StephanFX - Forex Trading

Friday, September 01, 2006

FOREX trading psychology: The mix between the trading plan and your emotions

by Bogdan Vasile
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Details about Forex trading psychology training here.

The vast majority of FOREX education organizations fail to address the only true characteristic of a market place, the human nature.

You can easily find loads of charts, pivot points, moving averages, trend lines and all sorts of Fibonacci ratios, together with the latest in trading automation. Any FOREX website publishes some or all of these data, along with myriads of other details, interviews and opinions.

You may even get entry and exit signals, support and resistance levels, all of which could appear as sufficient in the decision making process.

I was under the same impression as a beginner, I was at the same level as an intermediate trader and only heavy losses and low risk/reward decisions made me look for a different approach to trading.

If you are aware of the importance of having a trading plan for each trade you plan to initiate, then you must be familiar with moments of doubt, when following the opening of the trade, the market goes awry, together with your emotions and self-esteem.

Do you feel frustrated? Join the vast club of frustrated professional FOREX traders.
When you see the market moving against all odds and logic, your emotional self cries for an immediate position reversal (SHORT from LONG and vice-versa), in a complete disregard of your own trading plan.

On the other hand, all your training books, videos and mentors have pumped the “trading plan supremacy” into your brain.

While the viable solution seems to reside in the robotic way of trading the plan, a professional operator must learn to listen to his or her “hidden partner”, the subconscious.

Our brain is capable of storing immense quantities of data, without us being aware of it. Our five senses perceptions are in constant use and they permanently add to our overall life experience. While our subconscious is capable of dealing with all this seamlessly, the conscious mind has only a very limited operational capacity, primarily used to help us dealing with our daily tasks.

As we trade, ALL our experiences are deposited deep within our brain, slowly building up what I call the unseen analyst. This is what you may call the sixth sense or the instinct traders develop as they progress.

As the name of the game with FOREX trading is VOLATILITY and 80% of all trades do not last more than 2-3 days, with the vast majority of them being daytrades, it is easy to accept that conditions can and will change in a heartbeat, rendering most trade plans obsolete.

The only way to alleviate the contradictions between your emotional self and the heavily trained brain is to learn how to give them priority over time.

As a beginner, you simply cannot have the emotional experience to “feel” anything related to the market processes and therefore it is advisable to rely completely on the mechanisms of a trading plan.

At this stage, take your time to learn how to interpret the charts, prepare yourself according to the daily economic calendar and how to construct a comprehensive trading plan. Once you took a trading decision, stick with it, no matter what. At this stage, you are a robot, implementing a trading strategy.

Your emotional weight should be nonexistent in the economy of the trade.

As you progress along the path of becoming a professional FOREX operator, your unseen analyst will start adjusting your trading decisions, silently participating in your trading decision process.
It is now the time to make room to your “feel”, to accommodate your growing sentiment of “feeling the market”.

Your emotional weight should now become an accepted presence.
You will soon learn how to adjust this “mix” in a way to achieve the optimal trading performance.

Bogdan VASILE
www.forex-arena.com headoffice@forex-arena.com
Keywords: forex,trading,education,psychology

About the Author
Bogdan Vasile, headoffice@forex-arena.comMore Details about Forex trading psychology training here. Mr. VASILE is the founder and President of VORTEX Capital Management, a seasoned FOREX trader, member of the Securities & Investment Institute in London and author of the revolutionary SyncronDec™ training program used in his professional FOREX course. He has a Professional Certification in Financial Regulation with the Securities & Investment Institute in London, United Kingdom as well as extensive knowledge and experience in the field of Investment Management.

Thursday, August 31, 2006

A Look at Online Forex Brokers

An online forex broker is a firm that facilitates retail trading using Internet technologies.

Global Forex Trading (GFT), one of the popular online forex brokers.
It provides retail traders with a free demo trading account, allows users to open a live account, gives live help, provides software called DealBook FX 2, and allows viewing of account documents. (DealBook FX 2 can be downloaded for the demo trading account).

Gain Capital Group’s Online Forex offers 200:1 leverage. In some cases, the total return on investment is higher due to leverage. For example, with $1000 cash in a margin account, the investor can control up to $200,000 in notional value. Of course, trading on leverage magnifies both the investor’s profits and losses.

