robot parameters according to his strategy but he won’t be able to “play” new market conditions for exemple.

The market likes to defeat all automatic systems which tend to setup logical stop losses and profit targets. Have you ever seen the wonderful spikes on the forex market, in particular after news releases…

A discretionary approach will never prevent you from losses. Any trader will suffer from losses. It is part of the activity. If you don’t want to loose, you should try no-risk investments offering 2-3% a year.

But at least, you will always control what you are doing, knowing exactly what the market is leading and if this is a good moment to enter a position or not.

You have obviously a set of rules, explaining the “when & how” you enter a position, but you may adjust your strategy according to certain market conditions.

Be careful though. You need to stick to the plan you implemented when developing your trading system and money management. It’s a very important aspect of the trading. But once again, there is no automatic entry position. For the exits, it’s a bit different because you can set a profit target in advance and exit the position automatically. You developp this aspect in your money management rules.

I hope I gave you the desire to become a real trader using a discretionary approach, far from automatic systems which definitly don’t work. Trading can be fascinating if you give yourself the means to do it properly.

by Sebastien Duval

source:Kewords: Forex Currency Trading, Forex Forecast, Forex Learn Trading, Forex Mini, Forex Mini Account, Forex Mini Trading, Forex Trading, Forex Trading Platform, Forex Trading Software, Forex Market, Forex Strategy, Forex Signal, Forex Forum, Forex News, chicbull.com

Important Lessons to Get You on Your Way to Profitability

Trading in the foreign exchange market is not based on any rocket science as there is no such thing called holy-grail in it. There are numerous things in it that you learn by the time and whatever you know today about it; chances are that after a few months you would think how less you knew before. Optimizing the number of green trades in your account can only be possible by your experiential learning; had reading the books were the only key to profitable trading then almost all of us would be rich within no time.

However, if you don’t have enough expertise then you could at least learn from other traders experience and the tactics they followed that didn’t work out. Let’s have a look at some of key lessons that would certainly help you out in maintaining trading discipline and optimize profits.

1 – Control your Emotions

Never let them interfere while you are trading. Greed and fear both are detrimental as having greed for more profits usually ends up in losing the already-earned money. Fear of losing your trades compels the trader to close the position at loss and he does so too, and soon after that he realizes that the market has started moving in his favorable direction. Therefore, the market always supports those who keep calm, are patient with their trades, and avoid getting overwhelmed by unfavorable market movement.

2 – Say No to Overtrading

Once the trader has incurred loss in previous trades, he thinks to cover that loss up and enters the market again thinking that he would cover it up easily. But unfortunately, he keeps on losing more as the positions entered were based on emotions rather than rationale. This really brings his confidence level down and his fear increases due to which he often fails to enter in the market when the direction is clear. So opportunity cost doesn’t let his account grow.

3 – Trading Style & Session

Trading styles differ among traders, depending on their time feasibility and ease with which they can trade. However, most traders prefer trading in the European or U.S session as the market usually does not have choppiness in it and has 80% probability to move in one single direction.

4 – Closing the Trades

The fundamentals including the speech or conferences by the policymakers have been reflecting a deep impact on the market, so it is highly recommended for the traders to close their positions before such events as the technical points normally fail because of high volatility. Plus, don’t forget to close your trades on Friday before the market closes for weekend because you never know what news or decisions might come up by the policymakers on weekend, due to which the market may open in huge gaps.

5 – Trend is your Friend

Breakouts occur both in the bearish and as well as in the bullish trend, but that doesn’t mean you try to make the most out of the market and enter the market ‘against’ the trend to get each and every pip in your favor. Always follow the trend; for instance in a bullish market when you see a bearish breakout, selling is not a good idea rather you should buy more on the dips. The same is true for the bearish trend, where selling on bounces may optimize your profits too.

To identify the trend, follow the 200 EMA on daily, four-hour, and one-hour chart where the price moving above the EMA line represents a bullish trend, whereas price movement falling below that line means the trend is bearish.

6 – Adding to your Positions

Once you are done with identifying the trend and breakout, do not enter with a huge lot at that very same price, instead enter small lots repeatedly if the price is moving in your favorable direction. This decreases the risk to a great extent and makes sure that you are getting profits on each trade you enter one after the other. For instance, if you went long on EUR/USD, enter you buy positions after every 5 to 10 pips gap from the initial one, if the price is continuously moving upwards.

