Forex Scalping Techniques For Day Trading.

The word scalping immediately brings us images of that ancient indian tradition of removing the scalp of their enemies as a trophy of their victory. It may not be the nicest of the images coming to our minds, but Forex scalping or scalping the markets has nothing to do with the bloody scalp of any defeated enemy. Instead they are one of the most used approaches to trading the markets.

In a few words; traders who use scalping have as their main trading method the art of looking for any advantage given by very short term trading opportunities. By short term I mean entering and exiting a trade within a minute or two. This is, by using the �scalps� of the natural oscillations occurring in the markets.

When you are �scalping the markets� you are not looking for the big move of the markets that will result you in a big gain, instead you are looking for tiny moves in your favor that through all your trading session will result in a significant gain without the risks and insecurity involved in waiting for the big move in your favor.

In short; scalpers aim to have several trades a day with the objective of accruing a number of small profits each time that will grow into a respectable daily total. By using this approach to trading the markets losses per trade will be minimal. Every experienced trader knows that a small but profitable scalp is the easiest trade to make. The whole secret is to get in and get out of the market as quickly as possible. Short and small accumulated can make you real money in the markets.


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Forex

 

5 Signs To Look Out For When Trading The Currency Bottoms

One of the more popular trade setups in forex trading is to trade the bottoms of the currency market.

The question to be answered is this : " How do we know that a bottom is occurring or has occurred?"

To track the currency move by charts, we will usually look at the bar chart or the candlestick chart and its various bottoming formations.

Here are some common signs to watch out for during market bottoms.

1. The chart must show successive lower highs and lower bottoms to confirm a downtrend is in place

2. At the bottom of the market, there is usually a hammer pattern formation in the candlestick chart, an inside bar, a long legged doji or a morning star formation on the candlestick chart.

3. In volatile sessions, at the ends of downtrending markets, there can be an exhaustion gap where the price of the currency will have gapped down under selling pressure.

4. If you use dynamic analysis of time and price, there is usually a time day or a confluence of time clusters lying near to the bottom formation, showing the possibility of a significant event, such as a change in trend.

5. If you use momentum indicators, there will be a decceleration of downward momentum towards the end of the downtrend and where a possible rebound is possible.

Technical chartists may look out for an outbreak above the high of a bollinger band drawn into the currency price chart where it is usual for the bollinger band to have constricted at the bottom. This is additional confirmation of the market bottom.

While charting helps to pinpoint the possible bottom, it is very much trade management that is important to ensure you are protected in case the trade goes against you. At the same time, it is trade management that will pre-determine the level at which you will take your profits. So build into your trading system principles of trade management - stop loss and profit taking.

Master certain trade setups such as trading at the breakout, trading with the trend and trading at tops and bottoms and you will find a lot of opportunities to make profits when you trade.

Forex

 

Factors You Cannot Ignore To Become A Successful Forex Trader

When it comes to forex trading, there is one particular aspect that differentiates it from other types of trading. This aspect is that forex traders are predominantly technical based, depending a lot of fast entry and exit following charts. Forex traders adopt fundamental analysis only to give them a better economic picture and projection of an overall currency trend.

However, there are particular times when the forex trader has to watch out for significant fundamental developments such as economic matters, especially when there are reports and news release pertaining to international interest rates of the major currencies. This is because everything might be quiet before a news release, with prices breaking out only in a strong move upon the release of the news or after an important meeting.

Therefore, in forex trading, in considering the technical setups, the forex trader has to be aware of the dates of the release of major reports, including what the "chairman of the Fed" says. Certain comments may be construed as bullish and may cause forex prices to move strongly and vice versa.

It would be wise for the forex trader to determine a few reliable source of financial news feeds, and to apply the information from the news channels to his trading.

In any profitable trading system, the forex trader must know how to buy and sell the currency pairs, set appropriate stop losses, and set profit limits, and exploit the power of leveraged margin to his trades.

If he fails to follow these important principles, losses can easily follow and losses can exceed whatever profits and can ruin a man.

In a technical trading system, the forex trader will use some indicators to gauge the market direction . He will need to set up his charts with the right combination of indicators, and more importantly how to use them correctly.

To accelerate one's learning, a forex trader may use a trade simulator, called a trade sim for short. A trade sim provides simulation of actual forex price movements so that the forex trader can practise his entry and exit of his trades, and improve upon the timeliness of his trades.

From my own experience, I like to tell traders who are beginners to watch for 3 main technical trading setups which are broadly, to trade with the breakout of a trend, to trade with a strong trend, and lastly to trade the tops and bottoms of the market.

