Risk Management

One of the telling stories in the sub-prime saga is about how Citigroup’s former CEO woke up to the bank’s problems. In September 2007, Chuck

Prince asks his CFO, Thomas Maheras, if everything was ok. Yes, everything is fine, Maheras reassures him.

That’s what Maheras has been saying for a while. Rather belatedly, it occurs to Prince to get the position double-checked. A risk management group is asked to examine the bank’s mortgage-related holdings. The truth soon comes tumbling out and Citigroup announces billions of dollars in losses.

So, is this how one of the top banks in the world managed risk? By relying on the word of one executive? According to a story in the International Herald Tribune, the senior risk officer and Maheras’ deputy were close pals, so the hard questions were not asked. That says something about the culture of the bank. If a man at the top keeps quiet, nobody else is supposed to ask questions.

At , the CEO, Richard Fuld, left risk management to a trusted deputy, Joe Gregory. Gregory apparently relied on ‘instinct’, not hard analysis, when it came to managing risk. A senior executive, steeped for years in the real estate business, warns him that things are getting out of hand. Gregory’s ‘instinct’ tells him he should get rid of the troublesome guy. Fuld goes along. The rest, as they, is history.

Just think of it. Citigroup had over $2 trillion in assets; Lehman Brothers $640 billion. And the decisions on risk or even information about risk exposures were confined to two or three people! Leave aside the board, even the people working in these firms had no clue what they had got into.

The problem with firms in distress today was not just that they had the wrong risk management models. It was not lack of talent either. It was that life-and-death decisions about risk were concentrated in a few people at the top. Autocratic decision-making is what destroyed many of the biggest financial firms in the world.

So let’s get this straight: risk management is not about fancy models or employing rocket scientists. It is an aspect of firm governance. If risk is to be properly managed, it is absolutely essential, first, that a large number of people within the firm should be involved in the risk-taking decisions. An even larger number should have the information on risk exposures.

When you see how the mighty have fallen in the present crisis, you begin to understand why a firm’s processes need to be democratic, why it is necessary to actively foster diversity and dissent. Doing so is not a matter of practising virtue.

It is simply a condition for a firm’s long-run performance. That was the theme of a magnificent business book that came out in 2004, The Wisdom of Crowds (James Surowiecki). And yet, as the failures in the present crisis clearly show, the modern firm remains one of the most undemocratic institutions in the world.

Tips for Trading Forex

1: IMPLIMENTATION OF TRADING PLAN
Fore alive in forex fienld you have to make a plan 1st then u have to implement it to boost if u fail to make plan or fail to implement it then u should be ready to face a loss also in forex.

2:TRADE IN MEAN

If u wana afford profit u have to prpare to afford loss also in forex loosing is not must but it is part of buisneess and it is natural in any buisness of forex or currency trade field before starting your trade in forex we are going to suggest you to save your own income to use in your forex buisness.

3:TRADING EMOTION AVOID

IF you dont have any plane of trading forex ist u have to prepare a nice plane for trading and then implement your plane strictly then u will see the forex market will support you and give you all kind of favour.

4:CUT YOUR LOSSES

You should alway carefull in forex and try to avoid the mistakes in this field and as human nature if u wana stay long in this buisness ist u prepare yourself for a small profit and then slowly slowly you move forward in forex.

5:Trends

always love trends in forex to improve yourself in this market you have to depend on good references in this field.

An overview into the historical evolution of the foreign exchange market
This article will follow the historical roots of the international currency trading from the days of the gold exchange, through the Bretton Woods Agreement, to its current setting.

The Gold exchange period and the Bretton Woods Agreement.

Prior to Bretton Woods, the gold exchange standard -- paramount between 1876 and World War I -- ruled over the international economic system. Under the gold exchange, currencies experienced a new era of stability because they were supported by the price of gold.

However, the gold exchange standard had a weakness of boom-bust patterns. As a country's economy strengthened, its imports would increase until the country ran down its gold reserves, which were required to support its currency. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities would hit bottom, appearing attractive to other nations, who would rush in and amid a buying frenzy inject the economy with gold until it increased its money supply, driving down interest rates and restoring wealth into the economy. Such boom-bust patterns abounded throughout the gold standard until World War I temporarily discontinued trade flows and the free movement of gold.

The Bretton Woods Agreement, established in 1944, fixed national currencies against the dollar, and set the dollar at a rate of USD 35 per ounce of gold. The agreement was aimed at establishing international monetary steadiness by preventing money from taking flight across countries, and to curb speculation in the international currency market. Participating countries agreed to try to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold as needed. As a result, the dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA. Countries were prohibited from devaluing their currency to benefit their foreign trade and were only allowed to devalue their currency by less than 10%. The great volume of international Forex trade led to massive movements of capital, which were generated by post-war construction during the 1950s, and this movement destabilized the foreign exchange rates established in Bretton Woods.

The year 1971 heralded the abandonment of the Bretton Woods in that the US dollar would no longer be exchangeable into gold. By 1973, the forces of supply and demand controlled major industrialized nations' currencies, which now floated more freely across nations. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, and new financial instruments, market deregulation and trade liberalization emerged.

The onset of computers and technology in the 1980s accelerated the pace of extending the market continuum for cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly billion a day in the 1980s, to more than $1.9 trillion a day two decades later.

Credit Card Services

A credit card is basically a service provided by banks to customers who may or may not be having accounts with them. As the name suggests, they are meant to give credit to the user. With a credit card, users can shop for commodities, consumer goods, fuel, automobiles, and practically everything under the sun, at stores where credit cards are accepted, without paying any interest. One can also avail cash on credit for an interest rate from his credit card via the bank’s ATM. The affiliations for credit cards are with two international bodies, VISA and Master Card, which are basically economic joint ventures of more than 20,000 financial institutions each, with the former having a better acceptability in our country. Credit cards trace their history way back to 1914, and have become a necessity for millions across the world.

The most essential term one should be familiar with is a billing cycle. This refers to the time span when you can purchase goods on credit, and pay later. As a standard, the billing cycle of credit cards in India is of 45 days. This means that if my billing cycle starts at 1st March, I can purchase a T-Shirt on that date and pay for it 45 days later, i.e., 14th April. However, the purchase period, i.e., the period in which you can actually purchase is of 30 days. Hence, I would be billed for my purchases uptil 30th March and start off on a fresh purchase period starting the next day, for which I would be billed in the next cycle.

Another term to be familiar with is the grace period. Usually, banks offer a grace period after you bill is due, before charging the interest, which is actually an advantage in case of emergencies. One should always go for the card fofeing the longest grace period.

The credit limit signifies the amount of credit you can avail in one billing cycle. Banks generally have different categories of credit cards to indicate the same. The ranking goes like this ; Silver (standard, lowest credit), Gold (higher credit), Platinum(highest credit). Banks usually assign these categories based on one's paying capabilities according to their parameters.

There are often many additional charges such as membership fees, annual fees, renewal fees, etc. One should always check for these while making a choice between different options, since these charges, though trivial at first, sum up to a huge amount over the due course of time.

The interest rate (APR) that would be charged by banks is also very important. Generally, companies charge between 2-3% per month. One should always go for the card having the minimum APR.

