If you do not already know, there are trillions of dollars worth of foreign currencies exchanged every day on the forex markets around the world. Traders make money by buying a currency they think will rise in value, or selling one they think will fall in value. This is always done by exchanging one currency for another. Of course! There is no way to buy a currency other than with a different currency.

A majority of traders take a long term position. They identify an emerging trend in price movements, open an order and then wait days, weeks or even occasionally months before they determine that the trend is about to turn. That’s when they close out and make a profit.

Day trading, as the term suggests, is significantly different. It involves opening and closing a trade within one day. In fact, most day traders, or scalpers as they are sometimes known, will close a trade in less than an hour, often within a few minutes. They shoot for ‘little and often’, frequent trades with a small profit each time.

Forex trading is always risky. The day trading strategy is perhaps more risky than most. But it does have advantages for some traders. Some people like to see results fast. They don’t have the patience to wait for results in a long term trend. Others can trade only at certain times because of other time commitments, and do not like to leave a trade open when they cannot be online to watch it. Some just enjoy the adrenaline rush of the successful scalper, sneaking in and jumping out with the profits while others are busy poring over their charts.

There are some factors that must be in place if you are to be successful with currency day trading.

1. You need a profitable system. Use a demo account to make sure that it works for you in practice before you try it with real money.
2. Have the right broker. Some brokers don’t like scalpers and will quickly close you down, especially if you start to make a lot of money. You should check the forums and ask for recommendations from successful day traders.
3. Be very familiar with your charting tools and able to use them quickly. Having an analytical mind helps. Again, if you are new to forex trading or are changing to a new platform, you should definitely work in demo mode for a while to master your system.
4. You must be free of distractions while you are trading. You may only be online for a couple of hours each day, but it must be uninterrupted time. Lock yourself away from distractions if necessary. Close your email and turn off the cellphone.
5. You need a cool head and a very clear trading plan. The day trader who hesitates or panics will lose.

All currency trading is a risky business. The short time scale of day trading makes it more risky than most other methods. Self discipline and complete confidence in your system are absolutely vital if you are to be successful in currency day trading.

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1. How To Be Successful With Your Forex Currency Trading System

To begin with, you will need a computer of course. Most modern computers (less than five years old) are fine so long as you do not have them so packed with other programs that they run very slowly. Most of the software packages run on Windows, so you will probably need a Windows emulator if you have a Mac.

You should also have a broadband connection. Dialup is insufficient for foreign exchange trading. It is simply not fast enough. You will experience many missed trades and slipped prices due to the time delays. Sometimes you may not be able to trade at all. It would be a very frustrating experience to try to do serious trading on a dialup connection.

The software program that you use will be provided by your broker. This is the interface that connects you to the forex market via your broker. It gives you the ability to make your own trades based on the prices that you are following on the screen. The brokers usually give you a free demo account so that you can try the system out before you start risking your real money on currency trading. Most forex broker software platforms also supply free charts so that you can analyze price movements and identify trends. This will help you make profitable trades.

Broker foreign exchange software platforms are web based or desktop based. If they are web based, you can log in from anywhere and control your account on the broker’s hosted platform. If they are desktop based, you download the software package to your own computer and run it from there.

Some web based platforms have downloadable elements, but the deciding factor is whether the software will continue to run when you switch off your own computer. If it is web based, you can set up a trade or a stop loss, then switch off your computer knowing that the trade will still be triggered. If the software is on your own computer, you must leave it on and connected to the Internet so that it can make the trade at the appropriate time.

Many people buy a new computer to use only for their forex trading. There are several reasons why this might be a desireable option even if your present computer is operating fine. One reason is so that you have a dedicated computer that you can leave turned on and connected all the time. You do not have to share it with family members and risk someone disconnecting it when they are finished working.

Another major reason is to have a backup. Computers do sometimes fail. Repairs can take several days to fix. They can also be attacked by viruses and malware. You may want the security of a second computer running a backup copy of your foreign exchange software so that you can continue to trade even if your main machine has stopped working.

