By Jason Fielder

Retail sales are one of the major economic indicators that Forex traders need to be aware of. The retail sales report attempts to measure the total projected retail sales of all the retail stores in a country to give a number of how much is being bought. In the United States the retail sales report tends to be released on or around the 13th of the month, and this released report lists and analyzes the nation’’s consumer spending from the month before.

This report is important among Forex traders (not to mention other traders) because it is a timely indicator that gives a good sense of the general spending patterns of consumers - which is often a good indication of general belief on how the economy is doing and whether consumers are confident or not. Consumer confidence always has a huge influence on how the economy of a country is going to be, especially in the short term.

These reports can be used to predict the performance of other important lagging indicators used in technical analysis, as well as keeping focus on the immediate health of an economy. This makes this report very important for active Forex traders.

The retail sales report doesn”t simply concentrate on just large stores like Wal-Mart and Target, but also looks at small-town independent businesses and local franchises. This allows a much more accurate picture of how the over all economy is doing on both a local and national level. This accurate picture will be able to give you an in depth feel for how a nation’’s economy might stack up compared to others.

Most importantly, because of how quickly this information is turned around, this is considered a timely indicator that can tell you how the nation’’s economy is doing RIGHT NOW! That’’s huge for a fluid market like the Forex.

Retail sales reports are known for causing sudden volatility in the stock market, but the report also affects the Forex market. When retail sales are high, especially unexpectedly high, you can expect to see a hike in a nation’’s currency price, while an unexpected downturn could cause a sudden “sell” run on a nation’’s currency, which would cause the price to fall.

The retail sales reports will almost always provide you some of the most up to date information on a nation’’s economy, and remains absolutely necessary reading to any Forex trader looking to keep a solid fundamental base in their trading strategies. If you want to know how things are doing right now, this is the report to look for.

About The Author

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

By Jason Fielder

There are five major economic indicator reports that Forex traders pay strong attention to, and the Trade Balance Report (also referred to as a Balance of Trade Report) is one of those major five. The Trade Balance report measures the difference between a nation’’s imports and a nation’’s exports.

A positive number (surplus) means the country is sending out more than it is bringing in, while a negative number (deficit) means the nation is bringing in more than it is sending out.

This can be a major indication of how a nation’’s overall economy is doing.

Don”t let those terms trick you, a trade deficit is not necessarily a bad thing. That can be a sign of increased consumer buying, meaning that the deficit may simply be a result of a strong economy that gives the average consumer a lot more money to spend.

This report often times will have a major impact on GDP and can influence the value of a currency, making it important to Forex traders.

This report can give a lot of information that will be helpful in determining how one nation’’s economy is doing versus another, but knowing what to look for is important. For example, the United States has had a trade deficit for over 20 years, but no one is going to argue that the economy in the late 1990s wasn”t much better than the late 1970s.

A deficit can be bad or good, or sometimes a little bit of both. It just depends on how that report fits into the overall situation.

Part of the reason for such a long deficit is that the U.S. economy kept expanding during all that time, and other nations have not been able to keep up the same pace. As other nations catch up, this could change. The main concern that worries some people is what is going to happen long term if more money keeps flowing out than coming back in. This is an issue for another report.

The Trade Balance report can move the Forex market, and is interesting because it may be the least predictable from month to month of all the major reports, meaning that it has more ability to surprise individual traders and cause a quick swing in a currency’’s perceived value.

The trade balance report is one of the major reports, and learning to pounce on this information as it is released will help give you the edge you need in order to thrive in Forex trading.

About The Author

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

By Ian Armstrong

One thing to be kept in mind if you are thinking of getting into Forex trading - this is a business, and should be treated as such. Forex trading is NOT gambling, and you should never trade with money you cannot afford to lose. This is the most important principle of Forex trading. Don”t trade on the Forex market with the rent or grocery money.