Advantages

* First of all, they rule out the necessity of carrying extra cash, as they are accepted almost everywhere now, which in turn results in instant cash or credit in case of an urgent requirement.
* Credit cards give a grace period for payment, which means that even if one does not have cash even in his bank account, he can make purchases and pay for them later.
* Credit cards are handy, and can be carried anywhere with ease. While this might not be a significant advantage in words, it is extremely beneficial in practical usage.


Disadvantages

* Credit cards frequently lead to spontaneous buying decisions, which are often unaffordable. Since the user rarely keeps a check on how much has been spent prior to every transaction, credit bills are often more than expected.
* Credit cards, if used to avail cash, come at an enormous interest rate of 35-40%.
* There are security issues also; Credit cards, if stolen, could be used to do fraudulent purchases, and billed to the owners’ account, if proper action is not take on time.


A few points to be taken care of while handling credit cards

* Never reveal your credit card number to anybody. While shopping online, ensure that the source is credible and your account details would not be leaked.
* Sign your credit card as soon as it arrives. This would minimise its use to some extent in case of theft.
* Verify the purchases with your credit card when the bill arrives. Always keep a record of all your transactions. The most effective way would be to store your copy of the transaction slip.
* If the credit card is damaged or has expired, be sure to dispose it properly, after cutting it in two or more pieces with a pair of scissors.
* If your credit card is lost or stolen, inform the police as well as the credit card company.

Give the Life Style to Forex that you want

In order to be rich and make loads of money with forex, it is a must for anyone who is serious to have accurate knowledge with the trade. Sure there is no need for any diploma in trading Forex, but in order to succeed, investing time and effort to learn profitably is a dogma.Lately people have been buzzing about how a great income potential is forex. Getting tired of a monotonous life in the corporate world, there will come a time that people want to be free from all and have a rich lifestyle, to work from home and enjoy the greater things in life. Indeed Forex is a serious consideration and worth inveting on.Before Forex was not accesible to anybody. But thanks to the modernization and internet, everybody has the fighting chance to get rich and be merry. Yes Forex has low cost to operate, lower cost to start, very abundant information resources, flexible trading hours and very high income potential, everybody can get started in Forex in one way or another.It is one thing to start trading and being profitable Forex trader is different. In order to become profitable in every trade, you will find it imperative to invest some time in learning courses and practicing in a demo account rather than saving all the pain of losses. Concepts such as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.But having a good knowledge of these concepts is not everything you need. Fear is your worst enemy. To become a profitable trader, one thing that can free you of this fear is education. As you learn in the ways of the trade, you will find yourself more confident to what trading plans you have. You have to understand that there will be losses and it has happend to the richest traders today. If you truly understand that, there is no way that you can get poor in Forex.You want to change the way you live for the better? A profitable forex trader must be ready with education and psychological preparation. This is the only way to make the market work in your favor

Forex Money Market Participents

Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

Forex Trading Education - Important Tips to Get Started

The Foreign Exchange, also known as the FX market or forex market is a market where buying and selling of currencies takes place. Not just local currencies, but currencies from all over the world. How can you make money off of the forex market? For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit. What are some of the differences between the stock market and the forex market? Well, first of all, the stock market is where stocks are sold and bought whereas the forex market involves trade of currencies. The forex market is much larger than the stock exchange. Almost two trillion dollars are traded daily in the forex market. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries. One characteristic that differentiates the forex market from the stock market is that what is traded, bought and sold on the forex market is something that can easily be liquidated. This means that it can be turned back to cash fast, or often that it is actually going to be cash. Another difference between the stock market and the Forex is that Forex trading has a much higher leverage than the stock market. When someone decides to invest in the Forex, they can expect much higher profits than the stock market, especially as their level of experience increases. Being a global market, the forex exchange operates at twenty four hours a day. This is because the various countries involved in currency trade are located in so many different time zones. The stock exchange on the other hand is only open during the business day, and closes on banking holidays and weekends. This are just some of the many differences between the stock and forex markets. For those who want to get started in the forex trade, some brokers provide the service of trading using the mini-forex system. It requires a smaller initial deposit usually of around $100, therefore you have less chances of losing a lot of money. For a novice trader,the forex can be a complex jungle of terminologies and symbols. It is therefore a good idea to use an experienced broker to transact your investments as well as educate you on what this terminologies mean. Such brokers will provide excellent advice since they have invaluable experience gathered over time. Some names in the forex market are indicated using symbols. In such cases, the first half of the symbol indicates one currency, and the other half is the second currency that is being used. The symbol “usdjpy” means “US dollars” and Japanese yen. It is important to learn what currency symbols mean when learning about the Forex. There are many books and websites dedicated on teaching traders about using the Forex. Before choosing a broker to transact your deals in the forex market, certain factors should be considered. Choose a broker that offers low spreads. The spread is calculated in pips, or the difference between the price at which currency can be purchased and the price it can be sold at any given time. Forex brokers don’t charge a commission and only make their money off of the spreads.

Successful Forex Trading System

Forex trading system is the subsystem of the forex trading plan which governs when and at which price you open and close your trades. A trading system works on the signals given by technical analysis and/or fundamental analysis. The signals are taken to see if the trader should buy or sell a specific currency pair or must close the open position(s). Any currency trading system prevents information overload by filtering out the universe of technical and/or fundamental signals in such a way that only the most reliable (successful in the past) signals or signal combinations are acted upon.

There are two kinds of trading systems - the discretionary and the mechanical. Discretionary trading systems expect the trader to use his or her own judgement to ascertain the importance of each of the technical or fundamental signals (whose number is potentially infinite) that he or she gets. Mechanical trading systems operate on a fixed number of technical or fundamental signals without the participation of the trader. Discretionary trading systems require the perpetual application of creativity (flexibility of approach) from the trader in the understanding of the changing market conditions. Mechanical trading systems require the creativity from the trader only in the forex system development phase.

Discretionary forex trading systems are best employed by professional forex traders with a lot of experience (internalized practical market knowledge) against which they can determine the validity of any signal that they receive. These traders usually remember a large number of various signal patterns from the past (just like the master chessmen) that they can compare to the current market conditions, to make their analysis more objective. In essence, they use themselves (i.e. their brain) as their trading system - often very successfully - because human mind has the best pattern recognition power on the planet.

Starting currency traders are advised to begin by following professionally created mechanical forex trading systems. Most of these systems are sold-out in the form of the forex signals that are usually developed by experienced traders who have found a way to systemize their knowledge of the markets into a working strategy. At the same time, the beginning traders can work on building their own knowledge base of the forex market through the quality forex books, educational courses, bank reports and newswires on this subject -so that they can too, with time, create mechanical trading systems from their own insights and intuitions (using the forex charting packages which allow to do this).

Beginning without a proven mechanical forex trading system (that has positive mathematical expectation) drastically dilutes the chances of maintaining the capital. This is because any intuition or a hunch that the traders experience as a result of some newly gained knowledge of the forex market is likely to be overridden by one of the two emotional derivatives of their life-long programming towards the money - the greed and the fear. In other words, without exact adherence to an existing mechanical trading system the beginning trader will eventually succumb to his or her emotions. As a matter of fact, the only way the traders can acquire discipline in the early phases of their trading careers is by tight following the signals generated by a proven mechanical forex trading system.

