Forex Trading Tools

Forex Trading Tools

There is no one single super smart Forex trading tool which gives you profit, profit and more

profit. The only possible solution is to use a combination of different tools to identify the favorable

market forces to get a maximum number of high probability trades over a period of time.

Trendlines are the most popular and reliable Forex trading tool which many successful traders

give their testimonial for.

The Three Trend line Strategy

Trend Lines are an important tool for trend identification and confirmation in technical analysis. It

is a straight line that connects two or more price points and then extends into the future to guide

you.

There will be lines drawn across significant lows in an uptrend, and significant highs in a

downtrend. To roughly classify trend lines, we can divide them into three as short term trendlines,

medium term trendlines and long term trendlines.

1. Short Term Trendlines

Draw these lines across the most recent two lows for an uptrend or across most recent

two highs for a downtrend. Best observations are found on a smaller time frame such as

a 15 minute or 30 minute chart.

2. Medium Term Trendlines

These are best observed on a higher time frame like a 60 minute chart. It either connects

the nearest significant low to current price action to the previous significant low in an

uptrend or the nearest significant high to current price action to the previous significant

high in a downtrend.

3. Long Term Trendlines

It uses higher time frames such as the 4 hour chart or the daily chart to draw long term

trendlines using the same method of Medium Term Trendlines. The long term trend line

is considered as an effective Forex trading tool. The daily chart is used mostly by traders

of big institutions who do not usually engage in small moves on an intra day level.

By drawing a trend line on a daily chart you can graphically analyze where price is and where it is likely to bounce. But employ trendlines as a Forex trading tool with caution and discretion.

Covering your charts with every trend line possible will result in confusion and blurry analysis.

It is not a good idea to rely completely on a short time trend line. They merely give you a defined picture of current price action. These are broken often during the course of a day. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.

If you notice price coming back to test a trend line on the higher time frames, look at other factors.

Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw

Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your

chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.

Forex Trading Strategy -Channel Breakout

Forex system happens to be the greatest global trade. It taps into some movements for

businessmen to gain well. One accepted Forex business agenda utilized rather gainfully in the

business is called Channel Breakout.

Forex Trading Channels – Channels consist of paths made on a schedule to trace the array

where exchange had been transacted in a time span. They can be simply constructed. Observe

the schedule in a time span and draw lines linking the comparatively tall spot business expenses,

and down under linking a comparative low spot business expenses. This will give you a picture of

the business array existent during a time span like, six months.

Channel Breakout – Once the value of exchange goes up the peak network line, there is a rising

network getaway. Also, once the value goes down below the lowest network spot, you get a

downward network getaway. Network getaways happen upwards and downwards. With enough

Forex input with scientific scrutiny, everyone may utilize the process for getting a gainful

exchange business agenda.

You have to build the channels very carefully. Every meeting of lines doesn’t indicate a proper

getaway. If there is any fallacy in the line construction, what you observe is business out of the

array, which just leads you back inside. Therefore, before anything else, gain enough knowledge

on Forex.

Gainful Control of Forex channels – When you figure out the working of networks, gains will

happen. Construct the business with enough pauses. Then, in case of an incorrect getaway sign,

you will get tolerable losses or if luck favors you, a very low profit.

But if you are on the correct side of a proper network getaway, the tiny lack you received will be

moved away and you get a good big satisfactory gain.

Any proper Forex business shareholder worth his name capitalizes on channel breakouts. In case

you want to cash in the exchange markets, take out a certain amount of time for a Forex

education to build this agenda and various technological scrutiny processes.

That will build up the exchange agendas, which would yield gainful consequences. If you don’t

give some time to completely figure out the stakes and yields contained in a Forex business

agenda, you may not get the desirable consequences. So you see, your gain just depends on

you.

How to Win with Forex

How to Win with Forex

When 95% of traders lose money, what makes you think you can win? To see your chances

of succeeding as a forex trader, here is a checklist for you to see and become one of the elite

traders, who make tremendous long term profits.

