Forex Trading - Spotting the Big Trends For Big Profits Part 2

In part 1 we looked at how human psychology pushes prices away from fair value.

When there are extreme moves away from fair value you can make a contrary trade to the majority and pile up big profits with low risk.

So what tools do you need? Lets take a look.

As a general rule these tools will work in any market not just forex markets.

What sets ups do you look for?

Generally you want a set up that is the news where there is no end in sight to a spike move.

This generally indicates that greed and fear have taken hold and the market being looked at is emotionally driven and away from fair value.

This happens all the time:

The recent spike in crude oil, the 87 stock market crash and many others including in the forex market.

First place to start

Is the chart look for huge price spikes in short time spaces accompanied by experts and the news telling you there is no end in sight.

Now delve a bit deeper to see the true picture.

Useful technical tools are:

RSI, Sochastics and Bollinger bands

Then add in these sentiment tools to the mix.

% Bullish

This indictor is a poll of people, experts, brokers etc that have a view or interest in the market.

When this poll indicates above 70% are bullish the market is in overbought territory and when below 30% is in oversold territory.

In the currency markets we like to look for even more extreme readings of below 20% and above 80%

Commitment of Traders Net - Traders Position Report

This is a tool used for years by futures traders and shows the breakdown of open interest among three main participants.

We will explain what it means in a minute buy here is its definition of the groups.

Hedgers The smart money commercial traders

Large speculators These are normally large funds with reportable positions

Small speculators everyone else.

The commercials are long term traders and are close to the fundamentals and move very slowly they are hedging not speculating and not influenced by greed or far and are the smart money.

Speculators on the other hand, both funds and small speculators, are driven by greed and fear

If you see a set up where commercials start to move the opposite way to speculators at a market top or bottom and hold an opposite extreme, then prices have moved to far from fair value.

With the commercials taking and building the opposite position to speculators in a rampant bull or bear market you know prices are probably due to re bound.

You must only use extremes with this tool and this normally means 8 months to 2 years.

Breaking it down

Study chart first, look for experts telling you there is no end in sight to the move, then look at % bullish and then net trader report.

Finally, use the technical indicators to confirm the move.

These moves do not happen often.

Maybe a few times a year.

But when they do

You can zero in on a contrary trade that not only offers huge profit potential but offer low risk.

FREE ESSENTIAL CONTRARY TRADING PDF'S

On all aspects of becoming a profitable trader including features, downloads and your essential FREE Trading PDF's visit our website at http://www.net-planet.org/index.html

FOREX Brokers - Tips for Choosing the Best Forex Broker

There are many Forex brokers to choose from when trading currencies online - and choosing the right one is essential, if youre going to maximize your FX trading profits.

This article is all about choosing the best broker to help you trade online - and help you achieve currency-trading success.

Firstly, you need to understand the following:

A Forex broker is there to help you place orders and give you a good service when doing so.

Many novice traders however choose a broker assisted account - and then expect their broker to help them make money!

You shouldnt use a broker-assisted account.

To succeed in FX trading you need to understand that you alone are responsible for your trading success, and no one else.

Now you have your FOREX trading system / trading plan, its time to choose a broker. Here are some tips to help you:

Spreads Offered

Spreads can be very competitive and you need them to be. Transaction costs mount up - especially if you are trading frequently.

The tighter the spread, the more profits you will make.

Today, many brokers offer spreads as tight as 3 - 5 pips - and this is what you should look for.

Deposit Online

Look for a broker who will take online payments to your Forex account - and make sure the payment method is secure.

This is a great facility for funding your account quickly - and getting your trading profits back into your bank account!

Guaranteed Stop Loss Protection

The leverage is one of the main reasons that people are attracted to currency trading, as it increases the profit potential dramatically.

Of course, leverage is a double-edged sword - and where there are high rewards, there is high risk.

Many traders are nervous of trading with the potential to lose more than their initial deposit. With this in mind many Forex brokers now offer guaranteed stops and negative balance protection.

This is a sensible service to utilize when you first venture into trading, as it gives peace of mind for a small fee.

Leverage Offered

The leverage brokers will give you varies dramatically from broker to broker.

You should look at a broker who will grant you at least 200:1, as it will maximize your potential profits.