Note: Neural Network Packages (e.g. NeuroShell) emulate the process of human learning and can be used to accumualte the knowledge of the past technical and/or fundamental signal patterns (just like the mind of professional forex traders does) for the purpose of the future currency price forecasting.

Quote: "A mechanical approach to the markets can be successful and this is backed up by the fact that approximately 80% of the $30 billion in the managed futures industry is traded by exact systematic methods", from the "The Ultimate Trading Guide" by John R. Hill, George Pruitt, and Lundy Hill.
2.2. Components of a Forex Trading System.

A regular forex trading system consists of two subsystems - the entry system and the exit system. These systems can operate on a different or the same set of inputs. The inputs can be technical or fundamental signals.A system consists of a number of rules which interpret the signals that it receives. The entry system evaluates the signals to determine if and at which level the positions should be opened. The exit system evaluates the signals to determine if and at which level the open positions should be closed.

The propose of an entry system is to find market points which allow to open positions with high potential reward and low potential risk (high reward-to-risk ratio). The risk is defined as the pip distance from the entry price to the next support or resistance level lying opposite to the entry direction (above entry for sell and below entry for buy). The reward is defined as the pip distance from the entry price to the next support or resistance level lying in the direction of the entry (above entry for buy and below entry for sell). It is generally advised that the traders accept only the trades with the reward-to-risk ratio of over 2 (e.g. risk=60 pips, reward=130 pips). All the same, depending on the accuracy of a trading system (i.e. the percentage of the winning trades of all the past trades) this requirement might be shifted to a lower or a higher value without sacrificing the profitability of the system. This is because the true measure of the long term profitability of a forex trading system is neither the average per-trade reward-to-risk ratio nor the accuracy of the system but the combination of these two measures which is calculated as the mathematical expectation of a trading system. In the absence of the accuracy measure of a trading system (as is the case with some discretionary trading systems) - the trader ought strive to find entries with the greatest possible reward-to-risk ratio.

Note: Elliott wave analysis allows to find entries with extremely high reward-to-risk ratios (e.g. just check some of reports on MTPredictor's site). It is worth noting that MTPredictor automatically calculates the reward-to-risk ratios and helps to find optimum entry points based on these ratios. Some Elliot wave software developers (e.g. Advanced Get) also supply their subscribers with detailed Elliott wave trading plans.

The aim of an exit system is to protect the capital base and the unrealized profits. The capital base is shielded by ensuring that the trades are exited with a fixed loss when the reasons for holding them are no longer valid. This is done by triggering a stop-loss order on your forex brokerage account when the price crosses the level which defined your risk at the entry. If you are a discretionary trader, forcing yourself to place the slop-loss on each trade and to stick to it no matter what will make you very selective about your entries - which ought increase your profitability. The unrealized profits are protected either by a take-profit order which is triggered on your brokerage account when the price reaches the level which defined your profit at the entry or with the help of the trailing stop-loss which gradually locks in more profits as the price moves in your favour. In fact, the trailing stop-loss exit can be more suitable than the fixed take-profit exit if you wish to profit from the extending "character" of some impulse waves. In such a event the trailing stop-loss can be placed just a few pips opposite to the trendline which defines impulse wave. There is one more type of exit which can be used to protect the trader from missing trading opportunities - the time exit. A time exit is triggered if a trade hasn't reached either its stop-loss or take-profit level in the specified period of time. Exiting such trades reduces the chances that the capital will be tied up when better opportunities appear on the other currency pairs.

Note: Most forex newswires (e.g. Marketnews) are a great source of real-time information on the location of the major support and resistance levels and clusters of large orders that are watched by professional forex traders and which can be used to manually update the position of your trailing stop-loss.
2.3. Development of a Currency Trading System.

Making a mechanical forex trading system involves a number of steps: 1) Selecting the inputs for the trading system - technical analysis or fundamental analysis tools which will generate the signals for the system; 2) Developing the rule-set which will operate on these signals; 3) Optimizing the parameters of the analysis tools used to produce the signals; 4) Backtesting and forwardtesting the system over historical price data. Each of these steps is covered in more detail below:
2.3.1. Selecting the Inputs for the Trading System

It is important to base your selection of inputs to the system on a sensible premise about the way the currency markets operate. As an example, you can use 200-day moving average to determine if the market is in a long-term up or down trend because a large proportion of professional forex traders use this technical tool to measure market trendiness. It is also better to combine technical analysis tools of different type and scale because this increases the chances of finding high-probability entry points (those that are likely to be followed by sharp currency price moves in your favour), which should, in turn, contribute to the overall system accuracy.

If you use technical tools only on the higher time-frame charts like the daily or the weekly charts this will increase the duration of the trades and the time periods out of the market - because the signals will take longer to form. Either of these outcomes can have detrimental impact on the trader and investor morale during the inevitable losing streaks as is shown by our forex trading simulator (Please note: The size of this page is 0,6 Mbs and it requires that you have Flash installed and Javascript enabled in your browser). which can last longer than they are naturally prepared to wait. This makes it important to focus on lower time-frame charts (e.g. hourly charts) for signal generation which will lead to shorter trade durations and, consequently, to quicker recoveries from the drawdowns. Shorter trade durations can also help to the trader to defeat the temptation to overtrade because he or she can expect to see the next entry signal in the next couple of days - not in the next couple of weeks.

Quote: "Your freedom to choose your time-frame is too valuable to lose. Investors and margined speculators, on the other hand, can choose their own time-frames. This is one of their positional advantages, to use a favourite notion of Larry Hite* , one of the founders of Mint Investment Corp* - one of the largest of the futures fund operators. Investors and speculators can choose. Obviously it makes sense to choose time frames which match any natural rhythms that can be discerned in the currency markets." John Percival in his book "The Way of the Dollar".

Note: If you are using the Elliott Wave analysis your average holding period will depend on the degree of the impulse or corrective waves that you are trading.

Choosing which fundamental factors are best for your forex trading system (e.g. as inputs to your neural network) can be very hard because the effect of various economic indicators on the currency prices changes with time. In other words, the strength of correlation between the price of a currency pair and the fundamental factors relevant to it is not fixed (even with interest rate differentials). In contrast, the relationship between the price patterns (especially the classical price patterns) and trader psychology (the driving force behind most important price moves) remains fairly stable over the years. This is the reason why the forex traders are encouraged to dedicate most of their efforts to building trading systems around the technical analysis.

Another all-important question is the time horizon of the prediction that the trader is trying to make with his system. Better not to try to forecast currency prices too far into the future. This is because the number and the complexity of interaction of various technical and fundamental factors rises geometrically with each trading day. It is, therefore, best to "leave" this task to high-end investment banks and houses which alone have the capacity to perform the necessary calculations inherent in longer-term currency course forecasting. It is more practical for the typical currency trader to concentrate on capturing the so-called "knee-jerk" market reactions driven by crowd emotionalism through the analysis of the current technical or fundamental conditions.

Quote: "Rule 5: Be prepared for anything don't try to predict what will happen or when. Investing is a skill, not a science. The Zen swordsman dicsniplines body and mind to counter any blow spontaneously; he does not anticipate the moves of an opponent, for that impedes his ability to react. Likewise, professional investors know they cannot control the real estate or stock market, let alone the global economy. Instead, they train themselves to be financially intelligent, to think confidently and creatively when opportunities or problems arise." one of the The Seven Rules of Investing given in Robert Kiyosaki's book "You Can Choose to Be Rich".

