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How To Establish a Personal Strategy


Forex trading is one of the most versatile types of investments. You can profit from price movement in either direction. You can magnify your returns to almost any degree through high amounts of leverage. You can profit in the long-term scale or profitably work with trades that last only a few minutes. You can even expand into currency futures and add options trading.
However, this also means that the forex market involves lots of different trading strategies. For the sake of simplicity, we can say that these range from the short-term to long term strategies.
At the smallest time durations, scalping takes advantage of the micro-volatility a currency pair might experience. Most scalpers open at least a hundred positions in a single day and the majority of those trades stay open for less than five minutes. The focus is rarely on trends or the fundamentals behind the currencies as much as the quick jumps that are always happening.
Swing traders are more concerned with trends. As the name suggests, they usually open a trade at the top or bottom of a price trend, just as it reaches support or resistance. If all goes as planned, the currency will turn and they can profit from the next trend—hopefully closing the trade just as the price reaches new support or resistance.
Carry trades are inherently longer term because they rely on the underlying interest rates between currencies. For instance, JPY (the Japanese Yen) maintained rock-bottom interest rates for many years. At the same time, interest rates were much higher elsewhere in the industrialized world. So if you used yen to buy dollars, for instance, and held them for a certain period of time, your profit would be the difference between the two interest rates. Magnify this with leverage, and it might be significant.
Of course, the most basic type of trading is a medium to long-term strategy based on the fundamentals. Here, you simply evaluate where you think a given currency is going and try to find a pair with one currency headed up and another headed down. If your guess is right, holding the pair for an appropriate length of time can yield good profits.
So what is the best strategy? Like most questions in investment, this has no simple answer. Each strategy has pros and cons. The cons for scalping are the constant focus it requires, the temptation to raise leverage inappropriately, and the challenge of forex brokers that allow it. Swing trading requires a good sense of timing and facility with several technical analysis tools. Carry trades are often simple to research, but it is increasingly hard to find good pairs to use since most of the industrialized nations now have extremely low interest rates.
In general, the most versatile strategy and the most useful for beginning traders is day trading based on the fundamentals. A medium range is also helpful because it requires low capital with minimal risk. This simple method is also a good starting point. As you gain more experience you can specialize into other trading strategies.
If you are an experienced trader, try learning strategies you have never used before. The ideal is to have facility in all of the methods and be able to switch between them. Certain opportunities are ideal for certain strategies but not others. If you know how to use all of the methods, you can adjust quickly and maximize your profits at any one time.
So what is the best strategy? Here’s a simple answer—probably a hybrid form of them all!

Forex Trading Strategies And Systems


I've been trading the forex markets for several years now so I've developed quite a few different systems in my time. However there are some that are more profitable than others, so let me share you with you some of my most profitable forex trading strategies.

4 Hour Trading Strategy
I created this trading strategy myself and have been using it for several years now. This one system has generated more profits that any other system I have ever used, and yet it's surprisingly simple.
I simply look at the daily trend for a particular currency pair (usually the GBP/USD, EUR/USD or USD/JPY pair) using a very simple but effective technical indicator, then I wait for two EMAs (exponential moving averages) to cross over in the same direction on the 4 hour chart.
I will then enter a position (usually after a slight pull-back) and will employ a two-part exit strategy to maximise my profits. One half of the position will be closed out early for a safe profit, and the other half will be left to run for as long as possible in order to capture those really big price moves.
As I say, this particular forex trading strategy is highly effective, as regular readers of my blog will know because I share my trading results every week in my 'Weekly Trading Updates'.
Anyway if you would like to read all about my 4 hour trading method, you can access it (for free) by filling in the short form to the right and subscribing to my newsletter.
The only problem with trading this strategy is that there will always be quiet periods and particular days where you know you are not going to get any set-ups on any of the major currency pairs. Therefore at times like these I will often employ some of the other trading methods that I keep in reserve:

CCI Divergence Trading System
This is a forex system that I've recently created and it basically uses the popular CCI indicator with two different settings. The key here is to wait until there is divergence between both of the CCI indicators at the same time because this will give you a set-up with a very high success rate.
You don't get that many good set-ups per day using this trading strategy, but when you do, you are likely to make some decent profits because it is a very high probability set-up.
I have discussed this particular strategy elsewhere on this blog so please click here if you want to find out more about this CCI Divergence Trading System.

