Page 190 – XTrade

Online Forex Trading Methods for Beginners

Online forex trading methods for beginners should be simple, and serve as a basis for gradually developing more sophisticated methods, always at relaxed pace.

Best Online Forex Trading Methods for Beginners

The best online forex trading methods for beginners, and even for classic investors turned traders, are the ones that start simple, and do not overwhelm the trader with information. The best forex trading strategies are also based on very simple, perhaps amazingly simple and basic steps. The use of too many market indicators and chart patterns is never a good idea, even for seasoned traders, because it leads to so much ambiguity and confusion that it becomes impossible to maintain a clear mindset over the trading tasks at hand. Simple trading starts with something really simple, this can be something as simple as the 10 day moving average. Or the relation between the daily close in today’s trading session and the daily closing price of one ore more days within the last 20 days. Once the trader has become comfortable trading on so simple information, they can gradually bring in more indicators, to filter out false trading signals, detect market momentum and so on. But in any case, nobody who is really a good trader ever uses all the indicators available on their charts. Trading forex can be made possible and profitable on strategies which start so simple, and where the few indicators used are well understood. There’s nothing wrong with using an indicator which is poor, as long as the limitations and shortcomings of this indicator are well known.

The Myth of Perfect Indicators in Online Forex Trading

Some indicators used in online forex trading have been mythologized as being superior or as having some kind of secret formula which predicts market price action. All seasoned traders who know very well what is forex all about, will tell you that no such indicator really exists. These indicators have been mythologized as such only because they were developed by traders who made millions in the forex market. And the crowd tends to respect and believe anything that these millionaire traders say and publish. Having made millions however doesn’t make someone right in everything that they say or believe or create. Even these indicators, deep down, perform no better than the simple, humble 10 day moving average. All these indicators come with fancy names, long reputations and huge popularity, but real life trading shows that they perform bad. And in fact, the more one believes in such indicators, the greater their trading failures are. Beginners are far better off starting with simple indicators, and assigning more weight to chart patterns such as flags and trendlines, than to off chart indicators. Off chart indicators such as RSI and MACD always have secondary importance relative to chart patterns. So when in conflict, all one has to do is ignore the off chart indicators in favor of the conflicting chart patterns.

Best Guide for Trading CFDs

It is possible to learn how to trade CFD contracts better and more accurately. Just by avoiding impulsive trading and markets that are tough to figure out.

How to Trade CFD Better and Improve Your Judgmental Skills on the Market

The financial markets are too complex for anyone to handle. The use of too many indicators and news reports leads to extreme confusion and ambiguity, this is especially true in stocks. In order to learn how to trade CFD contracts better and more accurately. One should start by taking advantage of the linearity that CFDs provide, along with the other benefits. And they should focus on commodities first, and possibly on commodity stocks and currencies. Online CFD trading becomes best when the focus is on commodities. These commodity markets are still volatile and confusing, but they all boil down to supply and demand. Agricultural commodities and raw materials even more so. Stocks on the other hand, such as high tech stocks, as well as currencies that are not impacted strongly by some commodity, are impacted by other, more diverse and complicated factors. Markets that are tough to figure out, are so because there are too many factors involved, and not equally distributed over the days of the week, month etc. So that one day X factor is in control, then the next day something completely different comes in and changes everything.

How to Trade CFD Contracts on Agricultural Commodities

Learning how to trade CFD contracts on agricultural markets is one of the easiest and safest way to start trading. Some commodities, such as sugar, tend to develop rock solid trends, and the key data is more or less known. Trading CFD offers a unique way to buy dips in a rising market, or sell rallies in a falling market. When this market is sugar or something closely related to food or raw materials, things become clearer to figure out. Sugar for example is finite, and only a certain quantity will be available to meet market demand. Just by looking at previous years production and consumption levels, traders can figure out the supply-demand balance. This is not true with Apple’s stock, where the market is high tech, and a lot is at stake. New products are innovative but also risky for investors. And then there’s uncertain or badly calculated demand. Most CFD trading platforms allow traders to have multiple commodity trades on at the same time, with great ease. The risk of losing big money, even when being wrong on market direction can be much less than it usually is in many types of non commodity stocks. The only exception are precious metals, which are not limited to industrial use. But just about any other commodity is strongly impacted by very few factors. And when there’s less uncertainty, the odds are on the trader’s side, even if they are in their first steps of trading.

How Forex Traders Enhance Global Currency Exchanges

Forex traders actually enhance global currency exchanges with their actions. Because they perform a non-stop reality check on market price, supply and demand.

