John Harun Mwau Facebook: How To Trade FOREX Wisely?!
How To Trade Wisely?!
Yes, that’s true 95% losers and only 5% winners,
These 5% of investors get everything that the remaining
95% lose. This means unimaginable amounts of money
passing from hands to hands every day.
The 5% who get all the money KNOW what to do, because
they ALWAYS use proper software that makes the
decisions. So the BEST and ONLY working way to earn
money on Forex is by using READY buy/sell signals
generated by highly specialized, intelligent, and selfimproving software (machine). Only machine, a powerful
computer that analyzes all the data from the the
market is able to make the right decision. Machines don’t
have emotions, they don’t know what fear or greed means,
and they never act according to intuition. They obtain
the results by means of calculation, and this makes them
the best advisers. That’s why 95% of ordinary people lose
their money to 5% of wise investors.
And because I was too lazy to sit front of a computer screen
for 12 hours a day or more, So I embarked on a search to
find the ultimate forex trading system, a system which takes the emotions out of trading, and which is consistently
But, the Forex market is so powerful that many selfproclaimed gurus and pros have been selling their programs
for years, supposedly helping the average people of the
world to become forex market whiz kids. Unfortunately, most
of these systems are built strictly to capitalize on your
eagerness to participate in the global market, and never
show any real results.
Also a main problem cited by users of previous old forex
methods was that the software was too difficult to
understand, and nearly impossible to use. A person would
have to devote a large portion of their time to the system,
essentially learning about the market before attempting to
make money there. For that reason, people were giving up
and losing money by the thousands.
It is not impossible to join the league of successful traders – the winners’ club. All you need to do is follow a few Forex trading tips religiously. Forex trading tips do not imply following some weird crappy suggestions by mediocre traders, who haven’t spent much time in the trenches yet consider themselves as professionals. I am speaking of the guidelines and experiences shared by those few traders who have spent a large portion of their lives in the industry and can actually be considered masters of their craft. They are the ones who not only have profited time and again from this business, but also helped others along the way.
Following are some of the most significant Forex trading tips, which if deployed in your trading, can result in handsome amounts of profits and a good night’s sleep.
• First and foremost, you need to understand that forex trading is about winning. Your success implies someone else’s loss, and if you lose, you’re helping someone else to take your money. Yes, forex trading is all about making money. So you must act in your own best interest.
• You cannot digest all the information provided by news reports, political and geographical events and numerous technical indicators. This is why you need to follow a simple and uncomplicated system and strategy of trading, which follows the fundamental elements of forex trading. Keep is simple.
• Successful Forex traders identify and recognize the chief support, and the resistance regions of every currency they’re dealing in before the commencement of each trading day. But knowing the entry points will not suffice. You also need to make sure that you are acquainted with the exit points of each day and the factors influencing those exit points. Having an effective entry and exit strategy in place will definitely yield you profits at the end of the day. The key is to keep your decisions mechanical not emotional.
So, make the most out of these Forex trading tips and remember to always act in your own best interest when trading
To run an online Forex trade successfully, one need to know the Forex trading strategies properly. While you are dealing with this strategy, it is always good to be honest to yourself. It will also assist you to turn up with a strategy that you can manage easily. There are a lot of impulsive risks in the currency market that you can never rely on a single Forex trading strategy to be successful.
The key to successful trading lies in your ability to stick to your trading plan when it produces some losses and trade it with high risk reward ratio.
One of the best strategy that I can think of which can produce high risk reward ratio is the breakout strategy. The breakout occurs when the market suddenly burst in a particular direction after a period of consolidation. The burst will usually gives you a decent profit and the loss will usually be much smaller compared to the profit it can produce.
