Three Steps to Better Trading

This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. So here are the crucial steps I took that made me a profitable trader:

1. I Picked A Timeframe

The first step was to pick a single time frame. By this time, I had been trading Forex for about 6 months so I knew my way around the markets. I quickly learned that smaller time frame charts are hard to analyse because they are erratic and prone to random movements.

I decided to jump up to the 4 hour charts and I haven't looked back since. I strongly believe that every trader should trade on hourly charts or above.

The point is not so much what timeframe I traded it's the fact that I picked a single time frame, and stuck to it. To me it was all about simplifying trading so I could more efficiently learn to trade.

So looking at a single timeframe had several benefits:

1. Allowed me to concentrate on learning one time frame, therefore removing a lot of the confusion you can have when juggling multiple time frames.
2. Gave me less charts to look at and allowed me to concentrate more on analysing a single currency pair.
3. Stopped me from over analysing my pair. Looking at too many time frames gave me conflicting signals.

Overall having a single time frame keeps it simple.


2. I Picked a Pair

This was exactly the same concept as picking a single timeframe. It just simplified my trading concentrating only on a single pair. When you're a professional trader making tons of profit you can trade as many pairs as you want. However as you're learning it's best to concentrate on one pair. Here's why:

1. Each Pair is Unique: Trading a single pair allows you to learn how that pair breaths. You will know a lot about a single pair instead of knowing a little about 5 pairs.
2. Speeds up Learning: Trading a single pair with a single time frame gives you only 1 chart to look at. This allows you to concentrate all your analysis on a single pair.

The idea behind picking a single pair to trade is a simple one. It is all about simplifying trading so you can learn to become a consistently profitable trader.


3. I Set My Targets

This was absolutely essential. I do not mean I set my targets on a per trade basis. I mean I set myself weekly and monthly targets. I have discussed in this previous article how important discipline is. As a newbie, what I needed above all else was discipline and the way I became disciplined was by setting targets.

I looked at my method and I decided it was capable of generating around 50-70 pips per trade, giving me on average two trades per week. So I set my weekly pip goal to 100 pips. When I meet my goal I stopped trading for the week.

Why was this so important?

It was important because

1. It gave my trading structure and allowed me to plan ahead, long term.
2. It gave me a goal to aim for instead of trading aimlessly.

That's not all it did though. I fought against the biggest psychological pitfalls, which I discussed previously in this article, such as the tendency to overtrade and being undisciplined.

The urge to overtrade is one of the biggest problems a newbie trader faces. If you have a set target once you reach it you can relax, and take it easy for the rest of the week. It removes that pressure traders usually have to make more and more pips. It also keeps you disciplined because it gives you a structured plan that you can stick to.

Summary

If you follow these 3 steps I can guarantee you that your trading will improve immensely. It will take time but if you can stick to it you will begin to notice improvements. If you want to succeed you need to simplify your trading and you need to become disciplined. Chaos and complexity will get you nowhere.

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Demo Trading Account

A demo account is one of the best ways to check out any types of financial trading. The account provides an introduction to online trading for beginners. It helps the traders test the functionality of live trading account. More clearly, the demo account concept permits the customer to view the account online and understand how the account would execute when it was a real account.

For beginners, the trading demo account is vital because the financial system uses a specific terminology to operate as well as to trade in the trading demo account.
If you do not want your transactions to fail, you have to incorporate and master this language as if it were any other language, since using one word more or less may mean loosing huge amounts of money.

It is for that reason, and many others, that the trading demo account exists. Without it you would have to take long and expensive courses taught at the stock exchanges of your country.

What you want is having as much capital as possible to invest it in stock, bonds, and foreign currency, among other, since they will generate profits.
Trading is the oldest way to obtain goods and services. It has improved through time, and the arrival of the Internet could not but add to this improvement.
The advantages of having a trading demo account on the Internet makes everything faster, and increases income considerably.

Why does this happen? Because, with a trading demo account, you will be handling updated information and the same figures that other people around the world handle.
This narrows the margin of error of your transaction, apart from letting you invest at the exact right time, not a minute later.

Additionally, there is nothing better than a trading demo account which allows you to make transaction simulations without risking your money.
This is the best way to learn what is the right thing to do when you invest and, moreover, when not to invest.

Without using a trading demo account you would surely lose a lot of money, buying and selling in the wrong way, until you learn how the system works. Everyone would be discouraged in that situation, and that would end up in a person giving up this great opportunity to do business. One of the best opportunities that you have to obtain a trading demo account is by learning how to understand charts.

Many Forex brokerage services offer their clients a Forex demo account in order to learn the basic functions of an online Forex account. Forex (also, Foreign Exchange) is the simultaneous exchange of one currency for another between two parties at an agreed rate. These basic functions include the sell or buy order, the stop loss order, the profit limit function, etc. Acquiring these basic functions is very useful in online account, as they guide the customer to the path of success in currency trading.

