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The Trend Is Your Friend

  • November 5, 2011 5:21 pm

It is well known in the currency trading world that the trend is your pal and any currency trading method based around following a trend is probably going to be both easy and effective.

It is really easy to form trend lines on any forex chart, but most people prefer to use candlestick charts for this because the candlesticks are such a clear visual signal. The first step in using trend lines for a foreign exchange trading technique is to establish whether the market is rising, falling or is stable inside certain parameters. Naturally there will always be fluctuations, but at particular times you will see clear patterns.

1. If the price is rising

If the price is going up, first draw a straight line thru the highest highs on the chart. This line will be sloping upward. Then draw another line through the lowest lows on the chart. If this line is also going upward and is roughly parallel to the 1st, you’ve got an rising trend.

You can then use these 2 lines as support and resistance lines. This implies that you can assume that while the trend continues, the price will remain in the area between these two lines. any time that the price hits the top line you could sell, on the assumption that it’ll fall back. In a way this strategy means going against the trend, but you would only hold that position for a short time. However, you should keep in mind that there will at some point be a true reversal and you could be caught out by this.

2. If the price is falling

If the price is going down, you can follow a similar methodology to the prior system.

What You Need to Succeed

  • June 26, 2011 5:21 pm

Your exact day to day trading plan is more about your position size, stop losses, close point for a successful trade, and so on. In this example you do have a profit target, voiced in terms of the number of pips you will take if the trade is profitable. It isn’t a brilliant idea to let trades drift, hoping for unlimited profits. Some folk do only close out half of their position at a certain point, it’s correct, but if you’re about to do that it should be a written part of your plan, not a snap decision.

Do not carry your planned system in your head where you can simply get tempted to change it. Currency trading is a disturbing as well as a dangerous business, and having a well thought plan is critical to the success of your enterprise.

The Development of Currency Trading and the Global Market

  • June 8, 2011 5:21 pm

Till World War I it was always allegedly feasible to go to the central bank and ask for gold or silver in the place of your bank notes. Of course, this very rarely happened in significant amounts and many national banks stopped keeping enough gold to cover. Now and then like in Germany after World War I, there would be a tragic run on the banks, leading to silly inflation and the collapse of the nation’s economy. This was an important factor in the upward thrust of the German fascist party and thus might be announced to have caused World War II. To prevent a similar disaster going down in a vulnerable country again, the Bretton Woods agreement was drawn up in 1944. This ‘permanently’ pegged all national currencies to the US greenback, and fixed the value of the dollar against gold at $35 per oz. This held till the early 1970s. However, states were developing at different rates and in different directions, and in 1971 President Nixon postponed the gold standard. The US dollar was dropped as a reference point for the majority of the major countrywide currencies, and the relative values of different currencies began to change according to business conditions and market forces. Banks had to exchange money to offer their customers with foreign currencies for travel and importing goods, but pretty shortly they were exchanging much more than they wanted in order to profit from the continual rise and fall in the values of the different currencies. Steadily, personal stockholders joined in the game and the forex market mushroomed. The development of the Net meant that the market became accessible to anyone, in theory. At this point in currency exchange history, daily trading turnover has reached between $3 and $4 trillion, more than the trading volume of all of the world’s stock and bonds markets added together.

Finding a Good Foreign Exchange Trading System

  • June 5, 2011 5:21 pm

When you have found or purchased a foreign exchange system that seems ideal, you may naturally still test it in demo mode before going live. It can be helpful to know what is the anticipated profit per trade. This is calculated from the averages over a fair time period. Of course, if you find that it has an overall loss, you will need to either make changes or look for another system.

You’ll also wish to see how many trading opportunities it produces for you. Do not just go for the system with the most opportunities, however. A system which has an average of one trade a week could earn more cash than one that has 20 or thirty. It all depends on average profit per trade.

By proceeding in this manner, anyone who has an interest in currency trading should be well placed to work out whether earning with currency trading is a pragmatic chance for them, without any risk. Even with a good system, the market has its highs and lows and can be very unpredictable.

Why Scalping Currency Exchange Does Not Work

  • May 28, 2011 5:42 pm

If you visit foreign exchange forums you will certainly hear folk talking about scalping currency exchange. Some swear it is the only real way to trade, others say that it’s a funny method that has no hope of making profits. So who is right? Perhaps both, because it’s right that some traders do use currency exchange scalping strategies extremely successfully, lots of folks who start out making an attempt to use scalper strategies in the foreign exchange trading market lose enormously. In this piece we will look at some of the explanations why that happens, so you can make an informed decision about whether to try scalping foreign exchange.