Imagine you being able to generate a risk reward ratio of 3:1 for every trade, your one win can allow you to lost 3 times in a row. Let’s say that your trading strategy can gives you a 50% winning percentage. If you trade 100 times in a month, you will win half of the time and lost half of the time. If your stop loss is always set at 20 pips and your target profit at 60 pips, this is what you get:
Win = 60 pips x 50 = 3,000 pips
Loss = 20 pips x 50 = 1,000 pips
Total Profit = 2,000 pips
If you are trading with a standard account, this is equivalent to $20,000. This is exactly how most successful traders make their income from. They do not have a secret system that they hid in a dark room. In fact most professional traders that I know trade with very simple strategy and a few of them don’t even trade with indicators.
Therefore you should spend some time to pick 1 or at most 2 strategies that you think suits you best. Practice them on your demo account and record down their win and loss for about 300 to 500 trades. Work out the winning percentage and as long as it can produce 50 to 60% winning, you then work on improving the risk reward ratio and you will have an atm on hand for a life time.
Many times, I have heard people saying something like this. “This trading strategy is too simple, how can it be making money?”
In fact, this is what I think when I first started trading forex. I was always looking for sophisticated trading strategy as I always have the thinking that a system that I dun understand must be a good one. Ironically, this is the same strategy that wiped out my account.
If you have been following some forex gurus, you will find that they are trading with pretty simple strategy with at most 2 indicators. Are you one of those traders who clutter your computer monitor with indicators that you hardly can see the price movement?
I hope that this post can debunk the myth that a good trading strategy must be one that is complicated with a lot of indicators.
More often than not, a good trading system is usually a simple one. But in order to profit from it, it requires you to be able to trade with full discipline. There are always time where you are tempted to enter into a trade even when there is no setup according to your plan and this is what really kills your account.
It is not how complicated or how many indicators you use that determine your trading success. It is the mindset and your psychology that really makes or breaks your trading career.
A typical forex trap is a fake out that is very common in trading. There may be times when you will see a price bursting out of a triangle in a particular direction causing you to enter a trade. After some time, you will see the price moving back into the triangle again and then breakout in the opposite direction. This is what is usually known as fake outs and this is very common for those of you who love to trade forex breakout strategy.
However those losses cause by fake outs can be reduced with the help of a MACD indicator. Whenever you see a breakout occurring, you can immediately take a look at your MACD indicator.
If the breakout is in the UP direction, you have to make sure that the MACD cuts above the signal line to create a bullish crossover and if the breakout is DOWN, you have to check if the MACD cuts below the signal line.
Any breakouts that are not confirmed by the MACD crossover are usually fake outs and you should avoid entering any trades. It is always better to miss a trade than to lose in a trade.
I bet you have heard of the statement “The Trend Is Your Friend”. From this statement alone, you should understand the importance of trading in the direction of the trend. However, not many people really know how to trade in the direction of the trend. Therefore I decided to write this post to elaborate more on how you can trade the trend.
The key to riding the trend is to always remember this statement: Buy the dips in an uptrend and Sell the rally in a downtrend.
So how can you buy the dips in an uptrend?
Even when the price is in an uptrend, there are also times where it will retrace backward before it continues to move further up. The time when it retraces are known as DIPS.
If you are able to analysis when the dips will reverse, you will be able to enter a LONG trade when the price moves back up.
Being able to sport market trends and ride them are what make professional forex traders bank millions almost instantly. The market is revolving around a series of patterns – mostly based on human psychology and other external factors – and you should take your time and learn to spot the patterns and benefit from them. To help you get started, we are going to talk about some technical indicators that you can use to spot trends when forex trading.
First of all, we have Moving Average, known as the simplest, most universal technical indicator to use. Spotting trends can be done easily using multiple Moving Average indicators; we are not talking about advanced Moving Average indicators here, we are simply going to use Simple Moving Average or SMA to spot market trends.
Start by placing a 7 period, a 20 period, and a 65 period SMA on your chart. When you see the three indicators pack together and then spreading to a particular direction, you are looking at the beginning of a market trend. If the 7 period SMA is on top of the 20 period SMA with the 60 period SMA under both indicators, you are looking at an upward trend. On the contrary, if the situation is reversed then you are expecting a down trend.
