Sunday, September 18, 2011

Forex Articles


About the Author:
Joe Chalhoub
Lebanon, Beirut

1. How to Build a Good Forex Strategy

Each forex trader must have his own strategy, we can’t rely all the time on others strategies and forex signal, other FX traders are not better then us; we can develop more profitable techniques. In this article I will give you some tips to follow while developing your currency trading strategy.

<a href="http://instaforex.com/contest_forex_fastride.php?x=CELG">InstaForex</a>



First of all be simple as you can; Forex trading is not simple and it needs good concentration that’s true, but the good news is you can make profit by following simple techniques and stick to it. Don’t use complicated economic indicators; indicators describe the market and do not predict it. 

Second, develop a strategy which do not rely on news release, you can do that by closing a trade before a news release or open it after a news release, and by this way you will not be stopped out because a report came worse than your expectation. 

Combining the second and third rule we will have the following scenario: I see a currency in a downtrend (or uptrend) and I am sure of the trend, but the RSI is under 30, and after a while a report will be released, so what I do is wait for the report to be released. 

At release time we will either see the currency going down very quickly and we will miss the chance to enter into a very profitable trade and it is not a problem as long as we don’t loose pips, OR the currency will go up, in that case the RSI is no more oversold, so we identify a good entry point to enter a short trade. Forex is not so bad and it always gives us new chances and always tells us to enter or exit but we must read well the signs and forex signal.

Fourth, the most important thing in foreign exchange trading is the entry point; good entry point leads us to profit, bad entry point leads us to loose. You probably hear a lot of traders telling you do not trade against the trend, and that’s right but it is not enough, you must know where to enter a trend , timing is the most important, so where to enter, I will tell you where I enter. For example, let’s assume that EUR/USD major trend is down and I want to enter a short trade. We know very well that currencies move in waves 


 So most traders see in wave [A_B} a good opportunity to sell but it is too risky for me and it has a good probability to stop me out, if I enter at point [B] I will be stopped out, but If I short at point [C] I will be riding the trend from the beginning and make very good pips. 

At point [C] the currency is no more oversold and probably at point [B] a report has been released and caused a retracement to [C], so at [C] I will enter the corrective wave. With this technique, I will have a 95% chance to hit my target and the spread will be very tight. You see, forex gives you many chances, you must change your way of thinking a little bit and see trading from a different point of view and have our own forex signal. 


2. How to Trade The News
News Trading or (Trade the news technique) is a term which we always hear, in this article I will describe how I see Forex News Trading and how I trade the news; I tried forex news trading for many years and discovered great things; how to use economic reports and forex news along with technical analysis.

In this article I will describe the most accurate and profitable FX techniques that each trader must use in his trades. First of all, we must use Technical and Fundamental analysis in our trades, we can’t rely on one without the other, we must use them both; Technical analysis analyses the history of the currency and predict the future price; each trader has a different forex strategy which he uses in analyzing the market, me too I have my own strategies and they are not hidden; you can check my forex forum and get whatever you want from it. 

Let’s talk now about the fundamental analysis, I tried most of fundamental and news trading techniques but I didn’t find them worthy, it is real that releasing news can affect a certain currency, but how it affects the currency and when it deviates that currency, some economic reports make the currency jump 100 pips during the first split second of the time release – you must pay for this kind of service (getting the data in the second of the release) 

In addition a report may affect a currency during the first 10 minutes or half hour but before it takes the right trend it can fluctuates up and down and may stop you out, many traders put entries above and below the price before 2 minutes of the release, and wait for the spike, but also it is not worthy method because it may happen that the news which deviate the currency doesn’t have enough power to hit the target or maybe the revision came opposite to the actual or the deviation between the actual and the forecast was not enough to enter a trade or maybe the report was released and the price was below a certain resistance which forbid the price to pass it, so you enter a LONG trade but you find that the price went up, then tests the resistance then turns back to the support level and stops you out. 