So we commence with the understanding that it is possible to earn income with scalping techniques but there are certain things that you will need. The 1st is a broker who accepts this method of trading. There isn’t any point in hoping you can get away with it for a while: you’ll simply have your trades canceled and your funds kindly returned to you as fast as they work out what you do, which won’t be long. This is frustrating, intense and a large waste of your time. So ask the query before you even look at their dealing platform.

Getting the Most From a Micro Forex Account

  • May 16, 2011 5:24 pm

Newbie currency trading is a minefield where a lot of money can easily be lost. New traders generally come into the market with dreams of making it giant, but any attempt to make a lot of money in a short while is likely to result in losses in foreign exchange trading just as in any other field. So starting out with a micro currency exchange account can be the best way to go. It sounds counterintuitive to suggest that a new trader will make more cash with a small account balance of $100 or even less, but when you remember how much it’s feasible to lose by trading the bigger mini or standard lots, you will see this sounds right. The important point isn’t to suspect that simply because the account is tiny, you can take big hazards with it.

Opening a micro foreign exchange account for your first expedition into newb currency trading is a valuable way to start even if you have got a lot more money available. In fact , any forex trader should be prepared to risk at least $500 to start, even with a micro account and regardless of whether you don’t intend to put it all into the account straight away.

How to Find Good Foreign Exchange Trading Systems

  • April 28, 2011 5:21 pm

There are so many forex day trading systems that it can be hard for a trader to find the best one. In reality when you consider all the variations that you could have on all of the possible technical analysis tools, there must be an unending number of possible systems. Of course, if there had been one best system that topped them all and worked for everybody with assured profits, we’d all be using it. But this is essentially very unlikely. Each time someone makes cash in the forex market, someone else has to lose. Nonetheless the massive majority of the currency exchanged every day belongs to traders. So if everybody in forex trading used the same system, it wouldn’t work any more . How can we know that? We are able to ask ourselves these questions:

Is It easy To Understand?

The best day-trading systems are sometimes simple. Forex day traders need to act fast to maximise their profits so you do not wish to be having to have a look at a million different indicators before you can open a trade.

Does it have lots of Winning Trades?

Most people work best with systems having a comparatively high number of winning trades. The explanation for this is only psychological.

Currency Exchange Brokers – How They Work

  • April 16, 2011 5:21 am

Most foreign exchange brokers offering accounts to retail traders operate in one of 2 ways. Much more likely, you’ll be looking at either an ECN broker or a market maker. ECN currency exchange brokers use the Electronic Communication Network, a worldwide online marketplace that caters for many differing types of trader from retail to the gigantic banks and market makers. You can often improve prices from an ECN broker but take a close look at their fee structure and consider what it might mean for you on a normal deal.

ECN brokers are usually better for scalpers and may even welcome them because they are dealing at once with a big market. They’re also often well regulated. On the downside, the variable spread can imply more uncertainty when setting stop losses and limit orders. ECN brokers also tend to offer fewer charts and may have a less user friendly dealing system because they aren’t in particular planning to attract beginners. They tend to presume that you know what you do and have a paid subscription to do your technical research some place else.

Foreign Exchange Trading Books for Beginners

  • April 1, 2011 5:21 pm

Both released books and downloadable ebooks typically have lots of online reviews you can read. For printed books, the Amazon website is a superb source of reviews. Even if you intend to get a book at your local bookstore you can try the reviews on Amazon first. You might also find cheap used copies there. Paper reviewers are usually gurus in the topic while online customer reviews are by members of the public who may not be knowledgeable . Try to find reviews from folk whose situation is close to your own and remember that this is one person’s opinion about the foreign exchange trading books.

How to Test Forex Systems

  • March 31, 2011 5:22 pm

First you may use backtesting. Here you take your system and figure out on paper how well it might have done on the recent historic market, i.e. The last six months or whatever period you choose. This doesn’t take too much time as you can quickly scroll through historical charts searching for the signals that would have led you to make a trade if you had been operating your system live at that time. Naturally the market is not going to copy in exactly the same way so you should take into account the indisputable fact that you may have struck lucky or unfortunate and picked a point when the system performed abnormally well or badly. For that reason, it is best to backtest over the longest possible time and perhaps split your tests so that rather than testing, for example, one entire year when the market might have been especially robust or weak, take the 1st quarter of year 1, the second quarter of year two, etc so you test one 3-month period from each year of four years. This gives you a good period spread without requiring you to cover four whole years. On the other hand, it mimics real live trading strategies with the chance of slippage and other factors which aren’t gong to show up in back testing. Or you can use many demo accounts. Foreign exchange demo accounts also have the advantage that you are developing your live trading skills and familiarity with a software platform and charting service at the same time as you are running your tests. This gives you solid real time coaching to prepare you for the moment when you go live with real cash. Most currency exchange brokers will provide free demo accounts which you may use to check foreign exchange systems.