In fact, many brokers will give you leverage of up to 400:1.

Other Charges

Your only transaction cost should be the currency spread - you should not pay other commissions.

Always make sure that the currency spread is the only fee youre charged, and that you dont pay any extra brokerage commissions.

Investment Amounts

Today, currency trading is not just the preserve of wealthy individuals and banks - anyone can get involved, as deposits are affordable to all investors.

You can open a trading account online with as little as $100.00 this means that novice traders who want to start out with a small amount can do so.

Trading Platform

If you are trading online, you will go through a Forex trading platform - and you should look at this closely when looking to trade with a broker.

You want ease of use and reliability but also check that the broker provides assistance and support.

FOREX Trading Education

While you should always make your own investment decisions, its nice to get free trading tools such as:

FREE trading guides
Forex training seminars
Trading news
Trading recommendations
Forex trading systems
Trading books

These can be useful when you first start to learn Forex trading, and you are developing your own Forex trading strategy.

Choose Your Broker Wisely

When choosing a Forex broker you have a lot of choice, and the above tips will help you choose a broker that will be a valuable partner in your quest for profits from online Forex trading.

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Short Selling for Investors

Shorts. Lets see. If there are shorts there must be longs. Which is best? Longs or shorts?

If you are trading in the stock the stock market experts like longs better than shorts. If you are long that means you own stock and that is good. If you are short you have sold stock and that is bad. At least that is what Wall Street preaches. And why do they want to make you believe this and is it true? Lets examine the facts.

Today I hear stories on the financial news and there are articles in the paper that people who are short driving the market down. They have sold more stock than they own and this is causing the market to collapse. I even hear that Congress is trying to pass a law that will not allow people to sell short. They are blaming hedge funds who are allowed to sell short. The basic flaw in this concept is when a short sale is initiated it must be done on an up tick. That means the stock must be going up in order to make a short sale. No short sale may be made to pressure the market down. That is a fatal pin in the balloon of that lie.

There are reasons people will make the sale of a stock. If you own it you may just need the money now or if it is going down you may not want to lose money should the downward trend continue. There is on old saying in the market the trend is your friend. If you see a stock that is declining you may want to sell it first and when it declines further you will buy it back at a lower price later on. This actually puts a floor under that stock because some time in the futures you MUST buy it. Whoever is doing the shorting does not matter whether it is an individual or a hedge fund. They are actually doing two things that are both good for the market. They are providing a future buy to support the price at a lower level that keeps it from going lower and they are providing liquidity to the market.

When you buy long you want it to go up so you can sell it later at a profit. When you sell short you sell it now with the idea of buying it back after it declines. Both are driven by the profit motive. How can one be good and the other bad? It is like saying there is good electricity and bad electricity.

If company CEOs dont want people to short their stock I suggest they look in the mirror to find out who is at fault. The CEO is not running his company properly and that is why the stock is declining. No outside person or group can drive a stock lower that is making a good profit. There is a good reason for the price decline.

Buying short does not put the market down. The ultimate outcome of a short sale (covering the short) is very positive for the market.

INVESTMENT LETTER 3 month free trial.
http://www.mutualfundmagic.com Copyright Albert W. Thomas All rights reserved. Author of If It Doesnt Go Up, Dont Buy It! Former 17-year exchange member, floor trader and brokerage company owner.

Two Little Four Letter Words

The two words that every share trader has to come to grips with every time that they trade is "Risk and Fear." Combine the two of them and you have concocted a poisonous mixture.

As soon as you start with your first trade transaction you are leaving your self wide open to "Risk." That is the risk of losing part or nearly all of your original capital.

The first loss you encounter which you have no control over is brokerage. The amount depends which stockbroker you have chosen to deal with. So the share price has to rise a little bit just for you to break even. If the share price decreases then the loss compounded.

One of the first things that will help you to overcome "Fear" and to survive in the share market is by using a trading plan and sticking to it. Without one you are doomed to eventually fail. For all you are doing is a hit and miss affair.

By using a trading plan the odds of your survival and trading success arc dramatically increased tenfold if not more. By having a trading plan and adhering to it does not a guarantee success just puts the odds more in your favor.