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1. Foreign Exchange Markets: What You Need To Know

Many people already have some experience in exchanging currencies. When you travel to another country for business or on vacation you need to change some of your money into the local currency. You probably realize as well that the banks are constantly changing money for businesses who import or export goods from foreign countries. However, it is estimated that 70%-90% of currency transactions are speculative in nature. This means that the person or institution making the exchange  has no intention of taking delivery of the currency that they have ordered, but plans to trade it back at a profit. This is forex or currency trading.

Most world currencies no longer have a fixed exchange rate. This means that their values or prices are constantly fluctuating.  When a country is experiencing an economic boom its currency value will generally be strong, or high. When a country has an economic crisis or downturn, its currency will usually fall too.

Since small changes in currency values are happening every minute of the day to every currency, there is a lot of potential for financial traders to make money by buying a currency whose price is rising in exchange for one whose price is falling. Unlike with stocks, you are always dealing with a pair of currencies because you have to give money in one currency to get it in another. Each currency is denoted by a three-letter abbreviation. Examples of the major pairs look like this: EUR/USD (euro/US dollar), GBP/JPY (British pound, Japanese yen).

Unlike stocks, you do not receive any dividends on a currency investment. You have to act on rising and falling trends or economic and financial news to decide when to buy and sell. You then close the trade by exchanging the opposite direction. If the market has moved far enough in the direction you expected, you will end up with a profit.

Until recent years the market was entirely in the hands of banks and other institutions with large investment funds available. But the development of the Internet has meant that much smaller investors can enter the markets via their home computer.

First, you need a broker. There are many who cater to the smaller trader by offering mini forex trading accounts. This enables you to start trading with just a few hundred dollars. However, a larger starting fund is recommended. Like all speculative trading, this is a risky form of investment so you should only be trading with money that you do not need for other purposes. Fortunately most brokers offer free forex demo accounts where you can learn your trading skills by practicing in demonstration mode before you ever risk a real cent.

You can use leverage to control larger sums of money than you have in your account. This means that theoretically you can make a lot of money in a short time. This is a very attractive prospect for a growing number of people. Keep in mind that money can be lost very fast too. Solid training, experience with a demo account and a good system are some of the qualities that you will need to cultivate if you want to explore what is forex trading for real.

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1. Foreign Exchange Markets: What You Need To Know

You have probably heard many times before that it is important not to let your emotions rule important decisions. This is especially important when talking about your trading. Making decisions based on feelings of fear, greed or anxiety is a surefire way to lose money in the foreign exchange markets.

It is true that some successful traders talk about using their intuition to help them make money, but this intuition is not based on emotional feelings. Instead it comes from their experience, which has taught them much over time about trends and patterns. They may not even be conscious of this fact as they use their intuition.

One of the best ways to minimize the impact of emotions on your trading is to always trade only with money that you can afford to lose. Do not be in a position where you rely on income from forex trading to pay the rent or food bills. Instead, you should consider the money as spent as soon as you transfer it into your brokerage account, just as if you had used it to pay for a vacation.

Many people do not understand the importance of this. It seems counter intuitive. You might think that if you consider the money already spent you would be more reckless with it. While if it is important to you, you would take care not to lose it. But this train of thought does not take into account the emotional factor. The impact of fear on a person’s trading is so great that the opposite is true. If the money is so important to you that you cannot afford to lose it, you will be carrying a huge burden of fear that will affect your decisions and almost certainly lead to losses.

But, treating your investment as money spent is only the first step. Even if you have written off your investment and have plenty of other income for your everyday needs, you can be overcome by fears and anxieties simply because of the nature of the forex market itself.

Currency trading offers high margins and leverage which allow a trader to control many times the sum that is in his or her account. People are often seduced by the idea of making big profits into over committing their funds. Many brokers will allow you to open an account with a very small initial investment. If you then use the maximum leverage, you could be committing an overly large percentage of your account balance on just one trade.