If you are new to trading, playing it safe is what you need to focus on along with building up your confidence and balance because once it’s lost at the beginning then you might end up quitting forex trading as it may seem to you as a futile thing.

by Nils Rehfeldt

source:http://chicbull.com/important-lessons-to-get-you-on-your-way-to-profitability/

Kewords: Forex Currency Trading, Forex Forecast, Forex Learn Trading, Forex Mini, Forex Mini Account, Forex Mini Trading, Forex Trading, Forex Trading Platform, Forex Trading Software, Forex Market, Forex Strategy, Forex Signal, Forex Forum, Forex News, chicbull.com

REST — the Key to Success in Financial Investments

In order to be profitable in any form of investment, a trader needs to put every defining factor into perspective. Although the market is dynamic in its nature, it is important for every trader to have some established rules that govern their trading. This means that by fixing some aspects of your trading, you are indirectly taking care of your emotions, and thus giving yourself an edge to succeed in your chosen investment. “REST” above stands for Risk, Entry, Stop loss, and Target, and in the following paragraphs, I will explain why it is important to fix the above parameters if one aims at becoming successful in trading.

RISK: This is one easily overlooked aspect of trading. It is nothing but wise for any trader to be conscious of the risk that they are taking in any particular trade. Before taking a position, traders need to know how much money they might lose, and make sure it is within their comfort zone before they place the trade. Without proper risk management , traders cannot make defined claims on the profitability of their trading approach. For example, a trader might be over- risking during a losing streak or under-risking while they are scoring home runs. There are many different models of risk management in the investment world; however, there is one very nice model that requires a trader to risk a fixed percent of their equity in any trade that they take. The aim here is to increase your profitability during winning streaks while reducing your potential losses when the losing trades surface. This is the model that I personally use for my trading and it works well.

ENTRY: Based on the experience that I have garnered over the years, I have come to believe that it is also very important for traders to have a fixed entry for their trades. This might sound a little confusing; nevertheless, it is pretty simple. Anyone who has been around the block for a while should know that round numbers are good levels of support and resistance. These are numbers that end in .50 or .00; for example, 1.4200, 1.4250, etc. The reason behind this is that most of the big investors tend to base their entry and exit at round numbers, thus causing a change in market bias at those price levels. That being said, not all round numbers serve as entry prices, but when they are in the neighborhood of a bullish or bearish confluence, they tend to serve as near perfect entry levels.

STOPLOSS: before entering a trade, it is important to have pre- determined stop loss levels and actually place the stop loss order while you are placing your entry order. Under no circumstance should you move your stop loss further away from entry price after you have entered a trade. If there is need to trail your stop loss, it should be towards the entry or against the direction of current market bias as a way of minimizing potential loss. One big mistake a lot of traders make involves the idea of mental stop loss. This basically means that the trader determines a stop loss level; however, they don’t actually place the stop loss order but are willing to manually close the position should price get to that level. Please, this approach is not acceptable in the world of profitable trading. I mean, if you already know the price level you are willing to exit your trade, why can’t you just place it as a stop loss order? It is that simple. Market volatility can change instantaneously, thus moving price hundreds of pips in a couple of minutes. For example, on 6th September, 2011 during the SNB intervention, the Swiss franc pairs moved more than 800 pips in less than 5 minutes! Imagine you were using mental stop loss and stepped out to go and get a cup of coffee just to come back 5 minutes later and see your live account in red. Remember, such news is not usually posted on economic calendars. So, be warned.

TARGET: Just like in the case of stop loss, it is also necessary to have a pre- determined profit target level before entering a trade. Don’t let your emotions take charge of your trading by deceiving you to believe that the current market volatility will continue in your favor past your target level, thus causing you to get greedy by modifying your target in search for more pips or worse still, remove it completely. Fix your targets and make sure they are logical also. The market usually shows repetitive price patterns, and you can benefit from this by reading price action and setting your target levels accordingly.

It is only when you fix the “REST” above that you can have some rest and leave the rest to the market.

by Chinedu Ilobinso

source:http://chicbull.com/rest-the-key-to-success-in-financial-investments/

Market Mechanics — Understanding Market Movements in the Foreign Exchange Market

Have you ever wondered what causes price movements in your forex charts? Or why the market usually retraces at some point even in clearly established trends? Or better still, why some retracements finally become strong enough to form a whole new trend? This article is aimed at answering the questions above. Notice that a good understanding of market mechanics will definitely help you as a trader by fine- tuning your entry, exit, and stop loss levels, thus yielding better trading results.

