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"About Online FX Trading"

University of FX Forex Trading

Simplicity Is Best for Trading
Currencies and Commodities Futures

I primarily trade foreign currencies and live cattle, using 2 simple trader methods for futures trading. It took more than 10-yrs to boil my trading down to simplicity and finally profitability. I tried Gann, Elliot Wave, complex technical systems, chaos, volatility breakouts, optimizations, other people's systems, etc. Not to say that these systems are unworkable - just didn't work for me. My conclusion is that you have to find your own way and simplicity is best.

You should concentrate on the pure beauty of price, the immediate market action and try to internalize trading wisdom from master traders. For example, famour old trader Jesse Livermore said you should wait for extreme price movement and then place your trade risking a small amount. I have made this wisdom part of my gut and trading plan and I wait for these trade opportunities.

I will describe my methods of trading live cattle and currency. If readers have any suggestions or comments, I would welcome them. I do not trade in isolation and contrary to many others' methodology, I believe two heads are always better than one.

Fundamentals work well with live cattle when combined with Seasonals and a technical entry system. I watch the trend of cattle weights, box and load movements and carcass price equivalents. These fundamentals measure supply and demand. My technical entry system is very simple. I go long as the oversold RSI begins to tic up and short as it tics down from overbought. I use a 10-bar RSI. I never short in the winter or go long in the summer. My entry is at the extreme and I risk no more than $1.00. If it fails, I wait some more. That's it. It is a slow but steady moneymaker.

With currencies, I'm about a 75% technical trader but use reaction to news as my fundamental filter. Over the years, I have found that what works with currencies are always changing. Sometimes you need to focus on bonds, then gold, then the S&P, now Mexico, European markets, Japan and always the Federal Reserve.

I keep a little book with columns listing the fundamentals and what the crowd is focusing on. I note crowd reaction to the news. Along side of that, I record net changes in prices of bonds, all the currencies, CRB index and the S&P. I will not enter unless all indicators point in one direction. If they are all dollar bull, I will short the weakest currency at a time the momentum is really pushing hard. I place my stop over a swing high and will quickly move my stop to break even on the next swing.

I have found that the greatest risk of a position is when you first put it on. I have learned from Joe Ross, that the important thing is to reduce risk as soon as possible and try to put your positions on at the time of least risk. This method works for me, as it meets both of these criteria.

reprint permission from webtrading.com


Forex Course: A Quick Forex Guide for Traders

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisements featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from. A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.

reprint permission from goarticles.com & Raul Lopez is a full time Forex trader; his trades are based on a price behavior approach. Raul is also founder of straightforex.com a high quality Forex training company.

 

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