Jul 31 , Do CFDs Suck?
Many novice traders blame CFDs for their losses and even may say CFDs suck. Losing money can trigger an emotional response and novice traders may blame someone else for losing money.
Losing money is not due to the use of CFDs (Contracts for Difference) it is the decisions that the trader made. It is very important as a trader that you take responsibility for your actions, both win and lose.
The Impact Of Leverage
CFDs trade on leverage where a small amount of money down gives you access to a large position. This can result in very quick gains or losses as the market moves. If you lose money trading CFDs do not blame CFDs and say that CFDs suck.
If you do not yet have the discipline to use stops on every trade and to manage your risk, then maybe you are not ready to trade CFDs.
The Broker Knows Where Your Stop Is
Some of the reasons traders give that CFDs suck, centre on the CFD Broker knowing where your stop losses sit and therefore deliberately target these stops. The trade then reverses rapidly and goes in the favoured direction. The trader makes a loss, even though they were correct.
The brokers trade millions of dollars each day and it is not in their best interests to chase after traders stops. The more money you make the more you are likely to trade. I have had stops hit and then watched the market reverse and I have also seen the market very close to my stop loss before reversing. Good stop placement will minimise the number of false stop loss triggers.
A CFD broker cannot push the market around, it is the sum total of all the traders that move the market. Sometimes this will hit your stop no matter how carefully you place the order.
Re-quotes Rip Off Traders
It is possible to think that CFDs suck because you are re quoted a higher price when you try to buy CFDs through a market maker. Re-quotes are not a rip off they are used because the quantity you wish to trade can not be traded at the price level you specified. There is simply not enough volume in the underlying market.
Slippage is the difference between what you pay to enter a position and what you wanted to pay. Slippage is an accepted part of buying stock and occurs because there is not sufficient volume at the price you wish to pay. You end up paying a slightly higher price to get the quantity that you want.
A market maker can only execute the whole order or none of it, partial fills are not possible, so a re-quote is provided at a price level that allows them to execute the complete order. Re-quotes are not about ripping traders off, but just reflect the underlying execution of the order.
Trading Is Your Responsibility
Take responsibility for your trades as it is not that CFDs suck. Blaming someone else, the market, your spouse etc does not solve the underlying problem. It is your decisions that are costing you money.
It is essential that you accept full responsibility for your trading results. By doing this you are in a position to make a difference. If you think the rest of the world is driving you crazy, you will have to send the rest of the world to a psychiatrist for you to get better. If you always blame someone else you cannot change the results.
Jul 31 , CFDs And High Probability Trading Strategies
High probability trading strategies for CFDs are highly desirable. These strategies are easier to trade because they provide more winning trades.
A string of losing trades is less common with this type of strategy, which minimises the effects of leverage and subsequently drawdown.
But beware of chasing high probability strategies as you may be looking for the key to successful trading in the wrong place.
Its Not About Being Right
It is not just the win% that makes a trading strategy work, it is a combination of the win% and the risk reward. Looking at only one of these measures in isolation is a sure way to fail.
If a strategy had a win% of 95% and an average win of $100 then we would expect to make $9,500 form 100 trades. However we also need to know how the losses play out.
On the losing trades if the average loss is $2,500 then overall it will lose $12,500 from 100 trades. This strategy is not profitable even with a win% of 95%. It is important to remember that both numbers, risk reward and win%, need to be considered together.
Losses Still Happen
The strategy that is often used to get high probability trading strategies is to use wide stop losses and small profit targets. One hot selling product is FAP Turbo, the forex trading robot, that uses this idea to achieve a hit rate of 95%.
So for a while the strategy appears to work well, until it gets hit with a number of very large losses. To reduce the size of the loss it is necessary to tighten the stop, but this typically reduces the success rate of the strategy.
It Is All About Balance
Finding an optimal relationship between the level of the stop loss and the success rate of the strategy requires testing the idea to determine the trade off between risk/reward and success rate.
In my own trading I have tested a variety of chart pattern breakouts. The best trades breakout and keep going in the direction of the move. Because of this tight stops work ell with chart pattern breakouts as they improve the risk reward results. Profit targets on the other hand improve the win%, but actually reduced the overall profitability.
