Page 185 – XTrade

What is Forex Scalping and How It is Done

Many traders don’t know what is forex scalping and how they can do it. Scalping has to do with almost directionless trading around a temporary price baseline.

What is Forex Scalping for Day Traders

Day traders who know what is forex scalping or simply have heard about, are interested in low risk trading. First by day trading, as and when it becomes possible to trade directional moves during the active hours of a market. And to a secondary degree, by trading a small range, sideways trend. That sideways trading is defined as scalping. Though there is no rigorous definition. Forex exchange rates tend to lose momentum during non active hours, and prices simply move very little. And usually revert back to a mean level. If the trader can figure out this mean price level, they can use it as a baseline for doing scalping trades. Online trading can become much more exciting this way, because these non trending hours occur very often. And from the momentum traders’ perspective these hours are nothing but boring, inactive trading time , where nothing happens. Wise traders looking for scalping opportunity, utilize high leverage, perhaps higher than that used in other strategies. They look for few pips of profit here and there. But since price tends to revert back to the baseline so often, profits begin to amount to significant sums. Market price may rotate 20 or more times around the baseline, in a matter of 2 hours. So the seemingly boring trading time can now be used to make some significant profit. Only those who don’t know what is forex scalping, or think it’s too dangerous, never look to profit from the absence of momentum.

What is Forex Scalping in Terms of Probability

You may wonder what is forex scalping in practice, and how profitable it is. It can be very profitable, and typically yield $300 per session, on a medium size account, but not greater than $3,000. Trading online like this requires careful day selection, and choosing only days and hours where the market is not likely to show momentum. Time selection for scalping trading is most of the work involved, actual scalping trading is piece of cake. Since there is no direction to figure out. The trader simply fades all moves reaching 6 or more pips away from the baseline. Direction doesn’t really matter much, unless there is some risk for a breakout. And the trader may consider leaving an open losing scalping trade open. As long as the trade is in the direction of the underlying daily trend. So that open losing scalping trade will turn around by the next day or so, and become a profitable one. Another key decision is on determining the baseline, this is usually defined by some high and low around that time, on the 30 minute chart. Scalping is more flexible than you think, and no exact rules apply. But in actual tests, these trading results, of $300 per session, 6 pips to 30 pips trades, etc were possible. Maximum loss was $600. And when traders lose big is because they fail to select quiet trading times properly, and to figure out the daily trend as well. These are important, and if addressed properly, losses can be limited much more.

All forex strategies can be enhanced through part time forex trading scalping. No doubt about it. It is even possible to recover almost totally blown trading accounts, all the way to the top, through scalping. Traders considering scalping should be careful about day selection, and avoiding scalping through daily LSS pivots. Even during the inactive market hours, LSS pivots may impact momentum, cause breakouts and ruin a scalping day. That’s why a good scalping baseline should be found well away from the daily LSS pivots, and during inactive market hours only. Just by following these 2 simple tips you will be able to avoid a great number of breakouts and confusing moves. No forex calculator or software is really needed in scalping trading. Just preparation and attention to volatility causing factors, including news. Now that you know what is what is forex scalping capable of you should seriously consider it as part of your broader trading strategy. Because scalping allows you to do so much more with so much less. The only catch is the long time commitment required in every scalping session. But remember that no other method offers you such a safety net, so as to even recover a lost account. While using only a fraction of the original funds.

Online CFD Brokers and Platforms

Online CFD brokers facilitate advanced CFD trading, which all wise traders use in one way or another in their trading. These brokers have evolved accordingly.