Following a period of consolidation which is represented on the charts as a rectangular pattern, a breakout can result in good gains. To trade with the trend means to make several trades as the prices continue to move up, and to buy on the dips and to sell on the rebound. To trade the tops and bottoms, a forex trader needs to recognise toppish and bottoming chart patterns, including Japanese candlestick charting to catch a glimpse of the future.

The biggest advantage of forex trading is that a lot of money can be made ( or lost) within a very short period of time.

Therefore, it is always best for a less experienced forex trader to get under the tutelage of an experienced professional trader to walk him through the ropes.

Good traders are never born. Traders become good through gaining skills and from learning through experience. Either they pay their dues in the market, gaining experience from disappointing trades that went wrong, or they can have a smoother transition into the lucrative field of forex trading by getting a successful professional trader to mentor them.

Academic and head knowledge is useful,but it is always skills and experience that will determine how successful and profitable a trader is. Get trained, be prepared, be capitalised and you can become a successful forex trader.

Factors You Cannot Ignore To Become A Successful Forex Trader

Do you want to get started on an exciting and potentially profitable opportunity? I’m talking about getting into the world of Forex trading. Many people just like you have invested a little money in Forex trading and seen their income jump spectacularly. But that doesn’t happen overnight, so you should get started quickly if you want to benefit from Forex trading as soon as possible.

Forex trading refers to the trading of world currencies on the foreign exchange. Forex trading is speculative, and therefore carries some risks. But you can minimize your risks and maximize your profits by being up-to-date on market information and having good tools of analysis. The basic type of trade you will do in Forex is a currency trade, which means that you buy and sell a world currency with the goal of making a profit.

To get in on Forex trading, you will need to find yourself a broker to handle your transactions. There are many Forex brokers that are offering their services online for your greater convenience. You should check out their websites as they often have a lot of handy tools and information, such as software demos where you can practice Forex trading without risking any actual money, and helpful guides for the instruction of novice traders. Not all of these tools and guides are free, however. Most likely, you will have to pay a membership fee to be able to get full access to them. However, before you sign up, you should check to be sure that the online broker is registered as a Futures Commission Merchant with the CFTC, or Commodity Futures Trading Commission.

If you think you are ready to open a Forex account, all you need to do is go through the simple process of filling out a form and providing some form of personal identification. There is generally a margin agreement included on the form that allows the broker to intervene with any trade they consider too risky. There are different types of accounts made available by brokers to suit various Forex investors. A standard account can be opened with a minimum investment of $1000 or $2500, depending on the brokerage.

For a novice investor, or anyone intending to invest less than $10,000 in Forex, it is advisable to invest in a mini Forex account. The minimum investment for a mini account can be $100, $250, or $500 depending on the brokerage. They have the advantage of providing you with more flexibility in investing, as you will be able to trade on more lots with less of an investment.

Forex Trading: An Excellent Way of Augmenting Your Income

Forex option brokers can generally be divided into two separate categories: forex brokers who offer online forex option trading platforms and forex brokers who only broker forex option trading via telephone trades placed through a dealing/brokerage desk. A few forex option brokers offer both online forex option trading as well a dealing/brokerage desk for investors who prefer to place orders through a live forex option broker.

The trading account minimums required by different forex option brokers vary from a few thousand dollars to over fifty thousand dollars. Also, forex option brokers may require investors to trade forex options contracts having minimum notional values (contract sizes) up to $500,000. Last, but not least, certain types of forex option contracts can be entered into and exited at any time while other types of forex option contracts lock you in until expiration or settlement. Depending on the type of forex option contract you enter into, you might get stuck the wrong way with an option contract that you can not trade out of. Before trading, investors should inquire with their forex option brokers about initial trading account minimums, required contract size minimums and contract liquidity.

There are a number of different forex option trading products offered to investors by forex option brokers. We believe it is extremely important for investors to understand the distinctly different risk characteristics of each of the forex option trading products mentioned below that are offered by firms that broker forex options.

Plain Vanilla Forex Options Broker - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic option contracts that are traded through an over-the-counter (OTC) forex dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or forex put option contract.

There are only a few forex option broker/dealers who offer plain vanilla forex options online with real-time streaming quotes 24 hours a day. Most forex option brokers and banks only broker forex options via telephone. Vanilla forex options for major currencies have good liquidity and you can easily enter the market long or short, or exit the market any time day or night.

Vanilla forex option contracts can be used in combination with each other and/or with spot forex contracts to form a basic strategy such as writing a covered call, or much more complex forex trading strategies such as butterflies, strangles, ratio spreads, synthetics, etc. Also, plain vanilla options are often the basis of forex option trading strategies known as exotic options.

Exotic Forex Options Broker - First, it is important to note that there a couple of different forex definitions for "exotic" and we don't want anyone getting confused. The first definition of a forex "exotic" refers to any individual currency that is less broadly traded than the major currencies. The second forex definition for "exotic" is the one we refer to on this website - a forex option contract (trading strategy) that is a derivative of a standard vanilla forex option contract.