GCI Financial Ltd. offers commission-free online trading in forex. GCI offers Internet trading software, fast and efficient execution, and 0.5% margin requirements. This broker offers USD or Euro denominated trading accounts. The spreads are 3 pips in EUR/USD and USD/JPY, and are 4 to 5 pips for other major commissions. Clients can hedge by opening positions in the same currency in opposite directions. Risk to the investor is limited to the deposited funds. Market analysis and research, real-time charts, and forex trading signals are available at no charge.

ACM, part of the REFCO group, offers 3 pip spreads on all major currencies, which works out to between 0.02% and 0.03% on the dollar value. They also offer commission-free trading, and forex trading with a 1% margin, which means that a trader can control $1,000,000 with $10,000 in his account.

There are many online forex brokers that offer free demo accounts for potential forex traders to practice trading. It is only a matter of registering and starting demo trading to get a feel for forex trading. In addition, at most sites, traders can find free forex news to assist them with their trade strategies.

ABOUT THE AUTHOR
Forex Brokers provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. For more information go to
Forex Brokers and/or visit its sister site at Incorporating in Florida Web for related information.

Wednesday, August 30, 2006

Forex In One, Two, Three And Four Easy Steps

Number 1. CONCEPT.
Forex traders should know by now that the forex trading market is about trying to make big out of something small. This is in terms of earning big profits through smaller risks. Nobody is forex can control how this giant market is moving. Besides they would not start to understand it in the first place because the forex market is really really complicated and ever-changing.People remain in the forex trading industry because they thought that the probability of making profit is bigger than the probability of getting losses. This thinking would have proven effective if the trader is aware that they need to execute stop lost in this concept. Really understanding this point in the course of the transaction and relying on the forex traders’ own initiative rules and discipline will surely prevent losses from happening.
Number 2. STOP LOSS AND TAKE PROFIT POINT.
Many of the forex traders not using these two factors effectively and efficiently does not really make any money in forex trading. the traders usually buy a currency they think will rise, but eventually fell. In the anticipation that it will begin rising soon, the forex trader do not use stop loss. The loss then becomes larger and larger and the trader still waiting and hoping.The common result when the foreign currency starts rising is there are more losses acquired to make up for the profits. Another result would be getting the currency out of the market so fast that the best opportunities are missed in the process. Forex traders often makes these mistakes over and over again especially if they do not consider these two important points.
Number 3. MARGIN ALLOCATION AND PROPORTIONAL DISTRIBUTION LAW.
Combined forex orders are allowed only at a specific margin. But it cannot be used all in one shot. So if forex traders buy up but the trend fall out of the expectation, the trader will find himself in a passive condition.It is still best to stop loss after buying a position once there is a sudden shift in the forex market. For markets with consistent movement, there will be more profits to utilize to supplement the margin. The profit has a tendency to continue to rise too.
Number 4. CHOOSING THE PROPER TIME TO BEST EXECUTE THE ORDER.
Fundamental analysis of the forex market is the key. Even technical analysts prefer this method. Forex traders must use fundamental analysis to determine when is the best time to enter the forex market and trading.Forex traders must also use their own preferred forex views and charts to be able to execute an order. It is important to note that every forex trader has to formulate their own regulations and source of information that they can check upon whenever the need for it arise. It is also important to note that these things may affect how the trade will result to.Another way is to try and analyze the market by looking at the movement of the forex currency. Analyze the rising and falling of the currency and see, even guess the probability of things that might happen next. When there are forecasts of good things to come, the forex trader should grab that opportunity to choose the right currency to invest on.These are the four forex strategy that is used by many traders nowadays. These four important points have been proven to bring in more positive results in forex trading. There have already been lots of other advices that are also effective but these are the newly developed ones that can cater to the changes that the forex market is going through.It is important to note that these forex points and strategies should not be the only ones a forex trader can use in their trade. there are still many of the old and the new ones that forex trades can use in their trading. All in all, the final decision would still depend upon the say of the trader.There is also these other factors called luck and fortune. Sometimes they do tend to play some joke in the forex trading community and can bring down even the best of the best traders to their knees.

Author Info:
Kevin Anderson: Kevin Anderson is the owner and operator of
http://www.forextradingcenter.info a site developed to give users the most updated information on how to trade Forex properly to make a profit.

Tuesday, August 29, 2006

Avoiding Forex-Related Frauds & Scams

by: Marquez Comelab


A lot of people have been ‘burnt' from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt whether they would have gone through all that trouble building a trading platform just to steal your money. Beware.