Online CFD Brokers and Advanced Platforms

Online CFD brokers offer sophisticated CFD trading to their clients today. Traders are able to trade in highly beneficial conditions, which exceed those offered by the spot market itself. Forex brokers offering liquid CFD dealing are also in that category. Though some CFD brokers might be better than others, depending on what specific needs the client may have. Online CFD brokers have evolved through the last 10 years, so as to offer even better trading conditions. Their CFD trading platforms have also evolved. As trading software has evolved dramatically across the online trading industry. They all offer strong customer support, competitive incentives, and mobile trading for full account access. CFD brokers perform a difficult task since they have to meet clients’ requirements at all times, and take their trades in. Even if the underlying spot market is tough and illiquid, for hours. CFD brokers will still take the trade, through the one way liquidity they provide. How hey do it is down to them, and it often it proprietary technology. But to traders, this is so beneficial. It facilitates perfect trading conditions for up to $100 per pip, on all currency pairs. Older, more experienced traders appreciate this much more than anyone else, because they have had some horror experiences back in the past, while trading trough various spot market brokers. The most typical of which, which you have probably heard of, is that of short selling restrictions on stocks. These restrictions are imposed by regulators on stock brokers, and their clients are unable to short stocks during extremely bearish times. Missing out on many trades. CFD brokers get around this problem, and their clients can still short stocks perfectly, up the maximum limit sustainable, which is a lot. Leaving old fashioned stock broker clients in the dust… CFD brokers really rule in small to medium size trading, and this covers almost all traders, except for few multi millionaire traders whose trading size is too large and not possible for CFD brokers to handle. But you can see how primitive and inefficient classic spot market brokers can be. Even if you trade with $100million with them, this doesn’t grant you exception to the rules. They will still impose short selling restrictions on stocks, in your account if they have to. Also, liquidity in day to day trading is worse with spot market brokers. And the larger a trader is, the more problems will have. So don’t be fooled into thinking that the rich have it easy in trading.

Online CFD Brokers Win Hands down!

When it comes to small and medium size trading online CFD brokers win the argument. They can handle single $10,000 large, profitable trades per day. Amount small by market size, but very big to most traders. The online CFD trading industry has changed the markets for the better. By bringing in competition and better liquidity for all traders, in all markets and brokers. Because ultimately all brokers are interconnected through the markets. CFDs were thought to be the trading tool of the poor trader, and rightly so because they are most affordable than anything else. But all wise profitable traders do use CFDs one way or another. Only some super rich traders stay away from CFDs, either because their trading size might be too large for CFD brokers to handle. Or because they might be not intelligent enough to figure out the benefits of CFDs. Many super rich traders and investors use lame and primitive investment and trading methods. And when they lose, they lose a lot of money. So wise traders avoid following the trading ideas of the super rich, because they are wrong and misleading. In fact, wise traders look how the super rich trade currencies and stocks, through their large, but primitive brokers. And look to take the other side of the trade through CFDs, and implement fast and cost effective trades. As in the notorious case of short-selling restrictions imposed on stocks. Whereby shorting the stocks the super rich hold, through CFDs allows you to really have the upper hand. And you the small trader, stands to simply profit out of their investments, and at their expense.

Online CFD Analyses and Testing of Trading Ideas

Traders perform online CFD analyses, using simulator and risk control tools. Their goal is to uncover and hedge potential risks that could blow their accounts.

Online CFD Analyses for Detecting Hidden Risks

Online CFD analyses come in many types and forms, all for detecting different hidden risks. Some traders for example are afraid that their trading is vulnerable to extreme and sudden geopolitical risk. The US dollar and its crosses are all currencies subjected to this risk. This risk is almost impossible to predict. And even those who can predict it come up with poor forecasts, where the prediction spans over many months, so timing is very poor. Traders however can find markets that will move sharply, in one direction when a given specific risk happens. Online CFD analyses allow them to model such risks, and also ways to hedge their trades through those risk-benefiting markets. Many currency pairs in the forex market are subjected to such risks on a daily basis. Yet, some forex strategies manage to eliminate as much as 90% of the risk. The 10% risk means that the market could 1 out of 10 times move in totally unpredictable ways, due to natural disasters, terrorists attacks and so on. During that 10% of trades, the trader may or may not lose money. There is roughly 50% probability that the hedging trade protection will work. But because there is still randomness, similar to a coin flip outcome, it is thought to be a 50% risk. Risk however doesn’t have to result in massive losses, the trader can act quickly when things go totally wrong, and close all trades. So it is okay to win small and to win big, 90% of the time. While breaking even or losing on the remaining 10% of trades. Factors impacting markets to extreme levels are volatility, natural disasters, terrorists attacks and unforeseen economic events. Typically anything that is bad, tends to happen very fast. Whereas good events happen slowly. This is important in devising a hedging trading idea. The US dollar remains even to this day a key currency. But one that is totally unpredictable at times. Because geopolitics can come in and override all economics, for days or weeks. Unprepared forex traders are not aware of this, and a sudden such move on the US dollar usually is enough to wipe out their trading accounts. Because they still hold onto economic and technical analysis and add to the losing trade.

