FOREX TRADING SYSTEM REVIEW AND NEWS

FOREX Education — Thinking Of Buying FOREX Advice? Read This First

There is a huge amount of FOREX Education you can buy but before you buy it read this, as in excess of 90% of it will ensure you lose.

So you ensure you get the right FOREX Education follow the guidelines below.

1. Never buy a day trading system!

Most novice traders are enticed by the theory of making money everyday, with low risk and high rewards, but this is not the reality of day trading.

The reality of day trading is:

A quick wipe out of equity — why?

Quite simply, all short term moves are random and using support and resistance as day traders do is destined to failure.

If you don't believe me try this simple test when buying any FOREX Education from a vendor:

Ask for the real time track record of profits and you won't get one from a day trader.

At best you will get a hypothetical track record, but that's done in hindsight, knowing the closing prices and if we know the closing prices its not hard to make money.

If you want to make money don't day trade!

2. Real time profits

A real time track record is an essential requirement on ANY FOREX education you buy, not just day trading systems.

The fact however is, most FOREX education is sold by failed brokers, or people who have never traded in their lives.

If these people have not had the confidence to trade their own money on their own system why should you?

3. Understand the FOREX Education

Even if you are lucky enough to find a system that does have a track record of real FX Profits you need to be mindful of the following:

You need to fully understand the method and not follow it blindly.

If you don't understand why a method works you won't have confidence to follow it through inevitable periods of losses.

Not only must you understand it to follow it with discipline, you must also check it fits your trading personality.

Some traders can take big drawdowns or losses, other traders find them hard to take, so pick a system with a risk to reward you can handle emotionally.

4. The best FOREX education

There is a huge amount of FOREX education and FOREX advice free on the web, so use it.

In other articles we have shown how to build a system that makes profits from free info and it's a lot easier to learn FOREX Trading this way than many people think.

You can also get some great FOREX education at nominal cost from your local bookstore this FOREX advice is from:

Traders who don't just talk the talk — they have walked the walk and made money.

Great books to look at are Jack Schwager's excellent Market Wizards and New Market Wizards — which interview some of the best traders of all time.

Trader Vic — Victor Sperandeo a great all round book and there are many more.

Rather than buying a e-book from someone without a track record, get your FOREX Education free on the net and get some classics from legendary traders.

Most of the courses and systems on the web are over priced, don't work and you can frankly, do better on your own with the above advice.

Secrets To Potentially Making Money In The Forex Markets

How would you like to be able to potentially make money trading currencies in the Forex markets? Better yet, how would you like to be able to potentially do this within strict risk control parameters? Even better yet, how would you like to potentially do it with a minimum of effort on your part? I'm talking about only10 minutes a week. Well, I am here to tell you a few key principles or secrets to potentially make it happen.

Secret #1

The Forex markets are heavily advertised as being a great way to make money, which is very misleading. The unwary would-be Forex trader is led to believe all she has to do is open a Forex account to gain access to one of the many excellent Forex trading platforms, begin trading and then become rich in no time. So what's the secret? The Forex market is a highly liquid, potentially profitable market to trade, sure enough, but only if you have a winning edge methodology that you can apply to these markets. Without such a methodology, the hapless trader will quickly lose money trading the Forex as they would any market.

Secret #2

The Forex markets are heavily advertised as commission-free. True, but unlike the futures market, entering and exiting positions in the Forex markets is done by buying at the high end of a rather wide bid/ask spread and selling at the low end. So the difference in the spread is your cost of doing business. This cost may be acceptable for swing and long term traders, but may not be acceptable for day traders. So if your goal is to make money, you may not wan to day trade the Forex markets.

Secret #3

While swing trading could be potentially profitable trading the Forex markets, there is potentially greater opportunity trading the long term trends. Currencies have always moved in long sweeping mega-trends that potentially offer low risk entry points and the potential opportunity to ride a long money making trend (sometimes for several months). The following wisdom from legendary stock trader Jesse Livermore is equally applicable to the Forex markets:

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying and selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine — that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."

Secret #4

Potentially the best way to trade for the longer term is to trade off of the weekly charts, thus avoiding the day-to-day volatility that wreak havoc on one's account or at a minimum shake you out of your position prematurely and potentially missing a big money move altogether. By definition, then, a potential winning edge methodology based on a weekly chart only requires analysis once a week after the futures markets close for the week each Friday. You then simply update your chart, determine the following week's entry, trailing stop loss and profit target orders, which should be placed before the futures market opens on Monday. A clarification is in order here, even though we are trading the Forex market, we can use the weekly futures markets charts for determining exit and entry orders that can then be executed in the Forex market. And these same signals, by the way, are equally executable in the futures markets. It becomes a matter of which market platform you prefer to trade the currencies.

It should be clear from this discussion that there is no magic to trading the Forex or currency futures markets. The magic is in the potential winning edge methodology that you apply to these markets that makes the money.

Two Timeless Rules in FOREX Investing

RULE #1) ~ Cut your losers; let your winners ride.

One important thing that every new trader must know before entering this highly profitable business is that life is not perfect, even in Forex land, and you should always know one fact: YOU WILL HAVE LOSING TRADES.