Trading with these sorts of funds is gambling. Trading with money you can”t afford to lose is an unwise move - it is a near certainty that you will make poor decisions and lose money if you look at Forex trading in this way.

You Won”t Always Make A Profit

No one bats a thousand every time. This is true of Forex trading also. You”ll make money on some of your trades, and lose some on others. The pros have ups and downs too - and keeping a realistic attitude towards trading will keep you from becoming discouraged.

A prime example here is Nick Leeson, maybe you recall the name. Before Forex trading became feasible to the general public, there was futures trading, which Mr. Leeson engaged in. Futures trading works in a similar manner to Forex trading, which is why we are using Mr. Leeson as an example. Nick was a banker, and made some very large trades in the early 1990′’s. He made over 20 million for his employer in one year, and seemed unstoppable.

But by 1992, he was on a losing streak. He had lost about 4 million dollars, and was still ahead. By 1994 however, his losses had multiplied a hundredfold, and he began embezzling from the bank to continue trading. His desperation drove him to ever more spectacular trades, and ever more dismal failures. By early 1995, he had lost nearly one and a half million dollars.

This was far more than his bank had in assets - as a result the bank went under, and Nick Leeson went to prison.

You can be successful at Forex trading - the idea is to keep making more profitable than losing trades.

You can sharpen your trading skills by opening a demo account (it’’s free) and paper trade using virtual money for a few months before getting into Forex trading with your own money. If you can consistently perform a profitable trade two thirds of the time, you may be able to begin trading on the Forex market for real.

Any Forex trader with whom you will want to do business will offer these free demo accounts, which can give you the skills you need to get started. It is in the trader’’s best interests to see you succeed - when you make a profitable trade, they win too, and will likely keep you as a client.

Try a demo account from the broker you are considering going with. You”ll get a good handle on how they operate, which will help you to do well in the Forex market.

You may find at first when you start using your own money on Forex, that you are having a lower success rate. This is likely due to you having some apprehensions about losing money interfere with your decision making process. Use your analyses, not your gut when you are trading on the Forex market.

About The Author

Ian Armstrong is an avid Forex enthusiast.

Some of the most popular trading platforms have been objectively reviewed - based on actual performance - at http://www.forexshortcuts.com/trading-platforms.php

By Dean Whittingham

Over 90% of traders fail to reach any success simply because they are not equipped for success, especially in key components such as money management and emotional control. This is true for most things in the civilized world. We are programmed for failure and as such as easy prey for the trap that is the financial markets.

If you are bad with money, then guess what, trading wont fix that. I”ve seen first hand my parents win $500,000 and lose it all in less than 4 years. What they never did was assess their bad habits.

Bad habits are addictions which are fueled by our minds chemical pharmacy. We”re all the same, and it is nature’’s way of allowing us to evolve and stay alive. Habits are automatic programs that start with a memory which then creates an emotion, which in turn creates a chemical which then feeds the body and all its cells. This is a habit; our body’’s addiction to naturally produced chemicals.

If you keep doing the same thing over and over again, but expect different results, you”re fighting a system that has been in creation for millions of years. However, change what you are doing and you break the cycle.

Traders who continuously make the same mistakes are doing it by habit. The problem is that they are unaware they are doing it, or they choose not to accept who they are or what they are doing. Those who become aware and those who become humble will open new exciting doors to much more than just successful trading.

A lot of what occurs soon after beginning a trading career is based on pie in the sky thinking, and very little planning. Apart from needing to construct a business plan to achieve your goals, you need to see yourself as already there doing what needs to be done.

When you were younger and you were deciding what it is you wanted to become you had mental pictures in your mind. This is what helped you to see what interested you the most. If you saw yourself being an engineer and it felt good seeing that in your minds eye, then pursuing that career felt like the right thing to do. Using the markets to achieve your goals is no different.

There are many things you can use your minds eye to imagine, such as your online trading account balance being very large, your transactions being very large, placing less and less trades over time, becoming more accurate in your forecasts or improving your win rate, being emotionally in control as your trades close whether in the black or the red, seeing yourself allowing the really big trades to run for as long as your system permits and so on.