I faced a lot of these problems and you will face it too if you don’t follow the right technique while trading the news. My technique is very simple and effective: 

1 – Don’t trade all news trading reports, trade only those who create and define the direction of the trend (Interest rates, trade balance and NonFarm Payroll). Do not trade these news trading reports only because they are important it may happen that a report came better then expected but do not create a move. I enter a trade only if the actual data came much better or worse (good deviation) and the revised data came along with the actual data and there is no important conflicting report. 

2 – The other normal news trading reports are also important; they are used to confirm or to close a trade especially when we are in the beginning of a specific trade; If you have just entered a trade and your current profit is between -20 and 20 pips and a specific report is released and that report affects the currency you are trading then we close it because this report has a good probability to stop you out. When you gain a good number of pips then you may not rely on normal economic reports and rely only on technical analysis and continue your trade until you hit your target. 

Fundamental and news trading is a good technique but we must use it along with technical analysis, and we must take in consideration trading the important news reports, the deviation between actual and Consensus, the revised data, the conflicting news trading reports and the support and resistance levels.



3. How to Take Control in Forex Trading
Forex Trading is not that easy, all FX traders before they enter this business, they think that they will be rich very quickly and make $20 000 in one or two weeks, but when they begin trading currencies they discover it is not true, it is not easy to make money especially when we work with money. Very tricky business, many of us think that there is a conspiracy planned by “THE BIG GUYS”, they know what we think what we plan to do and they do the opposite to steel our money, many times we think to make the opposite of our decision (if I see the market is going up then I will sell). And we begin searching for someone to help us making at least 200 or 300 pips a month, probably many of us work with signals advisors who simply took our money and probably do not help us making decent profit. Many of us thought stop trading many of us quit FX trading but I think most of us will not quit easily because we see in it a golden opportunity to have our own business and make our fortune.

Foreign exchange is an opportunity to make a fortune and in same time it is an opportunity to loose our money, we can make a fortune if we knew how to handle Forex, if we don’t know how to control Forex it will destroy us, so we must be stronger than it, and if we don’t know how to control it with our own hands it will destroy us too. So how I can be stronger than this ferocious beast? It is simply by learning, observing, and practicing. The FX market will not go anywhere it will be trending and ranging for ever, so learn from experienced traders how they became that good, observe charts and look for common points look for the reason why the price change direction, and when you discover the reason which influence a currency you will have in your hand the first tool that gives you control. And each new thing you discover try it on a demo account, see if it is valid and develop it. In this Forex article I am helping you to find your way, this Forex Article does not give you the fish but it teaches you fishing. There is no conspiracy theory in this business, no big or small guys, we loose because we don’t know, and the first thing we must do to become good traders is to admit that we don’t know and we must always learn. 

In this Forex Article I will give some clues and I will leave you learn, observe and practice.

First of all you must know that you must use fundamental and technical analysis in conjunction, both complete each others, so don’t rely on one and leave the other. Fundamental is one of the reasons which influence the market, so if you are in a long trade and suddenly the trading currency went down so go and see if a report was released and see what its forecast and what was the released data and compare this data to your chart and you will have your first tool to control your business.

Second, in my opinion all the technical indicators didn’t help me at all, I tried all the combinations nothing work, and indicators describe the status of the market but don’t give you information about the next direction. I read a Forex article about a guy who describes his Forex Trading strategy in a Forex article, I was completely lost, he uses a combination of 12 indicators EMA340, SEMA890, EMA2900 etc… and he inserted FIBONACCI in it. I was totally lost. Even if his strategy worth 95% success I will not use it because I can control the market by using simpler techniques. So we don’t need to seek indicators, only one indicator I use the Bollinger Band which is the perfect weapon in my battle against forex trading. So I want you to look at the Bollinger Band and see how it affects a currency, focus on it and read well this forex article and you will discover a lot of things, and you will have your second tool. 

