Tuesday, 17 November 2009

Custom Forex Indicators - Beware!

Most Forex trading systems today use at least one custom technical indicator to determine its buying or selling criteria, and people flock to purchase these systems without carefully thinking about what those indicators really mean.

Here's an example of what a typical trading system will tell you: "Buy when moving average X crosses moving average Y from below".

Typical trading systems basically tell you to "buy" or "sell" when a set of indicators show a certain behavior... and that's a very common mistake that causes you to lose money.

Now don't get me wrong, there are indeed many successful trading systems that use custom indicators to produce very good trading results. However, there is a danger of misinterpreting the usefulness of technical indicators when using them.

All Trading Indicators Are Based On PAST Events

This might seem like a blatantly obvious fact, but you'd be surprised at how many people forget this in their everyday trading routine.

Custom indicators only serve as a guide to help with your analysis of the market... and yet many traders rely totally on them to enter into trades.

You'll need to understand that all trading indicators - no exception - are merely a reflection of market movements that happened in the past. They are a history book. And that's all they are. Winning traders realize this, and most losing traders don't.


That's not to say that trading indicators are useless... they do have their place in helping you make money, sure. The trick is to know how to use them in the right way. Simply relying on trading indicators alone to trade is a big mistake. And it could be a very expensive mistake too!

To learn more, download my free 26-page guide here: "Forex Trading Traps!"

Harold Hsu is the owner of ForexSystemProfits.com where he provides premium Forex trading information and resources.

Source: http://EzineArticles.com/?expert=Harold_Hsu
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Friday, 13 November 2009

Day Trading For Beginners

Trading the financial markets has become extremely rewarding, for those investors that have mastered the intricacies of intra-day and other short-term trading techniques. Day-traders focus on rapid or short-term day-to-day methods to potentially profit from market movements. The markets traded are usually highly liquid index futures, currencies or stocks. Traders use either intra-day strategies designed to generate buy and sell signals within the same trading session, or short-term strategies designed to be open for a period of up to three days.

If you wish to day-trade then you must develop a strategy, for trading volatile markets that has historically demonstrated the required intra-day or short-term price ranges needed for success. The results from your testing should provide a reasonable expectation of profitability from your chosen market. The best financial markets to trade, in my opinion, are index futures or index forward contracts, which are tradable financial instruments that mimic the movements of stock market indexes such as the Australian S&P/ASX 200 Index

The tradable instrument that can be bought and sold is the SPI 200 futures contract, which is the benchmark product for investors trading or hedging in the Australian equities market. The SPI 200 enables the investor to trade movements in the S&P/ASX 200 Index in one simple transaction, thereby allowing direct exposure to the top 200 Australian companies, without having to trade shares in every single company listed on the index. The main forward and mini forward instruments mimic the SPI 200 futures contract, and are basically no different to trade.

I have developed a mechanical 2-day gap strategy, for trading the Australian ASX 200 forward contract that is currently producing 36% annual compound return. The strategy is designed to exploit short-term market inefficiencies resulting from regular over-reactions to the US equities market. Mechanical trading is an automated method that uses pre-determined entry and exit techniques. Traders that have eliminated human decision making from entry and exit levels are usually more successful than other traders that do not uses these proven methods. It is well documented that professional traders have used mechanical trading, for well over 30 years, ever since the advent of cheap computing technology.

The reason why mechanical trading works is because it is unemotional and forces the trader to apply the rules of good trading that we all know, but find hard to apply. The rules that you consistently read in investment books such as "run with profits, and quickly cut losses" are absolutely correct. The real skill is to consistently stay true to those rules. The average author of an investment book usually likes to quote that "90% of futures traders will lose their trading capital", but they always neglect to tell their readers that the 10% of individuals consistently making big returns are the people using mechanical trading strategies. It makes logical sense that if you test multiple trading ideas then you will eventually develop complete strategies that consistently work.

My trading strategy can be traded long or short in any market environment. Trading long is the process of buying to open and then selling to close a market position, similar to any normal share market transaction. Short-selling is the process of selling to open a market position in the expectation to buy-back later to close that market position to potentially profit from a fall in the market price. I use a gap entry method combined with a 150-day Moving Average calculation to determine the initial entry signal. The gap is the difference between today's opening price relative to yesterday's closing price, which must be within a specific pre-determined price range on market open.

The stop-loss and profit-target methods are derived from a Standard Deviation calculation, which is a very common mathematical formula. The calculation is a statistic used as a measure of the dispersion or variation in a distribution, equal to the square root of the arithmetic mean of the squares of the deviations from the arithmetic mean. I have used the Standard Deviation calculation to determine stop-loss and profit-target levels, which I have tied into the lot-sizing calculation that balances the leverage, thus producing consistent compounding returns. These methods of money management are universal to all good short-term or long-term profitable trading applications.

The final component of this particular strategy is that I am only in the trade for a maximum of two trading sessions. This reduces market exposure, while taking adequate advantage of the short-term over-reaction to the Dow Jones index. I enter at "market-on-open" for my initial trade, and if the stop-loss or profit-target is not hit then I will exit at the end of the following session, usually with a profit. Exiting the following session allows for additional time to benefit from any strong favorable price movement.