The first thing I look for is the geographical location of the broker. If I find that they are based in a country where the financial industry is, in my opinion, relatively unregulated and under-developed, I quickly forgo signing up. This is terrible news for honest brokers in those countries, but your job as a trader is to protect your capital. If you loose that, then you cannot trade. The onus is on them to convince you that they will do the right thing by you as an investor.


I started out with an Australian broker. Currently I am using an American one. I have not tried UK-based brokers but the British financial industry is one of the best. Companies that are based in countries such as Japan , Germany and France are probably just as good too, if their website speaks your language.


Notice any license numbers that they may have registered with regulatory bodies that act like government watchdogs who oversee the finance and investments industries. These are organisations that impose strict rules to safeguard your investment. Some of these rules may include the requirement that brokers segregate all customer funds from the operational funds of the business. Your money is required to be put in highly-reputable banks and the funds are only withdrawn from these accounts upon specific withdrawal requests.


Take note that there are some fake regulatory bodies being thrown around in cyber-space as well. Take a look at how long they have been operating for. Try and search out any reviews or comments made about them. See if you can find forums where traders have discussions about their brokers.


Below is a list of things to keep in mind to help you avoid being a victim of a scam:
• Stay Away From Opportunities That Sound Too Good To Be True
There are people who may have just acquired a large amount of money just and recently are the same and are shopping around for safe investment vehicles. These may include retirees who have access to their retirement funds. It is understandable why retirees would be drawn to ‘high-return, low-risk investments'. This is also what makes them very vulnerable. If you identify yourself to be one of these people, be careful. A lot of deceitful characters are after your money. Furthermore, only allocate a tiny amount of your money to trading until you can start growing it. Not all people can trade successfully, so it is a venture you should take on haphazardly. It is your life savings at risk.


• Avoid Individuals Or Organizations Who Claim To Predict Or Guarantee Large Profits
Any form of trading is hard. Trading currencies is no different. Be wary of statements that make it sound easy. Statements like:
• “Whether the market moves up or down, in the currency market you will make a profit”;
• “Make $1000 per week, every week”;
• “We are out-performing 90% of domestic investments”;
• “You'll make returns of 70% a year”;
• “Here is a no-risk strategy”.


If they could make such returns, why would they even bother letting you know about it.
• Be Wary Of Companies Who Downplay Investment Risks
Hold your wallet tight and zip up your purse when companies say that written risk disclosure agreements are routine formalities imposed by the government. Watch out for statements like:
• “With a $10,000 deposit, the maximum you can lose is $200 to $250 per day”;
• “ We promise to recover any losses you have ”.
• Be Wary Of Companies That Claim To Trade In The ‘Interbank Market'
Do not believe it when some people say that they have access to the ‘Interbank market' or that they can give you access to trade in that market because that's where bargain prices can be obtained. This is not true. The ‘interbank market' is not a place, it is not a physical building. It is simply a loose network of currency transactions that are negotiated between big financial institutions and other large companies.


• Ethnic Minorities Are Often Targeted
Ethnic newspapers and television ‘infomercials' are sometimes used to attract Russian, Chinese and Indian minorities. Sometimes these ads offer so-called ‘job opportunities for account executives to trade foreign currencies', whereby the recruited ‘account executive' is expected to use his own money to trade currencies and would often times be encouraged to recruit members like their friends and family to do the same.


• Seek Out The Company's Background
Check any information you receive to be sure that the company is who they claim to be. If at all possible, try and get the background of the people operating the company. Do not rely solely on oral statements and promises made by the company's employees.


• If You Are In Doubt, It Is Not Worth Risking Your Money
If after trying to solicit information and at the end of it all, you are still in doubt about the credentials of a particular company, my suggestion is to start looking elsewhere.
You may find further information by contacting government ‘watchdogs' because they keep up to date with trends and reports regarding scams and other fraudulent activities. Please check the resource section of this site for the information of organizations that regulate the securities industry, sorted by country. There is also a list of brokers that you may want to look at.


Marquez Comelab, © 2006.
This is an excerpt, modified from the book: The Part-Time Currency Trader.

About The Author
Marquez Comelab is a private forex trader and is the author of the book: The Part-Time Currency Trader – A Trading Guide For Working Men And Women, which can be purchased from www.marquezcomelab.com. He is also a major contributor of articles at TheFreedomToChoose.Com, where other articles on trading can be found.