Every Forex trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW(based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).

All traders have to face it — you can't turn a donkey into a ferrari. You can't change the strips of a zebra and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies you can learn in my website will be your best indicator for just what a "right" trade really is).

Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.

RULE #2) ~ Thou Shall Not Trade the Forex Without Placing a Stop Loss Order.

When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.

Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.

Show me a Forex trader who doesn't use stop loss orders and I'll show you someone who loses a lot of money.

How The Matrix Will Boost Your Forex Profits?

Perhaps you remember one of the most impactful movies of our time, the Matrix? Morpheus believed totally in Neo to the point where he almost sacrificed his life to save him. Yet Neo did not believe in himself at the beginning, he was most uncertain about whether he was the One or not. So when he went to see the Oracle, she told him that being the One is like being in love, nobody tells you that you are in love, you just know it. The Oracle pointed to a sign hanging on the door: "Know Thyself"...

Still Neo didn't believe in himself but when agent Smith captured Morpheus and a member of his crew suggested to pull the plug so the agents of the Matrix won't get access to Zion, something in Neo changed and he began to believe...

A little further down the path of the One, Neo "accomplished miracles" because he learned how to believe in himself fully and completely. And remember Neo had a mentor who believed in him beyond any doubt and who taught him how to use his mind to defeat the Matrix and its dangerous agents. Neo's mentor, Morpheus, showed him the path and helped him empower his mind, yet Neo walked the path to his own success after he started believing in himself and mastered his own mind.

Perhaps you were wondering, yes and what has this to do with trading the Forex market?

"Know Thyself"

Forex trading or any trading for that matter is a mind game in the first place. Some people spend a lot of time and efforts perfecting certain trading skills and knowledge like reading the charts and data, entry and exit skills but any normally intelligent person can learn these skills, they are the easiest part of the trading game. They are no doubt necessary tools to your Forex success but they don't make the biggest difference between a really successful Forex trader and the one who is not successful. So what does make the difference?

Let's ask the question: what is your goal in trading the Forex? It is to make money. Period! Surely while you're making the money and great profits you can have fun too and you should but what you need are specific mental attitudes and strengths, that is if you want to be a successful Forex trader. These mental states are an asset that will help you in many other situations and contexts of your life.

As my Forex mentor told me, the major three mental and emotional frames of mind that characterize the majority of successful FOREX traders are:

1.Discipline & Passion 2.Confidence & Courage 3.Patience & Smart Persistence

We'll touch upon all three briefly to make it as clear as crystal to you so you succeed in the Forex market.

Like trading a Pair of Currencies these mental and emotional mindsets go hand in hand.

Discipline & Passion

Discipline, say the most successful Forex traders, is really important! It helps you be more effective in planning your trades and in sticking to the good plans you established before entering the trade. Always have an action plan for stop and limit levels for the trade before you enter it, your analysis should cover up the expected upside and downside.

Passion means commitment and love for what you do. It is your passion for something that keeps you going, improving, constantly learning (willing to buy excellent Forex courses from experienced and successful traders, remember Morpheus mentoring Neo) and persist beyond the ups and downs of the business. You need to know why you are trading the Forex because it is an awesome opportunity that you have to take, so develop a passion for it. Simply do what it takes to be successful, learn from the best.

A word of Caution: Never mistake your "Forex passion" for emotion that you might feel while trading the Forex, when trying to enter a trade without using clear and sound entry/exit indicators and rules. Have fun, learn, and stay tuned for future developments and grow as a person in strength and character in "your Forex business" while remaining emotionally detached when you get in and out of a trade. If you do, you are bound to incredible success in the Forex trading business.

Confidence & Courage

Successful Forex traders believe in themselves and their abilities to learn and grow, to acquire more competence learning from a mentor. There is no reality only perception, the Matrix can trick you but you can have your own special Matrix inside your mind that empowers you with an unwavering belief in yourself!

Have the confidence and courage to stick to your plan and stay with your rules even if others are doing the opposite. Keep your vision (end result) that you can make it in the Forex market in your mind until you are successful in it.

If you experience a situation where you know exactly how a currency pair will go and have a sound trading plan, go for it! Sometimes people fail to follow their own good plans because all sorts of emotions get in their way, emotions like greed and fear. Stay calm and act with confidence and courage otherwise your planning, analyzing and information gathering will be totally useless to you.

You become more competent when you educate yourself about the markets and learn from successful traders. Self develop: "Know Thyself", get into the habit of monitoring your emotions and questioning your limiting beliefs so that your mind works for you and not against you. Don't take things too personally, if you make a mistake then consider it to be valuable feedback so you become more successful, never a failure!

Patience & Smart Persistence

An Indian wisdom says: "Life is always right!" we say: "the market knows much better than you do!"

Learn to listen and read the signs the Forex market is giving you. Learn how to wait, observe and only enter a trade when it is the right time to do so, before you can reap the profits.