There are a number of different demo software are provided by financial services to test their currency accounts. The account can be accessed through logging in at their websites. A demo account usually possesses the following advantages: For a limited time, the customer will have full access to real-time pricing on all instruments offered, risk free demo trading, expert fundamental market analysis from the premier source of quality financial and business intelligence information, real-time breaking news, and multiple online order types including Market.

A demo account is useful for minimizing the margin of error once money is put into play. A demo account is the perfect ally to try luck. It should be remembered that the forex never sleeps, so it makes it easy to enter the financial world, and earn money once your workday is over and you rest comfortably at home.

The demo account is there, waiting for more people to become interested in it, and in the fascinating world of the world’s foreign currencies. Take some time to open a trading demo account and test your ability to operate. Do not forget that practice makes perfect.

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Currency Characteristics - U.S. Dollar, Euro, Pound and Yen

Each of the major currencies has its own personality. Getting to know what goes into each of these personalities will better prepare you to take advantage of trends in those pairs.
Some currencies are heavily influenced by changes interest rates, other currencies not so much. Some currencies are extremely sensitive to changes in commodity prices or even the winds of political change. Get to know each currency by studying its characteristics below

USD - U.S. dollar
The USD is the world's reserve currency. Central banks hold many, many dollars for financial dealings and through the acquisition of assets. This makes the USD very sensitive to changes in interest rates.
The U.S. is a debtor nation, meaning that it must borrow a lot of capital to operate. This, too, makes the USD very sensitive to interest rates.
The U.S. consumes and consequently imports much more than it exports. The U.S. consistently runs a large trade deficit. The single most important import is energy, specifically crude oil. Rising oil prices typically result in a weaker USD.
The U.S. is a politically susceptible country. This exposes the USD to political risks such as changes in government and taxes. Additionally, the U.S. regularly flexes its military might around the globe, which can cause the USD to weaken when conflict erupts.
EUR - euro
The EUR is extremely sensitive to changes in interest rates. That's because the EUR is emerging as a leading reserve currency, replacing the USD in most instances.
The EUR is equally sensitive to economic growth. The region typically lags the rest of the world in GDP growth, which can sometimes weaken the EUR. The EUR is supported by a vast collection of countries that oftentimes have differing monetary and political views. These differences often manifest in weakness in the EUR.
The European Union is frequently growing as more and more countries join. This has its advantages and disadvantages.
GBP - British pound
The GBP is one of the most highly valued currencies in the world because of the U.K.'s stable and reliable monetary policy. The GBP typically carries a relatively high interest rate. The U.K. economy relies heavily on consumer spending, which means the labor situation, retail sales, and housing data are all important statistics to consider when trading the GBP.
JPY - Japanese yen
The JPY is sensitive to changes in exchange rates because the rate is a huge exporter of manufactured goods. The Bank of Japan is notorious for managing the JPY because the country relies so heavily on exports to drive growth.
The country is quite small and short on natural resources. Naturally, Japan imports a great deal of its commodities including energy, metals, and other commodities.
The JPY is known for yielding a very low interest rate due to the sluggish domestic growth.
Currency Characteristics Summary
There are innumerable instances in which understanding a currency's characteristics can help you to spot opportunities in the Forex market. The more you know about the economies of each of the countries or regions, the better prepared you will be to spot opportunities in the Forex market. Take time to study the economies of these countries or regions. It will pay off down the road.

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Forex Trading is The Ultimate Home Business

FOREX trading is one of the few ways to start with small stakes and build wealth quickly. The good news is that everything about successful Forex Trading can be learned by those willing to put in the time and effort.
Forex trading is a challenge, its exciting, it’s fun and can offer you an income that other people only dream about.

Let’s take a look…
1. Leverage
Leverage is the ability to trade more funds than you actually have and if you use it correctly, you can make huge gains and build wealth quickly.
For example, if you deposit $5,000 with a FOREX broker they will allow you to trade with a leverage of at least 100:1. This gives you the ability to trade $1 million and considerably enhances your profit potential.
Leverage of course can work for or against you.
If however you can keep losses small and run profits then you can build wealth quickly. A PROVEN Forex trading system with good money management, combined with leverage, is the secret of making long term capital gains.

2. Profit Opportunities in Bull or Bear Markets
As one currency rises another must be falling and vice versa, this gives profit potential in ANY economic climate. Currencies are volatile and trading opportunities emerge somewhere in the world every day.

3. Currencies Trend
Currencies reflect the overall health of a country's economy and these economic trends last for months or even years. If you can spot and lock into these long term trends, you can build significant long term wealth.

4. liquidity
The currency markets are the world's largest investment medium and trillions of dollars are traded daily. This volume of transactions and liquidity means traders are able to open and close positions quickly, to lock in profits, or cut losses.

So, Forex trading is perhaps the ultimate home business and has more profit potential than any other including:
* You can trade from Home in just an hour a day
* You only need a computer and an internet connection
* Money you invest in your business can be leveraged 100 times or more
* You don’t need staff or stock and you don’t need to market your business
* There is never a bear market
* There are opportunities all the time to make profit
* Anyone can learn this business
* You can take holidays when you want
* You can build wealth quickly

Yeah... FOREX Trading An Opportunity For ALL. Trust me!