Third, suppose you are in a long trade and suddenly for no reason the Forex Trading price went down, there are no released reports it just turned down, this is weird. But weird things are those we don’t understand, but if you observe your chart and go back several hours or days and drop a break line from higher swing points you will see that the price turns down because it reached that break line, you see there is no mystery. So this break line will be your Resistance and if price breaks it, it will continue going up, but going where and till when? …. observe very carefully and you will learn as I did. And no need for midnight or afternoon candles, be simple as you can, that beast is not as ferocious as you think. So breakout is your third tool. [Rpchost.com provides traders with very important tools so they can trade with better accuracy; check the free forex signal section in the Rpchost.com and you can access free fundamental signal]. 

Fourth, what timeframe to use, it is up to you to choose the suitable timeframe, H1, H4, D1 … I don’t know, compare the charts and you will see the suitable timeframe. Timeframe is important and when you find it you will have your Fourth tool. [Traders can also have access to the Global economic calendar Section in the Rpchost.com and get access to a very good tool which helps traders identify and confirm their trades when an economic report is released].

And that’s it, I repeat observe your charts and focus and think in these clues in this forex article and the more you think the more you discover, read forex article, learn strategies and get foreign exchange books.

I do good profit from my forex trading strategy because I program it, I gave my system the data and leave it do his job. This eliminates the fear factor and gave me more time to go out and have fun.

I hope this Forex Article gave some tips and techniques which help traders in their Foreign Exchange trades [Traders can access Rpchost.com Forex Forum and view the latest predictions, strategies and forecasts]. 

Traders can access also the Rpchost.com Forex Trading Guide, this section explain the services provided by Rpchost.com. Good Luck 


How to Place the Stop Loss Order? A Few Tips for Controlling Risk Effectively.
by John Robinson
john.robinson@forextraders.com

To trade forex you don’t need to have the genius mind of a wizard and be right in every prediction about the next movement of the market. It is perfectly OK to be wrong about your analysis many times during your trading career. The crucial skill of a successful forex trader is his ability to control and manage his downside effectively. Losses are a natural part of trading, but if you can ensure that they do not derail your overall trading vision, and can be eliminated by the profits of your trades that are successful, a promising and exciting forex career will be the outcome. 

Clearly, the careful placement of the stop-loss order is crucial for risk management. To cut your losses short, you must make good use of this basic tool of money management. In the following section we’ll give a few ideas on the various ways of placing the stop-loss order, and you can use any combination of them in forex strategies.

1. Absolute stop Order: In this kind of order, the trader only concerns himself with the net unrealized profit or loss of his account. However confident he may be in his analytical skills, and the conditions that lead to his trade, the actual performance of the trade always has the final word about the fate of the position. Trader consensus demands that in every trade a maximum of 2.5 percent be risked in order to ensure that there will be ample future opportunities for correcting faulty decisions. Some traders go as far as 5 percent in a bid to be more aggressive about a trade scenario where they feel more confident, and five percent of the account value is probably the greatest extent a sensible trader will go with aggressive risk taking.

2. Technical Stop: In this case the stop-loss order is triggered when a technical formation is realized. In its most basic form, for example, the trader will close the position when the RSI rises to above 80 in a buy order. This kind of stop-loss order has the advantage of being more flexible in response to market events, but it clearly entails greater risk if things don’t go as planned. 

3. News Stop: This is a rare method used by some traders with long-term positions, and sufficient confidence. In this case, the trader will be willing to ignore most of the volatility in preference for a major change in the fundamental picture. Only an anticipated news release confirming the elimination of the conditions that justified the trade in the first place will trigger a stop-loss order. However, such traders will also monitor the price action carefully, and will not hesitate to bail out if market conditions necessitate it.

For a technical stop, a forex API provided by a competent forex broker offers the greatest potential. For other types of stop-loss orders, trader action will be necessary. In all cases, it is probably best to use a flexible technical stop-order, for example, with an absolute, numerical order to safely insure against an adverse scenario. Through these and similar means, you will be able to limit your risk, and benefit from opportunities as they arise.  

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