Forex currency trading is a zero sum game and those with a trading plan and the necessary discipline to stick to it will succeed over those that trade without one. If you want to be on the positive side of this game start with your trading plan – it is your most important weapon against your opponents. Here is an example of what a Forex Trading Plan should look like:

Goal

My goal is to make 20 ticks or $200 per day over the 20 day trading period.

Market

My target market is the EUR/USD spot market. Trading style is day trading with all trades taking place between 8:30 am and 11:00 am on class days. On certain occasions I will attempt to start trading at 7:20 am due to the fact that a majority of economic data is released at 7:30 am CST. All positions will be closed at the end of class.

Research and Fundamentals

Each day before trading I will fill out a trading plan for the day. I will also research fundamental data related to the markets before I start trading. This is to get a market feel such as overall macro trends, world events, upcoming economic data. I will also look into technical data over the past several days to figure out what technical movement has been present.

Charts

Candlestick charts are important for day-trading. I will use two charts; 5-min and 4 hr. I use the 4 hr charts to identify the major trends and the 5 minute chart to get minor trend timing.

Strategy

Before anything else I need to establish the minor trend. Although I will look at the 4 hr chart to get a broader view of the market, given the amount of time I have to trade, I feel it is more important to focus on the short term trend. If there is consolidation or any other non-committal movement on the minor trend, then I will stay out of trading until a trend presents itself. I will use western technical analysis (DailyFX resistance/support, Moving Averages) to get a general feel of which direction the market is going and eastern technical analysis to time my entry and exit points. Although technical analysis is the basis for my trading, if there is fundamental information that comes out that clearly swings the market against the trend I will go with the strength of the reaction towards the fundamental data.

1. The first step I will take is to determine whether the short term trend is bullish or bearish

2. I will check to see if there are any key psychological numbers and support/resistance points in the near future

3. If there are none, I will go long or short depending on the short term trend

4. If there are, I will wait until the market reaches those numbers to look for a reversal

5. I will trade against the trend if I find a candlestick reversal pattern with confirmation (Bullish Engulfing, Hammer, Morning Star, Shooting Star)

6. When trading against the short term trend, I will set my limit at the 50% fib retracement level

Rules of the Plan

1. Never trade during consolidation

2. ALWAYS close out a trade if the MAs cross against a position

3. Try to achieve 10 tics on every trade, 1 lot = 10 tics, 2 lots = 5X2 etc.

4. Stop set at 40 tics

5. Momentum should correspond with short term trend when looking for entry point into a trade

6. Get out of a trade before major economic data is released

7. Don’t make a trade within 10 mins of class ending

8. Always get out a trade the second you think it is going against you

Day trading the foreign currency market is definitely one of the more challenging endeavors an aspiring trader can pursue. The higher degree of leverage available in this market can increase profits, but it equally accelerates losses as well.

This makes the issue of trade timing, selection, and mental attitude that much more critical to success. This also makes newbie trader get very confused.

I wrote this short article to make that confusion away. Before entering the market, let’s look at four building blocks that I believe to be foundations to your trading.

#1st Foundation

Always follow and understand the daily forex news and analysis of the professional currency analysts. Even though your trading system is based solely on technical analysis of charts, it is very important to get a birds-eye view of the markets and the news that affects the price. Knowing what the key technical “support” and “resistance” levels in the currency pair that you want to trade are also valuable. Fortunately, all the best forex news and analysis is available for free on the internet. For example, take a look at dailyfx.com, forexnews.com, fxstreet.com, currencypro.com, or do Google search on “forex news” keywords.

#2nd Foundation

I highly recommend you to follow 1 or 2 major currency pairs only. Why? It gets far too complicated to keep tabs on all four. I also recommend that traders choose one of the majors because the spread is the best and they are the most liquid. For example, USD/CHF is one of the most liquid fairs that move every day.

#3rd Foundation

Only enter the market when you are ready and when the technical/fundamental indicators say when. Never get into trade without stop losses. It is important to be disciplined and to stick to a plan. Don’t just trade based on your “gut” feeling. Use technical indicators outlined and always enter in stop losses on every trade.

#4th Foundation

Practice made perfect. As old Wiseman say, there is no substitute for hard work and diligence. It is recommended to practice on a demo account and pretend the virtual money is your own real money. Do not open a live trading account until you are really confident and make some profit on a demo account. Stick to the plan and you will be successful.