Following are a few ways to lose money. You may wish to change your mind immediately if

you are thinking of trying any of them. Do this to avoid losses and continue your forex

education!

1. Following a Forex Robot with Simulated Gains - You can apparently achieve success

without any effort as promised by these. You are asked to accept their track records

simulated going backwards. Your equity will get destroyed by trying them.

2. Day trading and Scalping - Due to the random short term volatility, simply doesn't work.

Like the robots, even people selling these always have simulated track records.

Many more of these all fall into the category of trying to find someone else to give you

success. This does not work in forex markets.

Apart from needing a trading edge, you also have to understand ways and reasons of it

leading you to success. Let’s look at this in detail.

Success Comes From Within

The combination of a simple robust helping you to understand and trade with discipline is what

forex trading is about.

You need to know what you are doing to trade with discipline. This translates into having

confidence, which you definitely don't get from someone telling you what to do. You get

confidence by from your own knowledge and learning.

Discipline & Losses

As you have to keep executing trading signals through losing periods, discipline is hard. This has

to be continued till you hit a home run, even when the market is fooling you and taking your

money.

A Trading Edge

What separates out your forex trading system from the 95% losers is your trading edge. You can

answer what is your trading edge and how will it help you beat the majority. You don’t have one if

you don't know what it is.

Few succeed in the simple looking forex trading. These elements are present in the winners’

forex trading strategy:

Using simple robust forex trading system

- Having solid grounding in the basics of forex trading

- Knowing exactly why their system will lead them to success

- Having confidence and discipline to stick with their plan

- Knowing only they are responsible for their Forex trading success

You have to stand alone, be confident of your actions and be disciplined to follow your plan in

forex trading.

Success is in YOUR Hands

Sounds simple, however it is actually depends on your approach to forex trading - with the right

mindset and getting right education. The trader beats himself, rather than the market beating the

trader in forex trading.

Learn the basic fundamentals, get a suitable system, become confident, get an edge and be

disciplined. Do all of these to enjoy currency trading success.

Dangers of Getting EmotionalAbout Forex Trade

Getting emotional in the stock market is the worst thing that can happen to investors. The same

goes for Forex traders as well. Seeing paper losses in everyday trade is pretty common.

Once to take a decision to buy something and make losses, you still hold on even if situations

turn from bad to worse, only because you feel that things might turn back in your favor once

again. The main problem here is that, the decision to stick to a losing trade for a long time is an

emotional one, since you are in no mood to accept a loss and get out of the trade.

Forex market is largely influenced by the general market and you must always trade on what the

indications based on the market are, and not just initiate one since your heart tells you to. At

times, you might be so emotionally attached to a given currency in the Forex market, that most of

your exposure to the Forex market would be in that particular currency.

Nothing wrong with it, as if you have reasonable grounds to believe that the currency will do well,

then you will actually profit from the exchange. The ‘wrong’ thing is opening up a trade in a

currency just because your heart tells you to.

In the case, if you strongly feel about any given currency, then it’s better to check the reality by

having the look at what the market is indicating. That will give you a clear picture of whether or

not you should trade in that currency.

The basic thing that is needed to be remembered is that once you have initiated a trade, and are

incurring paper losses, and by all indications, things are likely to get even worse for you, then it is

much better to book losses and come out of it rather than sticking to it till a time you ultimately are

able to see some gains from it. Remember, the markets have little room for emotions.

Forex trading is not a win-win situation. Be prepared to lose on some trades as well. That’s the

precise manner in which the market works. It is not really a question of whether you are right or

not, the fact remains that markets move in an unexpected way and they have a knick of surprising

people when they least expect it. All the fundamentals and even experience may be thrown into

the air when the markets decide to do something.

So just follow the indications that the market gives you. If you feel that after initiating a trade,

things are not going the way you had foreseen, book your losses and get out of it. You can invest

the amount in some other trade and make good gains rather than sticking to your losing trade.

What is Forex Trading?

What is Forex Trading?