Before we delve into the topic, I will like to explain four major reactions that lead to price movements, and in what direction each of them effects their movement in the market.

Buyers entering the market: definitely, buyers entering the market will create a bullish reaction, thus causing upward price movement.
Sellers entering the market: in a similar manner, there would be a downward price movement when sellers enter the market thereby creating a bearish reaction.
Buyers leaving the market: when buyers are leaving the market, it gives a similar reaction as sellers entering the market. Therefore, this will cause a downward price movement.
Sellers leaving the market: sellers leaving the market will create a bullish reaction, thus causing upward price movements.

At every point in time while the market is open, a combination of some or all of the above is occurring. This means that the final price movement you actually see on your chart is the resultant of the market vectors listed above. For example, if we are in an uptrend, and are spotting bullish market reaction, it means that we have more net buyers than sellers which are causing the resultant upward movement. Now, as the swing tops out, those buyers who have been scoring profits all along will begin to bank their profits, thus buyers leaving the market. When this is happening, it causes a downward price movement as indicated above which we term retracement. Also, some sellers who were able to predict the end of the bullish swing will also jump in thereby augmenting the downward retracement. As price retraces to a bullish confluence below, those sellers, who entered at the top of the bullish swing, will begin to take their profits( sellers leaving the market), and more buyers will enter the market hoping to continue with the trend to the upside- the general result being a net bullish market reaction. The opposite is the case for a bearish trend.

So, what happens during a trend change? Most trend changes are signaled by fundamental analysis or by bigger investors massively closing out portions of their position which are usually huge enough to break levels of confluence in the previous direction of the trend. When this happens, emotion sets in, and other traders around the world will be keen in taking positions against the previous trend. This action increases the net volume in the new direction, thus creating a whole new trend.

by Chinedu Ilobinso

source:http://chicbull.com/market-mechanics-understanding-market-movements-in-the-foreign-exchange-market/

8 Tips To Improve Your Forex Trading

It is a well known fact that the vast majority of Forex traders do not make money. However, on the other hand, I believe many people can massively increase their chances of being successful by following the simple tips below.

Start with a demo account

If you are new to trading, don’t risk your money right away. You’ll probably lose it. Practice on a demo account for a few months, or if you are extremely eager to get started, at least a few weeks. The longer the better really. I know what it’s like at first, you just want to be trading!

Take time to choose your broker

Choosing a Forex broker is not a task to be rushed. There are so many to choose from, all have their own strengths and weaknesses. You can afford to be picky.

Bid/Ask spreads and execution are often the most important factors for short term traders. Longer term traders may want to pay closer attention to the “swap” rates paid by brokers. Especially if you are looking to make money on the interest rate differentials between currencies, such as a long AUD/JPY position.

Make sure you full know your platform inside out

It sounds simple, doesn’t it? But from reading the various Forex forums, it’s amazing how many people talk about making basic errors, such as incorrect position sizing, stop losses, limit orders etc.

Your trading platform is what you are going to be using to place your trading and orders, so it’s vital you know exactly how it works. Play with the demo account until you know the platform like the back of your hand.

Have a strategy and stick to it

Making impulsive trades that are not part of a trading strategy usually ends in tears. Having a solid strategy that has been thoroughly tested is imperative. Never deviate from your strategy, no matter how tempting it might be.

Forward test and back test your strategies first

Many Forex traders like to back test their strategies. This is where you see how your strategy would have performed in the past. There is nothing wrong with this, it can be helpful, but just because a strategy you have created has performed well in the past, there is no guarantee the strategy will work when future testing. This is because when you back test strategies, you are usually “curve fitting” to some extent.

So once you have backtested your strategy thoroughly, be sure to test it on a demo account for a good few months before trading it live.

Use proper risk management

Always be sure that you have a solid risk management strategy and never deviate from it. For example you may want to risk 2% of your entire account on one trade. Perhaps you want to move your stop to break even when your trade is up 1%. Whatever you decide, stick to it.

Never chase the market

I know it’s tempting to make a trade just so you can be “in the market”, but always be patient and get the best possible entry. This can massively lower your risk and improve the chance of your trade ending positive.

