Forex Highlights

Cutting losses short

A protective stop protects your trading capital, it is your initial trade risk. Before a trade is even entered your should know where your protective stop will be – this is your maximum loss (barring any slippage on the exit). There are many different ways to determine a protective stop on a trade:

Set dollar amount – Say $500 on every trade

Percentage retracement – Say 10% from the entry price

Volatility – A percentage of the average true range of the previous x bars

Moving Averages – the opposite of the moving average entry

Channel breakouts – the opposite of the channel breakout entry

Based on areas of support and resistance stops

Time – If a position is not in profit after a certain length of time then it is exited.

Letting profits run

An effective exit technique is also required to allow a successful trade to make the most profit possible and give back the least amount of it.

Usually a trailing stop is employed to achieve this objective. A trailing stop moves to lock in profits as the trade moves in the traders favour, it should never be moved backwards. There are many different ways to calculate a trailing stop:

Volatility – the stop is calculated as a percentage of the average true range of x periods.

Dollar – A set amount determined before the trade is entered.

channel breakout – exit a long position at the low of the last x bars.

moving average

chart patterns – ie move the trailing stop behind each consolidation as it forms.

Other forms of exit are:

Time Stops – A trade is exited after a certain length of time no mater what. A day trader, for example, will always exit at the market close.

Targets – A limit order is placed to exit a position at a pre-defined profit objective. However this tends to break the rule of letting profits run and usually reduces the profitability of a system by cutting short the best trades.

Tim Wreford runs Online Futures Trading, a website that provides information and resources for traders. Tim also provides a free day trading system, the results of which are updated daily on the site.

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Top Secrets For Successful Currency Trading

1. You need not work hard. You need to be Smart. Forex trading is a bit different kind of business. Working hard and trying to stay in the market round the clock will not make you successful in this business. You need to be smart in this business. Here you need to catch the movement at the right time and exit from it at right time.

2. There is no scientific formula to predict future movements in currency market. It is no way possible to predict the future movements in currency market. If you have any experience in this market you know for sure that all big theories available in the market go wrong many times. Instead for trying to predict the future based on data derived from previous records it is more important to analyze the present condition through technical and fundamental analysis.

3. Simple systems work better than complex ones. Complex systems involve too many elements. It is very difficult to keep track of all elements all the time. As a result complex systems break easily. Simple systems always work best as they are more robust and easy to manage.

4. You need to have courage to catch big moves. It is very difficult to continue holding even after seeing profits. You need to have courage to wait, if you want to make huge profits. This can be gained only after vast experience and clear understanding of the system.

5. Confidence, discipline and patience are the secret keys for success in this market. If you implement and execute a simple and robust plan with confidence and discipline there is no reason for you to fail. You need to learn to be patient if you want to be successful in this business.

For some excellent resources about online currency trading please visit this website: http://www.commodityforex-onlinetrading.com

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The Swing Trading System Enigma – And How to Profit From It

The swing trading system takes advantage of the human emotions bound up with trading the financial markets by identifying overbought and oversold positions. The traditional tools for doing this are charts, but I believe charts on their own are not enough to identify the stocks or other securities that are becoming potential trades. Something else is needed for that.

Before we work out what it is, we have to acknowledge that swing trading is based on different criteria from the “trend” method of trading, even though both cash in on the human factor. “The trend is your friend”, and traders following this method identify a definite up or down trend that is in place before they hitch their wagon to it.

The drawback to this is that so often by the time a trend is identified it is already finished, or nearly so. Even when the trader manages to ride the tail end of it he often loses out when the trend reverses and he closes his trade too late to save his profits. Swing traders seek to avoid that fate by identifying in advance when a particular stock is likely to become overbought or oversold.

It can be summarised like this. Take any stock. If something happens that makes it more desirable it increases in price. But usually it doesn’t simply move up smoothly to the new price level that it should now occupy. It “overshoots” and goes above what you might term the correct market price.

At some stage traders realise that it’s gone up too much, so it comes down, but, again, not to the correct level. It overshoots again and is now undervalued once more. So it starts to move up again. This up-and-down movement continues until either it stabilises at the new price level or something else happens to affect the market price and it overshoots up or down yet again.

It’s these “overshoots” that swing traders watch out for. When a stock is moving up fast towards the resistance level, or moving down fast towards support, it’s most likely (though not always) going to break through, temporarily, and then it’s only a matter of time before it comes back towards its proper level and then overshoots that as well. Those are the price movements that successful swing traders profit from.

So how do you identify stocks that are about to perform like this? By leaving your charts for a while and paying attention to what is happening in the real world. You can’t do this for every single stock, or even for every single sector, unless you have massive resources at your disposal. As an individual trader you have to specialise to a degree.

Choose your segment of the market so as to ensure a fair degree of volatility (though not too much). Get to know what is going on in that sector, what the seasonal patterns are, what the problems and challenges are. Keep abreast of the news relating to stocks in that sector. This is pure fundamental analysis, of course, and many technical analysts (and swing traders are often technical analysts) would frown on it.

Nevertheless, I believe using the two stock market trading systems together is a far better way to swing trade. Use your knowledge of your particular market sector to gauge which stocks are likely to be at or near an overbought or oversold position in the near future, and only then study your charts to identify the right times to enter and close your trades. This “fine tuning” of your swing trading system should increase your profit taking considerably.

We made 70 per cent on gold in less than a week. You can join us in trades like this at http://www.onlinefinancialtrading.com

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The Secrets of Forex Swing Trading

Forex swing trading has been garnering a lot of attention from the forex community as of late, and it seems like every new trader wants to learn about the secrets to forex swing trading. The truth about swing trading is that it is more of an overall philosophy rather than a specific technique, and if you want to learn how to implement a successfully forex swing trading strategy then you are going to have to learn about the fundamental principles first before you go ahead and get into the specifics.

There aren’t any forex trading secrets that are only kept within the confines of the select few traders that have success with forex, and most of these so-called secrets can be acquired by the beginner or intermediate trader. If you want to learn about the secrets of swing trading you simply need to be grounded in the fundamental principles, and then begin to study some real-world examples.

The real world examples can come as a result of either studying other people’s strategies or by experimenting on your own. The best way to go about this in my opinion involves utilizing both methods when you want to begin to learn how to trade with swing, and by doing so you will learn at a much faster rate with less guessing on your part. Trading with swing involves the observance of the major movements within a particular market to ultimately get a feel for whether the overall condition is bullish or bearish, and once you get a firm grasp on this fundamental principle you should then be able to develop a specific strategy that can work for you.

The traders who successfully implement a proper forex swing trading technique will then often take positions in an attempt to take advantage of future movements within a particular market. There are countless ways you can go about putting into action a swing strategy, and the specifics that are left up to you will be the determining factor of your level of success with swing. Forex swing trading is more about practicality than concepts, so if you want to learn the real secrets to swing your are going to have to dive in and get your feet wet.

Claude Ellesemere is an online author who writes about such topics as Forex Trading Secrets and Forex Swing Trading.

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