Posted by admin on April 6, 2010 · Leave a Comment
Foreign exchange scalping can be a lucrative business but it’s also terribly risky. A lot of folks are drawn into forex scalping secrets by hearing about people who make plenty of money that way, but noobs frequently get their fingers badly burned.
The reason? There are numerous traps in this kind of forex trading system and the majority fall into one or another of them terribly fast. So here are 5 typical mistakes courtesy of Correlation Code, that you must avoid if you would like to earn money with scalper strategies.
1. Leverage too high
The high quantity of leverage available to currency exchange traders is one of the explanations why you can make so much money from a small investment balance, but at the same time, it’s important to avoid over leveraging. Forget about getting the most important possible position on each trade for a minute, and focus instead on risk management. Be certain that whatever stop loss you are using does not involve you in an unsatisfactory risk per trade, and adjust your position size accordingly .
Here is a good way to work out your risk per trade. Rate how badly you would feel if you lost your full fund balance according to this scale: 1 = devastated; two = extremely bad; three = bad; four = not so bad; five = cool, it’s all part of the game. Then check the end of the article for the results of the quiz.
2. Shortage of patience
Patience is one of the most important qualities that any currency exchange trader needs to develop and it is especially so of scalpers who sit watching the market, infrequently for hours at a time. It is really easy to believe that you see the conditions coming right and then to leap in thinking you’ll maximize your profits by getting in early. You did not have the patience to hang about for the signal set by your system. Over trading in this manner nearly always leads to losses in the long run.
Patience is also needed in another situation : when you missed a trading opportunity. May be that you went to grab a coffee and when you get back, your dream trading situation has been and gone. The enticement is to jump in and chase after the price, but it can simply rebound on you. Better to wait patiently for the subsequent real trading opportunity.
3. Trying for more
Many of us believe that foreign exchange scalping strategies will bring them huge profits terribly fast. This isn’t true. Most scalping systems don’t make many pips on each trade. Many newbs are disappointed by this and quickly start trying for more.
It is tantalizing to let a trade run when you should be closing out, looking to get bigger profits than your system allows for, but doing this could probably just leave you losing the small profit that you nearly gained. The aim should be to make comparatively steady profits, accepting some losses but avoid the mistakes that lead to enormous losses. That way you have a chance of ending up with a profit on the bottom line. So remember, any profit is good profit.
Quiz results: whatever number you checked, that’s's your p.c. risk per trade. So if you checked option 2, you should not risk more than 2% of your total funds per trade in currency exchange scalping.
Posted by admin on December 19, 2009 · 1 Comment
Having the time and all the money to enable you to live a life you always dreamed of is something that passes through the minds of most people! The world’s markets can be challenging at times but if you get it right, the possiilities are huge. The beauty of being educated by a trading course such as High Velocity Market Master is that it teaches you how to be a successful system trader, which can then be applied to any market that you wish!
There are always those who are going to be pessimistic about having trading as a career instead of a hobby but all you need to do is look at the majority of professionals who make a living every day from trading alone. People who have not tried it have no idea of what really goes on or what the possibilities are, so they should be ignored, as should anyone else who turns up their nose without having tried it. System trading makes it all very possible to not only trade as a hobby and be a success but to trade full time too. All you need to look at is how professional traders are living, Mark Soberman, the creator of High Velocity Market Master, for example, travels all over the world, WHENEVER he wants to, not when his boss says he can. Many dream of having such a life and this is now his reality, where he can spend money on his family and also time with his family, on holidays doing whatever they fancy.
Becoming such a success did not happen over night, for there was investigation into tools and tactics as well as educating himself. For someone to believe that they can get by and become really successful in trading by just what they know already or pick up is ridiculous. Having a limited amount of experience in trading should encourage you to ask others for help. A lot of work has gone into the course, High Velocity Market Master for Mark and his team really want some rock solid foundations lain down so that those using it can be a real success.
High Velocity Market Master is packed full of information for whichever market you choose to trade in whether you are a full time trade or part time. Mark professes that system trading is the best way to trade. By using system trading you will find that there are specific rules it follows to be able to tell you when the correct entry and exit points are.
