Tag: trading

All trading related articles are found here. Educative, informative and written clearly.

  • What are the basic types of Forex trading?

    What are the basic types of Forex trading?


    Whatever measure, guide, or indicator you are looking for, whatever the time frame, there are 3 basic types of trades.

    Guy Avtalyon

    In this post, I’ll explain the basic types of Forex trading. What caused this subject?
    Regardless of personal experience in trading, conversations, and exchange of views with other traders are valuable. In one of such conversations, the topic was the types of tradings. After many hours and a lot of coffee, we had one conclusion: There are 3 types of trading.

    I need your attention for a minute. Let me explain this.

    True is, whatever measure, guide, or indicator you are looking for, whatever the time frame, there are only 3 types of trades.

    I meet a lot of people thinking they’ve mastered trading. The problem is they didn’t understand the differences between the trades they took.

    Sure thing is, it will be easier for you if you know the ultimate goal and what can you expect from the trade you took. And it is possible if you know the type of trade you just implemented. This is very important because your knowledge is what determines where to place your stop loss and your take profit.

    When a professional trader enters a trade, he knows exactly what he’s trading.

    And my trading friends and me, we can recognize 3 types of trading.

    Reversal trade
    Breakout trade
    Pullback trade

    Each of those trades has some special characteristics. I’ll tell you more about each of them. Depending on the market you’re trading, the success of each type of trades may be different.

    What are the basic types of Forex trading?

    Some traders are attracted to trade all of those types for a limited number of currency pairs.  But others are specialized in only one of those trades.

    When a professional trader enters some trade, he must know what he is trading.

    What is REVERSAL TRADE?

    A lot of traders think that implementing Reversal trades is composed of “calling a top” or “calling a bottom”.
    However, this isn’t quite true.  Actually, the entry price of a reversal trade is often in a previous zone of support or resistance.

    Reversal trades are among the most popular basic types of Forex trading because of their ability to be easily spotted. They take place in a ranging market.
    What are basic types of Forex trading? 2

    As you can see the buyers were very aggressive on the chart above because they pushed the price up all the way to point 1 from an original support zone. But, once the price hit a resistance zone (marked as 1), buyers started to take profit. And several traders began to short the currency pair and got more aggressive.

    They took control of the market. This had for the result to create a strong rapid decrease in price.

    At point 2, the same result came, which was a good opportunity to enter a Reversal trade. The sellers placed their orders at that level and the buyers began to take profit because they knew the price had reversed in the past at the same level.

    The stop loss should be placed above the highest point (A) and the take profit someplace below the resistance zone. It is okay to expect a risk-to-reward of 1:2.

    BREAKOUT TRADE is one of the basic types of Forex trading

    Breakouts trades are usually made by a strong continuous movement in a direction.  Therefore, some traders call it an acceleration because the movement is fast.

    What are basic types of Forex trading? 3

    This is a typical example of the Breakout trade. Take a look!

    The bulls were confident and kept pushing the price higher and higher to point 1. At that price, the sellers became more aggressive and took control of the market until the buyers showed even more power.

    The level pointed with a 2 shows a price at which bears are known to get more aggressive in the market. But, they were not aggressive when the price reached that level.

    Because there were no traders wanting to sell the currency pair aggressively, more and more traders went long, thus pushing the price higher and breaking through the resistance level.

    The stop loss on that trade should be somewhat below the resistance zone that was broken. So, the take profit level is above the zone. It is okay to expect a risk-to-reward of 1:2.

    PULLBACK TRADE

    Pullback trades are usually more solid because the retracement back to a previous price level represents a certain confirmation.

    (Retracement is the temporary reversal in the direction of a stock’s price that goes against the prevailing trend. But remember, a retracement does not signify a change in the larger trend.)

    As you can see, a pullback trade is characterized by a retracement, often to the previous support or resistance zone.
    What are basic types of Forex trading? 4
    Take a look at the chart above!

    The price kept ranging between a support and resistance zone. At point 2, no one was aggressive enough to move the price significantly higher or lower. Once the price broke above the resistance zone at point 3, several traders began to feel excited about their profit so far.

    Most of them thought that this high price might be a good opportunity to take a profit. But, as more and more people took profit on long trades, the price slowly decreased. When the price got back to the previous resistance zone, some traders began to feel that this price was too low.