Currency Exchanges and Forex Traders

Currency exchanges happen around the clock, as someone needs foreign currency at all times. The FX exchange facilitates these transactions by allowing buyers and sellers to find common ground and agree on market price. Each forex exchange rate undergoes scrutiny by so many different speculative traders as well as institutional traders who may be either hedgers or speculators. The end result is that the market becomes very liquid, and nobody can manipulate prices to their advantage. But also, the reality check that their trading does, helps bring various currencies to reasonable price levels, so that the economic situation of every country is fairly reflected in its currency. This kind of reality check is the best way to price one country’s currency, and the best way to economic prosperity, as defined by free market capitalism. This is also why countries abandoned the gold standard after WW2. Because pricing one’s currency based on gold reserves, doesn’t create flexibility, the currencies tend to be too strong. And when this happens, the country in question is unable to export anything that is both cheap to outsiders, and at the same time profitable to the producer. Abandoning the gold standard and adapting the free floating mechanism, has made the world much better. But traders, including small retail traders and amateurs, play their part, as they also provide liquidity through their winning and losing trades.

Currency Exchanges as Seen by Traders

Currency exchanges are seen as platforms to make money, by most speculative traders. Even though the risks are great for all traders, even millionaire traders risk losing all their trading capital. But those who are wise and slightly careful, end up profiting handsomely from their currency trading. Some even implement Carry trading strategies where the objective is to profit passively from interest rate differentials between two currency pairs. In this case the actual forex exchange rate is of no interest, but because it poses great risk it is hedged to the best way that it is possible. Carry traders use complicated techniques for hedging price movement risk. And because hedging is about correlated currency pairs, the strategies are always medium to long term oriented. Traders always find new innovative ways to profit from the global forex market, some of which are really amazing. Such techniques may involve advanced mathematical models for calculating arbitrage or risk-less trading conditions. Generally, markets do not help rich traders over poor ones, the fact that they are well financed doesn’t really mean anything. It is just as easy to lose millions as it is to lose few hundred dollars. In fact, rich traders tend to be more careless and silly with their trading, as opposed to not so rich but well focused Carry and arbitrage traders. Or as opposed to those who simply have to win, because they have no other sources of income. The forex market is where they all meet, rich and poor traders alike, and where the little guy can figure out a way to outsmart the super rich trader. The market is unforgiving to arrogant traders, and in the end only the humble and determined traders end up profiting, regardless of account size.

Effective Forex Online Trade Techniques

Traders develop effective forex online trade techniques for gaining an edge in the currency market. Some of these techniques are remarkably clever and unusual.

Effective Forex Online Trade Techniques Traders Use

All profitable traders have chosen specific markets to trade. Markets such as the forex market, where hey can apply their forex online trade techniques and ideas. Such online trading requires good forex trading strategies and methods. Trading becomes very specific on factors such as time zone, daily trend momentum, central bank interventions, and more. Time zones alone allow traders to figure out whether any given currency pair has a tendency to make its intra-day high or low or major move, in a specific continent. This will be the Asian trading time zone, or the New York trading time zone, or the London trading time zone. And for many currency pairs, the tendency is there. Other strategies focus more on day to day movements, and not on time zones. In this case, factors impacting a specific currency pair, tend to be in big control, and determine the major trend. Fundamentals tend to have the upper hand over all other factors, such as technical chart formations, daily news, and day to day volatility. Traders focus on quarter to quarter fundamental analysis and the few economic numbers that matter most. They also know that these economic numbers are very tough to figure out, at least using conventional wisdom. But by taking into account what happened in the previous quarter, and the relation between market price and fundamentals, they can figure out whether the currency pair in question is in a bad or good position.

Forex Online Trade Techniques Day-Traders Use

Day-traders use forex online trade techniques which do involve the time zone factor, as well as forex news and daily stories. Even commodity and stock market news can impact one currency or another, though not always in the same way. Day-traders use quarterly and weekly analysis too, at least the successful ones do. Looking into the intra-day market charts only is a big mistake, because even the intra-day trading action is heavily impacted by longer time frame traders and investors. The central bank intervention for example, is one such factor, which can cause a currency pair to deviate from its expected trend for several days. These interventions cause great confusion to technical traders, since price seems to behave nonsensically. But fundamental analysis focused on quarterly outlook, can reveal whether or not such interventions are needed. Because that’s how h central banks themselves look at national currencies. Generally speaking, regardless how one trades, their analysis should always include quarterly fundamental outlook. Because that is the time frame which carries most weight when politicians and monetary policy makers make decisions. And if the quarterly outlook is for example up, then there will be some strong up weeks in the quarter in question. And this is very important to even day-traders, since an entire trading week becomes possible to trade with great confidence.