Making Money is More Important Than Being Right
A trend following strategy is right around 30% of the time, but when it does win it wins big, with a risk reward of 3 or more. This is a profitable trading strategy.
Strategies that take advantage of short term movements are called scalping strategies and usually are right a lot of the time, 70% or more. Even though the average profit equals the average loss the strategy is profitable overall.
In the pursuit of being right and chasing high probability trading strategies, remember to ensure that trading is about making money, not being right.
Jul 31 , Identifying Breaking Support & Resistance
Support and resistance levels are used by investors and speculators to determine how far they believe a currency pair will move between the two levels. This also tells them at what points the price action may turn around due to the buying or selling pressure and start moving in the opposite direction.
But sometimes, the markets change direction due to a fundamental factor. The market change of direction is strong enough to cause a currency pair to break through a previously established support and resistance level. When a previous support and resistance level is broken by the markets, new levels are established. However, the broken levels may still have some influence on the market in the future.
Sometimes there are attempted breakouts, this is also known as False Breakouts. With experience, it will become clear to you that prices do not always stop at exactly the same points each time. So if you are going to use strict requirements for your support and resistance, those levels may not hold up every time. This way, you are going to fake yourself out of a lot of valid price movements.
Even when you take all the precautions with your level of support and resistance, you may become victim of a false breakout. Naturally, you will ask how I can tell when the price has truly broken through support and resistance.
There are two methods that help you screen out a false breakout with a true breakout. Setting price-amplitude benchmarks and identifying role reversals.
Setting price amplitude benchmarks involves analyzing a chart to determine if you can identify when the price momentarily broke through the prevailing support and resistance level before pulling back and once again returning to the previous level.
The dips through the predetermined support and resistance levels are usually short lived. You can draw a secondary support and resistance lines through these dips which you can then utilize as your price-amplitude benchmarks.
A price amplitude benchmark will tell you if the price has broken through the predetermined level but did not breakthrough the benchmark; you dont have to worry about a change in the trend direction. However, if the price had enough momentum behind it to breach the benchmark, it can continue in the new direction.
Identifying role reversals involves watching for support levels to turn into resistance levels and resistance levels to turn into support levels. All too often, you will see the price bounce off a level of resistance, turn around and start heading lower and bounce off the previous resistance level.
When a resistance level is broken, that same level will turn into a support level. Conversely when a support level is broken, that same level will turn into a resistance level. You should use both the benchmark and the role reversal confirmations in your trading analysis to screen out false breakout from a true breakout.
Jul 31 , Forex Trading Softwares - Bane Or Boon?
Forex trading software’s are great assets to have when one is deeply involved in Forex trading. These software tools are easy to understand and use and can greatly help any trader increase their money making chances. The advantage of having these tools is that it only requires some minimal effort to do, as the software handles most of the complicated analysis and interpretation of the market charts.
Not many people are aware of the benefits such Forex software can have with regards to their Forex education and training. It has only been of late that most experienced Forex traders have started to shed light on the secret methods they’ve been using in trading. This method utilizes a formulated set of advanced algorithms integrated into their strategies to help predict market trend changes.
Some programs are only able to function in a semi-automated capacity - which you should not use to invest in due to its limitations. You should find a good one that offers full functionality for better results. So it is to important to know which programs are worth spending your money on are, and which one’s to avoid.
Trading software programs like Forex Trading Signals Software are designed to connect to a database or server that will pass along vital information regarding Forex prevailing market conditions and trends, therefore giving you notice on what actions to take: buy, sell, or pass. For newbie’s, this can present a big problem since it demands from them to make trade decisions on their own volition, which in most cases can prove unfavorable due to their inexperience in the market.
Automated Forex Trading Software is best suited for beginners. It takes all the needed market data and based on program parameters to make the necessary trade actions. When the software program sees favorable circumstances to make a profit, it will do so automatically. If and when the market shifts unfavorably and the trade was not as successful as foreseen, the program protects the traders investment by halting trade, only to resume when the market shifts back up again. This is called a “stop loss” program, which is quite useful and integral to trading with Forex trading softwares.
With a Forex Software program installed in your computer system, you can have the luxury of doing other personal matters and other activities and not get tied down in front of your computer looking and straining at the figures, charts, and other Forex trading data’s. You can just monitor it from time to time to see how the program is doing in making money for you. So, choose wisely the kind of Forex software program for your trading in order to produce maximum profitable trades.