Of course, it only becomes apparent once you begin trading for a while that you need to see yourself doing the opposite of something undesirable (such as cursing at the computer screen), however even when starting out trading for the first time, envisioning your long term goals as being achieved is very necessary.

If you think this is hocus pocus then there’’s not much I can say other than, there are massive amounts of proven facts and research now available on how our mind functions, and the systems our brain has in place to be able to say, if you”re not prepared to imagine yourself as a success on a consistent basis, your brain will give you what it is programmed to give you and if you are like the herd, it will be failure.

About The Author

Dean Whittingham owns http://www.atradersuniverse.com a resource site for traders, with education, courses, videos, newsletters, trading systems, simulations and 7 steps to building a profitable stock, futures or forex trading system. His coaching program is at http://www.pentagonaltrading.com

By Ian Armstrong

The easiest way to illustrate how Forex trading works is to show some currency value fluctuations over the long term.

For instance, this list shows the difference in value of the US Dollar (USD) against the UK Pound (GBP) on Nov 30 your the years 2004, 2005 and 2006.

Year USD GBP
2004 1.91 1.00
2005 1.73 1.00
2006 1.97 1.00

Now let’’s say that you bought 1,000 British Pounds (GBP) on November 30, 2005 with US currency. This would have cost $1,730. And if you held those Pounds for one year, then sold them on November 30, 2006, for US Dollars, you would have gotten $1,970 for those Pounds. This would have netted you a profit of $240, or 13.8% on your purchase of Pounds.

While not enough to make you rich, compare the rate of return here with nearly any other investment. This is a good rate of return by anyone’’s standards.

You can, of course, lose money in Forex trading, as in any sort of investment. For example, say you had bought those 1,000 GBP on November 30, 3004 instead and sold them on November 30, 2005. You would have gotten only $1,730 for your initial investment of $1,910. You would then have lost $180, or 9.4% on this particular trade.

As we see, you can make a profit with Forex trading if you buy a currency and sell it once it has increased in value. You can also end up taking a loss if you decide to sell after a drop in the value of the currency you are holding.

Of course, the above was just for the sake of example. When you are actually trading on the Forex market, you will be holding currencies for a much shorter time than in the example above. Most currency trades on the Forex market are done in less than a week. Forex traders work with small changes in currency values, generally hundredths of a percent. Most of this happens within the space of a few hours at most.

What Are The Causes Of Currency Changes?

Inflation is one of the prime causes both of currency value fluctuations, as well as the differing values of the currency of different nations. This difference can be seen as a measure of one country’’s inflation versus another’’s. Almost every country’’s currency is subject to the effects of inflation and thusly will decrease over time. In a country with a stable economy (generally speaking, these are Western democracies such as the US, Western Europe and Japan) there will be an annual rate of inflation somewhere between 1 and 3 percent.

Instable economies (usually found in non-democratic nations), inflation can be much higher. Zimbabwe is a prime example, with an annual rate of inflation more than 1000%! A loaf of bread, for instance costs around one million Zimbabwean dollars, and a Zimbabwean dollar is worth less than 10% of its value last year. A grim situation, certainly.

A stable economy can still experience runaway inflation at times. There are other things which can come into play to drive up the rate of inflation. The current situation in the U.S. involving sub-prime mortgages is a good example. The value of the U.S. Dollar has dropped by about 3% in the last year, largely as a result of the large number of foreclosures.

Fundamental analysis is the study of these sorts of factors which influence the economy of a nation - and it is a good thing for any Forex trader to have some familiarity with. Since you are in essence investing in these countries by purchasing their currencies, it is valuable to know whatever you can find out about their economies.

About The Author

Ian Armstrong is an avid Forex enthusiast.