Now the action we take to protect our trading capital is a "Stop Loss." This is also known as a conditional order.

Now before you set the stop loss in place you need to have planned in advance how much of your precious capital you are prepared to lose. Once you have agreed upon the stop loss and have put it into place you can then sit back happily knowing that you have done the best you can possibly do to save your trading capital.

In a successful trade the share price is rising and soon you are experiencing a paper profit. It is called a paper profit because as yet we haven't as yet physically taken a profit. This only occurs when we sell the stock and not before.

Now we experience the risk and fear of losing that hard won profit. That is assuming that you have picked a preset level of profit according to your trading plan.

To safely lock in that profit we use a variant of the stop loss we first employed when we opened the trade. This is called a "Trailing Stop Loss." The purpose of this is to follow the share price upwards and it effectively locks in your profit that you have made so far.

These stop losses are based on either a percentage or a dollar figure. Most important of all is that they must be reviewed every day in case they need an adjustment. And when required do not procrastinate but do them straight away for it could cost you dearly.

By doing all of the above you have alleviated a lot of the risk and reduced your fear levels considerably which makes for sleeping better at night worry free.

Christopher Strudwick is a keen amateur investor on the Australian Stock Market. Visit his weblog for more free articles and useful information at http://www.asxnewbie.com

Currency Trading Courses - What Makes a Good Training Manual?

Many Forex courses use past information and facts as a basis for their training materials. The main problem with this is that they do not spend enough time on the practical side of investing. A better than average currency trading course should be able to help you understand the practical and technical workings of the Forex market which in turn will help yoin in developing and applying a strategy that you have formulated yourself.

Good courses should not spoon-feed you all of the information, sure they should teach you new things but it is important they also get you thinking for yourself. This is the only way you will learn how to apply the information they preach. You should be asked to think of your own approach to solving a particular problem.

Another sign that you have found a great course is if the manual is able to provide you with some first hand experience of the market or at least something simulating it. Video demonstrations, access to a safe, practice trading arena and a good level of support are always good signs that the currency trading course in question is worth purchasing.

Whilst Forex courses have their advantages, the one thing that has no substitute is confidence. A currency trading course must implant in you a confident attitude in making decisions related to Forex trading. Trading after all, is about taking risks and that is not possible until and unless you are confident about your own abilities.

When you are buying a currency trading educational course you must be sure that the material it offers you will prime you for successful trading in the real world not just in a practice environment. You will have to make a number of decisions in Forex trading and these actions that you choose will depend a lot on your instincts and on the knowledge. Therefore you are using the course to gain knowledge, which in turn builds your trading confidence and brings better results - thats the theory anyway!

It goes without saying that like any other field you want to enter, you need to have a basic understanding of the field. Forex trading is no different, if anything it is even more important to understand the fundamentals of the market than with any other market. Unlike stock trading you do not just need knowledge in one company or industry, you need global knowledge as a change in one currency can effect a change in another.

Most of the currency trading courses start with the US Dollars for the simple reason that it is the most predominant player in the market. With time, you should gain experience and knowledge about Forex trading with the US Dollar and after some practice you will find yourself more able to trade intelligently in other currencies also.

The currency trading courses can also teach you how to calculate the pip which, put simply, is the difference with which a currency rate increases or decreases. In other words, if the current exchange rate for two currencies is 1 to 45 and the next day it turns to 1 to 45.3, this means that the pip is 0.3. Calculating pip is not difficult but predicting it is essential in making profits and analyzing risk in any Foreign Exchange trade.

In summary, if you are looking to utilize a currency trading course to learn more and improve your Forex profitability then please do remember to consider the issues raised in this article carefully. A course should not be seen as a magic tutor that will bring you instant profits but should instead be viewed as a very useful learning experience that will boost your confidence and make you a more secure trader.

Paul Bryan operates Forex Reviews, News and Advice - A site aimed at bringing you the best and most independent Foreign Exchange information and articles.

Forex Education - Success You Follow These 2 Golden Rules

I read a lot about forex education and most of it is wrong; its a fact that 95% of traders lose, because they learn forex trading in the wrong way. Forex Trading success is easy but most traders simply have no idea how to acquire the right forex education and thats what this article is all about.