Jul 31 , Trade Smart With Mini Forex Trading
Forex currency trading is a large and complex investment market that takes time and effort to understand, apart from other existing trading markets. So why is it so popular, and with so many people wanting to get in? The answer: simply because if and when a trader makes successful transaction, it offers the chance of making a substantial amount of money at the shortest time possible, and with just minimal costs.
Mini-Forex trading market is very profitable way of trading since the lot size of a mini account is just one-tenth of a standard accounts lot size, so it gives the trader the chance to trade with lesser amounts with just a small initial capital fund, while controlling a larger currency position. An example would be if a $100,000 position is held in a 100:1 margin, the trader has only to put up $1,000, or 1% to control the position. In futures trading its about 5% of the total value of the holding, and about 25% for equities.
Every trading has its risks ” mini-Forex included. Even with its high profitability rate, chances of success are slim if a trader doesnt take time to learn the ropes of the business. Its important that you - the trader, have a clear understanding how a margin account works, especially with your account. So, if in any way there are some points or issues that are unclear to you, you should refer to the account specialist handling your account right away.
The positions of any trader with regard to their accounts are subject to full or partial liquidation should this fall below the specified allowable amounts. At times, this can be liquidated even before you get any margin call. Some employ automatic systems to close out positions when the trader runs out of capital. Be on the alert at all times by regularly monitoring your balance, and utilize your stop-loss orders when the market is on the downtrend to risk losing big time.
One of the glaring advantages of Forex trading over other trading markets is that its commission free, so you don’t have to pay exchange and brokerage fees. Forex currency trading is done on a world-wide scale through interbank marketing where buyers and sellers abound, and in constant touch. Without payments for matching up with any buyer and seller, and with larger spreads, its a much better investment market to get into.
Mini Forex trading offers a better option from futures and commodities trading. As certainly with its existing risks, having a good understanding, backed by a dependable trading system, any one can become a successful and profitable trader in a market that is vibrant and volatile to a fault ” mini Forex trading or not.
Jul 31 , What Is Swing Trading? (Part I)
Determining your trading style is very important right from the beginning. Not knowing what type of a trader you are can make or break your trading career. Take the analogy of a cricket team. There are 11 players in each team in the match. All players are talented and super fit. Everyone can throw and catch the ball. However some are more skilled at balling. Others are more skilled at batting. If the baller is going to do the job of the batter, not many runs will be made and the match will be lost.
In general there are three type of trading styles: Position trading, swing trading and day trading. Investing in the currency markets or stock markets is also the same. It depends on your personality makeup what type of trading is best suited to you. You need to know what type of trading style is for you.
Position Trading is generally the buy and hold strategy of investing in stocks over a long haul. In currency trading, position trading means you are in a trade for many months. Usually positions traders are in a trade for a large long term move like when you carry trade. Options traders can also be position traders through covered calls.
Swing trading is possibly the most dynamic of the three types of trading. A swing trader is able to switch up holding times quickly as the market demands. Swing traders take advantage of technical and fundamental analysis. Swing Trading means taking short term positions in anticipation of quick market movements over a series of days or weeks.
Day trading is not easy and it is certainly not a hobby. Sometimes when the positions warrants holding for a longer period, day trading can become swing trading! In Day Trading, you attempt to capitalize on intraday movements with the markets often trading on momentum and news. Day traders are also known as Kings of Stress.
Day trading is the riskiest of the three trading styles. Day trading is ideal for those who are able to handle erratic market movements while actually also having time to monitor the positions throughout the day. You should note that if you dont have time to watch your trades every moment, you should not think of day trading.
Know That Swing Trading Is a Better Alternative to Day Trading Day trading hardly ever ends up well especially if the trader has no previous professional trading experience. Only 10% of the day traders succeed. Many people are attracted to the glamour and excitement of day trading. Most day trader usually blow up their accounts and fade away soon.
By holding positions overnight and even for a few weeks, you can expose less money for larger moves. Swing trading can be on the other hand a much more effective trading style especially if you are a newer trader. If you are a new trader, think about it for a moment.