Forex Income Engine 2.0 Methods
At the time of writing (20 June 2009) I've just started using the three day trading methods included in the Forex Income Engine 2.0 course as well. I've always been quite sceptical about many of the short-term forex methods that I come across, but I've been very impressed with these three methods so far because they do actually produce some very good returns.
Anyway if you would like more details about each of these methods you can read all about them on my Forex Income Engine 2.0 review page.

Forex Nitty Gritty Method
This trading method was included in the Forex Nitty Gritty course and although it is a very basic method, it is actually surprisingly effective. The goal is to look for pairs that are in strong upward or downward trends, wait for a pull-back, and then enter a trade if the trend continues.
I've been using this method on the 15 minute charts for quite a while now and it has always performed well for me because these continuation trends occur all the time.
Again if you would like to find out more about this particular trading method, you may like to read my full review of Forex Nitty Gritty.

Long-Term Trading Strategy
I'm not really a long-term trader but I do occasionally open a position if a good trading opportunity arises. I will usually use the daily charts for these trades and will look at a variety of indicators such as the 200 day moving average, the supertrend indicator, established support and resistance levels, fibonacci levels if applicable, and Marketclub's excellent trading signals.
I will regularly post my long-term analysis of the various currency pairs on this blog, but I will only follow this up with an actual trade if I'm really confident about my predictions.

Other Forex Trading Strategies
Finally as well as all of the trading systems and strategies listed on this page, I also have a few breakout strategies that I like to use when a good opportunity presents itself. I'm also constantly testing out new ideas and reviewing the various trading systems that I get sent regularly by product owners who want me to promote their product.
However for the most part it's my 4 hour trading strategy that I spend most time on because this is my core system which generates the most consistent and reliable profits. All of the other forex trading systems are used to boost my trading pot during the quieter periods of the week.

Dollar Would be the Primary Benefactor of Volatility or a Market-Wide Risk Reversal Next Week


The benchmark dollar has plenty of event risk over the coming week; but compared to some of the highlights on other dockets, its listings are far from critical. Even so, the greenback will remain at the center of any momentous changes in the FX market derived from underlying shifts in speculative expectations thanks to its principle role as the world’s most liquid currency and begrudgingly-accepted safe haven status. Taking stock of the pressure that has built up behind the capital markets in general; we find many pairs and assets closed this past Friday’s trading session on the verge of trend-defining reversals. Acting as the benchmark for the majors, EURUSD closed just above a well-worn pivot see at 1.35. If sentiment is at risk, then the threat of reversal on a nine-month bull trend for the yield-heavy AUDUSD and NZDUSD should come as little surprise. Yet, giving greater credence to the dollar’s own intrinsic strength; the safe-haven balanced USDJPY and USDCHF pairs are both standing at the threshold of another phase of its February rally. What decides whether this is a short-lived live FX-based correction or a true speculative reversal, though, is complicity from the other asset classes. The 10-year Treasury note looks ready to rebound from nine-month lows, the S&P 500 is well-passed overbought and even gold is looking dangerously speculative. What we need is a catalyst and conviction.
If we want a genuine and pervasive transformation in the backdrop for speculative appetites, the tipping point will most likely be a deterioration in confidence in Europe’s financial conditions, concern that China’s inflation fight will panic global speculators or that the Bank of England’s austerity experiment will prove an disastrous example to the rest of the world. Compared to these looming threats, the dollar’s qualities are relatively benign and its positive characteristics require outside encouragement. That said, the docket will offer a thorough update on the economy’s progress towards recovery. Retail sales, housing starts, industrial production and capital flows are all critical to economic performance. The CPI data will play a unique role in shaping expectations for the eventual rate hike, and potentially before that, the withdrawal of the economy’s record stimulus.
And, though there is a dense round of predictable event risk ahead of us to threaten a near-term drive in risk appetite trends; we should also keep perspective of those fundamental developments that are further down the road. Though largely overlooked on Friday, the Treasury released a report offering up the proposal to wind down Freddie Mac and Fannie Mae. Essentially inevitable, there are far deeper connotations to this eventual effort than just exit of a stopgap for future disruptions in the housing market. These two GSEs hold a tremendous amount of toxic mortgage-backed debt that the market seems to have believed simply disappeared after the worst of the financial crisis. When market participants start to speculate on the influence of this transfer of assets back to the public space, the effects could be crippling.