Some of the most popular trading systems have been objectively reviewed - based on actual performance - at http://www.forexshortcuts.com/trading-systems.php

By Ian Armstrong

Short for Foreign (currency) Exchange, Forex is the world’’s biggest market for trading in currencies. As much as 2 trillion US dollars worth of currency are traded on the Forex on a daily basis. Compare this with the approximately 25 million US dollars traded on the NYSE and you”ll get the picture - Forex is huge.

So what is Forex all about? Simply put, Forex entails buying one currency, let’’s say Turkish Lira, and selling another, say US Dollars. In Forex, currencies are always traded and quoted in pairs. The exchange is made through a broker.

Just like the stock market where you are investing in a company, with Forex you are in a way investing in a country. If your company is a success, the value of your stock goes up. Much the same principle is at work in Forex. If the economy of the country whose currency you are trading is robust, the value of that currency will also go up - and you can then sell it for a profit.

Unlike stock markets, there is no “trading pit” in the world of Forex. Forex operates through the internet and other electronic communications and runs 24 hours a day, 5 days a week.

It has only been in the last several years that the Forex has been open to the average person to invest in. The Forex market itself has been around since 1971, but for most of its history only large companies and a few very wealthy individuals possessed the resources to be able to trade in foreign currency. Today however, anyone with a high speed internet connection and a small initial investment (as low as 50 US dollars) can get in on the Forex market.

The seven most commonly traded currencies on the Forex market are U.S. Dollars (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD) and Australian Dollars (AUD). Foreign currencies are identified by means of a three letter code. The first two letters stand for the country, while the last letter identifies the nation in question’’s currency.

For example:-
USD: U.S. = United States, D = Dollars.
GBP: GB = United Kingdom (Great Britain), P = Pounds.

At any given time, business is going on somewhere in the world. Global business never sleeps, and neither does Forex. This can be beneficial to you - you can trade on the Forex market any time that is convenient to you.

There are seven currencies on the Forex which are called Major Currencies, due to their being the most heavily traded currencies on the market. The biggest four are, in order: U.S. Dollars (USD), Euros (EUR), Japanese Yen (JPY), and UK Pounds (GBP). The remaining three are Swiss Francs (CHF), Canadian Dollars (CAD) and Australian Dollars (AUD).

Advantages Of Forex Trading

There are a few advantages which the Forex trader enjoys which those who trade in the stock market do not.

1.Unlike with stock brokers, the investor does not pay commissions, per se, to the broker. Instead, the dealers in Forex trading receive part of the “spread” (that is to say, the difference) between the buying and selling price of currency. This is generally a very small amount per trade; a fraction of a percent.

2.You can trade on the Forex market any time which is convenient for you, unlike the stock market - it is closed only on weekends, from 5pm Eastern time on Fridays to 12AM on Mondays.

3.As opposed to the stock market, it is nearly impossible for companies or individual investors to manipulate the Forex market. The volume of Forex trading each and every day prevents any one actor from having undue influence. We all know of instances of the stock market being artificially influenced by unscrupulous persons and companies however.

4.Forex trading can be done with borrowed capital, meaning that you need not have hundreds of thousands in liquid assets to trade currency in large numbers. This concept is called Margin Trading. A small amount of your own capital (less than 5 percent) can be used to leverage a large chunk of borrowed assets, which may then be invested. Forex is traded in what is called lots, the normal size of a lot being 100,000 US dollars. Depending on the dealer with whom you deal you may be able to trade is smaller amounts, these are known as mini-lots or micro-lots.

About The Author

Ian Armstrong is an avid Forex enthusiast.

To discover the real difference between most traders (who lose money) and the successful forex experts who don”t - download the free guide at http://www.forexshortcuts.com

By Bercle George

Day trading is a style wherein traders either sell all long positions are sold or cover short positions at the end of the trading day. There are many markets for day trading and some of these are currency, stocks, futures and commodities. For simplicity, we associate trading with purchasing a commodity, bringing it home or to our business premises, and then selling it.

