The most important step for a forex trader is to begin on a solid foundation of a good education. This is key to preserving capital and ensuring the long term survival and ultimate success of the Forex trader.
The key to a good forex education is to get a great Mentor. A Mentor is defined as a wise and trusted counselor; someone who has already proven themselves and can hold your hand and guide your footsteps as you walk along the path to success. Market Traders Institute, http://www.markettraders.com/landings/forexIQ/forexIQ.aspx?id=THEFOREXMOM(Blog), have been excellent mentors for me. They have provided me with a solid foundation for understanding the forex.
The easiest way to begin your forex education is to read my posts in this order:
1. Introduction to the forex
2. Candlestick Formations
3. Forex Trading Strategies
The Foreign Currency Exchange (or Forex, Spot market, or Cash Market) is a group of over 4500 world banks that are connected electronically.
It is different from the Stock Market because there is no centralized trading place. The Stock market trades $100 billion daily, the US Treasury Bond deals with $300 billion daily, but the Forex deals with $3 TRILLION daily! Because of this, it is much easier to get in and out of a trade.
The Forex open Sunday evening at 7pm EDT and closes Friday evening at 4PM EDT.
There are 3 sessions of trading:
- Asia 7 PM EDT to 6 AM EDT
- Europe 2 AM EDT to 11 AM EDT
- United States 8 AM EDT to 5 PM EDT
To trade the Forex, you need to open an account with a Forex broker, fund the account, then place a trade. This is easy to do if you have Internet access. You will also need charting software so that you can analyze the market.
90% of traders fail, and only 10% of traders succeed. The reason why so many fail, is because they fail to get a good education. They fail to secure a good mentor. I have found some excellent mentors at Market Traders Institute.
They have kept things simple and logical. They have always been available for me to ask questions. When I set up a trade, I can go into a live chat, and ask their opinion. They do live analysis of the market 5 times a day to help me see where the currencies are going and how I should be trading. They have always been patient with me.
I also have access to other traders that are learning in the MTI chatroom. I have made many friends in the chatroom and we help each other.
The most popular currencies along with their symbols are shown below:
Learning the forex is a lot like learning to become a chef.
First, discover what kind of chef you would like to be. Second, learn how to prepare your ingredients. Third, choose the best recipe for you. Fourth, decide if you need to add or omit certain ingredients to suit your taste. Finally, work on the recipe to perfect it.
How does this apply to the forex?
Let’s start with an uptrend. As we are going up, the candles are waving up and down. To find a good entry to go up, we want to wait for the candles to go down, and start going up. After we see 3 candles of retracement, we draw a counter trendline (down) and wait for a good bullish candle to break this. We prefer a candle that is at least 75% body (25% wick).
We put our stop 10 pips below the low. We use fibs or support/resistance to determine our limit.
Or you can set a very high limit (1000 pips) and move the stop loss every time a higher low is formed. Then you can ride this wave as long as it lasts (surfing the forex)! HANG 10!
Let’s go to the downtrend next. As we are going down, the candles are waving up and down. To find a good entry to go up, we want to wait for the candles to go up, and start going down. After we see 3 candles of retracement, we draw a counter trendline (up) and wait for a good bearish candle to break this. We prefer a candle that is at least 75% body (25% wick).
We put our stop 15 pips above the high. We use fibs or support/resistance to determine our limit.
Or you can set a very high limit (1000 pips) and move the stop loss every time a lower high is formed. Then you can ride this wave as long as it lasts (surfing the forex)! HANG 10! (Can you hear the Beach Boys in the background… listen very carefully).
My charting software from Market Traders, MTI4.0, makes it easy to draw trendlines. The green line is a trendline and it makes it very easy to see that the market is making lower LOWS and lower HIGHS. We are in a downtrend.
Ths will would be a good time to sell first and buy later.
Can you see how the market moves in waves, up and down? Overall we are going down. The best time to sell is after we hit a high and we start moving down again.
70% of the time the market is in consolidation; only 30% of the time it is trending.
When the candles are no longer making higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend) then the candles are in consolidation.
We do not follow the fibonacci’s when we are in consolidation. We do not follow crowns either.
We draw the lines of support and resistance. If the distance between support and resistance is greater than 120 pips, it is large consolidation.
When the candles go down to support and we see a good bullish candlestick formation, we enter long. We place our stop 10 pips below the support line (or low of the candlestick formation) and we place our limit 10 pips before the line of resistance. It is a good idea to move your stop loss each time a higher low is formed.
When the candles go up to resistance and we see a good bearish candlestick formation, we enter short. We place our stop 15 pips above the resistance line (or high of the candlestick formation) and we place our limit 10 pips before the line of support. It is a good idea to move your stop loss each time a lower high is formed.
It has been especially helpful for me to watch my mentors trading large consolidation. I learned more from waching them than from reading theories all day long. My mentors are Market Traders.
Fundamental Announcements tend to move the market very fast. It is important to watch for them. They require different trading strategies when the announcement is very different from what is expected. Bankers tend to trade on fundamental announcements.
Here is the list of announcements we need to watch for.
Market Traders have an economic calendar on their website that lists the upcoming fundamental announcements and the expected announcement. During every live analysis of the market, five times a day, the mentor begins by going over the upcoming FA’s and which ones to keep an eye on (the ones that have a large impact… like Non-FarmPayroll Indicator).
Market Traders also has a checklist for trading fundamental announcements. Join MTI and get the checklist for trading. It’s more fun than a roller coaster ride! (You also need to have nerves of steel to do it).
This collection of multiple-choice questions brings hours of fun!
Just how extensive is your knowledge of the Foreign Currency Exchange (Forex) Vocabulary?
Are you willing to jump in and learn them as you go?
Are you familiar with:
- Up trend
Features of this game:
- Multiple choice game
- Keeps track of your score
- Keeps track of your time
- Shows your highest score
- Shows your fastest time
- Rewards you when you achieve 100%
Are you ready?… Then let’s begin.
One of the most popular activities to hit the investment world during the past decade has been the trading of foreign currencies, or “forex” trading as it is more commonly called. This investment medium is not for the faint of heart. It requires discipline and decisive decision making skills, best obtained through rigorous training and practice trading routines. Charting and business cycle analysis are key factors for success in this high risk, highly stressful environment. Every trader seeks consistency and knowledge that will give him a competitive edge, and quite a few have looked to astrology for whatever insights are available from this predictive genre. Continue reading
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