Spot Trading


Currency spot trading is the most popular foreign currency instrument around the world, making up 37 percent of the total activity.
The fast-paced spot market is not for the fainthearted, as it features high volatility and quick profits (and losses). A spot deal consists of a bilateral contract whereby a party delivers a specified amount of a given currency against receipt of a specified amount of another currency from a counterparty, based on an agreed exchange rate, within two business days of the deal date. The exception is the Canadian dollar, in which the spot delivery is executed next business day.
The name "spot" does not mean that the currency exchange occurs the same business day the deal is executed. Currency transactions that require same-day delivery are called cash transactions. The two-day spot delivery for currencies was developed long before technological breakthroughs in information processing.

The Components of a Complete System


A  Complete  Trading  System  covers  each  of  the  decisions  required  for  successful
trading:

  •      Markets - What to buy or sell
  •      Position Sizing - How much to buy or sell
  •      Entries - When to buy or sell
  •      Stops - When to get out of a losing position
  •      Exits - When to get out of a winning position 
  •     Tactics - How to buy or sell
Markets – What to buy or sell 
The first decision is what to buy and sell, or essentially, what markets to trade. If you trade too few markets you greatly reduce your chances of getting aboard a trend. At the same time, you don’t want to trade Markets that have too low a trading volume, or that don’t trend well.


Position Sizing – How much to buy or sell 
The decision about how much to buy or sell is absolutely fundamental, and yet is often glossed over or handled improperly by most traders. How  much  to  buy  or  sell  affects  both  diversification  and  money  management. Diversification is an attempt to spread risk across many instruments, and to increase the  opportunity  for  profit  by  increasing  the  opportunities  for  catching  successful trades.  Proper  diversification  requires  making  similar,  if  not  identical  bets  on  many different  instruments.  Money  management  is  really  about  controlling  risk  by  not betting so much that you run out of money before the good trends come. 
How  much  to  buy  or  sell  is  the  single  most  important  aspect  of  trading.  Most beginning traders risk far too much on each trade, and greatly increase their chances of going bust, even if they have an otherwise valid trading style.

Entries – When to buy or sell 
The  decision  of  when  to  buy  or  sell  is  often  called  the  entry  decision.  Automated systems generate entry signals which define the exact price and market conditions to enter the market, whether by buying or selling.

Stops – When to get out of a losing position Traders who do not cut their losses will not be successful in the long term. The most important thing about cutting your losses is to predefine the point where you will get out before you enter a position.

Exits – When to get out of a winning position Many “trading systems” that are sold as complete trading systems do not specifically address the exit of winning positions. Yet the question of when to get out of a winning position is crucial to the profitability of the system. Any trading system that does not address the exit of winning positions is not a Complete Trading System.

Tactics – How to buy or sell Once a signal has been generated, tactical considerations regarding the mechanics of execution become important. This is especially true for larger accounts, where the entry and  exit  of  positions  can  result  in  significant  adverse  price  movement,  or  market impact.

What Is Hedging?


The concept of hedging is based upon the assumption that movement in cash and futures prices will parallel each other in movement after due allowance has been made for any seasonal or other trend in the cash market.
In essence, the goal of the hedger is to lock in an approximate future price in order to eliminate his risk of exposure to interim price fluctuations.  The best way to understand hedging and the futures market is by example.  I will assume that you have no understanding of the futures market.

Forex Trading – Sensible Method To Make Money With Forex Trading


The overseas currency exchange market has become widespread over the past few years. A part of the reason for its reputation amongst those who aren’t skilled traders is the benefit with which you’ll be able to enter and take part in the market. You possibly can enter it personally after learning the terms and charts that apply to the foreign money or commodity through which you’re interested.

At the other finish of the range is a managed account. In the sort of trading account, the broker or money manager does all the trades and makes all the decisions for you. Someplace in-between is an automated Forex trading robot. Each of those strategies can be utilized to earn a living Foreign currency trading system variations.