Some Facts You Should Know About Day Trading:

1. In day trading, different shares are bound to undergo different resistance and support levels.
2. Day trading systems utilize objective and mechanical criteria to choose the different trades of the market.
3. The day trading signals are the signals acquired when stocks bounce off of support levels or sometimes even off resistance, if required.
4. The stronger faith there is in the trend line, the better it acts as a support for you.
5. Day trading stock picks are selected based on a set of strategies or methodologies, of which the most important are technical analysis, trend analysis, relative strength ranking, fractals and volumes, chart formations, and algorithms.

Some Benefits Of Day Trading:

1. The main advantage of day trading is that one’’s stock positions are not held beyond the current trading day.
2. Another benefits of day trading is that since the positions are closed at the end of the trading day, any sudden news of events doesn”t affect the opening prices of trading.
3. One of the benefits of day trading is that since the positions are closed at the end of the trading day, any sudden news of events doesn”t affect the opening prices of trading.
4. It is a safer way for people who do not have a lot of know-how in stock trading; therefore, they can easily follow their stocks during the day and sell them off as soon as they see a rise in the value.

Some Tips For Day Trading:

1. Follow the day trading system rules and standards by remembering the number of open positions.
2. If you plan to invest your money in day trading, see to it you do not put in all your hard earned savings in one go, as this might prove to be quite dangerous for you.
3. According to the day trading system, it is a necessity to always be aware of the share movement and to not make wild decisions based on a margin call from a broker.
4. Do not trust advertising claims that promise fast and guaranteed profits from day trading.
5. You have to work with an experienced day trader, need to learn latest techniques, use latest stock market investment software, subscribe to on-line day trading tutorial and need to devise your own trading plan.

Trading Software:

A number of traders and investors rely too much on software’’s used for these purposes, but you do not get a true picture of the market just by using these software’’s, as there are many factors which constitute a stock market and some of them can only be assessed through skills and experience. Trading softwares are not only important but necessary to survive in today’’s competitive market.

About The Author

For more information, visit http://www.daytradingabc.com/

By James Theiss

When trading currencies online, there seems to be no end to the mistakes a beginning forex trader can make. Beginning traders are always the most susceptible, but experienced traders can often revert back into bad practices as well. Here are some of the most common trading mistakes listed in no particular order, and how to avoid them.

Predicting instead of reacting. Otherwise known as overconfidence. This usually happens after a winning trade or two. The trader starts to think that if he can enter a trade sooner, he will get more pips. He begins to believe he can pick the top or bottom before the market reveals it to him. So instead of reacting to what the market is telling him, he starts to predict what the market will do. He enters a trade and the market continues its move, which is against him. Now, does he admit he was wrong and close his position, or does he add to it?

Adding to losing positions. Here is an extension of predicting instead of reacting. Look, you just entered a trade and the market is going against your position. The market is telling you, you are wrong. Now is the time to close your position, not add to it. If you add to your losing position, you are making at least two incorrect decisions. First, you are predicting the market will turn around. Second, you are hoping the market will prove you right because you are unable to admit you made a losing trade. Losing trades are a fact of life in the forex market. You weren”t wrong, simply, your edge didn”t play in your favor on this trade. Close your losing position and move onto the next trade.

Insufficient capitalization. Forex trading is already highly leveraged. Insufficient capitalization just magnifies the potential problems you can face. If you read about the famous and big name traders, they never use more than 1% - 2% of their trading capital on a position. Get out a calculator and let’’s see… 1% of $10,000 is $100. So as a position trader who might have a stop-loss order of 100 pips, you can only trade one mini lot of one currency pair for each $10,000 in your trading account. That is, if you want to trade like the pros. Do you have $10,000 in your account? Why do forex dealers boldly advertise you can start trading with only $250 then? Because they are in business to make money, and if they can convince you to commit trading errors, they stand a much better chance that they will soon have your money.