You can also predict market trends easily by using the ADX or Average Directional Index. You can simply set up the indicator and start seeing market trends right away. However, the ADX is slightly a bit behind compared to the SMA when it comes to predicting trend so you should combine it with other technical indicators to support you.
If you are still trading foreign currency pairs using a line chart, you are missing the benefits of using the forex candlesticks. Although they might look simple at first, there are actually a lot of information you can gather from the market when you use forex candlesticks. There are four main aspects you should look into when viewing forex candlesticks and we are going to discuss them in this article.
First of all, you need to understand that a candlestick represents the chart time frame you choose to use. If you are trading at 30-minute time frame, then a candlestick represents a period of 30 minutes. If the market is moving upwards, the candlestick is usually hollow or displayed as white; on the contrary, the candlestick is filled or displayed as black if the market is moving downwards.
The main square of a candlestick represents the open and close prices of the time frame. If the candlestick is hollow, the upper end of the main square is the close price while the lower end represents the open price, and vice versa if the candlestick is filled. The lines you see extending from each end of the square are called shadows. The upper shadow represents just how high the price moved during the time frame while the lower shadow represents the lowest price of the time frame.
When used properly, you can easily predict market movements just by seeing the candlesticks. If you see three candlesticks having the same lower shadows – or in other words, the same lowest prices – then you can expect it to be a sign of reversal or the beginning of an upward trend.
You can’t just enter the forex market and expect some easy money in return. Even though the forex market offers tons of money making opportunities and great profits to be made, you still need to be patient and have proper skills and strategies. Not only that, you also need to have proper trading plan in hand if you want to stay profitable at all times.
Formulating a good trading plan that suits your personality and skills is relatively easy to do. First of all, you need to pick one or two foreign currency pairs that you will be focusing on. This is a necessary step to take since you will be able to focus your analysis on one or two markets, making taking the right decisions much easier to do.
Once you have selected the pairs you will be trading, learn as much as you can about the foreign currency pairs. If you plan on trading the GBP/JPY, for example, you need to understand the necessary fundamental elements of both the Pound and Japan Yen. Keep in mind that fundamental analysis can really help you anticipate trends and market movements, which means it will help you bank profits easily.
Last but certainly not least, you need to learn about the nature of the market and the right technical indicators to use. Technical analysis can help you make quick decisions during live trading sessions. Put all these aspects together and you will be able to formulate your own trading plan without hassle.
When trading forex, you need to take various aspects into the decision making process in order to be profitable. That is why trading at the right time frame is essentially important. When trading at the right time frame, you will find forex trading very enjoyable and rewarding at the same time. What you need is to pick the right time frame according to your trading style and personality.
Many new forex traders make the mistake of trading at smaller time frames such as 1-minute or 5-minute. Although this might seem like a good idea at first – since market movements are reflected instantly and you can make quick profits here and there – it may not be the best way to go.
Shorter time frames are only suitable if you plan on day trading or even scalping. Since you only need to capture a small momentum and bank profits immediately, you don’t need to trade at longer time frames. However, you also need to have superb skills in analyzing market movements and paying close attention to details if you want to stay ahead of the market.
Longer time frames, on the other hand, are more suitable for those of you who plan on riding trends and letting positions stay opened for an extended period of time. You will be able to bank more profits cumulatively but you also need to have the necessary skills to predict long-term market movements. Longer time frames such as 1-hour, 4-hour, even 1-day are certainly more suitable for this type of forex trader.
There are lots of literatures about trading strategies used by forex traders. Perhaps you’ve read a few if you’re regular reader. However, what makes the different between a successful trader and a loser is how they put these strategies to practice. Again, it is not just the use statistical analyses that will make you successful. It’s by using a mix of well examined forex trading strategies that work which will enables you make profits and not loses. Particularly, these types of methods are extremely helpful to newbie in the currency exchange market. Here are some strategies that you can easily follow.