You should also try not to include too many indicators (over 12) in your forex trading system. This is because probability that the system will perform like it did in the past diminishes as you add more indicators to your system. As a rule, the larger the number of indicators in your system the longer the period of historical currency price data you need to backtest the system on.

Note: There is no necessity to learn all the available indicators and technical analysis methods before you can start creating your own robust trading systems. It is usually enough to master just a few "basic" technical indicators and formations to start combining them to identify high probability entry and exit points. The fundamental and technical reports issues by the investment banks are one of the best sources of information on which technical and/or fundamental signals are watched by the professional trading community that you can include in your forex trading system. In the long run it is best to stick to a sound forex trading strategy, that has high probability of being profitable in the long-run, than to dissipate your capital among a variety of "promising" methods.
2.3.2. Developing the Rule-Set which will Operate on the Signals

You can create these rules based on your observation of how the prices move in relation to various technical and fundamental indicators. For example, you might notice that currency prices tend to resume trending behaviour after they correct toward and touch 200-day moving average. You can use this observance to formulate a rule which will enter the markets when the prices bounce off from the 200-day moving average. You could also notice that the prices tend to stop trending when they touch the outer daily Bollinger bands. You can use this information to create a rule which will exit the trades once the prices penetrate the outer daily Bollinger Band. Because making rule-sets for mechanical trading systems forces you to quantify your insights about the market this practice aids to clarify them.

The rule-set of a forex trading system is in essence the clarified version of the weighing algorithms that you naturally create in your mind as you learn the technical and fundamental analysis and observe the price action. I say "weighing" because most of the technical rules are transcribed in your mind as fuzzy patterns (e.g. "The longer the shadows of a doji the more likely the reversal" or "The steeper the trendline - the more bullish or bearish the market sentiment."). When you make the trading system, you transfer your knowledge to the computer in the form that can be understood by it. Admittedly, the quality of the computerized model very often will fall short of the actual mental model that you keep in your head. Nevertheless, the real advantage of the "mechanicizing" your market knowledge is the power to objectively determine the validity of your trading ideas by the process of the backtesting. It should be noted that the closest the computers approach to simulating the complexity of human comprehension of the market patterns is in the neural network packages.

Neural network packages can be especially effective if you wish to model your way of weighing the strength of support or resistance levels. For example, if you believe that fibonacci retracements are more reliable entry points if they are confirmed by reversal candlestick patterns and/or RSI divergence you can "ask" a neural network to search for past occurrences of this pattern combination and determine the actual numeric weight that should be placed on each of these technical signals for the entry or exit to occur. This process is very advantageous because it allows the computer to extend your natural pattern recognition ability by perfecting (or objectifying) the weights associated with each technical input/signal. This way you can objectively measure the strength or the beauty of the technical setups that you encounter in your trading (e.g. the resultant model might require the position to be opened if the total sum of signal weighs is bigger than 0,5 where a reversal candlestick signal is "worth" 0,15, fibonacci retracement is "worth" 0,3 and the RSI divergence is "worth" 0,45). In essence, your forex trading system is the description of how beautiful your trading setups should be, where "beauty" is defined as the convergence of confirming signals from different type and/or scale technical analysis tools. Advanced users of the neural networks can go even further by tying the position size (within the maximum percentage value set by their money management system) to the strength or the beauty of the technical setup. If done decently this practice will allow them to make the most of the best trading opportunities while simultaneously reducing the exposure on the less promising setups.

Meta4: An fascinating parallel to weighing the signals in order to determine if the position should be taken or not is the way people fall in love. Each individual carries a certain number of unconscious or semi-conscious qualifiers that "describe" in more or less fuzzy terms the appearance, the character, the temperament of their likely mate. When you meet the person who posses enough of these traits (i.e. above some "threshold" or unconscious minimum) the cascade of the confirming signals sets your mind off into the love state. A similar process occurs in the mind of discretionary trader when the market action through all of its technical and/or fundamental signals (i.e. "when all the pieces fit") activates the hunch or intuition response from him or her. If you compare the brain of a discretionary trader to a neural network the hunch finds its direct expression in the output neuron. The similarity between the process of falling in love and experiencing a hunch is probably behind such market advices as "do not marry your trades" or "do not fall in love with your trades". To stretch the similarity further we can compare a stop-loss order to the practice employed by some of the married couples called the "boundary". The boundary is the some form of behaviour unacceptable to the other spouse which if violated will lead to the end of relationship. Yet another analogue is between adding to a losing position and trying to win a favour of an unloving partner - the more you invest the harder it is to let go and the more likely you are to end up destroyed financially (emotionally in the relationships). As a final comparison the neural networks allow to model the connections among the ideas in the human mind in a similar way that a website through all its external and internal links permits to express the specific mental idea-network of its creator.

Quote: "I use all forms of technical analysis, but interpret them through gut feel. I do not believe in mathematical systems that always approach markets in the same way. Using myself as the "system," I constantly change the input to achieve the same output—profit!", Mark Weinstein in Jack D. Schwager's book "Market Wizards".

Note: It should be marked that the effectiveness of your model will always be only as good as the inputs that you give or "feed" to it (as someone said - "Garbage in, garbage out"). This is because computers merely extend your pattern recognition ability and cannot be relied upon to think up a winning system on their own - if this was false, the markets would have been cornered long ago by the guy with the most powerful computer.
2.3.3. Optimizing the Parameters of the Analysis Tools used to Produce the Signals

Some forex charting packages (e.g. TradeStation) permit to optimize the parameters of the technical indicators that you use in your forex trading system. Optimization allows to find parameter values of your indicators that result in the biggest profit (most frequently used measure of system performance in optimization) from the trading system over the past data. An good example of the optimization is looking for the best time-period parameters for a two-moving-averages crossover system. Commonly the periods of two moving averages are stepped from 1 to 50 in steps of 1 and the trading results for each of around 250 moving average combinations are recorded and then sorted to find the most profitable combination. Such process of going though all possible parameter combinations is called brute force optimization. As the number of indicators used in your system increases arithmetically the number of potential parameter combinations increases geometrically. The total number of parameter combinations is, therefore, said to be subject to combinatorial explosion. For example, to optimize a system with 5 indicators each of which has 50 different parameter values you would have to cycle through 312 500 000 (50^5) possible parameter combinations. The only way you can expect to quickly solve such huge optimization problems in your lifetime is through the use of generic optimizers (e.g. OptEvolve for the TradeStation or NeuroShell Trader Professional).

Optimization of the time-period parameter of the cycle-based indicators like Stochastics permits to automatically adapt them to the cycles present in the market instead of using the default time-period values - which is the method originally used by the developer of Stochastics.

As a final note, try not to over optimize your indicators because majority of the professional forex traders use default indicator settings. You are looking for trading setups where the smart money will be acting (as opposed to the general investor public) so it doesn't make much practical sense to use indicator settings that hardly any professional forex trader is aware of.