This is fine while you are winning, but a couple of losses with high leverage will soon have most beginners running scared and making panic decisions. This is the main reason behind the sad fact that forex trading often does not make money for the people who need it most. Some people out there are searching the Internet for a broker who will let them start trading with only a few dollars. Those people have very little chance of making money, and stand a great chance of losing their investment quickly.

So, do you have to be rich to make money in the forex markets? Not necessarily. Rich people can fall into emotional trading too, especially if they acquired their wealth without having to learn good money management and emotional control. On the other hand, people on a modest income can surely make money. However, you will need to at least have some disposable capital, and be cautious in calculating your position size. And never forget that the forex trading secrets of successful traders always take into account the emotional factor.

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The good news is that you can learn to minimize losses and maximize gains. Having a clear plan and knowing how to implement it can do wonders to help you avoid the worst of the loss situations, no matter which system you use.

Your Plan

Successful currency trading requires two things: a profitable system and an effective plan. There are many systems too numerous and complex to list here, so we will assume you are using just one system. The problem is that people often think that the system is enough. It’s not. It is equally important to have a plan for implementing your system.

Your plan should include three things:

1. Your position size. That is the amount that you will invest in each trade. You will probably think of this in terms of lots but it is also worth considering the margin and what percentage of your total funds it represents. The percentage amount will vary depending on the leverage you are using and the level of risk that you feel happy with.

2. Your stop loss level. This will be expressed in pips. But again you should also think it through as a percentage of your funds. Most people would be well advised to set a stop loss so that they never risk more than 2% of their funds on a single trade. If you have a minimal account balance, however, you may have to risk more, otherwise you will find the stop loss is triggered by every little normal fluctuation in the market. Just be aware this opens you up to a bigger risk.

3. Your exit level for a successful trade. This is one thing that many traders do not decide in advance, but they should. Deciding how much profit to take is the best way to maximize your profits in most situations. Do not be tempted to leave funds indefinitely hoping that the trend will keep going your way. Sooner or later it will turn on you and bite hard.

Sticking With Your Plan

There is no point in even having a plan for your FX online trading if you do not keep to it. There are many temptations: you will find voices popping up in your mind suggesting that you deviate from your plan in all different ways.

We just mentioned the temptation to leave your trade open indefinitely when things seem to be going your way. But there are other tempting situations too. For example, when you have just taken a loss, it is tempting to risk more on the next trade to try to recover your position. Don’t do it.

Or perhaps you have not been able to trade in a long time because nothing has met the criteria for your system. Then along comes a situation that almost qualifies – but not quite. Do you take it? No. You must maintain your discipline.

It is also important to avoid distractions while you are trading so that you reduce the risk of making simple errors. When starting out, you would not believe that you could ever do something so stupid as to go long when you meant to go short, or enter the market for the wrong pair, or set your stop loss at 10 times as many pips as you intended. Simple mistakes, but most traders have done this kind of thing at least once in their trading lives. Often it is because concentration slipped: the kids are banging on the door of your den, or the phone is ringing and you are trying to set your position quickly so you can go answer it.

One of the biggest advantages of using a forex robot is that the robot will stick to your plan for you. Provided you get one that will allow you to set up a profitable system, it really will trade for you on autopilot, sticking to your preset rules. You are safe from temptations and distractions when you use a forex robot for your FX online trading.

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Of course, this assumes that you are starting with a system that has a good chance of bringing you profits over the long term. Your selection of a system is important too, but it is less important than having the ability to stick with the system after you make your decision.

Why being consistent works, and flitting from one thing to another does not work:

The simple fact is that no system, however sound, is going to make a profit on every trade. What’s more, it will have what can be called winning runs and losing runs … periods when everything or nothing seems to go right. If you have 70% profitable trades, the laws of statistics dictate that you will not have 7 winners in every 10. Sometimes you will have 5; sometimes you will have 9 or even 10.

Depending on the aims of your forex currency trading system, it is even statistically possible for you to have a run of 20 losing trades. The temptation at that point is always to switch systems. This is what you absolutely must not do.

Think about it. If you drop out when you are down, and switch to a currency trading system that looks better (probably because it has just had a winning run) you will always be moving in at the high point, and pulling out at the low point. Losses are inevitable. You would never do that with an individual trade. So do not do it with any system.

