Page 190 – XTrade

What Kind of Forex Trading UK Traders Prefer

There are many sophisticated strategies for trading. The kind of forex trading UK traders prefer most has to do with high frequency trading and news trading.

Methods and Strategies for Forex Trading UK Traders Prefer

The kind of forex trading UK traders prefer most is based around news and high frequency trading. Partly because of the popularity of such strategies in the country and the wide range of resources available. But also because there are proven traders in this field, who have made millions, and 1000s of others are trying to emulate. There is also the concept of investing in foreign currency through a more conservative approach, such as long term trading at very low leverage. More advanced methods for forex trading UK investors and speculators prefer are based around fundamental analysis. Graduate in economics, from the top universities and colleges in the country have developed pioneering methods in fundamental analysis. When these people become traders, they apply more or less similar analysis to their trades. The average top forex trader in the UK does act originally, and does not attempt to copy trading methods used in other countries. As matter of principle, creative ideas have to originate from within the country, and this is the case in most countries with a good educational system, not just in the UK. Creative graduates of economics do develop new exciting ways to trade the markets, and forex could not be left out. As far as trading resources and brokers go, there are good and less good, but all in all there is less deceptive marketing compared to the US. Financial authorities in the UK regulate financial institutions much better than their their US counterparts. Especially investment funds, clubs and the like. Because in many countries of the world, dishonest marketers use forex as a cover up, in order to get ordinary people to invest in various currencies, for the long term. Often promising ridiculous returns, and at no risk, which any forex trader know it cannot possibly be true.

The Honest and Transparent Forex Trading UK Traders Want

The decent and realistic forex trading UK traders want is all about full risk disclosure, accurate representation of facts, and good customer service. These traders are street smart enough to know that the market is risky, and no profit can be made without taking any risks at all. And out of these traders, those who are educated in the field of economics. And in the field money management, also know that most trading resources available out there are useless. The UK is a tough market to sell misleading products and services. And users of such products and services are kind enough to report them online, and to warn other traders against buying them. Good services however, and good brokers operating in the UK, can win even the most demanding of clients. Day trading forex is the biggest test for many of these brokers, and the ones that are really good, do maintain their client base for many years. The list includes some spread betting firms, Futures, Stock and Option brokers, but also a list of particularly efficient CFD brokers, which are becoming very popular among the UK’s elite traders. It’s all about transparency, and full risk disclosure, which these traders get to see first hand, in their own trading. When they lose money, they know it’s their fault, not the broker’s. And when they win, they again know that their broker did their best to facilitate that trade.

Forex Trading For Newbies and Part Timers

Forex trading for newbies and part timers is a very interesting concept. One which focuses on simplicity, least possible stress, and quick changes when needed.

Forex Trading For Newbies and Investors Turned Part Time Traders

Forex trading for newbies involves ideas and methods for trading. Which for the most part are very similar to what classic investors, new to the forex market, need. These classic investors are used to buying and holding commodities and stocks. And some know about currencies too. But they all need forex trading for the purpose of short term hedging. Forex trading for newbies provides the basic roadmap, through which new traders and experienced investors alike, can reach their objectives. A forex trading course of this level, does provide all the introductory information. And in fact, it is classic investors who need more forex training, not so much the newbies. As it is much easier to learn something new, starting from zero, than trying to reconcile old established knowledge, with new ideas. There may be conflicts in such a process, especially when the learner believes too much in the old ideas. Newbies focus on making money fast, any amount even very small. Classic investors focus on hedging their investments through forex, for any amount also, even very small. Since when a trader or investor hedges a large trade, even partially, the profits from the hedging trade are up to a point, risk-free! Investors look at time, the cost of time due to inflation and the fact that their capital needs to be tied up for so long. So any smaller period in time, where their investment is unproductive or losing money, hedging comes in as a bright idea. It allows for some amazingly good, very profitable trades. So there is no much risk nor stress involved. With newbies, things could be slightly different in that there usually is stress involved, if the trade is not insured in some way. But even newbies can combine long term and short term trades, in opposite directions. Which helps offset risk and stress when markets are too volatile or hard to figure out.

