Wealth Masterminds Society
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Forex, A Trending Market Forex Trading Wealth Masterminds Society - $1 Teaches You Some Of Warren Buffet's Secrets In Investing! Join Today! First of all, what is Forex? It is a short version of FOReign EXchange. It is also called FX and 4X, but regardless of the name you use, it is the largest financial market in the world. From 1997 to the end of 2000, daily Forex trading has skyrocketed from $5 billion to over $1.5 trillion.. Let’s look at some reasons why Forex trading is rapidly gaining popularity over other markets. Trading hours: The Forex market is traded 24 hours per day from about 7pm EST on Sunday until about 3pm EST on Friday. The stock market is only traded Monday thru Friday with limited hours. Liquidity: Forex markets trade over $1.5 trillion each day while the stock market only around $200 billion. There are only 7 major currencies traded on the Forex while there are more than 40,000 stocks from which to choose. Commissions: No commissions are charged on the Forex while the stock markets charge high commissions and transaction fees. Leverage: Forex Market offers great leverage power. Brokers usually offer from 100:1 to 400:1 leverage. This means a trader using 100:1 leverage you control $100,000 with only $1,000 margin. Stock market investors pay full price for stock when purchased unless they have a margin account and the leverage with margin is usually only 2:1. Low Minimum Investment: The minimum initial investment to open a Forex trading account is as low as $300. Most stock brokers require several thousand dollars as a minimum to open an account. This is the perfect market. Foreign Exchange trading has long been recognized as a superior investment opportunity by major banks, multinational corporations and other institutions. Now the internet has propelled Forex trading among private individuals tremendously. Trade from home, the office, or virtually anywhere in the world. Trade virtually anytime day or night. Work part time or full time. It is obvious that the Forex Market offers a substantial opportunity to those willing to invest energy, focus, and a little money. It is difficult for a new Forex trader to become successful in the Forex market without understanding the basics and how it works. This knowledge can be obtained in a free Forex training program. Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com
Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com
The Forex market is widely known by its high liquidity and high volume of transactions occurring during most of its long trading week. These characteristics highly contribute to make the Forex market a very trendy market with few trend-less periods during the whole trading period. But what does this mean to the Forex trader? Mainly this trendy characteristic of the currency markets means that there will be plenty of opportunities for the trader to find profitable trades during the day. As you start analyzing forex charts you will realize that the market often display's some very familiar patterns of price movement, this is; trends; and you will notice that once a pattern is established, it becomes the most probable course of future price action until the market changes. Giving you a good forecast of what comes next with the currency prices. There are two types of markets which will become very important for you to identify and understand; these are: trending and, the less frequent, trend-less markets. Each market type has two specific patterns which you will also notice over time. A Trending market is defined as a steady, elongated price movements with less than a 45 degree angle with occasional pauses, profit taking, or resting periods. In a Trending market, you will notice two main and quite evident patterns: Uptrends - A pattern of higher highs and higher lows. Downtrends - A pattern of lower lows and lower highs.
There is also the less frequent kind of market, this is a Trend-less market with erratic price movements which are often steep (greater than 45 -degree angle) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they are constantly and rapidly oscillating with the consequence that they often result in very little net price movement over time. In a Trend-less market, you will find these main patterns: Choppy - An erratic pattern of higher highs and lower lows. Sideways - A narrow pattern of lower highs and higher lows. While up-trend and down-trend periods will offer excellent trading results most of the time, choppy markets often create stop outs, this is they activate your stops by constantly overshooting your Wealth Masterminds Society
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Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com
projected resistance level but without never really crossing too far from this level; while sideways markets produce for little in either direction making them hard to trade and to make any profit during these periods. As always in Forex, your main trading objective is to get into profitable trades most of the time and a trending market is the perfect situation to find this profitable trades by riding the trends until you make your target profit objective of the day.