It can be hard to wait before your Forex trading screen and not jump into action but The successful FOREX trader will enter a trade according to the direction of the prevailing trend or will wait until a new trend shows up and establishes itself. The waiting ranges from a few hours to days or even weeks before a winning trend appears.

even if you day trade and are not a long-term or position trader, you still are well advised to keep impatience from ruining your profit chances. Also be patient means you stick with winning trades. But be most impatient with losing trades.

Practice "Know Thyself" and continue learning your Forex trading from the best and we are sure you will be a successful Forex trader. You will be on the path of Neo, the One himself!

The 7 Undeniable Rules of Forex Trading

Before we go into 7 rules of Forex Trading, that have been approved by a number of full time and successful traders, I'd like to narrate this story.

There was a lion, a donkey and a fox all keen to go out rabbit hunting together. After a productive day of hunting, the three of them sit around the pile of rabbits and the lion asks the Donkey, "Mr Donkey, would you please divide the pile into equal shares for the 3 of us?". The Donkey obliges and counts the rabbits into three equal piles for each of them. The Lion immediately roared and pounced him. He then piled all the rabbits on top of the donkey and asked the Fox "Mr Fox, would you please divide the rabbits up evenly between us?". The Fox takes out 1 scrawny rabbit from the pile and puts it in a pile for himself then say "There you go, Mr Lion, that's your pile" pointing to the large pile of rabbits. The lion says "Mr Fox, where did you learn to divide so equally?" and the fox says "The Donkey taught me."

The moral of the story is to learn from others' mistakes. Now we proceed to our 7 rules. These are for you benefit as mentioned earlier, from experienced, successful traders.

Rule #1 Never risk any more than you can afford to lose, you will lose money, all traders do, make sure you're not sacrificing anything else important in the process

Rule #2 Never risk any more than 2% of your margin trading account on a simple trade. For mini account holders, 2% of $300 would be $6 so realistically you would need around $15 so you can make this 5%. As soon as your account size is big enough, make this 2%.

Rule #3 Always use a stop loss order. If you haven't figured out where your stop loss order and limit order should be at the start of your trade then you shouldn't be trading.

Rule #4 Know your exit point before you enter a trade.

Rule #5 Demo Trade First: Become successful with paper trading when there's nothing on the line before you open a real account.

Rule #6 Take a breather when your equity has taken a dive.

Rule #7 Don't let your emotions call the shots: Stay cool, calm and collected. Patience and a clear head will win the game.

Day Trading, Forex Or Currencies Back Testing — A Way To Improve Your Trading Score

You can draw some useful parallels between running a business and Day Trading, Forex or Currencies trading. For instance, most successful businesses keep statistics on everything from their conversion rate, to their average dollar sale, to the number of people that come in the door. Businesses do this to keep on top of how they are doing on a day to day basis and businesses must first take score before begining to improve on that score. Using a Day Trading, Forex or Currencies back testing plan in your trading works exactly the same way.

Now that you`re looking at Day Trading, Forex or Currencies trading as a business, you need to learn some valuable statistics about your system so you can improve it`s performance. You would use a Day Trading, Forex or Currencies back testing method. You can`t improve your system unless you have something to measure it against. How could you expect to improve your trading unless you knew what it was you were looking to improve? You can discover these measurements and other valuable information about your trading system, by using a Day Trading, Forex or Currencies back testing plan.

There are two ways that you can use a Day Trading, Forex or Currencies back testing plan to back test a system. You can do it manually, which can be a drawn out and labour intensive process, or you can do it with the aid of some software packages. Unfortunately, I recommend you do it by hand when you first start out. You`ll get a much better feel for your system, and you`ll understand exactly how using a Day Trading, Forex or Currencies back testing plan works in all its intricacies. Once you have the Day Trading, Forex or Currencies back testing plan and the in depth knowledge, you could look at finding a software package that does it for you.

There are a few major statistics on your Day Trading, Forex or Currencies back testing plan that you need that you will uncover through back testing. The first statistic you need to become familiar with is the R multiple principal. R stands for risk, the risk you take on any trade when you enter the market. The R multiple of a trade is the ratio of the profit or loss compared to the amount of money risked to make the profit or loss.

Therefore, if you risk $200 dollars in your initial purchase, and you make a profit of $1,000, you have made five times the amount you risked in the trade. You have an R multiple of five. This statistic gives you a good idea of the relative size of your profits to your losses. You can compare the average size of your winning trades with the average size of your losing trades.

The next statistic you`ll find useful is your win to loss ratio. This is how many times you get a winning trade in proportion to how many times you get a losing trade. For example, if you had ten trades, four of those trades were winners, and six were losers, your win to loss ratio is simply four to six. This is your hit rate; you`ll get 40% of your trades correct.

With these two simple statistics, you can calculate the average size of your profits and of your losses, multiply these figures with your win to loss ratio, and calculate on average how much money you make with every dollar you risk.

For those of you who think this sounds like a too much work, particularly using a Day Trading, Forex or Currencies back testing plan that you need to do to uncover these statistics, consider this scenario: Imagine yourself trading a system that you knew had a win to loss ratio of 60/40. You made profit on every six trades and lost one out of every four. How do you think you would feel, where would your confidence level be, after you traded the system for a little while and you received a string of 11 losses in a row?