Forex trading involves dealing in international currencies. Here, one can sell currency of one
country to buy that of another. The trader deals in Foreign Exchange [Forex] at the most
appropriate time to profit from the transaction. Good ability to forecast plays a vital role here. One
may wonder how Forex trading can be such a lucrative earning opportunity since fluctuations in
exchange is so little.
But remember, when done in big volumes, a minor change can mean a lot. There are many non-monetary advantages to it as well. Anyone who wants to deal in Forex can do so, since only the
basic knowledge is required for it.
Forex can help you earn a lot of money. But there are certain conditions to follow before trading in
Forex. Firstly, one must have a thorough knowledge about the trends in the stock market, the
basics of trading and risk-taking ability. You will get all the help you need for attaining these
conditions very easily.
There are many sites on the internet which can help you clarify your basics and help you brave
rough weather. A good reason why Forex trading can be considered is the fact that there are
frequent fluctuations in currencies, though in percentage terms it may be small.
You gain if the fluctuation favors you and the reverse holds true as well. No one can accurately
predict the trend of the currencies. Liquidity is another reason why Forex trading is so popular.
Now the most important part – in Forex, you can make huge sums of money even if your initial
investment is on a lower side. You can invest as little as $50,000. Rich people have no upper cap
to the amount of investment. So remember that even with a nominal investment, the earning
ability is undoubtedly very huge.
Most of the great businesses are connected to the world of internet today, and Forex trading is no
exception. You can deal in foreign currencies right from your home. In fact, it is fully conducted
online. You have the liberty to choose when you want to trade, and you don’t need to meet any
deadlines.
Basically, you can be your own boss. The process of online trading is fairly simple for anyone to
understand. You just need to open an account for Forex trading with a recognized broker and
they will complete the rest of the formalities. The only bit you need to do is get ready with your
investment amount.
So, it is thus clear that Forex trading can be one of the best businesses to earn money. Though
there is a level of risk attached to it, but it can be avoided with due care and an alert mind!
Importance of Forex trading
Foreign Exchange [Currency Trading] involves exchanging of different foreign currencies for a profit. The reason for buying the currency of another country may be the need to buy some commodity of the said country as well, besides making money through the difference in exchange rates.
In the latter case, people buy currency of a foreign country when the rate in the market is low, and
sell it off when the rates go up. Currency trading is usually done between the central banks, the
government, speculators and MNCs. Nations cannot trade with each other without the presence
of a foreign market.
A huge amount of money is daily traded in the Forex market, though the amount invested by an
individual trader may be very low. No one individually can have any influence on the Forex
fluctuations, not even the government. So it can easily be concluded that the level of the currency
reflects the strength or the weakness of the economy of a country. So this makes the Forex
market a good place for competition.
The government and the central bank do try to stabilize the currency of their country by
speculating, by buying and selling currencies at appropriate times. So they can influence the
market if they conduct a trade in huge volumes, though. To buy its own currency, however, the
government or the central bank must have huge reserves of foreign currency with them. So it is
virtually impossible to inflate the currency value artificially.
Banks trade a lot in foreign currencies and this forms a chunk of the volume in the Forex market.
They buy currencies not only as individual bodies, but also on behalf of their clients. They trade in
lots of futures. Till a few years back, the brokers could influence the volumes of trading in the
Forex market. But due to the electronic services available now, the services of brokers is not
required. It’s easy to operate electronically.
Trading with international countries is possible only with the existence of Forex markets. When
there is no Forex market, there is no common currency between two countries, so one cannot
evaluate the value of one currency with respect to the other.
The buyer pays the seller in the former’s currency. With the money so received, the seller buys
goods in the buyer’s country and sells those goods in his [seller] country.
Only then he is able to know how much he has earned through the export. In the presence of a
Forex market, though, it is very easy for a seller to know of his earnings at the very instant that he
conducts an export trade. In the same manner, the buyer too will have a thorough knowledge of
the cost he will have to incur to buy goods from an international country.