If you are likely to be swept away by the distractions of the moment, you may be feeling a little down at this point. It is important not to worry. Even if you have always had a tendency to act on impulse, it is not a fixed part of your personality. Being consistent is a skill. It is something you can and must learn to be successful in FX trading.

Practice with a demo account. Trade on paper and start small when you do start. You will find that as your confidence in your system increases, so does your ability to be consistent. Hold on to that confidence whenever you have doubts.

While you are learning your new skills, there is nothing wrong with having a little help. If you are not able to be consistent by yourself, automated forex trading software can do it for you. Once you set it up, the software will apply your forex currency trading system in every detail every moment that it is active, no matter what happens. That is why they call it a robot!

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Getting the practice is easy enough. Most forex brokers will let you open a free demo account. In fact they encourage it. They are hoping that once you are making money with your forex demo account you will go ahead and invest some real money with them. Then they can profit from the spread or the fees that they charge on your account. Of course, the idea is that you will make enough money to pay the broker and then some, so everybody benefits.

Finding profitable currency trading strategies is a different story. There are plenty of systems out there, but some are too complicated for the beginner. What you want to find is something simple enough that you can start trading with your demo account today. Notice that I said “with your demo account.”

Let’s take a look at a simple forex trading strategy using what is called support and resistance. You usually put this technique into action when you have a situation where the market is fluctuating up and down within certain boundaries. So if you look over a long time period, the movement is within an upper position and a lower position.

You can see this on the charts that you have access to in your demo account. Look at the candlestick chart over a large number of time periods. You will probably be able to identify a time when the price was moving up and down between certain points.

You can draw a line along all the top points. This line is called the resistance line and it will be horizontal. When the price hits this line it moves down again, keeping within the boundaries. So at that point you could sell the currency pair.

Similarly, a horizontal line drawn along the bottom points is called the support line. When the price hits this line it starts to move up again, so you could buy at that point.

When you try this in your demo account on live prices, you will find that sometimes the price does not bounce back into the zone. On those occasions you will lose. Usually this is because a trend was beginning to form. You can use the indicators in your charting software to check when a breakout like this might be expected. From this information you can develop your own system based on support and resistance on one hand and following new trends on the other.

Be sure that your system is working profitably over a long time (several months) before you start trading with real money. Forex trading is always risky. But by testing your system in this way you can be more confident that you have created a profitable system from your currency trading strategies.

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The two methods are known as “fundamental analysis” and “technical analysis.” Let’s look at fundamental analysis first.

Fundamental Analysis For Forex Market Trading

Fundamental analysis is based on the assumption that the underlying forces driving changes in currency values are related to the economic strength and financial performance of the two nations whose currencies you are trading as a pair. In other words, one currency will rise in value relative to another currency when the first country’s economy shows signs of strengthening or the second country’s economy shows signs of weakening.

Trading based around this type of analysis relies on market news and the interpretation of the many signs of economic strength or weakness. However, not many traders rely entirely on fundamental analysis these days. It is difficult to get a handle on all of the different factors involved, and the news is often unpredictable. It is possible for traders to make money focusing mainly on this method if they have a keen interest and involvement in international economic and financial developments. But they will most likely still use our second method some of the time.

Technical Analysis For Forex Market Trading

Most traders who are not closely involved in national economic news prefer to use the second method, technical analysis. This method is based around using charts and indicators to identify changing and continuing trends in the market. Most traders have systems relying on identifying charts and patterns. In general, these systems assume that patterns will repeat and that trends are predictable.

There are several different types of charts, but they mostly display the same data (i.e. currency values) in different formats. Most people find candlestick charts easiest to read because they are very visual. They display the opening, closing, high and low prices of a currency pair over a certain period.

You can adjust the period that a chart covers. It is a good idea to do this when you think you have spotted a trend or pattern that fits your system. For example if you generally look at hourly charts, check your data by focusing down to 15 minute and even 5 minute periods to be sure that the signs are right there, before you open your trade. If you usually use daily charts, check the 4 hour and hourly charts, too.