A robot makes use of mathematical calculations to determine when to enter and get out of a trade. The parameters could be designed by the traders or will be bought as a standalone software package. Some market gurus have made out there systems the place the clients are notified when a certain purchase or sell signal is received.The robotic methods can use numerous components and mixtures to resolve on the triggers. For example, it could be one or a mixture of or three features on the chart formations.

There are lots of indicators which might be offered freed from cost on the market platforms. You’ll be able to research the formations to find out which of them you need to use.The triggers is likely to be pushed by different options that can be seen on pairs charts. Volatility is among the measurements linked to how briskly the pairs worth is moving. The volume is one other measurement When there is lots of exercise in a specific pair, the value can improve or decrease very rapidly.

Throughout certain instances of the day, the triggers can range widely. Normally the busiest time is when the foremost markets are open. When you do not want to spend your entire time watching the charts develop, the robotic will watch the markets for you.As a result of there are so many pairs to observe and so many choices to select from, you could find a market that works for you. Often a robot can be set on essentially the most lively pairs. You may make the most of these mechanical aids to let you have the liberty to make the most effective decisions.

By utilizing an automatic Foreign currency trading robotic properly, you can also make cash Forex trading system signals. You don’t have to rely on a cash supervisor or broker. It is best to nonetheless know what you are doing so that you simply won’t be mystified by the transaction. I personally made greater than eight occasions on my money utilizing a Foreign exchange automated buying and selling robotic and would extremely suggest it.

To turn out to be successful at foreign currency trading, data is required. Before you possibly can come up with a workable buying and selling plan, you have to purchase the knowledge and expertise to implement what you learn. This web site is setup in such an approach that you’ll study, acquire data,implement the technique and grow your trading account steadily without worry of loss. That said, to inform you the truth, foreign currency trading is not for everyone. The uncooked emotions throughout live trading is just not simple for some to handle. So study who you are and how you handle these emotions. Everything you do during your training, should be intentional.

How To Establish a Personal Strategy


Forex trading is one of the most versatile types of investments. You can profit from price movement in either direction. You can magnify your returns to almost any degree through high amounts of leverage. You can profit in the long-term scale or profitably work with trades that last only a few minutes. You can even expand into currency futures and add options trading.
However, this also means that the forex market involves lots of different trading strategies. For the sake of simplicity, we can say that these range from the short-term to long term strategies.
At the smallest time durations, scalping takes advantage of the micro-volatility a currency pair might experience. Most scalpers open at least a hundred positions in a single day and the majority of those trades stay open for less than five minutes. The focus is rarely on trends or the fundamentals behind the currencies as much as the quick jumps that are always happening.
Swing traders are more concerned with trends. As the name suggests, they usually open a trade at the top or bottom of a price trend, just as it reaches support or resistance. If all goes as planned, the currency will turn and they can profit from the next trend—hopefully closing the trade just as the price reaches new support or resistance.
Carry trades are inherently longer term because they rely on the underlying interest rates between currencies. For instance, JPY (the Japanese Yen) maintained rock-bottom interest rates for many years. At the same time, interest rates were much higher elsewhere in the industrialized world. So if you used yen to buy dollars, for instance, and held them for a certain period of time, your profit would be the difference between the two interest rates. Magnify this with leverage, and it might be significant.
Of course, the most basic type of trading is a medium to long-term strategy based on the fundamentals. Here, you simply evaluate where you think a given currency is going and try to find a pair with one currency headed up and another headed down. If your guess is right, holding the pair for an appropriate length of time can yield good profits.
So what is the best strategy? Like most questions in investment, this has no simple answer. Each strategy has pros and cons. The cons for scalping are the constant focus it requires, the temptation to raise leverage inappropriately, and the challenge of forex brokers that allow it. Swing trading requires a good sense of timing and facility with several technical analysis tools. Carry trades are often simple to research, but it is increasingly hard to find good pairs to use since most of the industrialized nations now have extremely low interest rates.
In general, the most versatile strategy and the most useful for beginning traders is day trading based on the fundamentals. A medium range is also helpful because it requires low capital with minimal risk. This simple method is also a good starting point. As you gain more experience you can specialize into other trading strategies.
If you are an experienced trader, try learning strategies you have never used before. The ideal is to have facility in all of the methods and be able to switch between them. Certain opportunities are ideal for certain strategies but not others. If you know how to use all of the methods, you can adjust quickly and maximize your profits at any one time.
So what is the best strategy? Here’s a simple answer—probably a hybrid form of them all!