Last but not least, remember, caution is the best way forward in trading. Don’t risk money you can’t afford to lose, don’t trade with live cash until you have paper traded for at least three months and control your emotions.

Trading breakouts could be like gambling with your money if you are not knowledgeable with the data i.e. the fundamentals. However, if you really would love to trade breakouts and be able to generate over a 100 pips within a short time, then you have to know more about the fundamentals of Forex trading as well as the technical indicators.

The two major news events that trigger breakouts are:

1.) Interest rate decision.
2.) The non-farm payroll from the united states.

One thing you need to know about breakouts is this; before such news is released, the market looks usually quiet but tends to move in favor of the erring currency in the pair and if it’s the base currency, the currency pair usually moves higher than usual before the breakout. The same happens if the erring currency is the counter, this time in the opposite direction. You should also notice a squeeze in the Bollinger as if tightening up, and in the process of releasing something. I use the 62 band Bollinger.

I should tell you this about breakouts though, the currency pair usually tends to test its last resistance or support point before it finally makes a strong rally upwards or downwards.

<strong>Now how do I prosper from this?</strong>

I know there are lists of forex calendars used in confirming economic news events. I use the fxstreet, forexfactory and dailyfx to mention but a few. I love the forexfactory however, because you can configure the exact time of news event to your computer time in your country.

When the news comes out do not be in such a rush to enter the trade but check with your forex calendar. In the case where such news was bearish for the currency pair say GBP/USD, which means favorably for the dollar, find out where the currency pair is and then place your pending order say thirty to fifty (30-50) below the price without a stop loss because the currency pair will always hit you out on your stop loss because of the spike and still continue with its new found trend.

Remember, when trend forms, it stays that way for a while and you could actually profit ensuring you take your trades in line with the trend.

Do not be discouraged however, when you did not get what you actually planned to get out of the market. Remember, there are other opportunities.

Lest I forget, ensure you place your profit point on your pending trade. The least I suggest should be about seventy (70) pips.

Traders can pay hundreds of dollars a month for trading signals and technical analysis. But did you know you can find profitable forex signals and professional technical analysis from experienced traders for free?

Investments banks and commercial trading firms often post daily technical analysis reports to finance portals and news sites. The popular FXStreet portal publishes many of these reports in their Technical Analysis section.

These resources offer a wealth of professional analysis, along with some very good trading signals from companies like SAFE Limited and Financial Trend Analysis.

A handful of free websites and blogs offer regularly updated forex signals from experienced or semi-professional traders. These include sites such as Piphut and Daily 20 Pip. You can also find trading signals posted to forex trading forums, and even Facebook and Twitter.

These free resources can be hit or miss, depending on the expertise of the signal provider, and they may not always be regularly updated. The best of these sites post a performance record so you can see the historical performance of their signals.

A few commercial signal providers offer a free trial or a limited free account. TradeFXPlus, for example, offers a totally free account with daily EURUSD signals. A few brokers also offer a free trading signal service with a live account.

FXCM’s DailyFX portal provides free web based, real-time forex signals based on several proprietary strategies, while FX Universal offers a free subscription to Dashboard FX Pro, a PC software program that provides real-time signals for 20 different currency pairs.

With just a little bit of effort, you can easily find quality forex trading signals without spending a dime. Now all you have to do is enter those trades and observe your results. Happy trading!

Here is a Free example of what a FOREX Trading Plan should look like…read below.

All professional Forex Traders have a trading plan. Trading Forex is a zero sum game as they say and those with a plan and the necessary discipline to stick to it will succeed over those that have no plan. Here is an example of what your Forex Trading Plan should look like:

Goal My goal is to make 20 ticks or $200 per day over the 20 day trading period.

Market My target market is the EUR/USD spot market. Trading style is day trading with all trades taking place between 8:30 am and 11:00 am on class days. On certain occasions I will attempt to start trading at 7:20 am due to the fact that a majority of economic data is released at 7:30 am CST. All positions will be closed at the end of class.

Research and Fundamentals Each day before trading I will fill out a trading plan for the day. I will also research fundamental data related to the markets before I start trading. This is to get a market feel such as overall macro trends, world events, upcoming economic data. I will also look into technical data over the past several days to figure out what technical movement has been present.