2.3.4. Backtesting and Forwardtesting the System over Historical Price Data.

Backtesting allows to see how your system would have performed if it was run during some period in the past. You optimize indicator parameters using the price data in the backtesting period. It is crucial that the time period that you backtest your system on is representative of the currency pair that you wish to trade - it should include all types of market conditions (trending, rangebound) and it should be as recent as possible. Once you are comfortable with the performance of your system you forward test it - you run it on the out-of-sample price data (the price data that would be immediate future to the backtesting period). This way you can see if the system is able to perform likewise to the way it did during the backtesting. The closer the system's performance during the forward testing is to its performance during the backtesting the more robust the system and the more assured you can be that it will continue to trade in a similar manner during the real-time trading. You could also wish to trade your system on a forex demo account for some time before beginning to trade it with the real money.

Backtesting aids the trader or investor to determine if they are prepared psychologically for the live trading of a forex trading system. By examiningthe past performance of a system they can decide if the size of the drawdown, the number of the consecutive losses and the average duration of the trades are acceptable for them. For the complete list of the performance measures that you could wish to review before starting to trade with professionally-created mechanical trading systems please visit the forex signals page. In contrast to the mechanical trading systems the discretionary trading systems cannot be backtested because the discretionary traders cannot guarantee that they will react to a similar set of signals in the future in the same manner that they did in the past.
2.4. Implementation of a Forex Trading System.

There are two ways you can implement a forex trading system - either manually or automatically. Discretionary trading systems can only be followed by the manual placing of the trades. Mechanical trading systems are better followed though the use of automation.

If you are following a discretionary trading system you will be generally screening the currency markets for the signals that you have outlined in your checklist. The checklist is the description of the technical or fundamental trading signals that your trading system's rule-set operates on. The checklist could also contain the guidelines on how often you should check your forex charts/forex newswires for the signals (using the economic news calendar provided by the forex newswires as your fundamental signal timing tool); in contrast, the mechanical forex trading systems will be going through their own checklists with every second, 24 hours a day - which no human being can possibly do. Having a elaborate checklist will help you to be more disciplined in the application of your system. It is better to write your checklist in the form of the questionnaire. You can automate your search for some technical signals with the help of those forex charting packages which allow you to set up the sound or email/SMS alerts to notify you whenever the technical signal of your interest is generated (e.g. in Intellicharts). The forex bank reports and the forex newswires frequently issue mini reports of technical conditions on the market which most often are merely the "filled-in" versions of the same checklist.

Manual implementation of the mechanical signals is NOT recommended. Since the signals are generated by the computer you will always feel compelled to double-check them against you own experience - since no computer can model your thinking with 100% accuracy. This can lead to the delays and/or missing of some of the signals which can potentially undermine the system profitability, that rests on the principle of taking each signal exactly at the time it is generated. A lot is being said about the widespread lack of the discipline in taking the signals of the mechanical forex trading systems. This trouble can be easily overcome though the use of a reliable signal automation service. You solve all emotional troubles associated with the manual trading of the signals by simply automating this process. Elimination of the emotions from the trading through the use of the automated mechanical forex trading systems should explain their popularity amidst the multi-billion dollar hedge fund industry.

An crucial aspect of mechanical system trading is the monitoring of its real-time performance. The concealed market dynamics (a particular way of reacting to technical or fundamental signals that an important grouping of forex market participants shares - or, systematic mass investor impulsiveness) that your system has captured during the back-testing may be switching or might already have changed at the time you start to trade your system with the real money. The single way you can say that the market dynamics that you are focusing on have changed or not is to compare the real-time and the past system perofrmance. If the system continues to perform like it did on the backtesting then you can conclude that the market dynamics it targets have not yet changed. If you notice important deviations in such system performance measures like the maximum peak-to-valley drawdown, the average duration of trades, the average value of the profits/losses, the maximum number of consecutive winners/losses, it can signal that an important shift in market dynamics is taking place (e.g. a group of investment banks have modified their trading models). The fastest way to update your system to the changes in market dynamics is available for the neural network packages - which allow to retrain your model over the most recent price history. Retraining a neural network involves readjusting its matrix of weighs which allows it to stay attuned to the current market conditions. If mechanical trading systems suffer form the paradigm shifts on the market - the same can be said of the human mind (discretionary trading systmes) which tends to be very inflexible once a partciluar way of doing things (i.e. trading style) is ingrained in it.
2.5. Mastering System Trading.

To master system trading you ought have the patience to wait calmly for the entry or the exit signal from your own forex trading system and act only on them - irregardless of the technical or fundamental conditions that you see in-between these signals. It is no wonder why the best traders prefer to compare themselves to skilful predators when they describe their trading style:

Quote: "Top traders love the hunting metaphor to describe what they do. One of them, for example, claims he is like a cheetah. The cheetah can outrun any animal, but it still stalks its prey. It won't attack until it is right on top of its prey. In addition, the cheetah usually waits for a weak or lame animal to get close. Another top trader told me that he trades like a lion. He watches the herd for weeks until something other than his presence causes the herd to panic. When the herd panics, he then chases a weak or lame animal that appears most confused. The difference between an average hunter and a really skilled animal like the swift cheetah or the cunning lion is that the skilled hunter waits until the odds are overwhelmingly in his favor", from "The Ten Tasks of Top Trading" by Van K. Tharp.

Quote: "Much of the time, even professionals don't have a clear picture of what is going on, but they have learned to have the patience to wait for select, specific setups. You must learn to trade on only the most recognizable and reliable patterns." from the "Street Smarts: High Probability Short-Term Trading Strategies".

The most important rule of systematic trading is to take each and every trading signal that your system generates. Only by taking all the signals at the time they are generated can you count on replicating the past performance of your system. If you have the slightest suspicion that you will not be able to take all the signals - either due to the timing of the signals or your busy schedule - you should arrange for the signals to be automatically traded.

At the end of the day, a forex trading system just like the money management system serves to protect yourself from your own destructive tendencies which very often mask themselves as the "well-meaning" hunches and gut responses. This doesn't mean that you shouldn't trust your instincts - only that you should base your trades on them only if you can eliminate emotions from your decisions. This is because a trading system is a method to profit from other traders' emotional instability, therefore, if you do not control your own emotions you will not be able to profit from any system. Removing the emotions from your manual trading can take years (!!!)- so it can be more practical and profitable to simply autotrade your system.

Even if you start your currency trading career by following a professionally created forex trading system you will receive full satisfaction from the trading - in terms of profit and self-actualization - only if you make and trade a successful system of your own. One of the best books which can help you to start this fascinating journey is "Mechanical Trading Systems: Pairing Trader Psychology with Technical Analysis" by Richard L. Weissman.

Quote: " In the meantime, it cannot be emphasized enough that, at the very least, genuine success in trading markets involves the adoption of a trading system. Without the discipline of such a system, the very best efforts are likely to be doomed to failure." Tony Plummer in his book "Forecasting Financial Markets: The Psychology of Successful Investing".

There are no certainties in the forex trading, since the future will never be exactly the same as the past. There are only probabilities, which you can systematically put in your favour with the help of a established forex trading system.

What's the Best Forex Strategy?

Many forex traders find themselves asking the age old question what's the best forex strategy? To know the answer to that question, one must look at the history of trading. Not just forex trading, but trading, in general.