Learn these two golden rules and you can have a successful forex trading strategy and they are:

1. You are Responsible for Your Success

The problem for most forex traders is they think they can buy success from a vendor for a few hundred dollars. These gurus and mentors make millions from gullible and naive traders.

Most of the currency trading systems sold on the net are junk and simply promoted by clever marketing and the best example is perhapsforex day trading. Great story but it doesnt work.

The only person who can make you successful is you.

This means devising your own forex trading strategy for success.

If you devise your own strategy (its not as hard as many people think and is covered in our other articles) you will have a total understanding of your system and why it will work. This will give you two key character traits for success:

Confidence in your system and the discipline to follow it through inevitable losing periods.

2. Work smart and learn the RIGHT knowledge

There are those traders who are naive and gullible and believe someone else can give them success for a few hundred dollars, on the other hand there are others who believe that to make money you need to work hard their logic is the more you put in, the more you will get out but this is simply not true.

There are plenty of smart people working hard trading forex and a lot of them lose.

Why?

Because in the world of forex trading you only get a reward for being RIGHT and the market gives you nothing for effort.

So what does working smart entail?

Firstly, if you are new to forex trading develop a simple technical system with just a few indicators.

Simple systems work far better than complicated ones, as there are less elements to break in the brutal world of currency trading. Then, you need to focus on the long term trends and use a breakout methodology - its easy to understand, easy to apply and it's very profitable.

All the information you need is available free on the net.

If you seek out this forex education, you will be able to get a system that is robust and works and get a forex trading strategy together in less than 2 weeks.

If you are a long term trend follower you will only be executing forex trading signals a few times a month and your forex analysis will take under half an hour a day.

Is It Really That Simple?

Yes it is.

Currency trading success is built on a simple robust system and the ability to apply it with discipline.

Unless you develop it yourself, you wont confidence to follow it with dsipcline and without discipline, you dont have a method in the first place.

Currency trading is all about having the right knowledge and the right attitude to apply it.

Its a fact that everything about forex trading can be learned and anyone can become a successful trader, but 95% dont for the reasons outlined above dont make the same mistake.

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On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at http://www.net-planet.org/index.html

Learning Forex Trading - The Eight Steps To Get You On Your Way

Learning forex trading can certainly be a daunting process if you have no idea where to start. Although forex is less complex than some other methods of trading because it only deals with one specific commodity, it can still be a chore to get to grips with. There is so much involved when learning forex trading, especially if you want to be successful, but by following the tips below, you can soon obtain the knowledge and know how that you need.

1. Research forex trading You can never walk into any kind of investment without first investigating the possibilities and weighing up the advantages and disadvantages, and learning forex trading is no different. You should at least know what it is and how the concept of forex trading works before committing yourself to attempting to profit from it.

2. Learn all about currencies Most individuals know a little about the dollar, pound and euro, but it is essential to learn about all currencies and their histories whilst learning forex trading. Without having basic knowledge of the fundamentals of currency, you cannot hope to do well at forex trading.

3. Assess the odds The odds of success and failure are part and parcel of learning forex trading because you need to be able to recognise trends, analyse profit margins and recognise potential.

4. Learn the key terms Every investment opportunity has some form of jargon attached to it. Ensure that you have a full understanding of the jargon associated with learning forex trading before progressing to the next possible step.

5. Watch the market As with anything in life, always watch the market to get the feel of it before progressing to participation. Learning forex trading is all about understanding before participating, and the only way for you to do that is to watch other before attempting it yourself

6. Use software to trade for free Some softwares enable the learning forex trading before you actually invest. You can trade imaginary amounts via simulators to give you practice and give a greater understanding of the system. You can analyse your mistakes and rectify them before actually investing your own money!

7. Set a budget Always work out what you can afford to trade whilst you are learning forex trading. It is easy for an individual to get in over his or head and end up losing far more than he or she can afford, so make sure that you are not one of those people!

8. You are ready to begin for real Your learning forex trading crash course is complete so as soon as you feel confident, go for it!

Simon Aridej is the owner NewForexLive.com a site which provides a good information about forex trading tips, how to trade like a professional forex trading free forex trading ebook and much more. You can download forex trading ebook for free by Click Here!