Charts Candlestick charts are important for day-trading. I will use two charts; 5-min and 4 hr. I use the 4 hr charts to identify the major trends and the 5 minute chart to get minor trend timing

Strategy Before anything else I need to establish the minor trend. Although I will look at the 4 hr chart to get a broader view of the market, given the amount of time I have to trade, I feel it is more important to focus on the short term trend. If there is consolidation or any other non-committal movement on the minor trend, then I will stay out of trading until a trend presents itself. I will use western technical analysis (DailyFX resistance/support, Moving Averages) to get a general feel of which direction the market is going and eastern technical analysis to time my entry and exit points. Although technical analysis is the basis for my trading, if there is fundamental information that comes out that clearly swings the market against the trend I will go with the strength of the reaction towards the fundamental data.

1. The first step I will take is to determine whether the short term trend is bullish or bearish

2. I will check to see if there are any key psychological numbers and support/resistance points in the near future

3. If there are none, I will go long or short depending on the short term trend

4. If there are, I will wait until the market reaches those numbers to look for a reversal

5. I will trade against the trend if I find a candlestick reversal pattern with confirmation (Bullish Engulfing, Hammer, Morning Star, Shooting Star)

6. When trading against the short term trend, I will set my limit at the 50% fib retracement level

Rules of the Plan

1. Never trade during consolidation

2. ALWAYS close out a trade if the MAs cross against a position

3. Try to achieve 10 tics on every trade, 1 lot = 10 tics, 2 lots = 5X2 etc.

4. Stop set at 40 tics

5. Momentum should correspond with short term trend when looking for entry point into a trade

6. Get out of a trade before major economic data is released

7. Don’t make a trade within 10 mins of class ending

8. Always get out a trade the second you think it is going against you

Example Of Forex Trading

Purpose: To make an average of 50 tics per day, or $500 per day.

Market: Day trading will occur on the EUR/USD spot market. Trades will take place during defined trading period. Positions will be held no longer than 24 hours.

Research:

Fundamental Economic Information: Briefing.com, Bloomberg.com, DJIA, NASDAQ, FTSE

Trend Identification: Major trends will be identified using the moving averages on the 4 hour chart. Minor trends will be identified using the 5 minute charts. Moving Averages will be used to determine minor trend. If 10 Period MA is > 20 Period MA, uptrend is current trend. If 20 Period is < 10 period, downtrend is current trend.

Basic Trading Rules/Money Management:

1. All trades will follow the major trend, unless noted in the exception section.

2. Trades will occur using the 5 minute chart.

3. Trailing stop losses will be set for each trade.

4. Limit orders will be placed for each trade, and can be moved provided stop loss is also moved.

5. Trader can add to a winning position.

6. Trader can double down on a losing position provided trade fits plan.

7. No more than 2% of equity shall be lost on a single day.

Long (Short) Entry Points on 5 Minute Chart: When any of the following conditions hold:

1. Point where 10 Period MA crosses 20 Period MA.

2. Current Price is below (above) 200 Period MA.

3. Momentum is above .0015 and positive (negative) sloping.

4. Candlestick reversal pattern.

Exit Points on 5 minute chart: When any of the following conditions hold:

1. Profit limit is reached.

2. When trader feels uneasy about situation.

Exceptions to Trend Following:

A.  Forex Trading

may occur against the major trend due to a moving average cross on the 5 minute chart.

B. Forex Trading

on the basis of fundamental news may occur regardless of the trend.

For More Courses and Free Certification of Forex Trading

….

After switching from brokers to brokers in search for the perfect, I have gained some experience that I can share with the newbies and the people who are considering doing forex. Please rememebr that there is perfect broker, what you choose depends on what your trading style is.

1. FXCM Leverage:1:100, they recently changed it from 1:200, which is annoying because you will have a higher chance of getting a margin call. Minimum deposit: $25 for micro and $2000 for standard. Though not required,but don’t trade under $500!! It is not even enough for margin, and you will lose everything in just one day. Spreads: Medium. Especially during big news events, they increase the spreads, but not as much as the other brokers. Micro accounts have smaller spreads, but you don’t get online chat service. If you have more than 25,000 dollars, you can get even better spreads. Withdrawal: Fast. You can chat online and ask them put your request in front of the line if it is urgent. Regulation: under NFA regulation. But you cannot do two-way hedging anymore. You can apply for FXCM UK which is subject to NFA regulations.