Jul 30 , Forex Ivybot system Review
I have been into the world of trading since 15 years and have used many forex robots during this period. The main disadvantage which I found in all these products was that they became ineffective after a certain period of time. Forex world keeps on changing and if the software cannot update itself according to these fluctuations they become of no use.
Forex robot trading is the best way to make money from this field. The main problem is that you have to find a useful robot which will give you the latest information regarding the changes occurring in the market. It should be able to update itself and work according to the fluctuations which occurred in the forex world. Ivybot which is recently launched in the market has got this unique feature which will prove beneficial for the people.
There are actually four Ivybots - one for each currency pair. Doing it this way enabled the developers to design each bit of code so that it was fully optimized to each currency pair, giving the robot the accuracy to suck as much profit as possible out of each trade.
You can use it in your trading as long as you want as it will automatically be upgraded according to the happenings in the forex world. The people behind this project are keen to take their forex robot a step ahead in the foreign exchange market.
There are many reviews written about the efficiency of this product by the people which will give you more idea about its functioning. You can also refer different sites which are present online to know more about Ivybot.
Even though costly Ivybot is a life long software and will make your financial levels stable. It will improve your career and help you in gaining a stable profit every month.
Jul 30 , The Forex-trading Foreign Currencies Daily
Every day of the year, there is a trading market that is open for business. Unlike most markets that keep bank hours, the Forex or foreign exchange market never closes its doors for business. The Forex market is nothing like the stock markets that most people trade their fortunes on. Foreign currency is traded on the Forex market.
Every trade on the Forex market consists of two parts, the buying and selling of specific country’s currencies. When one is bought, another is sold. The two currencies that are involved in each trade are referred to as the cross. While every country has currency that is able to be exchanged on the Forex market, the biggest crosses that are traded daily are the U. S. Dollar and U. K. Euro, the Japanese Yen and the U. S. Dollar and the Great Britain Pound and the U. S. Dollar. These and other currencies are traded at a rate of over three trillion dollars each and every day.
The Forex is not about stocks and futures; it’s all about foreign currency exchange. Currency does not have a definitive value. It is all a matter of timing. The value of currency fluctuates drastically over the course of hours. On the Forex market, banks and other financial institutions trade foreign currency. Currency may fluctuate for a variety of reasons, one of which is the current political climate.
Currency does not have a fixed value. The value of each country’s currency changes rapidly and repeatedly throughout the course of the trading day and night. One the Forex, currency value can change for a plethora of reasons or no reason at all. Due to this uncertainty, all trades on the Forex are based predominantly on speculation.
There are several factors which play into currency fluctuations. The financial status of a country favors greatly into the determination of market value. Changes in gross domestic product and inflation cause swings in the value of each country’s currency.
Forex signals indicate when there may be a change in a currency’s value and the Forex robot gets to work, quickly buying or selling your currency. Most bots focus on U. S. And U. K. Currency but there are other programs that are available for more extensive trading. Trades on the Forex occur as the selling of one currency and simultaneous buying of another. The two currencies that are used in any trade are called a cross.
Unlike any other financial market, the Forex is traded mainly on speculation. Analysts and software experts have created Forex software that seems to have a pretty solid grasp on the pulse of the market. They use these Forex robots or Forex bots, to help them achieve the greatest reward in foreign currency trading. With the help of a Forex bot, many traders will make trades with 70% or higher certainty of market fluctuations.
Trading the Forex can be a very lucrative move in your investment strategies. It’s not for the faint of heart, though. Transactions occur rapidly and never stop. Without the use of a Forex bot, newcomers are strongly discouraged from making high dollar investments.
The Forex is the fastest moving and liquid market in the world. The differences in trading foreign currencies and stocks are enormous and the Forex has no base for most of its fluctuations. If you’ve got money to spend, there’s plenty to be made on the Forex. Whenever you make any financial decision, the pros and cons should be greatly weighed with caution.
Jul 30 , Understanding the Market Sentiment (Part V)
Rather than looking at the commercial participants, you should focus on the non-commercial participants when you look at the COT report. You would want to know the reason for ignoring the commercial category in the COT report. Commercial participants are mostly trading currency futures for hedging their future business transactions against exchange rate fluctuations. Commercial participants are mostly large transnational companies. These companies keep on rolling their positions from month to month for hedging even though they maybe taking losses.