Now, you know that this system has a win to loss ratio of six to four. Would you have the confidence to open another trade if your system brought up another buy signal after getting 11 trades wrong?

Unless you use Day Trading, Forex or Currencies back testing plan to back tested your system, I doubt that your confidence level will remain high. That trading system may be a fantastic profitable system. However, since you didn`t use your Day Trading, Forex or Currencies back testing plan to back test it, you don`t know that historically this system received up to 13 losses in a row, but was still profitable.

Here`s another point you may not have picked up unless you used your Day Trading, Forex or Currencies back testing plan. Once you`ve set your money management rules and you begin to trade, you will likely experience a string of losses. Countless times, I`ve had clients who get disheartened by this fact because they don`t understand the nature of setting good management. If you`re adhering to the rules of cutting your losses short and letting your profits run, because you`re cutting your losses short, those trades are going to last for a shorter amount of time.

This means once you begin trading the odds of getting losses early in the game are much higher than getting a winning trade. This is particularly true when you consider that many successful trading systems run on a 40/60 win to loss ratio. However, you will never know the intricacies of your system unless you use a Day Trading, Forex or Currencies back testing plan and back test it.

Using a Day Trading, Forex or Currencies back testing plan, will help you to understand what works and what doesn`t. It will give you the statistics to gauge the effectiveness of your trades. It fills in your scorecard, and allows you to make improvements. But, you shouldn`t simply believe everything I`ve told you. Instead, you need to prove it to yourself by using some Day Trading, Forex or Currencies back testing plans and back test your system.

Forex Trading Tips

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

Trade pairs, not currencies — Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.

Knowledge is Power — When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.

The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.

Unambitious trading — Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.

Over-cautious trading — Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.

Independence — If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:

Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);

Seek advice from too many sources — multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome — by yourself, for yourself.

Tiny margins — Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.

No strategy — The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.

Trading Off-Peak Hours — Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple — don't.

The only way is up/down — When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.

Trade on the news — Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.

Exiting Trades — If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.

Don't trade too short-term — If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.

Don't be smart — The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.

Tops and Bottoms — There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.

Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.

Emotional Trading — Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.

Confidence — Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

Take it like a man — If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders — permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.

Focus — Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride — you have no real control from now on, the market will do what it wants to do.

Don't trust demos — Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.

Stick to the strategy — When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.

Trade today — Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.

The clues are in the details — The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.

Simulated Results — Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results — historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.

Get to know one cross at a time — Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.

Risk Reward — If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.

Trading for Wrong Reasons — Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.

Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.

Determination — Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.

Short-term Moving Average Crossovers — This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.

Stochastic — Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).

One cross is all that counts — EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time — if EURUSD looks good to you, then just buy EURUSD.

Wrong Broker — A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Too bullish — Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.

Interpret forex news yourself — Learn to read the source documents of forex news and events — don't rely on the interpretations of news media or others.

Forex Course: A Quick Forex Guide for Traders

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from. A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.

Fundamental Analysis: Study Economics, Trade the Markets

Let's begin our brief examination of fundamental analysis by observing that up until a century ago there was only one school of analysis, and there were still a large number of self-made trading millionaires. That one school of analysis, of course, was fundamental analysis. Technical analysis has been with us as an organized discipline since the end of the 19th century, but fundamental analysis has been here since the beginning of economics in the days of Lydians and Persians, at the very least. Those new to online Forex trading can benefit from this little detail as they make their decisions about the merits of the two schools of analysis.

Fundamental analysis aims to predict future market action on the basis of economic data and news. While technical analysis focuses strictly on the price, fundamental analysis studies the economic, political, and social dynamics in an economy in order to reach conclusions about an asset, which is a currency pair in Forex of course. As fundamental analysts are aim is to identify the most powerful forces driving the price action, and then to formulate our strategies on that basis. At different times different factors will acquire greater significance in fundamental analysis. For example, in the first half of 2008 the ruble would be expected to appreciate by fundamental analysts as oil became more expensive, and commodity prices were the most important dynamic behind the prices. In August 2008, however, as war between Georgia and Russia broke out, traders would disregard economic factors and sell off the ruble as political factors (in our case, a war) became the dominant mover of the currency prices.

It is important to make a distinction between news trading and fundamental analysis. The markets immediate reaction to news events is mostly unpredictable, since there is not time to evaluate and formulate a proper strategy so soon after a release. News trading is more about technical patterns than fundamental analysis. Fundamental analysis involves the refinement of news data, the isolation of important pieces from the irrelevant ones, and the construction of a big picture which can then be used as a long term road-map for trading. Economic events interact with each other, and individual pieces of data do not mean much for a Forex strategy in isolation.

Fundamental analysis is reputed to be hard, but there's no evidence for this. It does require a bit more thinking on the part of the trader, but given how profitable and satisfying it can be to succeed in trading, that is only a small price to be paid. If you choose to apply this method to your trading, and persevere in your practice, surely the rewards will be more than satisfactory in comparison to even your highest expectations.