The moment that the first bell rang on the stock market floor, traders were coming up with strategies to beat the market. Obviously they didn't have the technology that most of us have at our disposal. They didn't have the thousand dollar charting platforms that so many traders are overpaying for, just for the privilege of using them, nowadays. So how do you think the successful traders of the past made their money?

Well, one way was through fundamental analysis. They were able to comprehend a company's financial statements such as balance sheets, income statements, statement of cash flows, etc. to know a bargain when they saw one. But these kind of people would be categorized as investors, not traders. Traders generally believed in technical analysis over fundamental analysis.

So how did traders of that generation made their money? Simple. They understood the concept of price action. Plenty of floor traders became rich just by paying attention to how the other floor traders were trading the respective stock.

How come a concept as simple as price action has been pushed back in favor of all the technological bells and whistles that most people use in their day to day trading?

People, today somehow feel that the best forex strategy has to be in these maze of indicators,colors, noises,and whatever else is en vogue nowadays. Its really quite sad that it has gotten to this point.

Traders used to pride themselves on how they were able to truly understand the market, but in the present time we live in, they are more worried about understanding what their indicators are telling them.

If you want to learn forex, then its a good idea to learn from our ancestors. The less is more approach has and will always result in more success. To find out more about price action and to get a forex trading education, make sure to visit Trading In The Buff.

13 SECRETS THAT GENERATED 992 PIPS NET PROFIT IN 15 FOREX TRADING DAYS

There is no hype in this headline. This is the absolute truth. The following 13 secrets generated 992 pips net profits for me in 15 trading days.
1 do not over expose your account .maintain an account exposure of between 10% and 30%.

2 Always trust god to find and join the trend early. Always learn to test the strength of the trend with the ADX.

3 Understand your best entry and exit points using pivot points and/or fibonnacci retracements

4 Understand the key japanese candlesticks Reversal patterns.

5 Know when the market is down or when the trend is weak and trade accordingly or stay away.

6 Only use take profit according to predetermined market potential.

7 Buy in oversold markets: stochastic oscilliator and RSI can be used in determining this

8 sell in overbought market: stochastic oscilliator and RSI can be used in determining this.

9 Never entertain fear even when the market moves against you. If you have a good trading system., it will surely come back in your favour.

10 Do not be greedy: Show contentment in all things and this demon will be far from you.

11 Do not over trade: Learn to draw a line between over trading and fear.

12 Always pray before making a trading decision: There is always a guiding light from god if only you will trust him.

!3 Rely on the holy spirit for guidance. He is very dependable and will never leave noy forsake you if you surrender the battle to him.

Send a blank e mail to wealthklub@yahoo.com to Get a free report on a powerful forex trading system that generates an average of 500 pips($5000 on a standard account) monthly plus how $5100 was turned to $40,000 without lifting a finger

Introduction to the forex market

Many of us have been fascinated by the shiny, colorful world of currencies as children, and even those of us who have little interest in the forex market have engaged in some form of currency trading while traveling outside their homeland. And these days, one will easily find people discussing the advantages and weaknesses of the US dollar even in a casual gathering.

The forex market is the currency market: it’s where the value of each currency is determined versus every other currency in the world. If you exchange one US dollar for its equivalent value in Euros, you’re already a part of the forex market, and are creating the quotes you see reported on TV screens every day. There’s no difference between the actions of a tourist at an exchange bureau, and the transactions of banks in the international market, apart from size and maturity terms.

In today’s integrated and specialized economies it’s rare to find all the components of any product produced inside one country’s borders, and so, international trade is a major creator of global forex volume. Deepening financial interactions across the globe through partnerships, buyouts of firms and international loans, along with ever complex tools of investment have been increasing the size of the forex market in recent years. If global trade and finance were the body of world economy, the forex market would be the circulatory system; in other words, there doesn’t exist a deeper, more liquid market than that of currency trading. Almost every political or economical event of long-term significance is reflected in its workings, and understanding it results in a very good comprehension of finance and economics in general.

Participating in such a vast and significant mechanism can be a rewarding and exciting experience for the individual investor. But while this is true, success during your interactions with the giants will require more than a bit of diligence and patient study. The rewards can be immense: famous investors such as George Soros, Jim Rogers, large Wall Street firms such as Goldman Sachs, or banks like Citibank all make millions of dollars each year from trading in the forex market. In fact George Soros is notorious as being the man who broke the Bank of England: Through successful speculations, he was able to make 1 billion dollars in just about a week.

Introduction to Forex Trading Technical Analysis

Any forex trader must apply a certain method in order to predict the future price of a certain currency, that's a given fact. The entire concept of speculative forex trading is based upon future fluctuations in currency prices. You make profit by buying a certain currency in one price and selling by another. Therefore, the most important thing for any trader, novice or expert, is to have some sort of prediction to future price changes.

Thus came to life several different methods of market analysis, each tries to incorporate different methods and data in order to give some sort of prediction to the future price of various currencies.

The first method we will review in this series of articles is Technical Analysis. Technical analysis is based on the concept that it is possible to predict future prices using only market generated data. All the data and history regarding a price is represented in various charts and imply assorted methodologies. Every trader, no matter what forex trading style he uses, uses this method at some point. At the very least, these charts help to determine what the ideal buy or sell position is, at any given time. It helps to give a broader look on he trends and patterns in the market.

Many critics accuse the Technicians of ignoring the fundamentals of the market, but they claim in return that all of the market's fundamentals are already represented in the charts. In their opinion any fundamental market rule is already enveloped in the current price and more importantly in the price's history.

The Basics of Forex Technical Analysis

Technical analysis is one of the two methods of analyzing Forex; fundamental analysis is the other. These two methods are very important in the Forex trading by forecasting the variations of the Forex market, prediction of the price and the movement of the market. Although technical analysis and fundamental analysis differ greatly, they both predict a price or movement. In this article, Forex technical analysis will be analyzed in detail.

Technical analysis is a method of forecasting price movements and future market trends through the study of past market action which take into account price of instruments, volume of trading and open interest in the instruments. Unlike fundamental analysis, technical analysis is focused with what has actually happened in the Forex market, rather than what should happen. There are certain technical analysis tools such as the relative strength index (RSI), which is a price-following oscillator that ranges between 0 and 100; the Elliott waves method, which deals in the prediction of the market movement by the study of wave patterns over a period of time; the parabolic SAR methodology, in which the prices are examined and compared to stop and reversal numbers which are an indication of entry points and exit points for any Forex trade; the stochastic oscillator, which shows the over bought or oversold currencies on a scale of 0- 100%; and gaps, which denotes the spaces on the bar chart that none of the trading takes place.

Technical analysts are confident that historical performance of stocks and markets denote future performance. They use charts and other tools to identify patterns that can suggest future activity. They do not attempt to measure a security's intrinsic value. They study the price and volume movements. And they create charts from that data. A technical analyst would rather sit on a bench in a certain mall and watch people going into the store. He decides basing on the activity of people going into each store. But if he is a fundamental analyst, he would rather go to each store and study the products on sale. Later he decides whether to buy or not. In other words, technical analysts disregard the intrinsic value of the products in the store. From the point of view of technical analyst, anyone can gain the profit by posing himself in the trend direction. Consequently, they use different patterns in order to create the price chart that will suit the future market and the price would follow the pattern.