To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.

Exotic forex options are generally traded by commercial and institutional investors rather than retail forex traders, so we won't spend too much time covering exotic forex options brokers. Examples of exotic forex options would include Asian options (average price options or "APO's"), barrier options (payout depends on whether or not the underlying reaches a certain price level or not), baskets (payout depends on more than one currency or a "basket" of currencies), binary options (the payout is cash-or-nothing if underlying does not reach strike price), lookback options (payout is based on maximum or minimum price reached during life of the contract), compound options (options on options with multiple strikes and exercise dates), spread options, chooser options, packages and so on. Exotic options can be tailored to a specific trader's needs, therefore, exotic options contract types change and evolve over time to suit those ever-changing needs.

Since exotic forex options contracts are usually specifically tailored to an individual investor, most of the exotic options business in transacted over the telephone through forex option brokers. There are, however, a handful of forex option brokers who offer "if touched" forex options or "single payment" forex options contracts online whereby an investor can specify an amount he or she is willing to risk in exchange for a specified payout amount if the underlying price reaches a certain strike price (price level). These transactions offered by legitimate online forex brokers can be considered a type of "exotic" option. However, we have noticed that the premiums charged for these types of contracts can be higher than plain vanilla option contracts with similar strike prices and you can not sell out of the option position once you have purchased this type of option - you can only attempt to offset the position with a separate risk management strategy. As a trade-off for getting to choose the dollar amount you want to risk and the payout you wish to receive, you pay a premium and sacrifice liquidity. We would encourage investors to compare premiums before investing in these kinds of options and also make sure the brokerage firm is reputable.

Again, it is fairly easy and liquid to enter into an exotic forex option contract but it is important to note that depending on the type of exotic option contract, there may be little to no liquidity at all if you wanted to exit the position.

Firms Offering Forex Option "Betting" - A number of new firms have popped up over the last year offering forex "betting." Though some may be legitimate, a number of these firms are either off-shore entities or located in some other remote location. We generally do not consider these to be forex brokerage firms. Many do not appear to be regulated by any government agency and we strongly suggest investors perform due diligence before investing with any forex betting firms. Invest at your own risk with these firms.

Regulated Forex Brokers - Your First Major Currency Decision

Choosing the right Forex broker is a hard decision to make. Most of them have different features, capabilities, weaknesses and advantages. But the first question that should come in your mind should be - “Is it a regulated Forex broker?”

The regulated Forex brokers are forced to keep the transactions transparent with documented financial reports as they must submit those reports to regulatory authorities. And when they fail to do it, authorities have the right to fine them or terminate their membership. A regulated Forex broker allows the resolution of any dispute increasing the investor protection.

Your broker will ensure the safety of your money. You also get a chance to file appeals in the case of bankruptcy. Moreover, a regulated Forex broker firm will also ensure that there are as few a problems as possible with the trading platform, which it offers to its traders.

To find out a regulated Forex broker, first you need to find out what country the broker is registered in. Some countries may have flexible laws for regulated Forex traders. The local regulatory authorities must regulate your broker.

For example, the National Futures Association (NFA) and Commodity Futures Trading Commission or CFTC must regulate the brokers in the U.S.; Swiss based brokers must be regulated by the Swiss Federal Department of Finance or FDF. These regulatory authorities protect the public against fraud, manipulation, and abusive trade practices.

The regulated Forex brokers are accountable to the authorities. They have specific regulations to follow. With these brokers, most of the information is available online and you can easily find out their past performances.

The NFA website can also help you find out whether there were any serious issues that the clients or the regulating authorities had with the broker in the past.

You can verify the CFTC registration and NFA membership status of your Forex broker firm or individual and check for their disciplinary history by the websites or phone numbers. Among the registered firms, look for one with clean regulatory records and solid financials support. Do stay away from non-regulated firms!

Recently NFA has published a brochure called "Trading in the Retail Off-Exchange Foreign Currency Market” for educating investors about retail Forex trading. You can consult this before selecting your broker.

The NFA also have an Interactive Forex Online Learning Program explaining how retail Forex contracts are traded, the risks inherent in currency trading and steps individuals should take before opening a Forex account.

Finally, before opening an account even with a regulated Forex broker, make sure that the broker will provide you with the backing you need. If the market collapses, they have the reserves to cope with it and will be around when you decide to withdraw your cash.

Welcome to Forex Trading Advice

It's nice to know I can be a voice out in the cyber world and share my knowledge in Forex trading. I hope I can be of some help by providing useful insight daily regarding the Forex Trading Market. Check back daily for articles about how I made millions buying and selling on the Forex market. See you soon!

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