Don’t get cocky or arrogant

It’s so easy to get cocky when you have had a long line of winning trades, you can begin to feel invincible. This can lead to rash and impulsive decisions. Remember, when you trade Forex, you are a very tiny fish in a very big pond. You must always respect that to be successful.

by Karl Marrion

source:http://chicbull.com/8-tips-to-improve-your-forex-trading/

Forex Knowledge — 5 Things to Consider Before Trading

In certain aspects Forex has been around us, since there was no electricity in caves. Long ago people always traded currency they had: whether it was food, animals or some shiny minerals. With the creation of modern money (coins and then paper) different nations traded one currency for another. In modern times currencies are widely traded by the world’s major financial organizations. The birth of a retail market in mid 1970s allowed non-commercial players to trade Forex. However, the most crucial change to the industry came in 1996 when Forex trading was put online.

Nowadays, the Forex child grew up and became the real giant. Over $4.5 trillion is traded daily in the Forex market where almost $1 trillion belong to the activity of such traders like me and you. These numbers strengthen Forex reputation and tell us about the broad opportunities for making profit with it. However, where the benefits, there come the dangers. Not every Forex-teaching company tells you about them — these guys need you to be thoughtlessly attracted to trading.

In this article, I want to give you the basics — five steps to put your thinking along the way of desirable profits in this biggest market space in the world.

1. The Hype Makes It Wipe

One trade makes me a millionaire. Hail Mr. Soros! This is what brokers want you to think when you are about to start with Forex. Relax and refer such words to what they call “True lies.” Not a Schwarzenegger movie, but a twisted reality. You can strike rich in Forex — it’s “true.” However, “lie” is that it comes an easy way. If you don’t be disciplined, prepared and patient, your winning chances are close to lottery. Approach market responsibly with a balanced frame, set your goals and stick to them. Like in fishing, success comes to those who wait and then strike.

2. Don’t Stay Hungry

I basically don’t mean that you have to trade Forex after having a nice breakfast. No. Before putting any cent into this venture, think if you are ready to lose it. Don’t leave your family without any food or clothes after betting all on ”black” and losing with “zero.” Trade a capital that you can afford to lose without affecting your common life strongly. As a trader, I have to admit — more than 80% of new traders lead to losses. So think twice. If you are ready to say “good bye” to your investments and still carry on, you have a chance get into those 20%.

3. Read, Listen, and Learn

Like you wouldn’t borrow your hard-earned to some guy Phillip you had met only once. You would not jump into such a risky and volatile market like Forex without knowing “who,” “what” and “why.” Your complete research on the subject should include all the market aspects: how it has developed, where it is going, etc. Study the FX history more carefully than I put in first paragraph. Then you could speak to other traders and hear what they say (e.g. go to forums) about the worthy trading practices, best FX tools and services, the surest tips on predicting the market movements, etc. Also learn to read charts, understand and distinguish the Forex news, and (most important) learn your strengths and weaknesses to work on them henceforth.

4. Use Many Baskets for Your Eggs

The way to success in Forex (if I may call it like this) is thorny so treat your capital with care. Do not put all of your hopes on one trade — use the certain percentage of your equity. Although these numbers are up for debate, but take a loss into account, try to predict where your account will be after you lose a trade. My receipt here: use Stop Losses and Take Profits, trade smaller trades, “kill” your greediness, and DON’T even think to overcompensate for losses. Loss means loss. Extending your Stop Losses in hope the market will reverse itself is worthless. Usually, it does not do that. Your “best friend”, a trend, could become your worst enemy. I would also recommend you to trade several currencies to branch out the risks in terms of trades and currencies.

5. Don’t Let It Go to Your Head

It’s like a deep-town rock band, nominated for a musical award: they haven’t finally won but already turned into mannered and arrogant creatures. As for traders, there is no good for them to get too excited and anxious with trades. Any given second they can reverse. If you let your Forex successes go to your head, it will change your trading philosophy so you might take risks where you never did.

Be consistent and get it one by one. Like deserts are thankful for the rain, be grateful for what you win. And carry on with the current scheme if you are profiting. Stick to your plan and be deaf to your hunch calling to move Take Profit or extend Stop Loss.