If you want to have as many successful trades as possible then you must keep emotion out of play and this is what system trading does. Emotion is something humans cannot be completely devoid of, however, you must really try to avoid it when trading. Buckling under the pressure of a trade results because a trader lets emotion get to them, which should be avoided at all costs. System trading means following a set up system so that traders do not have to make those reckless speedy decisions that so commonly result in huge losses. As a trader you should want to cut down on losses and you can do this by using system trading which reduces human error, resulting in higher gains! For more information find a High Velocity Market Master review.
Filed under Currency Trading · Tagged with course, education, Forex, high, hvmm, learn, mark soberman, market, master, teach, trader, trading, velocity
Posted by admin on October 15, 2009 · Leave a Comment
Bonds are one of the main stream types of investment along with stocks and real estate, and if you want to learn how to trade bonds make sure that you get a good education in the subject 1st. There are a number of important points that you must understand about bonds before you start investing in them. Not understanding these things may cause you to purchase the wrong bonds, at the wrong maturity date.
Like all investments it is important to learn about what you are investing in, and certainly don’t just take the advice given to you by a bond seller without checking it out first yourself. The three most important things that must be considered when purchasing a bond include the par value, the maturity date, and the coupon rate.
The par value of a bond refers to the amount of cash you will receive when the bond reaches its maturity date. In other words, you will receive your initial investment back when the bond reaches maturity.
The maturity date is of course the date that the bond will reach its full value. On this date, you will receive your initial investment, and the interest that your money has earned.
Corporate and State and Local Government bonds can be ‘called’ before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the interest that it has earned thus far. Federal bonds cannot be “called”.
The coupon rate is the interest that you will receive when the bond reaches maturity. This number is written as a %, and you must use other information to find out what the interest will be. A bond that has a par value of say 00, with a coupon rate of 5% would earn 0 per year until it reaches maturity.
Because bonds are not issued by banks, many people don’t understand how to go about buying one. There are two ways this can be done.
You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a broker, you will more than likely be charged a commission fee. If you want to use a broker, you should shop around for the lowest commissions!
Purchasing directly through the Government is not nearly as hard as it once was. There is a program called Treasury Direct which will allow you to buy bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid paying a broker or brokerage firm.
More advanced traders may try to buy and sell bonds to take advantage of the price movements, you can even swing trade them. But this is a very risky business if you don’t know what you are doing, you will need to take a swing trading course if this was something that wanted to, but again most people just buy and hold.
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Posted by admin on October 7, 2009 · Leave a Comment
Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:
In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These stock indexes generally only contain major blue chip stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.
For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).
Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to easily buy and sell at the price you want without having a delay. You will also get a lower spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered very liquid it should trade at least 500,000 shares per day, ideally even more.
It is best to avoid stocks that are bellow as this usually means the company is in trouble, although with the bear market of 2008 there have been a lot of good stocks at bargin prices between and . Avoid buying a stock that is below at anytime.
Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock.
Be very cautious about buying a stock just before it’s earnings are released, stocks often drop significantly if they come out with a poor report. Earnings are released 4 times a year with one of them being the annual report.
If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.
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Filed under Currency Trading · Tagged with call, finance, invest, investment, money, options, put, stock market, stocks, trader, trading
Posted by admin on October 1, 2009 · 1 Comment
Technical analysis of the stock market, or any other market such as Forex, futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.
You only have to think back to recent stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.
Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.
So what are the secrets to technical analysis?, I’m about to tell you, here are my golden rules:
* Only use 3-5 simple technical analysis indicators
* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective
* After selecting your indicators and parameter settings don’t mess with them.
The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.
The fact is that in any market, for each bar period, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.
For the record my set of indicators are:
* 4 Simple Moving Averages
* Bollinger Bands
* MACD
* Stochastics
But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:
Top Dog Trading Review
Posted by admin on September 23, 2009 · Leave a Comment
One of the most popular technical analysis indicators is the simple moving average also known as SMA, if you learn how to use these correctly they can be a very useful tool to help you to make good trading decisions.
