Foreign exchange trading is one of the largest trading opportunities available. Every day, nearly two trillion dollars worth of foreign currency is traded on the bourses. Because of the immense size of this market, no single investor can substantially impact the market. Even multibillion dollar transactions are a relatively small percentage of the overall market, and can alter prices only slightly, and in the short term.
Foreign exchange trading is built on variations in basis points, where the basis point is one tenth of a cent (or one tenth of the smallest unit of currency being traded). For example, if Euros are $1.60 each, every $32 you put into Euros will net 20 of them. If Euros rise to $1.80 each, your 20 Euros will be worth $36.00.
The chief strategy for foreign exchange trading is watching the closing times of the major trading venues, which are London, the Asian markets and New York. A lot of banks will try to close out their positions at those times, which will cause the market to fluctuate.
Foreign exchange trading, like day trading in stocks, can result in an adrenaline rush mentality, and there’s a lot of money to be made in small shifts in exchange rates. However, to make foreign exchange trading work for you as a day trader, you need to live the life and adjust your sleep schedule to be awake when the markets are open to capitalize on shifts.
You can also take a long term strategy on foreign exchange trading. This is where you’re looking for long term trends rather than trying to run the races each day on daily shifts.
Key factors to keep in mind in terms of foreign exchange trading are the international news. In particular, any moves the Federal Reserve makes will change the exchange rates. Interest rate increases make the dollar more valuable (because holding investments in dollars that earn interest mean they accrue faster). Anything related to international conflict will drive the dollar down, and make other currencies more valuable.
A related type of foreign exchange trading is holding foreign bonds. This is how most foreign traders hold dollars, they buy US Treasury T-bills. A variation on this strategy is to hold foreign certificates of deposit. Basically anything rated in a foreign currency that’s accumulating interest on a short term basis (or using a ladder strategy or options strategy) can be used to double dip foreign exchange processes, getting both the relative movement of currencies and the interest accrued.
Many forex traders want to trade on auto pilot and simply follow trading signals generated by a system, without having to make subjective judgements. Here we are going to give you one for FREE which is proven in terms of its profit potential.
The system is Richard Donchian’s 4 Week rule and has been the basis of many successful trading systems around the world.
Big fans included trading legends such as Richard Dennis, so if its good enough for him its good enough for you!
The system was originally developed in the late 70s to trade commodities but can be used on any trending market and currencies trend well.
Now this system is so simple it consists of just one rule and here it is:
1) Close any short positions and go long whenever the price exceeds the highs of the previous 4 calendar weeks.
2) Close any long positions and go short whenever the price falls below the lows of the previous 4 calendar weeks.
If the system is run with a SAR (stop and reverse), the above system will always maintain a position in the market (either long or short).
Does it work?
Back test and you will see it does.
Of course it works very well in trending markets ensuring you are on the right side of every big move -
but like all trading systems there is a downside:
It will get whipped in a choppy sideways market and here you may wish to consider some filters:
A common solution to this problem is to enter on the 4 week rule (the breakout), and to exit on a shorter time frame such as 1 or 2 weeks.
Traders can also use other exit rules i.e. exit when a moving average is broken. For example, applying a 10-day moving average as the exit - A 10-day moving average is one-half of the entry signal (four weeks is of course 20 trading days) is period we like. You can also experiment with ADX RSI and MACD filters if you wish.
Many traders ignore this system; after all it’s not trendy or complex like chaos theory or artificial intelligence based systems, or full of mystical nonsense like Gann, Elliot Wave or Fibonacci - but it works.
Simple systems work better than complicated ones as they have fewer elements to break. If you are interested in making money long term and have a disciplined nature you will like this system.
If you believe complexity will beat the markets, they move to a scientific theory or enjoy the buzz of trading frequently - you won’t like it - This system is all about making money long term in a disciplined fashion.
The 4 week rule is simple you can customize it to restrict losses, by adding filter and it will have you on the right side of every major move - do that and you have great profit potential.
So if you want to trade forex on autopilot and make big long term gains, consider this free system and you maybe glad you did.
