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Key Currency Trading Tips

There are some key currency trading tips that any, non-momentum following trader should master. These tips are about not getting fooled by market volatility.

Some Key Currency Trading Tips For Wise Traders

There are various currency trading tips, which often defy common sense. Some of the most valuable tips are about stop placement, and entry points. Most forex training courses teach the wrong concept, that one should use tight stops, and often place them near yesterday’s high or low. Real life trading has shown time and again that this is wrong. The fact is, you should never place stops near yesterday’s high or low, because the forex market has a tendency to sweep through those levels before making new moves. Another tip focuses on choosing entry points, and that you must take into account time zones before making any trade, expected to generate more than 30 pips. Most currencies tend to make their move in one particular time zone, for example during the Tokyo trading session only or during the New York trading session only. Opening the right trade, during the wrong time zone means that time goes on and on, the market doesn’t move, and there is a possibility for the trade to be stopped out if a tight stop is used. Foreign currency trading requires getting at least some basic tips, good tips, and taking them slightly further in one’s trading. Stop placement alone is a huge part of profitable trading, and most trading advice out there deals with stop placement in the most inefficient way imaginable. This is because all new traders want to hear about minimum risk and maximum reward. But that’s not the real word markets work, the markets act in a very intimidating way, and the tight stop theory turns into high risk trading where it becomes impossible to ride the market.

More Currency Trading Tips

other currency trading tips focus on handling open trades, such as trades that do not seem to be making progress. A good idea, that some day traders use, is to close all open trades within around 20 to 30 minutes should they fail to show even marginal profit. This is based on the belief that the probability of success tends to diminish exponentially as time goes on. So the longer a trade goes on, without showing even some profit, the less and less likely it becomes that it will end up making a profit at all during the day. Judging open trades in the first 20 to 30 minutes is a good tip, that helps day traders close bad trades, before they even have the time to become big losers. There is no strict rule for profitable trades, but usually traders have targets set on the market, and they get out at the right time. Finally, is a good idea to also use large stops, and even 100 pip stops even though the profit target may only be 30 or 40 pips. The probability for a profitable trade increases dramatically this way, even thought the risk-reward metric seems to make no sense. But the risk-reward theory is nonsensical and very poorly defined in itself, so much so that only naive traders believe in it. These are only few good tips in order to learn forex trading seriously and realistically, because most popular advice is actually wrong.

How To Learn To Trade

There are many ways to learn to trade, these usually include demo or live account trading. Each approach has its own unique advantages and secret benefits.

How to Learn to Trade Responsibly and Seriously

All new traders willing to learn to trade responsibly on their own, and seriously enough so as to generate consistent profits, should become original thinkers. For testing out a strategy, some may prefer demo trading, which is fine. Demo trading has its own advantages, since a strategy can be tested more objectively. Without developing confirmation bias when studying the markets, with an open trade on. The idea that demo trading is useless and not in touch with reality, is absolutely wrong! It is in fact, live trading which tends to lead unprepared traders away from reality, exactly because they tend to develop confirmation bias. So that buyers only see buy signals and sellers only see sell signals. It’s all because having real money at risk forces them to have this bias, along with strong denial to admit that their trade might be wrong. Demo trading is good, and can be used as a first step for trading CFD live contracts later on. But even if you happen to trade live already, nobody will ever take you seriously unless you have been trading for more than 6 months, and on an account larger than $10,000. Deep down, there’s no much difference between small live accounts and demo accounts. Serious trading can be possible when traders treat trading lightly, not taking markets extremely seriously, but just having some basic guidelines and rules.

Learn to Trade for Account Survivability

Account survivability is the number one priority, as it is more important not to lose than to win. In order to learn to trade well, traders must learn to direct their greed accordingly and know when to stay away from the markets. Traders who want to learn how to trade forex and commodities, should look for ways to become specialist in few markets. And have at least one market where profitable trades appear every once in a while. These are usually non popular markets. So that those casual profitable trades may appear in some least popular currency pair, and not in the popular, heavily traded EURUSD for example. CFDs make it possible to trade currencies and commodities in a very efficient way, and even hedge open losing trades during confusing market times. What the serious trader wants, is to have a unique strategy, think originally, and question popular opinion and from any authority. Because there are no real authorities when it comes to the markets. CFD trading platforms allow for the implementation of such original strategies, where the trader may have a buy, sell or neutral view on a market, for few hours or days.

What Makes Top Forex Brokers So Good and Popular

Few traders are perhaps aware of what makes top forex brokers so special. Their good reputation is known throughout the industry, mostly through word of mouth.

What Makes Top Forex Brokers Stand out So Well

Top forex brokers have a good reputation for being reliable, and listening to their clients’ problems and issues. And yet, these are not necessarily the most heavily advertised brokers, or those winning magazine awards. These who are good, are seen as good, simply because they have good rating by real traders of all account sizes. So word of mouth gets around, and everybody finds out about these brokers. The good reputation always originates from demanding and highly skilled traders who watch details, such as trade execution speed, slippage and re-quotes. Then, many other less skilled traders take their opinion at face value, without checking these details any further. Of course in real life trading, and fast trading especially, it isn’t very difficult for anyone to see these issues and how one broker may be better than another. The opinion of high volume traders carries a lot of weight, and is far more important than any magazine awards, for rating a broker. And as trading size increases it becomes apparent which brokers can handle large size trading just as good as they handle small size trading. No broker is 100% perfect, but the top rated ones really aim for providing a near perfect trading experience. So everybody willing to learn forex trading takes broker ratings seriously, and always looks to trade through some top rated broker.

Top Forex Brokers in the Future

The top forex brokers of the not so distant future will be able to offer even more features and competitive services to their clients. This will be in the form of enhanced trading platforms for trading forex at home or on the move. Other features will include more sophisticated contingent orders, more criteria for these orders, and of course better charts with more interactive features. Of course, none of this will make the markets easier to figure out. But to experienced traders, the extra features will be a nice enhancement which will make the use of a trading platform more fascinating and more efficient. Everyone who knows what is forex all about, will always look past the adverts and marketing hype, and focus on broker ratings and feedback given by real clients. Tops brokers will always be rated to almost five stars,by such real clients. And even though advertising is nice, it only helps to find out about a broker. It is the real life ratings that will confirm that this or that broker is really a top choice. Things will be the same way in the future too, as satisfied clients spread the word, and recommend their broker to other people interested in opening up trading accounts.

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.