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Trends, Chart and Spread

Trends
The Forex markets is one of the few markets that seems to repeat its patterns over time, this is called trending. The patterns and trends are consistent and it is a reliable way to judge what the market may do in the future. It is very important to understand that prices move in Trends and those traders who remember the phrase "The Trend is Your Friend" and trade with the trend are usually more successful. Finding the trend will help you become more aware of the market direction.

When first looking for a trade, always find the trend and trade with it, not against it. This applies even if it takes days or weeks for a new trend to become obvious. The most common form of technical analysis is looking at the charts and drawing trend lines Finding the trend will help you become more aware of the market direction. A trend is usually when 3 or more lows line up. A market that is trending up is making a series of higher highs and higher lows and you can draw a line connecting the bottoms (roughly), this is a support line.

The market is trending down when it is making lower lows and lower highs, if you draw a line connecting the tops you have drawn a resistance line.

This applies to any time frame, althought the trends might be different.

Charts
There is not one time period that makes more money than the others.It is a personal decision based on many different things. Many traders do not want to sit in front of their screens for hours.Accordingly Traders have different times they wish to trade in, some are comfortable using 1 and 5 minute time frame charts others prefer 15 min or 1 hour charts placing 4 to 10 trades daily and others prefer to place a trade and let it run for several days, weeks or longer.

One successful method that I follow is look at 3 different time frames When reading the charts. The reason for this is the largest time gives a general over view of what is happening, the direction of the market, then zooming in to the next level shows what is going on more recently and when you should enter the market and the third and closest time frame is the one where you would monitor your trade.

Depending on your chosen trading time the 3 different time frames can be any combination. A daily chart might show a downward trend but the 5 minute charts could show an upward trend and the 1 minute charts show a downward trend, these charts would be of no interest to anyone leaving a trade to run for weeks. Again there are software programs available to help identify trends and placement of orders. I believe it is useful even with automated programs to have an understanding of the charts and trends.

There are 3 main types of Charts: Candlestick charts. Bar charts. Line charts.

They all come in many different time periods, 1 minute, 5 minutes,10 minutes,30 minutes, 1 hour, 2 hours, 4 hours, 1 day, 1 week and 1 month plus others.

With the bar chart each bar represents one period of time (as above) and on each bar there are 4 marks. The highest point reached in that time frame, the lowest point, the opening point and the closing point. Those 4 points tell you what has happened in the market for that time.

The candlestick charts give exactly the same information with the candlestick body changing colour on a high(bullish) and changing back on a low (bearish) market

The line chart simply charts the direction of the market moving up, down or sideways. You usually have a choice of what sort of chart you want from the broker of your choice.

I prefer to use the candlestick charts, but that is a personal choice.

Trade in the time frame you feel comfortable with using the chart of your choice. There is no right or wrong time frame and there is no right or wrong chart.

Spread
Spread is only pay to the market and that is the main earning. This currency Forex exchange is categories in two currencies. First is base currency and other is quote currency. The spread is the difference of the bid and ask price of given currency. The brokers apply the altered quotes on the transaction fees and earn lot of money.
Forex do not know any rules and regulation because SEC cannot apply any type of regulation on it. SEC is regulates the orderly market, so it is the non regulated market. The innermost privates are the commercial banks that are now in the top most banks. Pips are the large digit of quotes. The currency trade with spread available is usually within 1 to 5 pips. EUR or USD bid and ask quote may vary among 1.3000 to 1.3001. It is having the spread of 0.01%.

Most of the currency quotes are purely driven by the supply and demand. Usually the USD hit divert from its direction for a second or minute. When the spread widens or worse you will not let you in at all. This is market, where the market maker has the compulsion to the honor trading to supply the quotes. He will let your order hand until the price slows down.

The brokers also make threat, when the market price slower downs. They will shift the quotes in the direction of the trend and make their markup and delay the execution. After waiting for some time it will gives lower price that occurred meantime. Some of the broker just shut down their server and do not distribute the information and say that there is some technical problem there.

Broker does not want to give the news to the customers. The broker does these types of manipulation and called a big market player. The customer should be bewaring of those brokers. They can trap your money from the lines of resistance and create the technical signals for breakouts. The bank must get some other sort of advantages but the customer might get the inevitable loss.

It is very less that Forex exists for longer, if you are having handful of currency. These currencies have different interest rates. If you are dealing with interest than accounts is reduced or increased with the interest rates. For the slower trend the betting option is good for a price change. The weak currency comes with the high interest rates.

There must be a comparison between Forex and stock market but there are many more good options in the stock market better than Forex. You can be exploited in some medium sized trends and technical analysis. In short Forex is just having no motors. Everything is having its pros and cons so Forex is also having the demerits. You are left with the risky entry and you will get your money, after very long settlement. It is the easy cash cow for the banks so the Forex is running just for their benefit. The new traders should keep in mind that you should focus more on currency pair.

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