Tags : 4 Week Rule, Currency Trading, Forex Trading System, Richard Donchian, Trade Forex On Auto Pilot
Chief Minister M Karunanidhi was thoroughly moved and was impressed after watching a song trailer of the magnum opus ‘Dasavadharam’.
He reportedly hugged Kamal Haasan and expressed his admiration at Kamal Haasan doing ten different roles.
The actor plays characters including that of an American, a Chinese man, a CBI officer from Andhra Pradesh, an old lady, a leader from Afghanistan, George Bush and a Punjabi singer.
The audio of the movie would be released in Chennai on 25 April in a grand manner in which Karunanidhi, Jackie Chan, Amitabh Bachchan, Mohanlal and Vijay are expected to take part.
If there is one story about forex trading that you should learn and digest it’s the story of “the turtles”. This group of traders learned to trade in just 14 days and went on to make $100 million in just 4 years - this story is inspiring and could lead you to currency trading success.
Legendary trader Richard Dennis set himself a task to show that anyone was capable of becoming a successful trader with the right education and mindset, so he gathered together some people from all walks of life, of all ages, both sexes and set about teaching them to trade.
They were a diverse group which included an auditor, a security guard and a kid fresh out of high school. In fact they only had one thing in common:
They knew nothing about financial markets and had never traded before.
Dennis taught them in 14 days and set them up with trading accounts and the rest is history they made over 100 million dollars within a few years and many went on to become trading legends.
Dennis taught them a simple currency trading system so simple in fact it could be understood by anyone (essentially it was a long term following breakout system) and rigid money management criteria. He didn’t tell them to follow it blindly, he made sure that they understood the logic it was based upon, so they were confident enough to take the system and apply it themselves.
So what can you learn?
That simple systems work well and still do why?
If you complicate a system to much you will end up losing because there are too many elements to break. Today we have more computer power and better number crunching data than ever before yet, 95% of traders still wipe themselves out and always have done.
Being to clever or building complicated systems will not help you - so keep it simple.
Anyone can learn to trade a system but far fewer can apply it with discipline when the pressure is on and the chips are down and loss after loss hits you (and believe me they do and its tough) its here rigid money management and the discipline to hang on are vital and take short term losses to make bigger long term profits.
Of course you need a robust system to succeed - but you also need the discipline to follow it and that’s what Dennis taught his pupils.
Discipline is hard, as it means we have to keep our emotions in check and that’s tough, even for seasoned traders. However learn how to do it and you can enjoy currency trading success.
Maybe you won’t become as rich as the turtles did, life is simply not like that but it does prove one point:
Anyone can learn to trade and anyone can be successful so use it as an inspiration in your forex trading and check out these two great books.
Way Of the Turtle by Curtis Faith, who was the most successful of the turtles and tells you all you need to know about the experiment and also read the great interviews in Market Wizards, by Jack Schwager which has not just info about the turtle experiment, but some of the best traders ever interviewed - both are essential reading.
The turtles inspired me to trade over 20 years ago and I hope they inspire you to and their story helps lead you to currency trading success.
Over 90% of traders fail to reach any success simply because they are not equipped for success, especially in key components such as money management and emotional control. This is true for most things in the civilized world. We are programmed for failure and as such as easy prey for the trap that is the financial markets.
If you are bad with money, then guess what, trading wont fix that. I’ve seen first hand my parents win $500,000 and lose it all in less than 4 years. What they never did was assess their bad habits.
Bad habits are addictions which are fueled by our minds chemical pharmacy. We’re all the same, and it is nature’s way of allowing us to evolve and stay alive. Habits are automatic programs that start with a memory which then creates an emotion, which in turn creates a chemical which then feeds the body and all its cells. This is a habit; our body’s addiction to naturally produced chemicals.
If you keep doing the same thing over and over again, but expect different results, you’re fighting a system that has been in creation for millions of years. However, change what you are doing and you break the cycle.
Traders who continuously make the same mistakes are doing it by habit. The problem is that they are unaware they are doing it, or they choose not to accept who they are or what they are doing. Those who become aware and those who become humble will open new exciting doors to much more than just successful trading.