Scalping trading strategy requires a trader to make several trades within a single day. There is no limit to the number of trades to make. Sometimes it can reach hundreds in any single day. When doing scalping trading, you do not hold to the trades for long. You may also exit a trade whenever you feel the marketplace is actually reacting unfavourably. To make profits with scalping strategy, you should sell a currency pair when it makes slight gains above the bid price. Nevertheless, you have to measure the market scenario continuously to achieve success along with scalp trading strategy.
Invest In Correct Currency Pairs
Foreign currency set is actually an additional essential factor to think about when creating forex trading strategies that work. It is important to invest in currency pairs that move in two different directions at any single trading time. To find the proper currency pair, you need to research a number of market data. This will consist of charts of previous many years. Choosing two currency pairs that moves in opposite direction is help because if one goes down and makes loses, the other pair will cover it up by going up and making profits. This helps minimize risks to a great extent.
Understanding how you can use money carefully is actually an effective forex trading strategy that works specifically to newbie. Regardless whether you are a newbie to the forex market or not, you have to safeguard the fund available in your accounts from being squandered. The best way to do this is to maintain a margin account. This really is an account which your broker lends you money to trade. Nevertheless, you will pay interest for the amount lent to you. Maintaining a margin account helps you get some additional cash if you have limited capital.
The 1-2-3 pattern is very common in the trading world and frankly speaking I love spotting those distinctive trades. As the name suggests, they form a 1-2-3 cycle and once you get used to spotting them you will be amazed by the accuracy of this method. Whether it is at the beginning of a new trend or the end of an actual trend, with this system you will be able to pick a highly profitable trade when it comes along your way.
I personally find that this system works best on the bigger timeframes, daily and above. However, if you are a bit of a thrill seeker, you may also use it on the smaller timeframes with some extra indicators to catch some quick profit.
This pattern in commonly known as a 1-2-3 buy pattern and as you can see from the above graph, price bottomed, did a correction, then a retest and finally broke through the correction line marked as the red-line.
It seems a lot to grasp just by saying it but believe me it’s as simple as 1-2-3.
Point 1 – Price bottoms. Point 2 – Price does a correction Point 3 – Price retest and bang goes back to correction point and above.
This is a perfect set-up of the 123 system at work. There’s no tedious analysis, just spot the pattern and place your buy order 10pips above point 2.
(Note: some experienced traders usually jump in the market before the crowd and buy just below point 2)
It is crucial that the retest, which is labeled point 3, does not go beyond point 1. If price does go all the way down to point 1, it is not a valid pattern to take a trade. Abort mission and move to the next one.
Point 1 – Price tops Point 2 – Price correctionPoint 3 – Price retests and breaks red line to continue downward movement.
Now for you to get some practice and become familiar with those trades simply open a daily, weekly or even a monthly chart and spot those 1-2-3 patterns. Write it down on a piece of paper and count the number of wins you picked to the number of losses you incurred. Now calculate the accuracy on the system. I found that the system was accurate around 70% of the time and noticed that the higher the timeframe the more accurate the signals were and bigger were the moves.
I hope that this helps shed some light on the way to profit from the market and catch some big moves. These trades usually last anywhere from weeks to months and are great for traders who do not have time to sit in front of their computer all day long. If you are one of those traders I genuinely believe that this strategy will greatly help you in your trading.
Note: Usually the stop loss with such a system is anywhere between 100-300 pips depending on the timeframe you are trading. The bigger the time frames the bigger the stop-loss.
Remember only risk 3% of your tradable account. The path to success lies greatly on a sound money management system. Stick to this rule and you will prosper in your trading career.