Forex Trading For Newbies the Stress-Free Way

Well it’s not exactly stress-free, but forex trading for newbies can be made possible at very low stress, and limited risk. New traders need to open their minds, and think both as traders and as long term classic investors, no matter what their available trading balance is. The forex market does allow for this approach, because there are always currency pairs which are bound to trade within a predictable range, for a year or more. If the trader gets the margin requirement calculations right, and manages their capital well, the idea is set to work. The currency pair in question will either go up or down in any given week or month. But over 3 or 4 months it may remain well come back to the same level. Newbies can easily figure out that the simplest and safest way to trade this scenario is through a static trade. Combined with frequent trades in the opposite direction, as and when the trade criteria are met. This doesn’t have to be dollar for dollar hedging. Because the hedging trade is actually a series of many small trades. And volatility makes it possible to get 300 or many more, intraday pips out of around 100 pips on the daily chart. So even though the whole concept is not a dollar for dollar hedging trade, it actually becomes equivalent to one.

Long term analysis applied to forex pairs, helps eliminate insecurity and provide a road map to more confident trading. Be careful not to focus too much on fundamentals, because they can be misleading or too complicated to figure out. It’s better to stick to a commodity currency pair that you understand best, and to actively trade that pair. By knowing medium and long term market direction, things do become easier. Such trading requires knowing forex basics and basic calculations. This works more like investing rather than trading, but it offers the benefit of low stress. As you can go on for few days at a time without even looking at the markets. These trends do last from weeks to many months, you can’t miss them. Traders trade these moves through multiple small traders, and through maintaining sufficient margins in their accounts. As long as these two are taken care of, you cannot go wrong. Investing principles can be applied to forex trading, first and foremost, you don’t want to use a lot of leverage when you are an investor. But you do want to employ cost averaging principles and a year-long plan. The idea is to profit from global currency fluctuations and to liquidate your trades on a currency, all at the same time.

Forex Trading for Dummies Courses

Forex trading for dummies type of training courses provide a basic introduction to the forex market. Which attempts to simplify and present concepts and ideas.

Forex Trading For Dummies and the Reality Beginner Traders Face

Many new traders want to learn forex trading the easy way, which is not an easy task, by any means. Learning through a course which promises easy forex trading for dummies, as well as fool-proof ideas, is bound to be of poor quality. These training courses tend to oversimplify the facts, and present ideas and tips. Such as the one which says that more trades will make you a better trader, and so on. That is not necessarily true, more trading may actually fail to provide you with new insights and allow you to learn from mistakes. The forex trading for dummies series of courses and books, is useful, only as an introduction to the forex market. And it just doesn’t get beyond that. Also, when one sets out to learn how to trade forex through these educational resources, they will soon find conflicting points. So that one course suggests one tip, while another course suggests the exact opposite. Difference of opinion is acceptable, but new traders will go through more than one course, and will face these conflict points. Many of these conflicting tips are based around news-trading, trendline analysis, moving averages and more. And the more the new trader reads from different resources, the more confused they get. It is as if as one keeps on accepting more and more tips and ideas from 3rd party sources. Their collective predictive power tends to zero. The list goes on and on with tips and trading ideas which differ so much from one course to another. So new traders have to be slightly more selective in their education. And should avoid too much diversification. This is true with market indicators also. Using a single indicator is too risky, but using too many is total nonsense. Ideally, one doesn’t need more than 5 or 6 specific indicators, and some skills in analyzing fundamental economic data.

Elements of Forex Trading for Dummies Education which Work

All forex trading for dummies educational materials involve the use of some moving average. The most popular being the 10 day moving average. This moving average is deceptively simple, but it does have some limited predictive power over the markets. There is something that 10 day period, and traders of various time frames pay attention, just like they do to the 200 bar moving average. All traders who really know what is forex technical trading all about, have a respect for the 10 day moving average. Some go beyond that, and study the entire trading range of the market, over the last 10 days. Many sophisticated traders actually use moving averages, in a little more advanced ways that beginners do. That is to say, some basic trading tips, are used alongside other complex indicators, in perfect harmony. Because even the seasoned trader wants to know how simple, widely watched indicators are seen by the market participants. But that’s where similarities between beginners and seasoned traders end. Introductory forex courses do not provide any leading indicators or leading analysis techniques. The whole material is based around trend and momentum following indicators, which have limited predictive power.