A lot of what occurs soon after beginning a trading career is based on pie in the sky thinking, and very little planning. Apart from needing to construct a business plan to achieve your goals, you need to see yourself as already there doing what needs to be done.
When you were younger and you were deciding what it is you wanted to become you had mental pictures in your mind. This is what helped you to see what interested you the most. If you saw yourself being an engineer and it felt good seeing that in your minds eye, then pursuing that career felt like the right thing to do. Using the markets to achieve your goals is no different.
There are many things you can use your minds eye to imagine, such as your online trading account balance being very large, your transactions being very large, placing less and less trades over time, becoming more accurate in your forecasts or improving your win rate, being emotionally in control as your trades close whether in the black or the red, seeing yourself allowing the really big trades to run for as long as your system permits and so on.
Of course, it only becomes apparent once you begin trading for a while that you need to see yourself doing the opposite of something undesirable (such as cursing at the computer screen), however even when starting out trading for the first time, envisioning your long term goals as being achieved is very necessary.
If you think this is hocus pocus then there’s not much I can say other than, there are massive amounts of proven facts and research now available on how our mind functions, and the systems our brain has in place to be able to say, if you’re not prepared to imagine yourself as a success on a consistent basis, your brain will give you what it is programmed to give you and if you are like the herd, it will be failure.
So you are a young person with some extra money and you don’t know what to do with it, but you know you can get rich by spending it wisely. Congratulations! The sooner you start to investing, the sooner you will be able to become financially free.
Let’s say you have a $500 - $1,000 to invest and need know the best place to put your money. What you really want to know is how you can use that money to make more money, right? Unfortunately, there is not one right answer, just a lot of opinions and different advice. Before you invest, do your research, understand that in the short term you may lose some money, but in the long run it will make money, and then take action. Here are some places to start:
* Stocks: Investing in individual stocks can be considered a bit more risky, particularly when considering the stock type and sector. Penny stocks, for example, can be a great way to loose all your money very quickly. High quality, blue chips are more likely safer bets – in general. Learn to understand how stock prices are valued and spread your risk across a few stocks that you plan to own for a few years. A subscription to www.morningstar.com may be your greatest investment, which can help you understand investing and quickly screen for the investment that is right for you.
* Mutual Funds: A mutual fund is an investment with a financial organization that manages a portfolio of stocks or assets. Since mutual funds invest in a number of stocks, your risk is spread and the value of the fund is reflected in the performance in the securities the fund owns. Be sure to look for funds that have a minimum initial investment that is in line with what you are able to spend. Consider the fees as well, which can eat up your profits. A good fund to start with may be an index fund, which tracks one of the major stock indexes such as the S&P 500. This would provide a relatively safe, yet consistent return on your investment.
* Start a Part-Time Business: Do you want to become really wealthy? Most of America’s wealthiest people are all business owners. Researchers claim that 1 in 10 business fail, so 9 out of 10 succeed! Why not start now at building your first business? Think about what you already do with your time and how you can turn that into a cash-generating business that will return your money several times over.
* CDs: A certificate of deposit is a perfect place to stash your cash if you want guaranteed returns and can afford to stash your money away for relatively short periods of time. Depending on the interest rates, you can generally make 5 - 10 percent on your money in a year, but you won’t be able to make any withdrawals without a paying a penalty. BankRate will show you the best deals.
* Prosper.com: At Prosper, you get to be the banker and loan other people money at a rate you negotiate.
The important thing is to just do it and get started as soon as you possibly can. You will learn more about investing by actually trying it yourself than by reading how to invest. If you lose some money, that is okay because that is to be expected. Only invest what you can afford to lose, and diversify properly by buying a mutual fund and you will minimize your loses. You will likely make many mistakes throughout your investing career. Better to lose some now and gain experience so when your income increases with age you already have the experience to turbo-charge your wealth. You cannot put a price tag on experience.
Most importantly, try to find an experienced money mentor that can help teach you the basics. You will learn there are multiple ways to make money, and you just want to find the one that you enjoy, understand and is right for you.
Tags : 000, Beginner Investing, Cds, Currency Trading, Investing Basics, Kid With Money, Where To Invest $1, Young Money