Durable Goods and the Forex Market

Forex traders, like all investors in the big investment markets, pay close attention to the economic news of the day. That's because economic data (or economic indicators) often shapes trading, whether it's on the stock market or the currency market. One of the more common economic indicators that are utilized by Forex and other investors is the durable goods report.

Defining durable goods

Before discussing the actual report, the term "durable goods" needs to be explained. Durable goods are those goods that last more than three years. In other words, the consumer expects to make a purchase that won't have to be replaced in the near future. Examples of some durable goods are automobiles, furniture, appliances, tools, and factory equipment.

The durable goods report

The durable goods report is released about the 20th of each month for the prior month's activity. The report measures the number of newly placed orders on durable goods from a sample of over 4,000 manufacturers in roughly 85 industries. Usually, defense and transportation figures are deleted from the report due to their volatility.

This report is vital to investors since it's considered to be one of the major leading indicators for the economy. That means if figures are strong (i.e. high number of orders), then consumers will more likely purchase more durable goods, which will strengthen the domestic currency. On the other hand, if the durable goods number decreases, then consumers will more than likely purchase less goods, which can negatively affect a country's currency rate.

Non-defense capital goods

In addition to other numerous breakdowns of durable goods orders, this report also reflects orders of non-defense capital goods. Non-defense capital goods refer to those orders for non-defense related capital equipment orders. This is an important piece of information since it's basically equivalent to the producers' durable equipment (PDE) category in the all-important GDP economic indicator. Just like other categories, this PDE-like category is a strong indicator for future economic trends. If the non-defense capital goods figure increases, that's a good sign that the economy is growing (positive affect on a country's currency rate). On the other hand, a decrease in orders can signify an impending downturn in the economy.

The ISM Manufacturing Index and the Economy

Since the Forex market is interwoven with the state of the economy, most Forex traders stay abreast of the latest changes in the economy. In addition to the usually news forecasts of the day, the majority of Forex traders utilize fundamental analysis or economic indicators to base their strategies on. One economic indicator that's often used by Forex traders is the Institute for Supply Management (ISM) manufacturing index.

It sounds complicated.

The ISM index is really not complicated. This index basically measures manufacturing output during a certain time frame. Even though manufacturing is not a huge chunk of the overall economy of developed nations, it still reigns high as an economic indicator. That's because the ISM index relies on production of the manufacturing parts prior to the goods being sold. In economic talk, that means that the ISM index is a leading indicator: it changes before the economy changes. If the index drops (less manufacturing output), that usually indicates a weakening in the economy. On the other hand, if the index edges upward (an increase in manufacturing output), that more than likely indicates a strengthening of the overall economy.

What does the ISM index actually measure?

The ISM index measures the manufacturing activity in the country. Here's how it's calculated: 300 purchasing managers throughout the country, representing 20 different industries, are surveyed on a monthly basis regarding overall manufacturing activity. The index is broken up into 9 sub-indexes, of which the five most important are as follows:

• The Prices Index - gives information relating to another index, the Producer Price Index, which is an inflation trend indicator.
• The Production Index - relates to production numbers.
• The Employment Index - helps to predict employment figures for the manufacturing element.
• The New Orders Index - predicts factory orders.
• Supplier Deliveries Index - helps predict future health of the economy by utilizing estimates of future deliveries.

What do the actual index numbers mean?

An ISM index reading over 50 indicates expansion in the manufacturing sector, or growth in an economy. On the other hand, an ISM index reading below 50 indicates reduction in the manufacturing sector, or a contraction in the economy.

How often is the ISM index released?

The ISM index is released on a monthly basis, on the first business day of the month for the prior month's numbers.

The Forex Market and the Employment Cost Index

Fundamental analysis, or the analysis of the market based upon economic indicators, is a huge part of developing Forex market strategies. Most online Forex trading system platforms provide data on economic indicators through their online Forex journals, which are often offered free of charge. One of the more important economic indicators around is the Economic Cost Index (ECI), a major player that shapes and defines Forex market strategies.

What exactly does the Employment Cost Index (ECI) measure?

The Employment Cost Index basically measures the cost of doing business. It measures monthly changes in such crucial variables as employee's wages, employment benefits, and job bonuses. The ECI is so important that it even helps define monetary decisions and policies of the Federal Reserve.

Tie in with inflation

Comparing the inflation rate to changes in monthly employee wages is crucial in accessing whether or not wages are keeping up with current price levels. For instance, if the current inflation rate is 3% per year, and employee wages are increasing at a rate of 2% per year, then even though wages are increasing overall, they're actually decreasing when compared to actual living expenses. That could negatively affect the economy (i.e. less consumer spending), and in the long run, affect a country's currency exchange rate. On the other hand, if wages are increasing at a rate of 3% per year, along with healthy increases in employment benefits and job related bonuses (overall compensation package), and inflation is only at 2% per year, then the overall economy will benefit, as will the nation's currency rate.

It might be a lagging indicator, but it's still important!

Even though the ECI is a lagging indicator (follows after economic change), it's still an important factor to base market strategies upon. The ECI (whether up or down) basically validates a particular economic environment, and can help the investor solidify an overall trading strategy. Let's say the economy is showing signs of weakness for the past few months, but there are overall conflicting reports. The ECI report comes out and validates the economic findings of a weakening economy (i.e. lower employee wages), which in turn, can negatively affect a country's currency exchange rate. With this information, the investor can make the necessary strategic decisions when investing in the Forex market.