Trading Online Worldwide for Best Liquidity

Today’s traders have access to trading online worldwide. This enhances efficiency and reduces extreme volatility. Which in the old days could wipe everyone out.

Trading Online Worldwide Offers a Better Deal on Every Trade

Trading online worldwide offers much more stability not only to retail traders, but also to investment banks. Investment banks are just as likely to be wiped out as the average retail trader is. This is because risk, in theory at least, is always greater than reward. And because as with all things in nature, there is a million ways for things to go wrong, and only few for them to go right. Extreme market conditions, extreme volatility and natural disasters can wipe out even the largest trader. No better example than the collapse of LTCM in 1998, which was wiped out in trading because of not controlling risk properly. And this was sophisticated trading, but based on the assumption that Russia would not default on its debt. And as always, assumption is the mother of all failures. Barings Bank was also wiped out, in 1995, because of risky Futures trading combined with the earthquake in Japan that year. Today, trading online worldwide still doesn’t protect you against such events, but you as a trader can put stop losses on your trades, accept failure and cut your losses early. Just about every forex broker today offers better liquidity. Especially CFD brokers who offer one way, highly beneficial liquidity and still protect you from many adverse market effects. These brokers can handle retail trading well, and trades up to $100 per pip very well, at all times and speeds. You as a retail trader can choose the best forex trading platform that matches your trading style, and gain access to a worldwide market. Market stability means that you can always find another trader to take the opposite side of your trade. And they in turn can also find another to close their trade and so on.

Trading Online Worldwide Makes it Possible for Wise Traders to Win

Trading online worldwide makes it possible for traders with original ideas to implement them fast and efficiently. Anything from hedged Carry trades through to directional forex trading ideas, can all be implemented one way or another. And the trader in question can even hedge risk better on losing trades, before making a decision on them. Forex signals based on momentum and divergence patterns are also more solid and reliable thanks to today’s massive market. And this is because traders look at the same charts, and are connected through them. Back in the old days, no such trading could be done, because participants were very few, and volatility was through the roof. Volatility is still a very strong factor in the markets, it offers opportunity and poses risks, but it is at levels which are acceptable by most retail traders. Nonetheless, the use of large size stops is a mistake, even today, and it is not compatible with any level of volatility. Many traders cannot embrace volatility at all. But those who can are able to turn many adverse market moves into profitable opportunities.

How to Use Forex Trading Signals

In order to use forex trading signals efficiently, traders should adjust more to reality lessen their emotional behavior. Such as confirmation bias habits.

Why Many Forex Trading Signals Fail

Forex trading signals tend to fail, very often in some strategies. And it happens because the criteria are not very clear, there is ambiguity and room for confirmation bias on the part of the trader. Forex trading is promoted by many mentors, why themselves use ambiguous techniques. The mentors however tend to trade at relaxed pace, and make small profits. The new impatient traders are the ones who want to make money fast, and tend to suffer from all kinds of delusions. This is what makes them see profitable trades all over the charts. Forex trading signals are going to have failure rates anyway, even with the best defined trade entry criteria. The impatient trader however, makes things much worse because they are focused on the moment, and usually on one time frame alone. Forex signals can be improved to a satisfactory degree, by being reminded that indicators do not work 100% of the time. Traders can use popular indicators in interrupted rather than continuous mode, and develop trade validating techniques. The basic idea around this is that a single indicator is not reliable enough on its own. But equally so, too many indicators will never agree, and it is actually a minority, not the majority of indicators which will predict the trend right. So it all comes down to finding the right balance, and using more than one indicators but not too many either.