    The traders then bought the currency pair again (at point 4) to force the price up.

    The stop loss on that trade should be somewhat below the resistance zone that was broken. The take profit point should be someplace above the zone. It is okay to expect a risk-to-reward of 1:2.

    How to use the basic types of Forex trading

    Look at the top of this post.

    When a professional trader enters a trade, he knows exactly what he’s trading. But do you know too?

    Study your previous trades and recognize the types of trades you were entering. Then ask yourself this simple question:

    ”Did I make this as well as I could?”

    If you get YES as an answer, you are a very good trader. But if your answer is NO this will help you to make progress.

     

  • How to Buy Stock Options??

    How to Buy Stock Options??

    HOW TO BUY STOCK OPTIONS? 1
    Buying and selling stock options isn’t just new territory for many investors, it’s a whole new language, new world.

    By Guy Avtalyon

    Let’s see how to buy stock options. They are not new, there are historical findings that confirm their use during the Antiquity period.

    You might suppose these options markets are another superfine financial instrument that Wall Street gurus created for their own dishonest purposes, but you would be wrong.

    Actually, options contracts did not originate on Wall Street at all. These types of instruments exist for thousand – long before they began officially trading in 1973 under the name of the Chicago Board of Options.

    Since you have a better understanding of what options are (calls and puts) let’s look at how to buy a call option in a more detailed explanation.

    How to buy stock options

    At first, place, how to buy a call option. To buy a call you must first recognize the stock you think is going up and find the stock’s ticker image.  

    When you get a quote on a stock on most sites you may click on a link for that stock options chain which lists every actively traded call and put option that exists for that stock. 

    Let’s go step by step:

    1) Identify the stock that you think is going to go up in price
    2) Review stock Option Chain
    3) Select the Expiration Month
    4) Select the Strike Price
    5) Determine if the market price of the call option seems reasonable

    Are there the options for all and every stock?

    Well, this is a fantastic question because options cannot be traded for all stocks. Some of them don’t have the options. You can buy options for only the most popular stocks. They are tradable. Also, there is no possibility to always buy a call with the strike price that you want for some options.

    Strike prices are generally, in intervals of $5 e.g. $30, $35, $40. Occasionally, you can find $34,5 or $32,5 available for popular stocks.

    Also, there is no possibility to always find the expiration month you are looking for on the option for which you want to buy a call. Most of all, you will see the expiration months for the closest two months. Then every 3 months thereafter. Surprisingly, if you find the option that you want to buy a call on, you still need to make sure it has enough volume trading on it. Just to provide liquidity so that you can sell it if you decide to.

    Are options frequently traded on the most stocks?

    The most stock options are infrequently traded. Therefore have a higher bid/ask spread.

    To buy a call you have to understand what the option prices mean and you have to find one that is reasonably priced.

    If trading is at $22,5 a share in September and you are looking to buy a call of the November $32 call option, the call option price is regulated like a stock, fully on a supply and demand basis.

    If the price of the call option is $0.5 then not many people are expecting to rise above $60; and if the price of that call option is $4,00, then you know that a lot of people are expecting that option to rise above $60. The most important thing to understand when you want to buy a call is that option prices are a function of the price of the underlying stock, the price, period left to expiration, and volatility of stock itself. The volatility and the expected volatility of the stock are keeping traders in different opinions and hence drives prices.
    The most important\ thing to understand when you want to buy a call is that option prices are a function.

    The function of the price of the underlying stock, the price, period left to expiration, and volatility of stock itself.

    The volatility and the expected volatility of the stock are keeping traders in different opinions and hence drives prices.

    Many genuine investors and traders wake up in the morning and sneak a peek at the stock futures to anticipate where the market will open in comparison to the previous day’s close.

    What are the main characteristics of call options?

    – The security on which to buy call options.

    Suppose you think XYZ company stock is going to rise over a specific period of time. You can consider buying XYZ call options.

    – The number of options contracts to buy.

    Each option contract holds 100 shares of the underlying stock. Buying 3 call options contracts, for example, grants the owner the right, but not the obligation, to buy 300 shares (3 x 100 = 300)

    – The strike price.

    Strike price refers to the price at which the owner of options can buy, let’s say the stock when the option is exercised.