CFD Trading Advice for Beginner Traders

All beginner traders seek advice. CFD trading advice is very useful, regardless of the chosen strategy. As every strategy can improve with few tips and tricks.

CFD Trading Advice for Beginners and those Lacking Confidence

Most good CFD trading advice focuses on strategy development, and on sharpening one’s trading skills. Trading CFD contracts offers some good benefits, the biggest and most important of them is liquidity. This makes it possible for traders to take a more flexible approach to trading their chosen markets. So instead of focusing on precise entry and exit levels, as popular myths suggest, the flexible approach works best, and embraces volatility much better. Precision does not work in the markets, and nothing which claims precision and accurate trading ever works. The flexible approach means that the trader is willing to be wrong first time around, and willing to add to the open losing trade. The next step is to focus on longer and longer time frame even as the market moves against them. At that point, the trader may trade both sides of the market, and only marginally favoring one side over the other, for example buying over selling. This offers great flexibility, which through the linearity and liquidity of CFDs offers big profits in every such trade. The open losing trades can be hedged, or placed under scrutiny for a while, but an open loss does not in any way suggest that it is a wrong trade.

CFD Trading Advice Beyond Myths

CFD trading advice focuses on the properties of CFDs, which are unique, and takes advantage of flexible trading approaches and linear and precise CFD pricing. The same flexible approaches would not have been possible through Futures, as the element of linearity is not there. And not even through the spot market directly, because liquidity tends to play nasty games against traders, and day traders especially. CFD trading platforms offer the tools required for flexible trading, whether it has to do with a stock, commodity, or investing in foreign currency. Markets tend to pull back all the time, and to also create false moves. But most importantly they tend to prove analysts wrong, either on the timing of the expected move, or on direction. Trading with precision is the wrong way to go, and it can never be done. Simply because, the more precision there is in a plan, the more uncertainty its execution creates. A flexible plan acts like a suspension system in an automobile, where it is okay for the road to be unpredictable. And the objective is to turn adverse moves in the market, into opportunities. All the trading advice that exists out there, about using tight stops, low risk reward ratios, and never adding to losing trades, is downright wrong and not in touch with reality! And the proof to this are those rich traders, whose trading does not involve accuracy, nor any of the trading myths.

Opening a UK Trading Account

Opening a UK trading account is flexible and easy. UK citizens are allowed to open accounts with many good brokers, and make use of the high leverage offered.

Opening a UK Trading Account for Efficient Trading

Many good brokers are licensed to operate in the UK, and even are allowed to offer high leverage forex accounts, unlike in the US where leverage is limited to just 50:1. Opening a UK trading account comes with higher than 50:1 leverage, which is a big advantage. Most good traders usually don’t need more than 100:1 leverage for trading forex, and no more than 200:1 for trading commodities. But even this seemingly marginally higher leverage offered in the UK, to good traders, does actually help enhance their trading to a huge degree. Trading online is very popular in the UK, and in particular online CFD trading, as traders know the benefits of CFDs. Some UK traders are very efficient in their trading, and almost all have stock trading or stock investing experience. Traders like the stock market, because more or less many pension funds in the UK invest their reserves in the stock market, and they do so selectively and profitably. So stock trading in the UK has a good reputation for being a good method to make money. Stock trading has the same reputation that property investing has, and CFDs make things even better through their tax benefits and increased flexibility.

Using a UK Trading Account

Using a UK trading account for currency trading is not as popular as stock trading is. But because there are some good currencies out there, it is perfectly possible to trade those currencies in a solid and transparent way. Currencies are no more risky than stocks or commodities, and in fact commodity currencies can be a great choice for many traders. It’s just that classic traders often lack the analytical skills to determine a currency’s trend, in the same way that they analyse stocks. Currencies are usually more expensive to trade, as they hardly ever decline to extreme lows, but commodities actually do. Currencies however develop more solid and longer lasting, smoother trends, than any stocks. So in that regard, currencies can enhance the portfolio of any UK stock trader, and there is no need to use more than 100:1 leverage. Traders who trade carefully and are well financed can go for higher leverage accounts, there’s nothing wrong with that. UK traders are very methodical in their approach, not easily sold on turn-key trading systems promoted by vendors. And they know that deep down, good trading comes to those who know what they are doing, not to those who just have large trading accounts and millions available. After all, the risk in the markets is big enough for everyone, no matter how rich they are. UK traders are careful, perhaps more so than many traders in the US or in continental Europe, and those who are successful tend not to brag about their trading achievements.