Online CFD Analyses for Energy and Precious Metal Traders

Gold and crude oil CFD traders focus on supply and demand for the days and weeks ahead. The forces of supply and demand are critically important. But these come down to investor fear, and to a lesser extend, down to the US dollar. There is no clear cut relationship between the dollar and commodities. Sometimes both the US dollar and the commodities can rally hand in hand, for weeks. Various in-depth online CFD analyses offer these traders insights into how many risks can be hedged through CFDs. Because trading CFD offers linear hedging and profiting, and unrestricted access to the market. They can rely on CFD instruments more than any other. But this doesn’t stop them from investigating further, and staying within the safety limits. CFDs are extremely good and superior trading instruments but still not perfect, their benefits are limited to $100 per pip. Above this level, liquidity problems will probably arise. So very large size traders may not be able to use them in full. But to small and medium size traders and investors, they are the top tool in their trading arsenal.

What an Online CFD Course Has to Offer

An online CFD course offers wide range of guidance to new traders, regarding CFDs and their benefits. These benefits extend to commodity trading and stocks.

What An Online CFD Course Does

An online CFD course is different from a forex trading course, in that it focuses on ways to improve existing strategies. The whole concept is to introduce CFDs and how they differ from the spot market, when trading forex. An online CFD course addresses issues of liquidity, trade execution speed, hedging possibilities and more. It even goes as far as to cover basic concepts in Carry forex trading, where 80% to 90% of the risk can be completely offset. This is achieved through specialized hedging, but this hedging is possible through high exposure to currency commodities. And in turn, nobody can afford to gain high exposure on these commodities, unless they use high leverage and linear pricing. And these advantages are provided by CFDs. It is not obvious at first, but CFDs are not all about leverage, just for the sake of trading one currency or stock more affordably. They are about leverage combined with excellent pricing, which follows the underlying market very closely. They allow you to trade at any time, no matter how strained the market conditions (with spot forex you can’t do this). And the net achievement for Carry traders, is a reduction of risk. This reduction is not on a day-to-day basis, but it is based on correlations between markets. And correlations are valid over weeks and months. Still, significant amounts of funds have to be committed in a Carry trade. The goal is to gain say $300 daily, from the difference in annual interest rates. Daily interest rates are way too small. But given for example a 2% annual interest rate differential over 200 trading days in the year, is equivalent to 0.0099% per business day. Given a $60,000 CFD trading account, with 200% leverage, where 1/3 of the money ($20,000) goes to the Carry trade, the daily gain on the rate differential is around $396! Part of the remaining funds has to go into hedging the Carry trade, price-wise, through some interest free market. Using CFDs and high leverage. The Carry trade concept requires excellent correlation, and maximum risk analysis. But it does work, just look at USDCAD and crude oil, and their medium term inverse correlation. These are the concepts CFD enthusiasts want to know more about. While other old fashioned investors will look at CFDs just for the sake of their tax benefits.

Online CFD Course for Pioneer Investors

Some investors, due to lack of funds, and lack of access to other markets want to take leverage to a next level. Margin trading in general is beneficial, but only when used after carefully checking the numbers. An online CFD course will focus on money management and leverage, though individual investors might want to dig deeper into the potential risks. Forex trading is tricky and one can fall into a trap very easily, if the market is not understood in term of risk. Online CFD trading helps make the whole task easier, by providing better trading conditions and linear pricing. Pioneer investor and traders are willing to take great risks, usually one at a time. Because it gives them the opportunity to explore new trading methods in the markets. But a gear amount of risk can be modeled and predicted before you make the first trade. This is similar to the first flight pioneers: They wanted to explore more but most failed due to poor risk management. Then came the Wright brothers, who had simulated, calculated and predicted flight risk to a very precise approximation. And their concept was successful. It’s the same with financial trading. If a concept is modeled well in simulated trading, it will very likely work in live trading also. But here is the trick, only CFD contracts provide you with all the tools and benefits for accurate risk modeling and accurate implementation.

What is Forex Leverage and Why it Matters

Most traders know more or less what is forex leverage. Because it impacts their buying power and risk, in their accounts. Leverage is simply trading on margin.

What is Forex Leverage Used for

If you wonder what is forex leverage used for, it is simply used as a way to trade on margin. Or in other words, to trade on borrowed funds. These funds are provided at an interest rate. And in currencies you get paid interest when you are long. And you pay interest when you are short. Directional traders and Carry traders know what is forex leverage used for, and how it impacts their accounts. The vast majority of traders are directional traders. And these simply want to know how the effect of leverage will impact their trading. Leverage increases their buying power, so that both risk and reward are increased many times. Many traders use 100 to 1 and even 200 to 1 leverage. Which means their funds go a long way, but so does risk too. Leverage also determines the amount of money risked per currency pip. So pip value will vary from account to account based on the leverage used. Forex trading strategies range from simple to very complicated ones. Most of these are directional, and leverage can have a huge impact. Both bad and good. That’s why anyone who really knows what is forex trading all about, spends a great deal of time devising a good money management system. In fact, money management is just as important as picking entry points in the market. Beyond that, there are some traders who have more than one account, utilizing different levels of leverage. They use one or the other, depending on the quality of the expected trade. Typically, short term traders need high leverage, much higher than long term traders who simply engage in investing in foreign currency. Nonetheless, one can find a balance, and use the same leverage for both concepts.