The presented article covers one of the most important (in author’s opinion) aspects of trading in general and FOREX trading in particular – managing of orders and positions. This includes choosing entry points, making decisions about exit points, stop-loss and take-profit of the trader. I hope this article will help new traders, who just began to work with FOREX, and also to experienced traders who trade regularly and regularly make or loose their money to the market. When I started to trade FOREX and made my first big losses and profits I began to notice when very important thing about the whole trading process. While the right time to enter a position was rarely a problem for myself (nearly 80% of all my open positions had gone into the “green” profit zone), the problem was hidden in the determining the right exit point for that position. Not only was it important to cut my risk on the potential losses with stop-loss orders, but to limit my greediness and take profit when I can take it and make it as high as I can. There are many known guidelines and ways to enter a right position at a right time – like major economic news releases, global world events, technical indicators combinations, etc. But while the entering into a position is optional and trade can decide to miss as many good/bad entry point moments as they wish, this is untrue if we talk about exiting a position. Margin trading makes it impossible to wait too long with an open position. More than that, every ope Choosing the good exit points for positions could be an easy task if only the FOREX market wasn’t so chaotic and volatile. In my opinion (backed by my trading experience) exit orders for every position should be toggled constantly with time and as the new market data (technical and fundamental) appear. Let’s say, you took a short position on EUR/USD at 1.2563, at the time you are taking this position the support/resistance level is 1.2500/1.2620. You set your stop-loss order to 1.2625 and your take-profit order to 1.2505. So now, this position can be considered as an intraday or 2-3 days term position. This means that you must close it before it’s “term” is over, or it will become a very unpredictable position (because market will differ greatly from what it was at the time you have entered this position). After the position is taken and initial exit orders are set, you need to follow the market events and technical indicators to adjust your exit orders. The most important rule is to tighten the loss/profit limit as time goes by. Usually if I take a middle term position (2-4 days) I try to lower the stop and target order by 1025 pips every day. I also monitor global events, trying to lower my stop-losses when very important news can hurt my position. If the profit is already quite high, I try to move my st Wealth Masterminds Society
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Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com
Every trader has their own trading strategy and habits. I hope this article will make its readers think about such an important aspect of trading as the exit orders and this will only improve their trading results.
Back when I first started learning about investing, I decided to start from the beginning and read basic books on personal finance as well as “guides” for understanding all of the investment world in a nut shell. Most of these authors were very knowledgeable and informative, but their investment advice was far too conservative for my taste. They would literally write chapter after chapter talking about the differences between conservative investing, which according to them generally yields somewhere around 5% PA, as opposed to “risky” investing which usually meant a diversified stock/mutual fund portfolio yielding (in my mind) only slightly higher averages. What kind of returns can you expect in the stock market? Well they say the market has gone up an average of 10% a year since Adam and Eve. Popular indexes like the DOW and the now more popular S&P500 have always, like real estate, “gone up over time.” Now, these market averages are almost worshiped like golden calves. Repeatedly drilled into my brain was the concept that there were hundreds (if not thousands) of fund managers and other “professionals” out there with Harvard degrees, decades of experience, millions of dollars under management, and they were all spending 15 hours a day consuming every single bit of market information in the hopes of beating these golden calves by a few points. What chance did I have? If Dr. Fund Guru Jr. who eats, sleeps, breathes the markets and has more credentials than I have individual hairs on my body can’t consistently make 20% a year...well...forget it kid...your chances are slim to none. I guess I’ll buy some shares of XYZ fund and accept the scraps off the table from the stock gurus. NOT! The foreign exchange market offers many benefits that the stock market does not have. Most of these have been beaten to death on various forums, blogs, articles, e-books, etc. However, it’s always good to reiterate the positive (my own personal reason is last): - Forex offers unprecedented liquidity. With over two trillion dollars transacted per day on the market, it makes filling any buy/sell order virtually instant. That equates to less slippage and more profitability. “Paper trading” stocks vs actually trading stocks is very different, because orders may not be filled in a timely manner. The difference between trading a forex demo accout and an actual account is virtually nill. - Forex is available 24 hours a day 5.5 days a week, as opposed to the daylight trading hours of the stock exchanges. - Forex is uncontrollable by large entities. Large net worth individuals, banks and fund managers who Wealth Masterminds Society
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Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com
throw their weight around in the stock market can often have huge effects on price action. Because of the immense volume of foreign currency traded per day, the market is unmoved by “heavy hitters.” Not even central banks can control the Forex market. - Forex offers up to 200:1 leverage as opposed to 2:1 stock leverage. - Forex has no restrictions for selling short, as opposed to the stock market’s “uptick” rule - Forex can actually be traded INSIDE of an IRA or Roth IRA account. - Forex gains are taxed at the preferred 60/40 rate, no matter what trading style you use (intra-day, swing, position) as opposed to the tax penalties for holding stocks for short periods of time. The list does go on, but for me the biggest advantage is a psychological one. I know it probably sounds silly, but fear and intimidation can sometimes subconsciously defeat us before we even begin. I don’t like the idea of having to live up to, and in a way, compete with “professional managers” who have more knowledge of the fundamentals of the markets than I ever will. It’s almost as if Forex, in some way, levels the playing field. I don’t have to psychologically compete against anyone’s idea of what kind of returns are “acceptable and realistic” and what kind of returns are “pure fantasy.” I only have to trade until I can find an acceptable reward to risk ratio, and consistent profitability thereof. The only one I compete against is myself.
Have you always wondered how the rich and wealthy achieve the highest investment returns and monetary success? They know what the Wealth Masterminds Society knows! Join here today and suffer and wonder no more!
Wealth Masterminds Society
http://wealth-masterminds.venicompanies.com