In summary, Forex technical analysis focuses on what actually happens in the market. The charts are based on market action involving price, volume and open interest. It is always focused with the pricing and time factors rather than the factors affecting the market. Thus technical analysts study the effects, not the cause of market movement.

How to Achieve Financial Freedom with Forex Trading

With the growth of the forex market, there is a large amount of traders lose all their money. Unfortunately, they haven't done the simple steps presented to you. Read these steps below and give yourself the financial freedom you always wanted.

Trust In Yourself and how you decide

To reach the level of elite forex trader, you must trust in yourself and your forex trading education. If you have the highest quality education you can get like from Forex Profit Accelerator, you have to possess self-decision instead of relying on someone else's thoughts or ability (or lack of). Of course, you will prepare yourself fully before every risking any money. That is what demo accounts and home study courses is all about.


Decide What Type of Trader You Are

There are many ways to trade the forex. They range from very active to very patient. You must decide which style suits you best. The best time to learn this about yourself is while you are trading a demo account. you should not allow money to be lost. you should be making more of it.

Learn and Earn

Education is the shortest path to elite forex trading. Regardless of your ultimate goals, you will reach them quicker with a great forex trading education. The good thing is Forex Home Courses nowadays is that they have customer support, Like the Forex Profit Accelerator. Bottom line? they will support you until you succeed.

The more you Learn the more you Earn.


In order to achieve and retain elite forex trading skills, you must constantly searching and learning. one significant point to look for in an elite forex trading course is ongoing education. It is always pleasant and motivating to have an ongoing relationship with the person/people helping you to achieve your goals. The support yet being independent makes an elite trader.

What separates the elite from the not is that some follows only what the people around them tell them to do. the strategies and decisions come only from the points of view of others. An elite does other wise.

An elite forex trader will lead. Their decisions will be calculated and analyzed to near perfection. They will make decisions with no hesitation, and handle the growth of their account in a predetermined, intelligent fashion. Take your trading to their level and you will never look back.

It is not hard even for a beginner to be an elite forex trader. If you are decided to be financially free, it always start with one's character, Constant learning and the right people to support you. Being an independently learning trader can bring you to new heights, and being independent means freedom, financially.

How to Make Forex Give the Lifestyle You Want

In order to be rich and make loads of money with forex, it is a must for anyone who is serious to have accurate knowledge with the trade. Sure there is no need for any diploma in trading Forex, but in order to succeed, investing time and effort to learn profitably is a dogma.

Lately people have been buzzing about how a great income potential is forex. Getting tired of a monotonous life in the corporate world, there will come a time that people want to be free from all and have a rich lifestyle, to work from home and enjoy the greater things in life. Indeed Forex is a serious consideration and worth inveting on.

Before Forex was not accesible to anybody. But thanks to the modernization and internet, everybody has the fighting chance to get rich and be merry.

Yes Forex has low cost to operate, lower cost to start, very abundant information resources, flexible trading hours and very high income potential, everybody can get started in Forex in one way or another.

It is one thing to start trading and being profitable Forex trader is different. In order to become profitable in every trade, you will find it imperative to invest some time in learning courses and practicing in a demo account rather than saving all the pain of losses. Concepts such as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.

But having a good knowledge of these concepts is not everything you need. Fear is your worst enemy. To become a profitable trader, one thing that can free you of this fear is education. As you learn in the ways of the trade, you will find yourself more confident to what trading plans you have. You have to understand that there will be losses and it has happend to the richest traders today. If you truly understand that, there is no way that you can get poor in Forex.

You want to change the way you live for the better? A profitable forex trader must be ready with education and psychological preparation. This is the only way to make the market work in your favor.

Tips in Choosing a Forex Course and Getting A Demo Account

For any one serious making money with Forex trading, training is essential. There are many available resources on the net : E-books, books, seminars, courses are just some of them. With all the available means of studying, no one this serious would be dumb enough to get into Forex without the proper arsenal.

Choosing the right tools to guide you, however, may not be easy. The internet is also home to the scammers to take your money for so little information. But there are some courses, like Forex Profit Accelerator, would give you the training of an elite trader.

Some of the courses will just deal mainly on the technical analysis nad just the basics, teaching how to read charts etc. So choosing the right course, such as Forex profit Accelerator, will not only guarantee "the basics", but there are special factors that makes it special too. Such as:

- Quality Education with Bill Poulos, a 30-year veteran
- Easy to understand and apply techniques that are guaranteed profitable.
- Constant support upto 1 year. They help you until you are profitable
- Added bonus such as Risk and Money Management.

And the good thing about this is that before you even pay, you are to recieve a lot of free stuff. Videos, E-books (4 to be exact), Charts, Articles and Newsletters just for showing seriousness in the course.

Using a Demo account can boost the confidence level of a "learning" trader.

Trading Currencies is getting very popular nowadays, and there are online platforms, such as Easy Forex, that are offering Charting packages, Demo accounts and other tools that will help you practice concepts learned in the courses such as the one mentioned above.

If used accordingly, demo accounts can be very useful tool in training before using a live account. This lets you apply concepts and learn from almost "hands-on" experience.


Many traders who just jump in into trading without any training and education is either broke or just never heard of again. Investing time and money in learning how to be profitable in Forex Trading is anyone would not regret.

How to Start the Forex Trader Life

Think of this scenario : you are waking up in a very sunny morning, doing your usual routine, turning on your computer and as a forex trader, you spot a great opportunity to place a trade. After placing a trade, you eat with your family or maybe jog for 15 minutes, by the time you come back, you just earned $3000.00. This is what it's like living the Forex trader life. If you have a job, this can make more than what you earn working 8++ hours for a company or someone.

Forex of course is not for everybody. Like being a president in a company or a driver of a cab, forex may or may not apply to everyone, but those who do earn in their pajamas or spare time.

This field is so exciting in a way, the potential of turning $200 into $2000 in 10 minutes in the comfort of your home is just so appealing. You can start small and earn big. I bet, once you earn $2000 the first, second or third time, you will be hooked.

This kind of market is not for everyone, if you are not dedicated to change your financial status, more conservative means of earning is for you.But if you are decided to change your financial future on the Forex market, this is a path worth investing on.

Forex charts may at first seem to look like any stock trading chart, but the difference is, the momentum and volatility constantly open doors every minute. Leveraging is one of the advantages of the Forex Market that makes it so special that no other investment has, such as stocks or real estate. Like i said earlier, you can turn $200 into $2000 if you have the right arsenal of information and training.

Be warned, this is not the type of home earning potential you can just do like in a snap. It is definitely true that you don't need any degree to earn in forex, but training and understanding forex is essential if you want to get rich as soon as possible. There is not one product that can proclaim that you will succeed in forex if you use it, because it all relies in you.

Like a college student entering the real world, all the learning in school will be tested. Some may apply, most will not, but a hands-on experience, makes you learn more, makes you do more.

In forex, the right thing to do is :
Take time to learn, read, listen, watch.
- Take time to practice, practice, practice
- Learn again until you are profitable.

Forex truly is an opportunity worth investing time, effort, and money. There is no opportunity that will let you earn (a lot) in 10 minutes. It truly is exciting, are you up to it? Take your time in learning the Foreign Exchange Currency Market. You won't regret it.

