Forex Strategies and Techniques Profitable
This article is intended primarily for people who already know what Forex market is and at least know the basics. If you have no idea what this is or have never heard of him, I'll give a very brief explanation.
Forex stands for Foreign Exchange Market. Today it is the largest and most liquid market in the world. Every day one to three trillion dollars change owners. That's a huge amount of money. In any country there are stock market that comes close to this.
It is a huge market. It's like a sea of money full of sharks and dangerous waters, but is also the only market in which at least hypothetically can make $ 1,000,000 in two weeks at starting at just $ 1,000.
I say hypothetically because often what happens is that people simply stationed themselves their money on Forex without knowing anything about it and lose your shirt. Therefore I say beware! This market is profitable, but you have to learn the basics well, do much your homework and demo trading.
Just remember that 95% of traders lose money, 5% earn it and less than 1% become rich at Forex. One advantage of this market is that you can make money without creating any product or service without selling anything, without advertising. You just make some money trading and will reward dependiento of their knowledge and experience.
It is the market where banks, transnational corporations and individual computers change one currency for another. I'm talking about the spot Forex market. You can operate with huge leverage as much as 400 to 1, meaning that for every dollar that you have to trade can trade 400. For example, if you have $ 1,000 in your account you can trade with $ 400,000.
This is dangerous. Experienced operators do not use the lever. On the other hand, high leverage can be good if you know how to use it to your advantage. Anyway, it's enough for the basics. For more information on how this market emerged, its history and another read my other articles.
Now let's talk about strategies and how some computers make money in Forex. Let's start by saying that what works for me may not work for you. Forex market is risky. This is a fact. But I finally figured out strategies that could give novice computers profits.
Forex Trading is not as easy as people think. Today you can win a lot and am losing 40% of its initial capital. Novice traders often make the same mistakes over and over again. I will name some of them down.
1. Do not look for a holy grail of trading.
This is for people who are afraid of losing money or are too greedy and want to get rich very quickly. Yet it seems so, the Forex market is not a place to get rich quick. Yes, you can make a lot of money over time and yes do not have to sell anything, nor create or promote any product. But he has to learn a lot about what makes you tick this market and what moves the price of foreign exchange along with how to manage your money effectively to keep the shirt so.
Many novice traders spend a lot time looking for the perfect strategy that will allow them to always win and never lose. They want guaranteed benefits because they do not want to lose and / or want to make too much (millions) money quickly so they can retire and buy a mansion in a distant tropical island. This never happens.
Do not waste your time. There is a business strategy that will allow you to have guaranteed benefits. Trading is very risky. And why it's so profitable. Remember: "no risk, no reward." Therefore, do not try to always win and every trade. It's not possible. In no way you can get rid of uncertainty. What I mean is that no matter how effective your trading strategy, someday will fail and you have to be prepared to face this fact.
By not trying to find a perfect strategy will quickly become a millionaire, you simply end up with save a lot of time and effort. There are no such strategies. And if you find it, please do not tell me. First I do not believe you. And secondly I do not need. Below you will discover that you say you will not need.
2. Use technical analysis and fundamental analysis.
When he began trading did not believe in this. I wanted to find a strategy that consisted of money management alone (I'll explain below). This is not good! Money management is important, but you still need the other two elements. You define ( "predict") where the market dependent on the effectiveness of its technical and fundamental strategies are going.
Mastering technical analysis is to gain the ability to predict future price movements by analyzing past price data and graphic patterns. You get a graph of some currencies. Check the observed data and based on your knowledge of technical analysis "predicts" with some degree of accuracy where the market goes.
Many brokers allow you to add technical indicators to the charts during trading. You can treat it with a demo account to see if you are able to define the future price movements of currency planned for trading. One of these corridors is www.oanda.com.
There are many technical indicators. I can not say what will be the most effective for you. Each computer is different. This is what we have to discover for yourself. There is some hidden secret or magic formula for trading Forex. It's what you do every minute when in front of graphics and examines the news that really count.
The secret is in your overall knowledge and your decisions. This comes with experience and practice. By opening an account with one of these online brokers you can trade on paper before trading with real money, so you can learn and practice before risking any capital.
Let me inform you about some technical indicators that can be used. You can use the MACD (Moving Average Convergence Divergence), Bollinger Bands, pivot points, RSI, Stochastic, Fibonacci, EMA, Elliot Waves and many others. In fact, there are many technical indicators but these are the most known and used.
When you add technical indicators to graphic software automatically runners mathematical calculations to present interesting data and graphic patterns that can not be easily seen without these indicators. You can use technical indicators to create their own technical systems.
These systems will never work 100% of the time, but if they work well in a 70% - 80% may be sufficient. That's because you can control your risks with money management skills as it is describe below.
To increase your chance of winning and reduce your chance of losing on every trade you can use fundamental analysis. I think most traders choose one or the other, but many use them.
Fundamental analysis is the is the news. What about the economies of the countries that are trading currencies? What is the unemployment rate? Yeah suddenly something happened which could drastically affect currency prices?
It is operating with other effective news to "predict" where the market is going way. Many online brokers offer you a link with important financial news. For example so does www.oanda.com. You can also find financial news on the following websites:
3. Use the money management strategies.
You need to use the techniques of money management. This is what makes it good or make you fail. Most traders spend too much on each trade. "If you expect to win too, you earn little, little expected to win and give you a lot."
What does that mean? This means that in trying to make a fortune on every trade, lose your shirt. By gaining little on each trade and collect your benefits, you can earn a lot of money in the long term.
The first rule of money management says you should not risk more than 1% of the money you have in your account. You control this risk with stop loss and limit orders. When you start to trading this may seem like small profits especially if you start with little capital investment. On the other hand, to collect some or all of the benefits you can increase your account exponentially over time.
The magic of stockpiled interest is amazing! This is the way that most fortunes are created in the financial markets gradually. If you play with your money you can lose quickly.
Many traders do exactly the opposite. Imagine that you open an account with $ 5,000 and enter a trade with $ 1,000. Let's say the market moves against you and lose the $ 1,000. So, you have $ 4,000 in your account. You believe that the currency price is too low, so it must be recovered. In fact, you are pretty sure it will come back.
Then invests $ 1.500 to recover from the previous loss and win $ 500 profit. The market moves against you again. It kept going in the same direction, something unexpected. What's going on? Now you have $ 2,500 in your account. That is 50% of its initial trading capital. It will be very difficult to recover from that loss.
On the other hand, if you risk with 1% on each trade, you will have $ 4.900 in your account after the loss mentioned. It could be much easier to recover from those trades.
The second rule of money management plan is always to receive more money than risk losing. This can be accomplished through limit and stop orders as well as trailing stops.
For example, if you expect to win 25 pips on every trade, then, puts the stop 15 pips below or above your entry price. A better way to have the highest hope ratio is to use trailing stops and have one described above. A trailing stop allows you to cut your losses and let your profits increase.
These are the basic techniques that a successful computer must use to generate consistent profits in the Forex Market. Is basic information, but I realize that many people out there do not even know what Forex, why not want to tell here about the more complex strategies. You can find more information about Forex strategies complex and advanced on my website.