MT4: Yes. Supported by Boston Technologies. They transfer your trades from MT4 to your trading platform. So sometimes there is a delay. If you want to do EURGBP scalping, forget it, too many people are using this service, so you will get bad entry prices.

Other: You can have access more analysis on www.dailyfx.com . They also have trading signals, but I dont use them. You can learn a lot from that website, but just don’t follow their trades recklessly. I doubt about the the analysts’ trading performance.

This is the broker I am using right now. Good execution on their trading platform. I am a news trader, so the execution during news events is very important, The orders are executed fast, and the spreads are normally 10-20 spreads 30 seconds before huge news events.

2. Oanda

Leverage 50:1, not very attractive for retail traders minimum deposit: $1 Spreads: Good. HOWEVER, they increase your spreads substantially during news events. Not recommented for news traders. Regulation: NFA MT4: No Withdrawal: it takes time, because they don’t do direct deposit. They use paypal which will take another two days before you get the money. Trading lots: One big plus for Oanda is that you can trade mini-mini lot (0.01 standard lot). So the minimum lot is $1,000 for transaction size. Other brokers’ minimum are 10,000 (0.1lot) per mini lot. So this is good for traders with small amount of money, like several hundreds of dollar. You can trade small with Oanda.

3. MB Trading

Leverage 100:1 minimum deposit: $400 Spreads: Good. But small spreads come at a price, they also charge you commissions.$2.95/10k transaction size. MT4: Yes. I never tried it. They beta tested for years, and they just went live. Regulation: NFA Withdrawal: this is the worst. They will tell you to wait for 2 days for the settlement of your trades before they can process your request. Within in 2 days, you cannot trade anything, and you also have to close your opening positions as well if you use a lot of margin. Execution: I was once doing scalping on their trading platform, and I set limit orders like TP. The execution was great. But when I do news trading, they also increase spreads a lot, and the execution is not guaranteed. Last year this problem was more prominent. This year it is better. But after a bad experience, I don’t want to trade news with them anymore. Trading lot: LIke Oanda, you can trade small lot size of $1,000 only. It’s a plus for MBT.

So I recommend this broker to people who do scalping and normal trades. News trading may be fine now, but at least I won’t do it with them.

4. Forex.com

I never used their service before. But I demoed it for a long time, because they have a fantastic real-time comment system. It feels like you are a pro. So basically if you are newbie, you see a big spike on EURUSD, and you don’t know because you dont have money to subscribe to the expensive corporate analysis services such as Reuters and Bloomberg. But with Forex.com’s platform, you can comments real-time like “ECB just announced…” So it is definitely worth it to get a demo from Forex.com.

Leverage: 100:1 and 200:1 Minimum deposit:$250

For more information and review about these brokers, please visit www.forexpeacearmy.com

To access my website with free daily forex analysis, comments, signals and Zulutrade rebate program, please visit http://sites.google.com/site/fxfountain/

The preeminent forex broker for day traders (i.e., average Joes) is FXCM. As of June 2009, there is in excess of $600 million in customer funds trading on platforms offered by FXCM. Over 150,000 live accounts trade through trading platforms offered by FXCM from over 150 countries, with an average of 8,000,000 trades executed each month; moreover, customer support is provided in over a dozen languages. 

FXCM has received numerous awards from the investment community, including Best Currency Broker from Shares, Best Retail Foreign Exchange Platform from FX Week and Best Foreign Exchange Specialist from Technical Analysis of Stocks & Commodities. In addition to currency trading, FXCM offers educational courses on forex trading, and provides research through DailyFX.com

There are dozens of other brokers, though, who service day traders. It’s done almost exclusively online, and in fact ordinary citizens rarely got involved with forex trading at all until the computer boom of the 1980s, and then exponentially more with the advent of the Internet in the 1990s. Since then, forex brokers have proliferated.

As you might expect, levels of reliability and competence vary from one broker to another. The Internet is rife with unsavory types seeking to take advantage of suckers, so you would do well to investigate thoroughly any broker you’re planning to use. Does their Web site look professional and reassuring, or is it riddled with dead links and spelling errors? Google the broker to see if they’ve been mentioned in news articles. Ask about their track record. And above all, avoid anyone who promises things that sound too good to be true, or who downplay the financial risk involved in forex trading.