Tips on How to Make More Money with Forex

Foreign Exchange trading has proved itself time and time again that is is a very rewarding income source for companies and individuals like you and me. Daily trading volume of over a trillion and a half dollars (thirty times larger than the volume of all the U.S. equity markets combined), has some of the richest people now, and some unlucky ones. If you know how the way this 'game' is played, you one day will belong with the richest people. Do you want to be in the wealthy circle?

You do not have to be a professional or have a degree in order to win, you have to have these three basic characteristics within yourself:

- The Desire to get rich

- The thirst for knowledge

- The basic understanding of Forex

Most of the information about forex is very abundant online. Home- study courses, seminars and the like offer the quality of learning you need to succeed. There are also trading platforms that can give you a free demo account to practice trading until you are ready.

Speaking of practice, i cannot emphasize more on how important these two factors are : learning and practice. Practice with a demo account until you feel you are ready to deal with real money. It may take months, yes, but this is an investment that can pay you exponentially in years to come.

In order to win forex, it is a must to have a trading strategy.

You need to know what you are looking for and how to do get it without loss as much as possible.

These are guidelines or foundations that should be included in your trading strategies:

- Never let emotions rule you. Stick to what you have learned and what strategy you have made.

- Risk no more than 2% on your trade, so that when bad luck does not want to leave your side, you would not have to worry that you are out of cash.

- when you are in a loosing streak, return to practicing at a demo account and be profitable at least for a week and come back to trading.

- Make rules and stick to it.

- Believe in the power of Compounding - don't try to get a million bucks in a trade, expect growth every month and the month after, until at the end of the year, you have increased your capital 12 fold.

- Constantly learn - listen to trading veterans, read articles, go to seminars, talk to people. here you can fast track your trade learning and thus making more money.

Remember to just have fun with it and do little by little each day. This is a career worth spending your freetime or lifetime in.

The Mind Games

First, what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

Mind Games defined: Mind Games are a kind of social interaction where participants try to screw with one anothers' heads. The concept is most often used colloquially to refer to deceitful, confusing or Machiavellian situations. However some mind games are described by the psychology of transactional analysis.

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who's been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind — and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn't take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others — including the mass psychology of the people that use the currency on a daily basis — but neglect to know what moves you, you're going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying 'Huh?" about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged. All right. You've heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you'll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info — if it's math, there's only one right answer, right?

The answer lies in interpretation. The numbers don't lie, but your mind does. Your hopes and fears can make you see things that just aren't there. When you invest in a currency, you're investing more than just money — you make an emotional investment. Being 'right' becomes important. Being 'wrong' doesn't just cost you money when you let yourself be ruled by your emotions — it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It's that little thing inside your head that says, "I KNOW I'm right on this, dammit!"

To most people, being right is more important than making money. Here's the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You've got to accept that picking a loser is NOT an indication of your self-worth, it's not a reflection on who you are. It's simply a loss, and the best way to deal with it is to stop losing money by moving on — and really move on. Moving on means you don't keep a running total of how many losses you've had — that's the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning. Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didn't work. But he didn't give up — because he knew that creating a source of light from electricity was possible. He believed in his overall theory — so when one design didn't work, he simply knew that he'd eliminated one possibility. Keep eliminating possibilities long enough, and you'll eventually find the possibility that works.

Winning traders see loss in the same way. They haven't failed — they've learned something new about the way that they and the market work. Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I'm wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades — but I made $250,000, making my overall profit $175,000. It's a pretty clear numbers game — but how do you keep on trading when you're losing in trade after trade? Simple — just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you've set up — but define yourself by what really matters — the overall record.

Bottom line: You can't keep emotions out of the picture, but you can learn not to let them control your decisions. Keep it all in perspective and realise that there are a lot of big boys playing this game and playing it to win...

Forex Glossary 2

ere are some of the most common terms used in FOREX trading.

Ask Price — Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote — e.g. EUR/USD 1.1965 / 68 — means that one euro can be bought for 1.1968 UD dollars.

Bar Chart — A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information — the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.

Base Currency — is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote — USD/JPY 112.13 — US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.

Bid Price — is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote — e.g. EUR/USD 1.1965 / 68 — means that one euro can be sold for 1.1965 UD dollars.

Bid/Ask Spread — is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker's fee, and varies from broker to broker.

Broker — the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.

Candlestick Chart — A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick — a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.

Cross Currency — A currency pair that does not include US dollars — e.g. EUR/GBP.

Currency Pair — Two currencies involved in a FOREX transaction — e.g. EUR/USD.

Economic Indicator — A statistical report issued by governments or academic institutions indicating economic conditions within a country.

First In First Out (FIFO) — refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.

Foreign Exchange (FOREX, FX) — Simultaneously buying one currency and selling another.

Fundamental Analysis — Analysis of political and economic conditions that can affect currency prices.

Leverage or Margin — The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 — you can trade currency worth 100 times the amount of your deposit.

Limit Order — An order to buy or sell when the price reaches a specified level.

Lot — The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.

Major Currency — The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency — The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO) — Two orders placed simultaneously with instructions to cancel the second order on execution of the first.

Open Position — An active trade that has not been closed.

Pips or Points — The smallest unit a currency can be traded in.

Quote Currency — The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover — Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.

Technical Analysis — Analysis of historical market data to predict future movements in the market.

Tick — The minimum change in price.

Transaction Cost — The cost of a FOREX transaction — typically the spread between bid and ask prices.

Volatility — A statistical measure indicating the tendency of sharp price movements within a period of time.

The 3 Best Ideas

Many people today are excited by the possibilities of the Forex Market and how much money can be made. Many of these people want to become a full time forex trader, either now or very soon. This is the one of the most common thoughts amongst forex traders, so do you think like this too?

To make lots of money from Forex Trading and to survive in the Forex Markets just being a normal forex trader will not cut it, you need to become a professional Forex Trader. So what are the secrets of the professional trader? What enables them to make lots of money from Forex Trading? So here are some secrets of a Professional Forex Trader , which he uses to make big money?

The Best Idea Number 1- Keep it simple
You do not have to be Einstein to be a professional Trader- They will simply Follow a Forex Trading System. Most of the professional traders are not God, they don't have any exceptional foresight skills. What makes them different to most people is simply because they have a forex system, which gives great signals and most importantly they stick to this system and there rules. More than likely they have a very simply trading plan, nothing too complicated and nothing over the top.

The Best idea number 2- Think and work smarter, not harder.

When it comes to Forex Trading sometimes it doesn't matter how much you learn, how much time you put in, it comes down to how accurate and how useful the tutorials and education is and also the mindset of the individual. So the key is finding the right information, the right education lessons and the right Forex Broker. The CFD FX REPORT recently researched all the brokers and they have come up with who they believe to be the Best Forex Broker. They also have some excellent education lessons available.

The Best Idea Number 3 - Determination, Discipline, Ability to Take a Loss, Money Management and Belief
Most of the successful Forex Traders have the mindset that they will succeed, they set rules, they stick to them and they can take a loss. They understand that you can't pick the market 100% of the time and if they trade to their plan. They understand to make big profits are not achieved over one or weeks but over years. They will not put anymore then 5-10% of their capital per trade