Forex Trading Signals Beyond Just Market Price

They say the market is always right, but is it really? Market price is strongly influenced by volatility. So much so that it can diverge away from fundamental trends and forces. So much that it becomes very misleading. The market therefore is not always right. The market is right when there is strong agreement between buyers and sellers, and high trading volume occurs. That is why traders pay so much attention to the daily closing price of the stock market, as well as specific time zones in the forex market. Because that’s when most trading volume occurs, and the market is most right at those times. Forex trading signals become much more reliable when these price levels of mutual cooperation between buyers and sellers are identified. Apart from the closing price, these levels are also found around the times where most trading volume took place, and sometimes traders refer to this as the Value Area. In the short term, regardless of the fundamentals, a forex rate will react to the LSS pivots for the day (defined by the previous day’s close). It will also react to the day’s value area (defined by the previous 24 hours volume distribution. The price zone which the rate was trading in, during the highest volume defines the Value Area, and will act as key support and resistance for the next 24 hours. In a nutshell, if a signal calls for a long trade, and price happens to be below the Value Area, then the probabilities are against this trade. In order for the long trade in question to have a better chance of making a profit, market price should be above the Value Area. To this day, no exact formula exists for this Value Area, each trader has their own. But it’s all about figuring out the best practical price zone around the last 24 hours, where most trading volume occurred.

Forex Trading Calculator Tools You Don’t Need

Most forex trading calculator tools are useful, but there are some which have been made available by popular demand. Deep down though, they are simply useless.

Forex Trading Calculator Tools You Can Do without

Most forex trading calculator tools, such as trade size and stop loss calculators are very useful, and so are LSS pivot point calculators. There are however some forex trading calculator tools, such as Elliot wave theory and Fibonacci tools, which are embedded in trading platforms and charting software, simply due to popular demand. Using an Elliot wave theory forex calculator and price projector, is totally useless and misleading. The theory is totally false and unproven. The same goes for Fibonacci theory as well. These theories were once believed to work, based on the idea that too many traders would act the same way, upon seeing the same signals. Real tests however have shown that not all theories really work. Many of them simply don’t work because not many traders act on them. LSS pivot theory is debatable, it does work very often and it often works at critical price levels. But even LSS pivot theory cannot be totally dependable, since there is always some element of ambiguity. Any theory based on support and resistance seems to be working perfectly, because no matter what market price does, the theory seems to match the trading action. LSS pivot theory however does provide warning signals, and that alone can be used to adjust stop loss size accordingly. Which is very useful. Forex charts are very confusing and ambiguous at all times, it is natural. However, Fibonacci and Elliot wave theory are among the two biggest losers, because they are more myth that fact. Some new traders spend many hours of their research time, analyzing markets using these false theories. Time that would much more productive had they been using other theories, such as swing trading theory or time zone analysis.

Why Proponents of those False Forex Trading Calculator Tools still Believe in them

These forex trading calculator tools rely on Fibonacci and Elliottt wave theory. Theories which if one has enough wishful thinking and confirmation bias, will surely find some market charts perfectly matching their concepts. But that is not real, unbiased research. Moreover these false theories have been mythologized by all kinds of traders, even by profitable traders. So, new traders do not dare question the opinions of profitable traders. Believe it or not, no matter how profitable a trader, user of these theories and calculators, might be, they are only fooling themselves. The most logical explanation is that they use these false theories alongside some solid theories, which ultimately kept their trading profitable. Forex exchange rates and their trend are hard to figure out. The list of false theories in trading, goes on and on, and it includes some other supposedly good trading theories also. These supposedly good ones, are theories such as contrarian indicators and the COT report. These theories use real data, they are right some of the time, but their accuracy in predicting market turning points, is very poor. Perhaps as good as a tossing a coin. There is some predictive power in contrarian indicators, and even though the theory is not used in calculator tools, it is used in graph form. These graphs do accurately confirm existing trends, much better than classic market price moving averages. They are not however leading indicators. Because many times, the crowd can actually be right, and the minority will be wrong. But as the new trend develops in the market, after the reversal, the majority of new traders are not willing to take a loss on their losing trades. And so the contrarian indicators do very accurately show that the market will continue to move in the direction of the few for a while.