So signals are selling and buying recommendations given by any third party. It can come from the brokers, brokerage firms or trade analysts. A combination of fundamental and technical analysis can generate accurate forex signals.

There are different indicator signals to keep you informed about the market. For example, the Simple Moving Average or SMA indicates buy signals when currency prices rise above the average line. Sell signals occur when the price falls below the moving average line.

Moving Average Convergence Divergence or MACD studies have a signal line to generate a buy/sell signal depending on above/below the line. Volume indicators are to find out market interest. High volume, especially near the bottom of the market indicates the beginning of a new trend, whereas low volume indicates investor insecurity.

Other indicators like volatility and momentum are used to strengthen signals. So signals based on such technical analysis form a comparatively reliable source of information on how the market is behaving.

The Right Forex strategy Service can Deliver Big Profits

Forecast signals can give you good indication about which currencies to trade, but they can not promise their information to be 100% accurate.

You will have to select a reliable service after going through their past performances and their track record.

Most service providers offer signals for only the most traded currency pairs, such as EUR/USD, USD/JPY, GBP/USD and USD/CHF. Some special services may also provide signals for the lesser-traded pairs. The charges for these services vary from analyst to analyst and type of services offered.

A basic service, which offers email alerts of entry/exit opportunities to traders, will be cheaper than a more detailed service. If you have opted for an automated trading your program may offer this service as an additional offer.

Signals are not based on emotions. They follow certain patterns according to market trends and forces of demand and supply of currencies. They are derived after detailed study of markets and technical analysis of operating forces.

Forex Signal Alerts Are Based On Detailed Analysis

The biggest advantage of Forex forecast signals are they relieve you from analyzing or exploring data. However you should not rely upon them completely to gain profits or minimize losses. In order to achieve that you must develop sufficient trust in certain signal trading services.

Otherwise you should use your own decision and market watch to develop your trading strategy. These forecast signals are just another analytical tool which helps in forming your opinion before making the decision.

Signals are generated to provide a visual representation of exchange rate fluctuations. Many other variables can affect the currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of a day.

Some trading forecast signals are adaptive in nature that incorporates multiple trading periodicities and proprietary technical indicators to identify key reversal levels.

Signals are generated for popular currency pairs and are triggered by the automated system any time round the clock depending on the market conditions. The signals are delivered to the clients immediately after it is generated. To learn more about the best Forex Strategy Services click here.

Next we will look at Automated Forex Trading and the benefits of using autotrade tools when trading the currency exchange market. Click the next button below to proceed.

The forex market operates round the clock and around the world! So to become a successful trader you need to invest your money as well as time to monitor the markets for advantageous entry and exit points.

You can use automatic orders such as restrictions and stops which allow you to leave your computer terminal for a while. This ensures that your losses will be kept to a minimum, but you may miss out on prospective profits.

If you don't have the time to and still wish to achieve as much profit as possible, you can join some Forex forecast signal services. These services will monitor and investigate the market for you and send the signals directly to your computer by email, or SMS to your cell phone.

Forex forecast signals are time-tested indicators of trends in the market. Breakouts, support levels and resistance levels, envelope patterns, currency pairs near moving averages, stochastic lines, oscillators, and Fibonacci levels are few of indicators, which generate signals for the trader to make a profitable entry into the market.

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.

Market knowledge and ability to understand analysis will only get you so far in forex trading, but without the nerve to actively compete risking your own money in the process you can never become a successful trader.

Wagering huge volumes of money in a market as susceptible to change is liable to cause a whole range of opposing emotions; fear, excitement and anxiety just to name a few. Battling against your emotions in order to complete a successful deal is one of the major hurdles, which must be overcome if you are to become a trader able to close huge deals and earn vast sums of money. If you can overcome or even use these emotions to make trades on the Forex then a successful career may be beckoning, but failure to do so will almost certainly cost you a substantial amount of money and end any lingering desires to progress in the busy world of exchange rate trading.

Initiating and closing a trade at the right times are the backbone of becoming a successful Forex trader. If a person cannot execute these deals at the right times, the psychological and financial damage can be crippling. Missing a huge trend or sitting too long on a good price, can be a demoralising experience, but one that many will encounter during a career in Forex trading.

Entering at the right time is just one thing that must be done correctly, but if you are unable to leave at the right time or hold your nerve during the course of the trade, the implications are potentially severe. For example accepting a small loss just before the market rises can lead to a horrendous huge profit/loss ratio margin. Similarly sitting on a currency price that is plummeting for too long could be financially crippling. Understanding the Forex market and having faith in your ability to judge a trend will pay dividends if you hold your nerve, backing out at the wrong time can prove to be a catastrophic misnomer.

The fear generated by investing your own personal money is the main thing that must be overcome. It is the culprit in so many failure stories, people who just couldn't overcome their anxiety investing unwisely, pulling out at the wrong time, missing a rise completely, all result in failure and are caused by fear. Accepting this fear, and using it to your potential will make you a stronger trader, able to trade freely and enjoy the thrill of the exchange. Fighting it will get you nowhere, understanding and overcoming it are the best remedies to this baseless emotion.