Forex Trading Strategies And Systems


I've been trading the forex markets for several years now so I've developed quite a few different systems in my time. However there are some that are more profitable than others, so let me share you with you some of my most profitable forex trading strategies.
4 Hour Trading Strategy
I created this trading strategy myself and have been using it for several years now. This one system has generated more profits that any other system I have ever used, and yet it's surprisingly simple.
I simply look at the daily trend for a particular currency pair (usually the GBP/USD, EUR/USD or USD/JPY pair) using a very simple but effective technical indicator, then I wait for two EMAs (exponential moving averages) to cross over in the same direction on the 4 hour chart.
I will then enter a position (usually after a slight pull-back) and will employ a two-part exit strategy to maximise my profits. One half of the position will be closed out early for a safe profit, and the other half will be left to run for as long as possible in order to capture those really big price moves.
As I say, this particular forex trading strategy is highly effective, as regular readers of my blog will know because I share my trading results every week in my 'Weekly Trading Updates'.
Anyway if you would like to read all about my 4 hour trading method, you can access it (for free) by filling in the short form to the right and subscribing to my newsletter.
The only problem with trading this strategy is that there will always be quiet periods and particular days where you know you are not going to get any set-ups on any of the major currency pairs. Therefore at times like these I will often employ some of the other trading methods that I keep in reserve:
CCI Divergence Trading System
This is a forex system that I've recently created and it basically uses the popular CCI indicator with two different settings. The key here is to wait until there is divergence between both of the CCI indicators at the same time because this will give you a set-up with a very high success rate.
You don't get that many good set-ups per day using this trading strategy, but when you do, you are likely to make some decent profits because it is a very high probability set-up.
I have discussed this particular strategy elsewhere on this blog so please click here if you want to find out more about this CCI Divergence Trading System.
Forex Income Engine 2.0 Methods
At the time of writing (20 June 2009) I've just started using the three day trading methods included in the Forex Income Engine 2.0 course as well. I've always been quite sceptical about many of the short-term forex methods that I come across, but I've been very impressed with these three methods so far because they do actually produce some very good returns.
Anyway if you would like more details about each of these methods you can read all about them on my Forex Income Engine 2.0 review page.
Forex Nitty Gritty Method
This trading method was included in the Forex Nitty Gritty course and although it is a very basic method, it is actually surprisingly effective. The goal is to look for pairs that are in strong upward or downward trends, wait for a pull-back, and then enter a trade if the trend continues.
I've been using this method on the 15 minute charts for quite a while now and it has always performed well for me because these continuation trends occur all the time.
Again if you would like to find out more about this particular trading method, you may like to read my full review of Forex Nitty Gritty.

Long-Term Trading Strategy
I'm not really a long-term trader but I do occasionally open a position if a good trading opportunity arises. I will usually use the daily charts for these trades and will look at a variety of indicators such as the 200 day moving average, the supertrend indicator, established support and resistance levels, fibonacci levels if applicable, and Marketclub's excellent trading signals.
I will regularly post my long-term analysis of the various currency pairs on this blog, but I will only follow this up with an actual trade if I'm really confident about my predictions.

Other Forex Trading Strategies
Finally as well as all of the trading systems and strategies listed on this page, I also have a few breakout strategies that I like to use when a good opportunity presents itself. I'm also constantly testing out new ideas and reviewing the various trading systems that I get sent regularly by product owners who want me to promote their product.
However for the most part it's my 4 hour trading strategy that I spend most time on because this is my core system which generates the most consistent and reliable profits. All of the other forex trading systems are used to boost my trading pot during the quieter periods of the week.

A Forex Education is a Proven Lucrative Forex Entry Strategy when Practiced with a Free Demo Account


Far too many new Forex traders attempt to enter the markets with little or no knowledge of the subject and have never taken the time to acquire a proper Forex education. I really have no idea how they think they are going to possibly be successful and make money, but none the less they do it ever day. Yes, the currency markets do offer a way to acquire wealth quicker and with less risk than almost any other form of investment. But, this is limited to the people who have taken time to learn Forex trading and have invested in themselves. While there is a vast amount of free information on the internet that will teach you about the currency markets, I assure it is not of the quality that one needs to be a profitable Forex trader.