Look for a broker that seems to genuinely want your business. Does the firm have customer service representatives available? Is there a phone number you can call to speak to a live person? The Web site should explain things clearly. If the site is full of language that seems designed to go over your head, look for a different broker.    If you set up an account with an online forex broker, it will work like this. First, you must apply for an account, which most brokers allow you to do online. This is to verify your identity and the validity of your bank accounts and financial records. Some brokers also require you to download their forex trading software, while others let you use whatever software you prefer. You will also have to transfer a minimum deposit to your account with your new broker. The minimum can be anywhere from $100 to $2,500.

Ideally, the broker you choose should offer service and support when you need it but should mostly simply stay out of the way and let you conduct your business. If you can find a forex broker who is professional and helpful, your experience in the forex market should be full of smooth sailing.

Find A Forex Broker You Can Trust At    The Forex Robot World Cup

MetaTrader, the famous forex trading platform

MetaTrader 4 is a free-of-charge program specially designed for online trading in the Forex market. The built-in technical indicators allow you to analyze securities’ quotes, whilst the MQL4 network enables the development and usage of automated trading strategies. In order to trade in the financial market, traders need a program that allows them to analyze quotes, make trades and develop strategies.

MetaTrader 4 is a complete online trading package designed for providing brokerage services to Forex markets. The system has all that is needed for brokerage companies and at present, is considered the best online Forex trading platform. Until now, there are over 200 brokerage companies and banks worldwide that are using the MetaTrader 4.

MetaTrader 4 allows you the possibility of developing and using automated trading programs, known as the Expert Advisors (EA), to do the trading for you.

The Expert Advisor is a small program that you can embed/install into MetaTrader software. It is written in a specific programming language called MetaQuotes Programming Language Version 4 (abbreviated to MQL4). It can be switched on and off to automate your trades. It can analyze the chart as any indicator do plus it can, at specific conditions, open, modify and close trading orders for you.

Why Do Average Forex Traders Lose Money?

The reason behind the need for Expert Advisors
According to DailyFX.com, A Premier Site For Forex Trading News, Charts, Signals, & Strategies, most forex traders lost money due to poor money management. A lot of traders just do not seem to follow a simple good money management strategy: Take your profit quickly and cut your losses short. Unfortunately, this strategy is actually harder than it sounds because of a few natural, built-in traits that all humans have. Humans are made greedy, fearful and thus, inconsistent. That is why, according to DailyFX again, most traders would probably lose all their money in one single trade right after winning a few.

Making money by trading forex is all about consistently taking profit, no matter how small it is and consistently cut your losses at losing trades. The BEST forex trading strategy is to do all that, plus consistently look for currency pairs that would give you indication of a winning trade. Has anybody done this? sure. Can just ANYBODY do this? I think not. This is why Expert Advisor is needed.

It runs 24/7.
It consistently look for winning trade.
It consistently cut loses to minimal.
It has no greed, no fear and very consistent.
It does all of the above for all currency pairs simultaneously.
Most importantly, it has ingrained strategies in its mind and will stick to it no matter what.

Again, can a human do this? yes. you would need at least 4 PC monitors and probably a few computers to cover the need of the processing power and you, sitting in front of them for hours and hours. Or, you could save yourself from a lot of trouble by using a money-making expert advisor instead.

How To Select The Best And Most Profitable Expert Advisor

There are 4 things that you would have to look for a money-making expert advisor:

High percentage of winning trades – means the EA would detect a lot more winning trades than losing ones. In other word, the EA that has the least drawdown percentage (losing trades).
The least loss in each trade – means the EA has strict stop-loss policy to ensure minimal losses on losing trades.
Software maker/seller that can show proven, Live forex account results that meets both requirements above on their website.
Have huge customer base – indicating satisfaction of the product usage.

Any MetaTrader Expert Advisor that meet these criteria above should definitely be considered. Read reviews from other users could also help in the decision-making.

10 Essentials To Keep You In Business Until You Master The Market

Currency or FX trading is an exciting and rewarding activity that no trader or speculator should leave out. It offers a liquid, fast moving market, the use of leverage and opportunity to trade global stories. It trades 24 hours a day so individuals can find a time segment to suit any lifestyle. That means that FX trading is suitable whether you trade full time or put in an additional activity while you take care of your full time profession.