Trading strategies will help you ride out the rough times and capitalize on the good ones. Sometimes just taking a step back and accepting a few losses will give you the energy and the knowledge to attack the Forex with renewed vigour, and make some serious profits. Accepting that sometimes you will lose out, you need to be able to take the hits and roll with a punch, there are no guarantees in the trading market, so being able to move on and start again is a skill that is paramount to generating success.

Analysis and charts can only get you so far. You must first master these things, and be able to correctly interpret the figures that are represented in order to spot the trends and make your move. But this all means nothing if you don't have the courage of your convictions. If you are too afraid to buy and not sure when to sell then a glittering career in market trading is likely to elude you. 'The trend is your friend' but it means nothing if you firstly can't spot it and secondly don't have the courage to back it. Knowledge, strategies and overcoming fear may well be the 3 best ways to become to unlock the door to becoming a successful trader. Without all 3 you will more often than not become unstuck, so prepare, practice and evaluate everything before taking the plunge in the complicated world of Forex trading.

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. Don't get us wrong, it is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

In the trading environment, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, "There must be something wrong with my system", or "I knew it, I shouldn't have taken this trade" (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

When it comes to trading the Forexa market as well as other markets, only 5% of traders achieve the ultimate goal: to be consistent in profits. What is interesting though is that there is just a tiny difference between this 5% of traders and the rest of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes THE big difference.

Mistakes in the trading environment

Most of us relate a trading mistake to the outcome (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios:

First scenario: The system signals a trade.

1. Signal taken and trade turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: Its good to follow the system, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the system. Mistake made: None.

2. Signal taken and trade turns out to be a loosing trade. Outcome of the trade: Negative, lost money. Experience gained: It is impossible to win every single trade, a loosing trade is just part of the business; our raw material, we know we can't get them all right. Even with this lost trade, the trader is proud about himself for following the system. Confidence in the trader is gained. Mistake made: None.

3. Signal not taken and trade turns out to be a profitable trade. Outcome of the trade: Neutral. Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self. Mistake made: Not taking a trade when the system signaled it.

4. Signal not taken and trade turns out to be a loosing trade. Outcome of the trade: Neutral. Experience gained: The trader will start to think "hey, I'm better than my system". Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the system because deep in his or her mind, his or her "feeling" is more intelligent than the system itself. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence to the system. The confidence on the trader turns into overconfidence. Mistake made: Not taking a trade when system signaled it

Second Scenario: System does not signal a trade.

1. No trade is taken Outcome of the trade: Neutral Experience gained: Good discipline, we only need to take trades when the odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the system. Mistake made: None

2. A trade is taken, turns out to be a profitable trade. Outcome of the trade: Positive, made money. Experience gained: This mistake has the most catastrophic effects in the trader self, the system and most importantly in the trader's trading career. You will start to think you need no system, you know better from them all. From this point on, you will start to trade based on what you think. Confidence in the system is totally lost. Confidence in the trader self turns into overconfidence. Mistake made: Take a trade when there was no signal from the system.

3. A trade is taken, turned out to be a loosing trade. Outcome of the trade: negative, lost money. Experience gained: The trader will rethink his strategy. The next time, the trader will think it twice before getting in a trade when the system does not signal it. The trader will go "Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success". Confidence is gained in the system. Mistake made: Take a trade when there was no signal from the system

As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this could be the beginning of the end of the trader's career. As we have already stated, mistakes must only be related to the violation of rules a trader trades by.

All these mistakes were directly related to the signals given by a system, but the same is applied when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more.

Most mistakes can be avoided by first having a trading plan. A trading plan includes the system: the criteria we use to get in and out the market, the money management plan: how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are certain about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don't have to worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic results in our trading career.

How to deal with mistakes

There are many possible ways to properly manage mistakes. We will suggest the one that works better for us.

Step one: Belief change. Every mistake is a learning experience. They all have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself "ok, I did something wrong, what happened? What is it?

Step two: Identify the mistake made. Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again. More than often you will find the answer where you less expected. Take for instance a trader that doesn't follow the system. The reason behind this could be that the trader is afraid of loosing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the mistake is not in the surface. You need to try as hard as you can to find the real reason of the given mistake.

Step three: Measure the consequences of the mistake. List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think on all possible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, if you don't follow the system, you will gradually loose confidence in it, and this at the end will put you into trades you don't really want to be, and out of trades you should be in.

Step four: Take action. Taking proper action is the last and most important step. In order to learn, you need to change your behavior. Make sure that whatever you do, you become "this-mistake-proof". By taking action we turn every single mistake into a small part of success in our trading career. Continuing with the same example, redefining the system would be the trader's final step. The trader would put a system that perfectly fits him or her, so the trader doesn't find any trouble following it in future signals.

Understanding the fact that the outcome of any trade has nothing to do with a mistake will open your mind to other possibilities, where you will be able to understand the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made.

The process of success is slow, and plenty of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person.