It is important to keep in mind that even the clearest pattern can be upset if major news is suddenly released indicating a move in the opposite direction. So even the biggest fans of technical analysis will at least keep an eye on news alerts. Most people check a daily calendar to see when reports and data are due to be released in the countries whose currencies they trade.

Try to get a grasp of both types of analysis before deciding which one is best for you. Then concentrate on your chosen method, but without completely ignoring other factors. This will give you the best chance of success in forex market trading.

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Here are five of the most common reasons why people fail with forex trading. Keeping them in mind at all times will help you avoid falling into these traps yourself.

1. Bucking the trend

We all hear that “the trend is your friend”, but there are still many traders who try to base their system around going against the trend. It is bound to turn at some point: that is true. But what makes you think it will happen right now? In most cases, it is much easier to make money by going with a trend than by trying to second guess when it might change direction.

2. Taking a narrow view

If you rely too much on a single method or indicator, you could be in danger of losing big time whenever it lets you down. Even the best indicators have weak points. They may lag, they may be subject to different interpretations, or news may break that sends the trend into a spin. Develop a strong system, by all means, but cover your bases. Cross check against other indicators and keep one eye on the economic news.

3. Desperation

It is good to have a strong sense of purpose, but if you are desperate for results you are likely to take risks that will end in disaster. Forex trading is not for people who are in urgent need of cash. You must be free of that type of worry when you are trading.

Equally, it is not for people who are trying to prove something. Do not involve your ego by boasting about your success or entering into competition with other traders. This too can make you desperate for success and push you into very risky trades.

4. System hopping

All online trading systems, even the most profitable, have their bad spells. If you abandon a forex system every time it reaches a low point, you will be constantly getting the worst of every system. Stick with it unless you have reason to believe that market conditions have truly blown your system out of the water. Even then, you should consider waiting until conditions resolve and then picking it up again. This may be a much better option than trying to begin all over with a new system.

5. Guru worship

Do not take anybody’s opinion as gospel truth, even if they are a millionaire. Their system may not suit you for one reason or another. Some successful traders have forgotten what it is like to be starting out and watching every dollar. They may encourage you to get into situations that you are not ready for. Of course, it is great to get training and even coaching, but keep an open mind. When you are successful with forex online trading, you will be successful in your own way.

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There are two main issues that someone new to the world of forex trading must address if you want to make money with forex autopilot software. First, you must understand that the robot does not come with any guarantee that it will make you money. The only guarantee the retailers will ever give you is a refund on the purchase price of the software. Currency trading is a risky business. Even with a robot you can still lose money, either because the market is going through a patch where the robot’s system does not work or because you committed more of your funds than you should have to one trade.

The second issue is that these trading robots can take a while to set up. Sure they work on autopilot once you have them connected, but they do have to be installed and configured on your computer. You have to download them, install the platform that they run on, install the program itself and link everything up. Of course you get the instructions, which are usually clear, and you can also contact the product’s support system if you need to. But setting up the robots properly can take a while and some people do not have the patience to see it through.

So you need to be prepared to spend a little time on getting things set up correctly. You also need to think seriously about money management. The system will not work if you are constantly tweaking your settings. The best thing you can do is to set up a demo account (which usually comes free as part of the package) and practice with it until you are completely familiar with the system and are seeing consistent profits.

Forex robots certainly have some advantages over a human trader. They can monitor the currency markets 24 hours a day. Since the currency markets are active 24 hours a day this is a big bonus. Also, the trading robots are perfectly disciplined. They will never close a trade early because they got scared, or hang on to a trade when they should have exited because they were hoping for a few dollars more.

Provided you take into account the above points and have the patience to set up your robot correctly and then test it, you could find that running an automated forex trading system on your home computer brings enormous benefits, in terms of profits, from your investment.

Forex Trading Online compares and reviews the best-selling forex trading software and fx training products. If you are looking to get into currency forex online trading, learn the basics and investigate the most popular products at Forex Trading Online.

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