The breakout method is a simple and easy to follow trading strategy using basic indicators. Best part is this system can work on any currency pair of your choice. The rules of this system are very easy and clear to follow. Remember the KISS principle when applying the strategy, do not try to over complicate it as it just defeats the purpose of having a system in the first place. I cannot stress this enough…the simpler it is the better you will trade.
I can tell you that if executed properly with minimum psychological conflicts, this stratehy will let you enjoy big gains in your trading cashflow.
NOTE: This system is best suited for trending currencies.
Open a daily chart.
Add a 50 Simple Moving Average (SMA) on the chart as shown above. The observation made from the graph above is that price is trading below the 50SMA. That is the most important part of this trading system, to define the market trend.
The daily chart will provide you with an insight of the type of trades to take. If price was above 50SMA and 50SMA was pointing up with a positive gradient, you will take only long trades (buy). In the above case, price is clearly trading under 50SMA, which is pointing downwards. This gives you an overall idea to take short trades only (sell).
Once the type of trade is determined, head to a 30-mins chart. That is where your entire trade signal is going to be triggered.
Draw a trend-line from the lowest point where price last broke the 50SMA from downwards and connect line to the next highest lows which are trading above the 50SMA as shown in 30-mins chart above. This line will act as a support for price to bounce off.
Remember that you are taking only short trades for this setup. Trade will be triggered only when price breaks through support line (Blue Line) as shown in graph below.
Now, there are two ways that you may enter the market:
1. If you are an aggressive trader, you may jump in the market at the open of the candlestick that follows the break of the blue trend-line. (You may need the confirmation of another indicator to support your claim)
2. If you are a conservative trader, you might draw a support line on the last price low shown on graph above as the gray line. Break of this support line provides extra confirmation for the trade, which is also trading under the 50SMA. The next step is for price too clearly open under the 50 SMA (Red Line) as shown above to take the trade.
If trend is strong, you can potentially make huge profit. In that instance you could potentially have made just over 300pips where risk was 70pips. This is on a standard account, means risking $700 to make $3000. Great risk to reward ratio of nearly 1:4.
With this strategy my stop-loss is usually between 50-70 pips and my profit target is between 150-300+pips depending on the volatility of the pair am trading.
Note: An indicator acting as a filter may be used for false breakout to minimize risk of taking a bad trade.
1. Avoid overtrading
Overtrading is regarded as a curse in the world of Forex trade. Overtrading affects those people that have higher amounts of greed. Every trader must tame the internal desires that may drive him or her to trade more when he or she should be quitting. This is a tricky situation that can make you plough all the profits that you have made and in the process, you may lose everything depending on how you approach the trade. This calls for high levels of caution since this is the only way that you will know when to stop and when to continue trading in Forex.
2. Get rid of emotions
When trading Forex, emotions can affect your trade by a huge margin. You must not be under emotions when trading at any given time. When you are sober emotionally, you will not spend your money trading unnecessarily. This is because your decisions will not be based on emotions but on facts.
3. Avoid speculation
Speculation is fine when used to gain competitive advantage in long term Forex trading. You will note that speculation may be very destructive when used to make short term predictions in Forex trading. When you want to use speculation for the short run, you will need to bring on board the use of other proven techniques that when combined with other methods can offer dependable results.
4. Making use of stop loss
This is very necessary for those people who would like to have their investments protected. The technique will limit the amount of risk that you may incur hence in the process, you will be at a position to consolidate your trading gains and achieve their best.
5. Continue learning
Every Forex trader must keep on learning new trading techniques because there is nothing that can be taken to substitute it. Learn as many things as possible especially that have something to do with what professional Forex traders do to guarantee successful trading.
6. Put in place effective risk management models
This is very necessary for every Forex trader that is interested in accumulating wealth through Forex trade in the long run. As a trader, you can invest in procedures that will reduce the risk levels that you get exposed to. There are many models that can be used to manage trading risks in the Forex market successfully. Choose the one that suits you trading needs.
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John Harun Mwau Facebook: How To Trade FOREX Wisely?!