Overtrading. A close cousin of insufficient capitalization. Knowing that very few currency traders trade with sufficient capital in the first place, they further compound the potential problems by trading too actively and in too many currency pairs. Spreading themselves too thin you might say. Potential problems include loosing focus and margin calls. Getting a margin call is a very irresponsible position for a forex trader to be in and is a direct result of overtrading, over leveraging, and insufficient capitalization. This is as close to the perfect recipe for failure as you can get.

Not using stop-loss orders. There are very few times when not using stop-loss orders is the correct action to take. Large traders with several hundred or more lots don”t want to advertise where their stops are placed is one. The other might be scalpers whose stop is only 10-15 pips away. By the time they figure the math and enter it in the system, the price might already be there or even past it. And some forex dealing stations won”t let you place stops closer than 15 pips anyway, especially in fast moving situations. Other than those times, you need to put stop-loss orders in on every position. It is in your own best interest to protect yourself. I know, some people whine that their stops are always being run by the dealer. A whole article could be written on stop-loss order management, if not a complete chapter in a book. Let’’s just say for now, don”t put them where everybody else does, and don”t put them too close.

Trading as a hobby. Golf is a hobby and it costs you money to play. Horseback riding is a hobby and it costs you money as well. The point is hobbies cost money, business makes money. You need to treat your forex trading as a business if you ever hope to make money on a consistent basis. That means keeping records, keeping a trading journal, and have a written business plan. You wouldn”t invest money into a start up business without first seeing a business plan, so why would you invest money into your own trading account without the same thoughtful consideration.

Not having a trading plan. This is one of those catch-all mistakes. If you have a written trading plan, and follow it, you will already have identified and hopefully eliminated all of the above mistakes. If you don”t have a written trading plan, you are almost assuredly making some, if not all of the above mistakes. Maybe not all at once, but even occasional mistakes add up quickly. Do yourself a favor and don”t put on another trade until you think through and write down the response for all of the above mistakes and any others you can identify, as well as entry and exit rules. Then follow it.

These are just some of the many mistakes you can make as a forex trader. You need to take responsibility for yourself and your money and act in your own best interest. The currency markets are a zero sum game and the many players are out to make a profit. Don”t let them profit with your money. Do your best to eliminate the above mistakes, and you will go a long way to ensuring you are the one who profits in the forex market.

About The Author

James is a successful online currency trader and also runs the popular website http://www.todayscurrencytrading.com. Go there now and you can sign up for his FREE, “Currency Trade of the Week”.

By Chris Rohrer

If you are reading this you probably are looking to work at home. Everyone now a day wants to work at home and spend more time doing the things they love the most. Ever dream of spending time with your loved ones, taking vacations to the islands, or buying that car you always wanted.

90% of people that try to work at home FAIL. Why do they fail because they think its going to be easy and fast money. Well your wrong working at home is not easy and its not fast money. It’’s just like working any other job you ever had. Now the 10% of people that do succeed stick with it and make a good income each week. Work at home can be done if you stick with it.

What if I told you though there was an easier work at home business that can be done in 15 minutes each day? And you can start it with as little as $25. With e-currency exchange it can be done. I used the e-currency exchange to work from home, and I now have the freedom, and extra time I have always dreamed about just like you dream of every day. With this extra income I get each month from the e-currency exchange I am able to pay bills, and take vacations on the side. No more worrying for me.

If you are in dept, or just looking to make an extra income each month e-currency exchange can make it happen. I have tried other online work at home business like building a down line, aim way, and I have been scammed out of money on all of them. I did my homework and research and found e-currency is a real way you can make money each month with very little money.

The only downside is that e-currency exchange can be hard to learn if you do not know anything about. Which most do not? Do not worry though I was in the same boat I knew nothing about it. So I invested some money into buying a guide that showed me step by step how to work from home with the e-currency exchange program. It showed me how currency exchange could change my life. Following the steps showed and the online support I was giving help me learn everything I know about this amazing work at home opportunity. The best thing about using currency exchange to work at home is it only takes 15 minutes each day to work. There is little effort involved. If you dead serious about working out of your house. I HIGHLY suggest using currency exchange and e-currency to work from home.