As an ”after word” I would like to say thatt Forex marke is immensely huge. You can profit quickly and get large returns. However, if you are betting on ”black” because it’s your favorite color, you can win in casino, but with Forex in the end. Address it like a business (with same responsibility) and it will get back to you with the benefits.

by Alexander Collins

source:http://chicbull.com/forex-knowledge-5-things-to-consider-before-trading/

Understanding the NETELLER Payment System

When choosing a Forex broker, it’s critical that you do your research and make sure the broker is reputable, reliable and regulated. When it comes to choosing a payment system, the same research should be done, so that you can make sure you’re paying the fewest fees and getting the most reliable and secure service. Following the collapse of Liberty Reserve earlier this year, traders have been more conscious than ever about choosing a payment option, and rightfully so. Fortunately, there are several options, among them NETELLER, a long-standing option that has grown into one of the most reliable and respectable online payment systems in the world. We’ve chosen to do a full NETELLER review to help traders (both new and experienced) decide if this is the right payment processor for them, or to see if there’s a better solution than time-consuming wire transfers or risky credit card transfers.

NETELLER is serviced by Optimal Payments Limited which was founded in 1999. For over a decade, NETELLER has been supplying individuals and commercial enterprises with a secure method of moving money from one place to another in a way that is both quick and easy to execute. Today, NETELLER is one of the world’s largest independent money transfer businesses, processing more than a $1billion worth of transactions each year.

Of specific importance is the fact that Optimal Payments LTD is authorized by the Financial Conduct Authority (FCA) for the issuing of electronic money. NETELLER maintains the highest standards for their services around the world using advanced physical and electronic security measures and Anti-Money Laundering protocols such as 128-bit encryption technology, identity verification and real-time transaction monitoring to ensure total protection from identity theft and fraud.

eWallet

The NETELLER eWallet or digital wallet is straightforward to set up and is used for both deposits and withdrawals. There are many options for funding the eWallet account, including free debit card deposits, local bank deposits, credit cards, international bank transfers and many other local options.

NETELLER offers low-cost options for depositing money into your eWallet account or into a merchant’s account. Fees for taking out money with one of their withdrawal options or costs for transferring funds to an individual are far below standard charges. Cashing out from a merchant site can be done directly to your eWallet without any charge for the transaction. Transfers from member to member are also free.

With the NETELLER eWallet, payouts are immediate for both personal and business members and with the option to have payments 100 per cent indemnified from customers world-wide, businesses are protected from chargebacks. The transaction limit at NETELLER is $50,000.

Net+ Prepaid MasterCard

Another transaction option at NETELLER is the Net+ Prepaid MasterCard which looks, acts and functions like a traditional debit card and credit card. The card is linked to the balance in your NETELLER eWallet account. After loading the card with funds, you can make withdrawals at ATMs and purchases at any POS location that accepts MasterCard. There is no annual, monthly or dormancy fees with the Net+ Prepaid MasterCard and no credit checks are required in order to qualify. Because it’s a reloadable prepaid card, you’ll never pay interest, overdraft or late payment fees when you use it and since the card only lets you spend the money available in your account, there is no risk of accumulating debt.

NETELLER is one of the preferred payment methods for Forex traders. The eWallet is available in 13 languages, 19 currencies and offers a host of local options for depositing and withdrawing money online in nearly 200 countries. Together with the Net+ Prepaid MasterCard which uses 8 different currencies–GBP, USD, EUR, CAD, SEK, DKK, AUD and JPY– transferring funds for Forex trades anywhere in the world is convenient and reliable.

Using your eWallet to accept payouts from individuals or other sites and the Net+ card to instantly access the funds in your account at ATMs worldwide is a great combination for moving money for any reason from wherever you may be.

Earn Money

Making transfer transactions at NETELLER can also be a money-making event. The NETELLER VIP program is based upon the transfer activity in a member’s account. There are five VIP levels–Bronze, Silver, Gold, Platinum and Diamond and members are automatically awarded as soon as they reach an activity requirement. A clear table outlining all the relevant information for each account is presented on the NETELLER website.

There is also a Reward Points program where you can earn rewards each time you use your eWallet to move USD or equivalent funds in or out of your eWallet. The points are rewarded according to the VIP account you have signed up for. When you’ve built up your points balance, you can redeem them for electronics, gift cards and even cash credited to your eWallet.

Conclusion

The NETELLER website is well organized and easy to navigate. Information is presented visibly in a manner that invites trust and confidence. A comprehensive FAQ page provides precise explanations of how the NETELLER programs work and how to get started and email, chat support and phone services are available 24/7 to 13 countries. Fast deposits and withdrawals, secure transactions and friendly support make NETELLER a high-quality online payment service for both individuals and businesses.

Source:http://chicbull.com/understanding-the-neteller-payment-system/

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