I fully support and endorse researching, reading and learning from as much free material as you possibly can find before entering the currency markets. What I do not endorse is the idea that this will supply you with enough of an education to make it possible for you to make money in the markets. For the skeptical there is a simple path to providing proof of this statement without them losing money trying. Which is to become acquainted with the material and then open a FREE demo account supplied by many Forex brokerage firms. These accounts do not require you to invest any funds and allow you to try trading using play money by just filling out a simple online application.

There are many exceptional Forex training courses on the market today that are very inexpensive. Especially when taken into consideration the fact that one single simple currency trade will make more in profits than the cost of a course. Therefore, it is really beyond belief that people continue to trade in the FX markets knowing little or nothing about what they are doing. My personal favorites, which are quite a bit more expensive than the normal online courses are the mentoring programs. These courses are taught by professional Forex traders and have one on one teaching and trading sessions. Most of the better mentoring programs allow you to customize your specific training package. Unfortunately, new currency traders usually don’t enroll in these classes but they are taken by the people who have tried trading, but have failed.

The currency markets offer a great place to acquire wealth quickly and with a limited amount of risk. To take advantage of this opportunity you really should acquire a top level Forex education before attempting to trade with real money. I have offered an excellent suggestion to trade with a demo account and use play money to see if this is really a place for you and to decide for yourself exactly what type of knowledge you will need to be profitable. I fully invite you to take advantage of that suggestion.

Catching a Movie or Catching The Move


I was playing around with my charts this morning and I never thought to kick my existing charts up to weekly and monthly time frames because many of the indicators I use don't calculate that far back. I have been saying alot how the Chandeliers stop indicators catch bigger moves the higher time frames you go, thats a given, but I'm inclined to want and try to take longer term trades now based on what I see. When I first started out I thought I wouldn't be able to handle large swings and trade on an interday basis. But it still may be a good idea to not just give them a passing glance, but to base your entire approach of whether or not to go long or short on what your longer time frame chart says the trend is on a yearly basis. This is what I am referring to when I ask, do we want to catch a move here and there, or do we want to catch THE move that the big money goes after? I should ask, do you want to be on the grind day after day, or do you want to enter a trade and live your life knowing you're money is working for you?



As you can see in this example, between July and August of 2007, GBPJPY had gone up all the way to 250.00 with a green chandelier that lasted at least one year. So you see these chandeliers on the highest time frame charts will last you a LONG time, keeping you in the trade in the direction of the trend which is nothing new. But what I'm interested in is the inception of THE moves that the big banks and big traders are going after. So, the green chandelier turns to red on 8/24/2007, but this is not a magical entry point finder that will get you into a massive winning trade. If you notice, there are slight pullbacks (it seems) on this chart, but represent hundred pip moves (against us) that would wipe most of us out.

Trend lines really help in this regard, as you can see the yellow dotted lines are drawn underneath the upswings in this downward moving pair. If we enter at the exact moment these trend lines are broken, that all but eliminates the need to withstand huge losses before price went our way. 

How I would approach this, is keep on scalping, looking for entry points but only in the direction of the weekly chandelier, draw the trend lines above or below the short term trends, and wait for crossovers of these levels to go back to your 5 Minute or 100 Tick charts to look for the proper entry levels on the shorter term time frames. But always exit the trade break even when it goes against us too far. Re-enter when shorter term indicators tell us things may go the way of the longer term trend again. 
    


That's why I think it's wise to have a short term approach that turns into an longer term strategy when the right move is caught. It's one thing to just enter when the indicaotrs flip having to withstand hundreds of pips of swings up and down and knowing the LONG term trend has changed and trading in that direction (getting out when small swings down occur) until you get it right which could save your account from getting margin called. Patience is key with longer term strategies, and always think about the rollover, I have no idea what the fee would be for holding on to GBP/JPY for an entire year, but it can't be good. 

So as always please use caution with any method, this is not magic like I said, but is a good way to incorporate longer term charts into your daily strategies, whatever they may be.