The 50 simple moving average, or 50 SMA, is simply the sum of the last 50 values for each period, divided by 50, this is a moving window, as time moves on so does the average. Notice that I used the term period because this indicator works on any time period in exactly the same way.
It can be used on monthly, weekly, daily, hourly, 30 minutes, 10 minute and on whatever time period you want to monitor and trade. Although the SMA is the most widley used there is also the exponential moving average or EMA. This is a weighted version of the formula using the mathematical exponent function to give more weight to the more recent values, this has the effect of making it a slightly faster average that many traders prefer.
The truth is that it probably does not matter if you used the SMA or the EMA, what does matter however is that you use one or the other and then be very consistent with it. Do not switch between them, it is more important that you trust your chosen indicator then a slight difference in its value.
The simple moving average is primarily used to determine what the current trend of the stock is, depending on the value used it could be a short term, medium term or long term trend. An important point to note is that moving averages are most useful when the stock is trending, if the moving average is flat, i.e. horizontal on your chart it can become very choppy, this is a good time to not trade.
The general rule is that if the chart price is above the SMA the trend is up, if below the trend is down. This is very important to know because it forms the basics of trend trading and trading with the trend.
For the short term trend many traders like using a 5-8 SMA or EMA, here is a trading secret, never trade again the direction of the short term tend, actually this is really just common sense when you think about it.
Moving averages can often act as support or resistance, many traders use the 15, 21 or 30 SMA for this purpose.
There are a number of other very important moving averages that you need to know about, these are the 50, 100 and 200 SMA, and this mainly applies to the daily and weekly charts. A lot of big players in the markets, like the the mutual funds, investment banks etc use the 50 and 200 SMA as support and resistance, if they decide to buy or sell based on these you need to follow suite, the 100 to a lesser extent. These are very useful averages to watch if you trade EFT’s like an Oil ETF.
A useful tip is that when a stock breaks through one moving average it will often move all the way to the next, for example, if a stock breaks the 30 it may move to the 50 before finding some support or resistance.
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Posted by admin on September 15, 2009 · Leave a Comment
There is a lot of hype surrounding options trading, and for good reason, it’s a good way make a lot of money fast, or can be used to grow your capital consistently month after month.
There’s also a lot of hype about how complicated it is and why you need to spend thousands of dollars on options trading education before you get started. Needless to say this last statement usually comes from trading seminar companies trying to sell your their trading course on options.
Lets cover a few of the basics about options trading and set you straight about a few important points. Firstly yes it is true that you can make a lot of money trading options, but of course you can also lose money just as fast.
When trading stocks your leverage is 1:1, if you go on margin you can get get 1:2 leverage, but thats about it. With options it is not as straight forward to calculate the leverage but generally speaking you can get between 1:5 and 1:10 when you buy an option on a stock, or ETF.
So with 1:10 leverage, when the stock increases by 5% your option can increase by approx 50%, and this can happen in just a few days, this is why swing trading strategies using options on stocks is so popular.
However the downside is that the reverse can happen, if the stock drops by 5% your option can also drop by 50%, at which point you may want to close the trade and save some of your option value, it really depends on what your stop loss and risk management plan is.
What I’ve just described is called directional option trading where you are betting on the getting the direction of the stock movement correct, this is highly speculative. Options can also be used in option strategies which are much more non directional, such as covered call trades, credit spreads and Iron Condors. In these trades there is much lower dependance on getting the stock direction correct, but it still matters.
So should you trades options?, in my opinion you should not do directional option trades until you become very good at trading stocks. This is because you must be very precise with your entry and exit strategy and trading plan, and be very good at technical analysis.
Whereas if you want to do non directional option trades you don’t need to be such an experianced stock trader to be successful, but of course it does not hurt either.
Learning how to trade options is a very useful skill you have, but don’t rush into it and blow out your account. Make sure that you get a good options trading education before you start, and also make sure that you have a very solid stock trading education as well, such one from Top Dog Trading Review.
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