Back when I first started learning about investing, I decided to start from the beginning and read basic books on personal finance as well as "guides" for understanding all of the investment world in a nut shell. Most of these authors were very knowledgeable and informative, but their investment advice was far too conservative for my taste. They would literally write chapter after chapter talking about the differences between conservative investing, which according to them generally yields somewhere around 5% PA, as opposed to "risky" investing which usually meant a diversified stock/mutual fund portfolio yielding (in my mind) only slightly higher averages. What kind of returns can you expect in the stock market? Well they say the market has gone up an average of 10% a year since Adam and Eve. Popular indexes like the DOW and the now more popular S&P500 have always, like real estate, "gone up over time."

Now, these market averages are almost worshiped like golden calves. Repeatedly drilled into my brain was the concept that there were hundreds (if not thousands) of fund managers and other "professionals" out there with Harvard degrees, decades of experience, millions of dollars under management, and they were all spending 15 hours a day consuming every single bit of market information in the hopes of beating these golden calves by a few points.

What chance did I have? If Dr. Fund Guru Jr. who eats, sleeps, breathes the markets and has more credentials than I have individual hairs on my body can't consistently make 20% a year...well...forget it kid...your chances are slim to none. I guess I'll buy some shares of XYZ fund and accept the scraps off the table from the stock gurus.

NOT!

The foreign exchange market offers many benefits that the stock market does not have. Most of these have been beaten to death on various forums, blogs, articles, e-books, etc. However, it's always good to reiterate the positive (my own personal reason is last): — Forex offers unprecedented liquidity. With over two trillion dollars transacted per day on the market, it makes filling any buy/sell order virtually instant. That equates to less slippage and more profitability. "Paper trading" stocks vs actually trading stocks is very different, because orders may not be filled in a timely manner. The difference between trading a forex demo account and an actual account is virtually nill. — Forex is available 24 hours a day 5.5 days a week, as opposed to the daylight trading hours of the stock exchanges. — Forex is uncontrollable by large entities. Large net worth individuals, banks and fund managers who throw their weight around in the stock market can often have huge effects on price action. Because of the immense volume of foreign currency traded per day, the market is unmoved by "heavy hitters." Not even central banks can control the Forex market. — Forex offers up to 200:1 leverage as opposed to 2:1 stock leverage. — Forex has no restrictions for selling short, as opposed to the stock market's "uptick" rule — Forex can actually be traded INSIDE of an IRA or Roth IRA account. — Forex gains are taxed at the preferred 60/40 rate, no matter what trading style you use (intra-day, swing, position) as opposed to the tax penalties for holding stocks for short periods of time.

The list does go on, but for me the biggest advantage is a psychological one. I know it probably sounds silly, but fear and intimidation can sometimes subconsciously defeat us before we even begin. I don't like the idea of having to live up to, and in a way, compete with "professional managers" who have more knowledge of the fundamentals of the markets than I ever will. It's almost as if Forex, in some way, levels the playing field. I don't have to psychologically compete against anyone's idea of what kind of returns are "acceptable and realistic" and what kind of returns are "pure fantasy." I only have to trade until I can find an acceptable reward to risk ratio, and consistent profitability thereof. The only one I compete against is myself.

First, what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

Mind Games defined: Mind Games are a kind of social interaction where participants try to screw with one anothers' heads. The concept is most often used colloquially to refer to deceitful, confusing or Machiavellian situations. However some mind games are described by the psychology of transactional analysis.

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who's been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind — and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn't take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others — including the mass psychology of the people that use the currency on a daily basis — but neglect to know what moves you, you're going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying 'Huh?" about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged. All right. You've heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you'll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info — if it's math, there's only one right answer, right?

The answer lies in interpretation. The numbers don't lie, but your mind does. Your hopes and fears can make you see things that just aren't there. When you invest in a currency, you're investing more than just money — you make an emotional investment. Being 'right' becomes important. Being 'wrong' doesn't just cost you money when you let yourself be ruled by your emotions — it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It's that little thing inside your head that says, "I KNOW I'm right on this, dammit!"

To most people, being right is more important than making money. Here's the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You've got to accept that picking a loser is NOT an indication of your self-worth, it's not a reflection on who you are. It's simply a loss, and the best way to deal with it is to stop losing money by moving on — and really move on. Moving on means you don't keep a running total of how many losses you've had — that's the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning. Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didn't work. But he didn't give up — because he knew that creating a source of light from electricity was possible. He believed in his overall theory — so when one design didn't work, he simply knew that he'd eliminated one possibility. Keep eliminating possibilities long enough, and you'll eventually find the possibility that works.

Winning traders see loss in the same way. They haven't failed — they've learned something new about the way that they and the market work. Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I'm wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades — but I made $250,000, making my overall profit $175,000. It's a pretty clear numbers game — but how do you keep on trading when you're losing in trade after trade? Simple — just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you've set up — but define yourself by what really matters — the overall record.

Bottom line: You can't keep emotions out of the picture, but you can learn not to let them control your decisions. Keep it all in perspective and realise that there are a lot of big boys playing this game and playing it to win...