I have tested my complete mechanical trading strategy over a three year period using computer code that I personally developed, and I have traded live funds to make sure the complete strategy produces my expected results. I now have a complete fully automated trading strategy that can produce consistent income, for both my retail clients and my own account. If you wish to generate a part-time or full-time trading income, then you should consider intra-day or short-term trading as a new entrepreneurial home-based opportunity.

Matthew Corica is a full-time private trader and managing director of licensed investment firm Titan Securities Pty Ltd AFSL: 307040.

This article has been written for educational purposes only. If the reader wishes to trade any financial market due to this article, then to satisfy any unforeseen disclosure obligations of the writer as an Australian Financial Services Licence holder, please refer to the standard risk disclaimer located at http://www.titansecurities.com.au.

Employment Opportunity: http://www.mystockmarketcareer.com

Source: http://EzineArticles.com/?expert=Matthew_Corica
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Thursday, 12 November 2009

Learn About the Day Trading System

Day trading system is identified as the buying and selling of a stock in a single trading day. Typically, day traders have two major functions within the market place. First, they make sure the market is running efficiently through arbitrage. Second, they provide most of the market's liquidity.

There are two distinct classifications of a trader in a day trading system, those who work independently and those who work for a firm or larger institution. Most professional traders work for a firm in a day trading system. These traders have the advantage over independent traders, because they easily have access to a dealing desk, huge amounts of capital and leverage, and expensive analytical software. These traders are most likely to involve themselves with easy profits from arbitrage opportunities and news events. Because of their wealth of resources, they are able to make less risky trades before independent traders can even respond.

Independent traders, on the other hand, often manage and trade with their own money or sometimes with others. Very few of them will have access to a dealing desk but oftentimes have access to a brokerage and other resources. However, because of their limited assets, they are not up to par to compete with institutionalized traders and often have to take more risks in order to make money.

The day trading system requires a trader to have access to a trading desk, which provides instantaneous order executions. These are usually reserved for traders who work for a firm and with large sums of money. It is also imperative to have access to multiple news sources like Wall Street and Dow Jones Newswire. Lastly, analytical software is the most expensive but useful tool that a trader can have. It provides them with much leverage, but because of its cost, independent traders usually do not have access to such.

Are you looking to make a daily income by learning the secrets of a day trading system? Visit http://www.eminitradingstrategies.com for a free video on how to trade for a daily income!

Source: http://EzineArticles.com/?expert=Gabriel_Knight
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Wednesday, 11 November 2009

Automated Currency Trading - Will Currency Trading Robots Be the Answer to Forex Traders Needs?

We cannot deny the fact that the use of robots in currency trading is flourishing. A new trader can learn currency trading with the help of automated trading robots. They are very versatile in a way that they can devise new tactics and techniques. Many traders rely on the ability of these robots because no matter how busy they are they can still trade and earn a considerable amount of money. Learning the capability of the robot can put traders in very promising situation to earn.

Automated Currency Trading robots are tools that can help traders do business without closely monitoring the movement of the market. The system is completely automatic and can deal business even without the intervention of human element. The software can go into buying or selling and can give signal or information when dealing. It can be upgraded automatically thus giving the traders' confidence to increase the amount of money they will invest.

One of the advantages of automated trading system is that they can perform complex calculations and analyze a considerable amount of historical data. It is time saving and trader does not need to monitor the market closely. It can open and close orders immediately. The system can guarantee a big return of investments because one can assure of round the clock technical assistance. This automated trading robot has superior quality and its accomplishment and standing is remarkably undeniable. With these qualities, traders are more confident that they will really benefit from these robots.

But of course before a trader bent into buying this automated trading system, one should be trained to use these robots and try to experiment the method to have a better understanding of the software including how to form new trades and even to bring to a close old ones. Researching the robot through the net also let you know the special qualities of the android. Make sure that you have a clear knowledge of the ability and quality of the craft. One should also take into consideration that this robot is designed to make business worthwhile and enjoyable. The birth of the automated currency trading system will make a difference in the world market.

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Source: http://EzineArticles.com/?expert=Andy_S._Morissons
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Forex Trading Times - What Are the Best Hours to Trade Forex?

As you should know by now, Forex trading market is open almost 24 hours which gives it the flexibility unlike other investments. However, what are the best times to trade? It actually depends on which currencies that you want to trade in.

Firstly, the market is open between 0800 GMT and ends at 2200 GMT. During this period, the trade goes on around the world or as we know it, the office hours of every country. The time when most profits and losses are made is between 1300 GMT to 1600 GMT. So, if you want more selections this period will be the best to make your trade. Still, there are a few sessions that you can choose from.

What are the Best Times to Trade Forex?

Asian Session - Asian session is generally a slow moving one. However, with the current economy recession, it is best to do your own research and find out the pairs that can gain the most profit for you.

US Session - US session is often the most active and starts around 1300 GMT. Some currencies that are active are USD and EUR. However, watch out for yourself after the severe economic downturn in US.

London Session - London session starts around 0800 GMT and ends at 1600GMT. Some noted currencies would be the same as US.

On the last note, the best time to trade is between 1300GMT to 1600GMT. Around this time, most currency traders will make their trade and you will be able to choose from a variety of currencies. Even most of the vital news comes out during this period and you should not miss out on all the happenings in the forex market.

So, grab your chances and make some clean profits from Trading Forex Online now and discover the blueprint of how to become a millionaire fast at Optimindzer.com!

Article Source: http://EzineArticles.com/?expert=Steven_Allen
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