What is Forex Leverage to a Beginner?

Beginner traders are delusional about some aspects of forex trading, and what is forex leverage all about. Many of them want to use the highest possible leverage available. Thinking that more buying power will bring in more profits, and that their trading will be profitable from day one. But that rarely ever happens, most of them who use very high leverage end up blowing their accounts far too soon. This is because even tiny mistakes and misconceptions in trading, magnify into massive losses through leverage. And this relates back to overall account size and available funds in the bank account. If the trader doesn’t have a viable money management system in place, the funds can be lost in no time. So it’s best to start with no more than 100 to 1 leverage, and see how it goes before going any higher. Overall however, leverage is a good thing to have. Since it makes it possible for wise beginner traders to finally trade and profit from the markets in an affordable way. Especially in commodity trading, where it would have been way too costly to deal without leverage.

Pursuing a Trading Online Career

The Forex Trading Platform Online You Should Use

(deThe dream of a trading online career can become quite elusive and very costly, because of all the misleading information there is out there. It takes courage.

A Trading Online Career Takes Unbelievable Courage to Develop

Many people pursue a trading online career, yet most end up failing sooner or later because they cannot handle complexity and stress. And sometimes failure actually comes after having made millions of dollars trading, the trader simply loses it all back to the market. To develop a serious trading online career, the pursuing trader must be absolutely strategic in their planning, and even ruthless while trading if necessary. They must be willing to break many rules too. Trading is very similar to military academy and fighting, so as to want to win a war. The problem is that if the general sticks to military academy rules, he will be predictable to the enemy and he will have no chance of winning the war. The forex market for example is indeed a battlefield of the financial markets, and institutional traders do all kinds of deceptive trades so as to fool traders of other competing investment banks. Deception tactics involve misleading announcements, to the effect of ‘we believe this or that currency will do such and such’. While in fact they are planning to trade in the opposite direction. Other tactics are about direct misleading action, so that actual trades are purposely opened in the wrong direction, so as to leak out misleading information. There is no collective conspiracy in the markets, by the institutional traders against small retail traders, it’s just that the bankers themselves are always acting against each other. So there goes the myth of the so called tip that you as a retail trader must follow the smart money. Nobody knows where the smart money is! If it was possible to detect it, then it wouldn’t be smart money at all. These deception tactics are often reflected on the charts, and do confuse even institutional traders, it should not be a wonder then why retail traders, and beginner traders are fooled too. So, in a nutshell there is no smart money you can detect and follow and build your trading career upon. Even the COT report is totally misleading, and cannot predict market direction any better than a coin flip.

How to Win the War of Your Trading Online Career

In your own trading online career you are bound to face the same challenges as other traders have faced in the past. Failure and failure and more failure. And you cannot win consistently because you are afraid to break established trading rules, or still believe that detecting smart money is the way to go. To really trade forex online profitably, you should take existing trading strategies and modify them so as to fit your personality. Feeling comfortable is important. Then you can bend and break many trading rules. One such old rule is about risk control and states that you should never add to a losing trade. This rule is based on the idea that new traders are not willing to take a loss, and just keep their losses open. And it is a fact, this is really what happens. But if your trading strategy is better, you can increase profitability dramatically by breaking this rule. Commodity traders and commodity currency traders do trade through CFDs and have good insights into the commodities in question, usually fundamental insights. They add to losing trades very often, and they know that the fundamental direction will prevail. It’s all a matter of maintaining sufficient margins in their CFD accounts, but CFDs are affordable enough in most cases. Going through a CFD trading guide can help you understand margin requirements, and how far can you go adding to losing trades, or hedging losing trades as well. The old saying is true, those who dare win, and in the financial markets you have to take calculated risks, and dare to break many rules. It is something the market collectively doesn’t expect you to do, because it seems to defy belief. And just like in war battles, conventional wisdom and military academy rules never worked in winning them, certainly not down at the critical point.