Forex Trading Online

When to Trade Forex

webword — Sat, 16 Aug 2008 18:01:18 +0000

The foreign exchange market operates 24 hours a day and is the most liquid market in the world, enabling you to enter and exit your positions nearly at will.

However, the Forex market is also very risky to trade. There are times during the day and night that offer you some very good movement and consequently higher risk.

Studying the various currency pairing and how they trade during various times of the day will help determine which pairing (or pairings) you should concentrate on and at which times offer you more opportunities based on your trading style.

It is advisable at first to concentrate on just one pairing. Trying to watch two, three or more pairings can lead you into making bad decisions.

So, to begin, focus on one of the big six (major) pairings, which are: the Euro Dollar vs. the US Dollar (EUR/USD), the British Pound vs. the US Dollar (GBP/USD), the Australian Dollar vs. the US Dollar (AUD/USD), the US Dollar vs. the Japanese Yen (USD/JPY), the US Dollar vs. the Swiss Franc (USD/CHF), and the US Dollar vs. the Canadian Dollar (USD/CAD).

Yes, there are opportunities at all times of the day and night to make Forex trades with these pairings. However, the best opportunities you will find are when you have two major markets open at the same time.

Here are the major market times you should be aware of:

* New York – 8am to 4pm EST
* London – 2am to 12nn EST
* Great Britain – 3am to 11am EST
* Tokyo – 8pm to 4am EST
* Australia – 7pm to 3am EST

You will notice that there are plenty of times to trade (24 hours a day!) But if you look at that list, you will see that from 8am EST to 12pm EST you have two of the largest financial markets open at the same time: New York and London! These are your golden hours to trade.

You will also notice that, if you are a night owl, you also have some prime hours from about 2am EST to 4am EST, with London and Tokyo both open.

The best way to see which times will work for you is to first open a demo account with a Forex broker. All reputable Forex brokers will have a free demo account available for you to use. Once you have the account set up, log into the demo account during various times of the day. Watch how the market reacts among the various currency pairings.

Given enough screen time, you will start to learn the various nuances of each currency pair and what times of the day will fit with your schedule and your trading strategy.

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And when you are ready to trade a live account with real money on the line, you will be much better prepared to make that first trade in this great market.

Forex Market Trading Plan

webword — Sat, 16 Aug 2008 17:47:36 +0000

Do you know how to trade forex? If not, let’s begin with these questions…

When is the last time you took a trip out of state to a place you have never been before? Did you get into your vehicle and just start driving, hoping that you will just somehow find your destination? OK, yes, perhaps it would be fun to discover new territory without a road map, but most times you will find it hard and very frustrating to get where you want to go.

That is why you make plans, and that is why you need to create a Forex trading plan. It is, in fact, way more important than a simple road trip!

Trading plans are meant to make you create a Forex trading roadmap on where you are currently, where you want to go, and the rules you will need in order to help you get there.

Creating a trading plan involves writing down your goals and objectives in your trading venture. You will want to keep it as simple as possible, but with enough detail and with strict rules so that when you start to question your trading, you can look back at your plan and get back on track. Having a trading plan is a key to consistency, which is the cornerstone of your trading life.

Having a Forex trading plan also allows for continuing growth and expansion of your trading career. If you stick with your plan, you should be able to gradually and continually increase your trading account, giving you the ability to trade larger lots, and hopefully make a good living from doing so.

There is an adage in the trading community that you will hear and see quite often:

Plan Your Trade and Trade Your Plan

You will find that this is very easy to say, but can be very difficult to do. However, it is essential that you follow the advice. All it means is that you create your trading guidelines (setups to watch for, entry rules and exits, and what you are allowed to risk on each trade) and then follow through with what you have written.

Here are some key things that make up a trading plan:

Your System: Are you a day trader or a swing trader? What charts do you watch? What indicators do you watch? What are your entries and exits? What is the most you are willing to risk per trade?

Your Goals: What dollar amount do you want to try and achieve the first month, second month, etc.? What is your yearly income goal? What dollar amount is your ìdrop deadî figure (meaning at what point or loss of capital do you stop trading for good)? What do you want to get out of trading?

Your Weaknesses: Do you tend to overtrade? Do you stick with your money management rules? Do you overreact with anger?

You can find sample trading plans on the internet and please use them to create your own, custom trading plan.

Create it, stick to it, read it, re-read it, and revise it as needed. Doing so will give you an advantage over many other traders that simple will not take the time to create one!

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Forex Money Management Basics

webword — Sat, 16 Aug 2008 17:14:21 +0000

You know the old saying: “Never place all of your eggs in one basket.” This is very true of the Forex market (or any financial market for that matter.)

It is widely held that one should NEVER risk more than 5% (or less) on any one trade. This is the basis behind money (or risk) management.

It helps keep you from getting emotionally attached to the trade. It is VERY easy to get angry at the market for a trade that went bad — you will want to “get even.” Everyone has experienced this. BUT if you stick to the 5% or less rule, it will help contain that urge to invest more money into a losing trade.

Oh, and YOU WILL LOSE MONEY TRADING — PERIOD!

There is not one person on this planet that always makes good trades. It is simply not possible…well, ok: itís simple not probable. If a person were to be a perfect trader, we would have no markets. They would dominate everything.

If you read any trading book, magazine or website (and you should), if they are intelligent at all, they will all tell you the same thing. You will lose money trading. The key is to limit your risk as best as you can and to stick to your money management plan.

Most traders lose money because of a lack of a trading plan and not having strict money management guidelines.

It is important that you understand the risks involved in Forex trading. You need not to over invest or be overconfident at the thrill of opportunity of making huge money.

Create a money management plan by simply writing down your goal and objectives. You know what amount of money you are going to start your account with, so take that number and do the calculations to see how much money you can risk with each trade…remember: no more than 5%, less if possible.

Write it down and keep it in front of you at all times. Remind yourself of your limits.

Trading the Forex market is a skill that takes quite a bit of time to learn. And while you may have some good success at first, keep yourself grounded. It will become very tempting, especially after having quite a few winning trades in a row, to become overconfident and start risking more than your allotted 5% limit. You are setting yourself up for disaster if you fall into this false sense of “I CAN’T LOSE” mentality.

Take your time, study the nuances of the market, and set up a strict money management plan. This will help you stay in this game longer than the average trader!

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