About The Author

See how with the hell of currency exchange and the mazu e-currency exchange porgram I turned $400 into $4,000 in under 32 days. Visit http://www.e-currencyonline.com now to see how you can to.

By Ian Armstrong

If you do an Internet search on the keywords “Forex trading systems”, just about any search engine is going to bring up every conceivable scheme under the sun as to what makes the perfect trading system.

Most of these are scams that state you can make big profits every day, and they also promise that you”ll never lose a trade. What’’s the catch? This “foolproof” system will cost you just $5,000. Of course, that’’s a lot of money even for a foolproof system, but worse than that, this is most likely a scam. Why?

First of all, it’’s not true that you”ll never make a losing trade, no matter how good you get at doing trades. That alone should make you turn the other way and run. Second of all, if these people are so rich from their trading secrets, why are they selling you their secrets for $5,000? Unquestionably, they make their money from selling you their “secrets,” and nothing else.

It may be true that these systems to work in some cases, but better yet, you can develop your own personal trading system so that you know exactly what you”re doing — and you don”t have to spend a penny beyond funding your own trading account. So, take that $5,000 and find your trading account instead. Develop your own trading system by using a free demo account so that it’’s not going to cost you anything until you”ve got your system down.

Now, you can”t expect to come out on top for every single one of your trades, but you can certainly do more profitable trades than losing ones, which in turn will earn you a profit overall. And it’’s not difficult to develop your own profitable trading system, either. What is difficult at times is that you stick to your system over the long term. This is where inexperienced traders fall short versus experienced ones.

Simply put, any trading system’’s main aim is to identify trends as early as possible so that you get maximum advantage from them. At the same time, you want to avoid false trends and blips, wherein the market will either stand still or even go against you. The earlier you catch onto a trend, the more likely it is to be a false one. However, it’’s also a shortcoming if you wait until you are certain of your trend before you start trading, because then the market will be much more likely to stand still or move against you.

How, then, can you identify trends early enough to be profitable for you and yet still be reliable? Look at moving averages. Use two moving averages: a fast moving average (meaning you average over a small number of time periods, such as five time periods) and a slow moving average, where you average over a larger number of time periods, such as 10). Plot each of these on the same chart together and look to see where they cross over each other.

This is your “moving average crossover” system. When you”ve identified something that you think is a trend, confirm it by looking at other market indicators, in addition to moving averages. If you use at least two different indicators, this will help you avoid false trends or other erroneous indicators.

Decide beforehand how much you can afford to lose on a particular trade; this is more important than determining how much profit you want to earn. This is because not doing so may very well cause you to lose much more money than you”re prepared to, which is where forex trading can become harmful.

You have to be prepared to have a least some losses, and you have to know how much those can be. Once you”ve decided how much you can lose, set up a stop loss order. Then, decide at what price you are going to open your trade and what price you are going to close it at in order to get maximum profit. Remember that you need to stick to this no matter what happens — even if the trade moves against you.

By developing your own successful trading system, you can have consistent profits. You need to do this by doing demo trading first until you are comfortable with the system and know what it can do for you. Don”t be influenced by your emotions and make sure that you can afford what you are inevitably going to lose on occasion.

Once you have gotten your own system down, write it down so that you have a record of this for yourself. You should also write down your stop-loss amount, such as if the price falls by 30 pips, and when you”ll close your trade, such as if it rises by 50 pips.

Stick to your system consistently, and you should have success. Remember that no trading system works for you unless you have the discipline to stick to it.

About The Author

Ian Armstrong is an avid Forex enthusiast.

Some of the most popular trading systems have been objectively reviewed - based on actual performance - at http://www.forexshortcuts.com/trading-systems.php