However, large speculators trade the forex futures contract for speculation and capital gains. They do not have any intention of taking delivery of the currency in cash like the commercial participants. Most will immediately close their losing position instead of rolling it over to the next month.
You can also gauge the market sentiment in the spot forex market by gauging market sentiment in the currency futures market. There is a close correlation between the currency futures market and the spot forex market and both the markets move in tandem.
Forex futures are basically spot prices adjusted for the forwards to arrive at the future delivery price based on the interest rate differentials. Near the maturity of the forex futures contract, both the prices converge. Prices become equal on maturity.
The main difference between the spot forex market and the forex futures market is that the spot forex market is not a centralized market. It is an Over the Counter (OTC) market. However, Forex futures are traded on a Centralized Exchange Chicago Mercantile Exchange (CME). CME functions as a clearing house between the counter parties.
When either the spot or the future price of the currency rises, the other also tends to rise and when either falls, the other also tend to falls. The spot and futures prices of a currency tend to move in tandem. For example, if GBP futures price goes up spot GBP/USD goes up too. You should become familiar with the differences in price quotation system used in both the markets.
By subtracting the total long positions from the total short positions, calculate the net position of the non-commercial contracts in the COT report. The non-commercials tend to register a net long position when a particular currency is trending up against the US Dollar. This is due to the fact that the large speculators mostly hedge funds like to continue riding the trend as long as it lasts.
The opposite is also true when a particular currency is trending down against the US Dollar. When the market is trending down against USD, the non-commercials will have a net short position. By comparing the latest net positioning with that of the past few weeks or months, you can tell if the latest net positioning is skewing towards an extreme reading.
You can detect turning points in the spot forex market with the COT reports by keeping an eye on the net directional positioning and net contract volume in the non-commercial category. When the majority of the market is positioned incorrectly, dramatic price moves like the major turning points tend to occur.
You can use your COT report analysis to optimize your trading strategies. Entry and exit cannot be timed solely based on COT report but it can generate warning signals of a possible turn ahead in the spot forex market. What deters many traders from using the COT report is its raw organization of data. COT report is a treasure trove.
Jul 29 , Get Yourself A Good Day Trading Ebook
Day trading has made fortunes for many stock traders; this is one of the few types of trading where large profits can be made quickly by those with a limited amount of capital. However, there is always risk associated with investing and traders can lose large sums as well as reap sizeable profits, leading many to be wary of this market. A lot of day trading ebooks focus on futures these days.
While the futures market is well known for being a risky path to take, some experts would argue that it is as risky as you let it become. If you are careful and plan things out right, then you will probably do a lot better than you would just be jumping in headfirst and throwing caution to the wind.
What Are Futures?
Futures are what are known as contracts, and they are transferable. They represent buying a stock or commodity at a set price. The one who holds this contract is bound to make the purchase, and the seller has to deliver on everything that happens to be in the contract. Futures aren’t quite the same as options, simply because they’re an obligation to buy and sell instead of allowing the buyer and seller the right to buy or sell the named asset.
To make any sort of profit on futures, you have to do some speculative trading based upon the way the market is going. These changes could show gains or losses. These might be large or small, it all depends on the way the market happens to go.
Emini contracts are very popular futures contracts to trade. Most ebooks and courses today are really some form of emini trading system.
Why And How Are Futures Traded?
Futures trading is particularly popular with day traders, since many futures contracts can be traded at a low initial investment and there are a wide range of markets which can be traded in this way. You can trade futures whether the market is expected to go up or down. If the trader expects the market (and thus the value of the futures contract) to go up, then they will perform a long trade, purchasing the contract and selling it once the value has increased. If the trader expects a decline in the market and the value of their futures contract with it, they will perform a short trade, selling one contract to enter and buying another to exit.
Any trader that knows the market well and is good at trading will have the ability to turn a profit no matter what. A lot of traders watch the market tend rather than the direction of things simply because of this fact.
Trading futures is a risky venture, but if you know how the stock market works, then futures trading should be fairly simple. You need to be able to recognize the way the market is moving, and this will be very easy for anyone that is well seasoned in the stock trade.
It isn’t too difficult to get your foot in the door of futures trading, but make sure that you don’t do too much too soon, especially if you don’t have experience. Be smart and do your research. This could work out great for you if you go about it right!