Being the largest market, retail traders are pitted against the largest business and financial entities and some of the smartest brains. Coupled with the use of large levels of leverage (50 times in Singapore and up to as much as 800 times offered by brokers elsewhere), trading in FX can be a highly risky business. Therefore, early mistakes for the novice or aspiring trader can be expensive and can put one out of business right away.

In this article, I would like to bring up 10 essentials for new trader to take note. Consider them the survival guide while you navigate unfamiliar territory. The rule is to stay in the game while you strengthen your wings and feathers. This guide will help new FX traders eliminate mistakes that arise from lack of experience as well as personal complacency.

1. Investigate all you can by reading up.

There are plenty of literature both in print as well as the Internet. While many titles that you pick up will actually carry a lot of information that overlaps, I always consider it worthwhile if it contains one paragraph that has insight not mentioned elsewhere.

2. Consult an experienced trader or trading representative from a brokerage firm

Discussion with such persons provides structure to all the information that we have gathered through our reading. We ask for their help with the questions we have and as a two-way process, they jog our memories and test our understanding by asking us critical questions.

An experienced and caring professional can also interview you to understand your needs. By pointing to a suitable path based on their experience, they can help to save us a lot of trial and error.

3. Learn technical analysis

No one trades FX without knowing technical analysis because it is really a game of managing support and resistance and knowing what the trend is. Now some readers may not like that sentence but let me make some observations.

Visit popular FX-related websites like DailyFX (http://www.dailyfx.com) and CNBC (http://www.cnbc.com) and you will realize that there are always price charts and mention of support and resistance of currency pairs. Now you need technical analysis knowledge to be able to analyze those and that means if you ignore technical analysis, you miss out half of the input.

4. Get a good charting software and price data

We can really get good ones provided by trading brokerages if we use their trading platform. Not all brokerages provide price charts however and some provide charts that are inadequate.

What kind of charting software?

Try to get one provided by the trading platform you are using. If your trading platform does not provide, there are plenty of free sophisticated software and free data for download and use so there is no reason to pay. They should include most technical studies and allow you to save your settings and lines. As FX trades Over-The-Counter and different trading spreads available, get a data source that quotes prices closest to the ones on your trading platform. Choose software that is not cumbersome. Good ones allow you to switch between price charts quickly and do not slow your computer down. 5. Learn to analyze market fundamentals

Get acquainted with economic news and understand their implications to FX. That said even readers who have good clear understanding of economics may not be able to fully comprehend their effects on currency movement. That is because as retail traders, many of us do not receive enough information. In addition, the markets are forward looking, that is they anticipate and move ahead of events so that markets may not react anymore when news actually comes out.

I know of two types of traders who make use of news announcements: one to speculate and the other to avoid them.

The former speculates on the outcome of news announcements hoping that price will react decisively in a profitable direction. While it sounds like betting, some technique is involved. To be profitable in the long run, the speculator must follow some rules including limiting the downside risk of getting it wrong.

The other type of trader uses some strategy or another but wants news out of the way. Sudden movements are not welcome so no news is good news.

6. Get a good calendar

Whether you like to trade news or avoid them, a trading calendar is indispensable.

A good calendar has the following:

Contains a comprehensive list of recurring events like FOMC meetings, interest rate announcements, options and futures expiry days Include non-recurring events such speeches by influential persons in a timely manner. Include a simple legend or user guide that describes the importance of a piece of news to currency pairs, links to the source of the news and the exact time of announcement. Sophisticated calendars outdo the others by including some filtering function. They may also convert the time of news usually listed in GMT to local time. 7. Get a ‘demo’ trading account that lets you trade virtual money

This is the place where we try out FX trading in a hands-on manner. After all we need to put our knowledge to application. At this stage, two things cross your mind: what is a good demo platform and what do you do with it?

Some important features:

You might try out a few accounts so the registration might as well be simple. You don’t want to give your personal particulars every time you sign up so name, contact number and email address should suffice at this stage. A demo account must have the same functionalities as a cash trading account. Realism is important. This is where you prepare for your actual trading later. Get an account with sufficient time for trial. Consider how long you need to try and aim for that. Six months to a year is good. Take as long as you want without pressure to proceed to real funds.

What do you then?

Make use of all the functions so that you can place orders fluidly and find information when you need. FX trading is sophisticated and most platforms have more order functions than the stock account that we encounter locally. Know the risk management orders known as stops because you need to incorporate these into your trading. Many traders will recall silly mistakes like buying or selling a wrong currency pair or even placing a wrong quantity. Make such mistakes in your demo account and not the cash one. 8. Develop a strategy or strategies on your demo trading

Your strategies should make use of technical analysis or fundamental analysis or both. You should never be trading on someone else’s opinion because FX is fluid and situations change rapidly.

A crucial aspect of FX trading is risk management and cutting loss. Due to the high levels of leverage at work, traders should never hang on to a losing position. Averaging is NO-NO.

Improve and refine your strategy until you win money consistently. You must fully understand the mechanics of success so that they can be duplicated. Reasons for failure must be avoided. Sometimes, you have to drop a strategy entirely and start all over.

9. Trade a lot

The more we trade, the more we learn. Situations continue to arise that challenge our knowledge. Gaps will appear and ‘truth’ suddenly becomes myth. Learn to recognize price setups and the events they associate with. Drill your trade execution based on the chosen strategy until you can carry them out reflexively.

10. Select a good cash trading platform

Cash accounts should fit some criteria:

Brokerage does not trade against you. Your funds should be kept separately from the broker’s so that if the brokerage goes bust, you should be able to get your money back. The brokerage should be regulated; brokers in Singapore should comply to MAS while overseas located brokers should comply to some form of regulation. Go to the Financial Institutions List on the MAS website (http://www.mas.gov.sg/fi_directory/index.html) to check if your selected brokerage in Singapore is regulated. Low trading spreads and minimum or no commission.

New traders should take note of an important fact. Brokerages offering FX trading in Singapore provide differentiation of services. The terms and conditions they offer can be varied and no one should take for granted that one broker is the same as the other. Make sure that you talk to a trading representative to discuss the finer points.

Summary: Start trading but start small

That’s because at this point emotions are involved. Make sure that you trade with disposable funds and follow a plan. After all, currency speculation is a really thoughtful activity.

It happens almost every time the market reacts to a scheduled news release. New traders get caught off guard as they are unaware of what is coming. Since I work with new traders as an instructor of the FX Power Courses offered by FXCM, I always get emails from a few new traders asking why the market moved so much in such a short period of time. I usually refer them to the economic calendar at DailyFX (http://www.dailyfx.com/calendar/) and to the commentary offered by the analysts at that website.

Did you know that the US Federal Open Market Committee was meeting Wednesday, October 31st and will release a statement on US interest rates at 2:15PM Eastern? Did you realize that another major release was taking place this Friday, November 2nd at 830AM Eastern? This is when the US Department of Labor will release the Nonfarm Payrolls. These two events may be the biggest two movers of the world’s financial markets and will have a big impact on any open trades. You can find much more at DailyFX, including some recommendations on how to trade these events.

This is much better than not realizing what is happening and watching in horror as your profitable trade turns into a big loser in a matter of a couple of minutes. If you are trading, you should make it a habit to check the economic calendar at the beginning of every week to make sure you are aware of what is about to be released.

Being prepared for volatility is always better than being surprised by it. You may not be able to profit by the big moves, but you sure can protect yourself from big losses, and that may be more important to your success as a trader.

Trading the various news events is popular in the FX markets. It is very tempting to want to jump into a trade right after an economic report is released and make 100 pips in a minute. Who wouldn’t want to do that? However it isn’t that easy.

By the time we see that release and can react, the market has already started to move. Usually by the time you are filled, the price has moved quite a bit from where it was before the release and a big portion of that 100 pip move may already be over.

That calls for a change of strategy. Unfortunately, many new traders think that means trying to find out what the release is before anybody else so they can place their trade first. But that is more wishful thinking than a change in strategy.

FXCM does conduct a webinar on how to trade the news events that does include three specific strategies that increase your chance of success. The schedule can be seen at http://www.fxcm.com/webinars-page.jsp. But one thing you will not hear in the webinar is what news service can get you the number first. Instead you will hear about how to react to the opinions of other traders and how to take advantage of those who think that being faster is better.