    For example, XYZ company ‘s 100 call options allow the owner the right to buy the stock at $30, regardless of what the current market price is. In this case, $30 is the strike price (this is known as the exercise price too).

    – The trade amount that can be supported.

    This means the maximum amount of money you want to use to buy call options.

    – The expiration month.

    Options do not last forever. They have an expiration date.

    Say, if the stock closes below the strike price and a call option has not been exercised by the expiration date. It expires worthless. And the trader no longer has the right to buy the underlying asset and the trader loses the premium paid for the option.

    Most stocks have options contracts that last up to nine months. Traditional options contracts typically expire on the third Friday of each month. So, you must be aware of how to buy stock options.

    –The price to pay for the options.

    When you buy the stock for the stock price, you buy options for what’s known as the premium.

    Premium is the price to buy options. In 100 XXX call options example, the premium might be $4 per contract.

    It means the total cost of buying one XXX 100 call option contract would be $400 ($4 premium per contract x 100 shares that the options control x 1 contract = $400).

    If the premium were $6 per contract, instead of $4, the total cost of buying 2 contracts would be $1,200 ($6 per contract x 100 shares that the options control x 2 total contracts = $1,200).

    – The type of order.

    Options prices are constantly changing, like stocks. So, you may choose the type of trading order with which to purchase some options contract.
    There are several types of orders, including market, limit, stop-loss, stop-limit, trailing-stop-loss, and trailing-stop-limit.

     

  • Successful Forex traders – What are the characteristics of them?

    Successful Forex traders – What are the characteristics of them?

    2 min read

    successful Forex traders

    As we know almost 95% of Forex traders fails. But 5% have success.

    So what is it that puts these traders in the top 5 percent?

    Typical reasons such as experience, discipline, and fortitude?

    We’ve all heard about that. But what is it that really makes them spot?

    In this article, I’m going to analyze lesser-known characteristics that successful Forex traders have in common.

    When I say successful Forex traders I mean consistently profitable.

    Let me be crystal clear.

    So many people talk about whether anyone can consistently profit from trading Forex.

    I know because I made big research for finding proof on the internet. I found articles, testimonials, videos… And what I found is that is the truth.

    Anyone can make consistent profit trading Forex and don’t ever let anyone tell you something different.

    And what did I find?

    What’s the secret to success?

    I have to say, the only secret is that there is no secret.

    But there is a piece of advice that will fully determine whether or not you are profitable. It’s a kind of habit.

    Every single successful Forex trader has it in common, and it’s not something you can negotiate.

    Successful traders never give up!

    I know because I found the stories.

    The ones about how some man tried for 3 years to make this Forex thing work, but with poor result. And he thought he just wasn’t for it. He failed because he didn’t recognize that his breakthrough moment was waiting for him just around the corner.

    That is the problem.

    There are so many traders who were fighting for years and suddenly took a break just before they made progress.

    I know, they were exhausted by a large number of failures. But if they had a couple of trades more, they would have succeeded.

    Never give up! This applies to all important things in life, but it’s never been truer than it is when it comes to becoming a successful Forex trader.

    They don’t “lose”

    Ok, every Forex trader has losses. That’s true.

    But, there is some difference between how the novice trader loses and how the successful Forex trader loses. What makes this difference? 

    In one word –  mindset.

    Most novices in the Forex market view a loss as a bad thing.

    Oh, no! It’s only one step on your way to winning.

    The successful trader doesn’t view it as bad or wrong. It’s not a penalty because the Forex market isn’t able to do such things.

    Forex market doesn’t know where you entered the market or where your stop loss was.

    So, where you find a possibility to be punished? Nowhere, it is completely impossible.

    Yes, I know! Making money is much more enjoyable than losing money.

    If your trade doesn’t go your way doesn’t mean you should take it personally or emotionally. Stop to think like this and prevent this hole to be deeper! The successful Forex trader has the mindset that a loss is simply feedback.
    successful Forex traders
    Losses are useful, they are very good teachers, they can be a powerful way to learn. Even a trade that ends up as a loss can be the right decision. How is that possible? If you’ve defined your edge, and the setup met all of your criteria to enter the market, then you did all you can do. The rest is up to the market. But some days the market just doesn’t play along. It isn’t your fault.

    Instead of giving up, you should ask yourself “would I take this same setup again next week if it presented itself?”

    If your answer is YES you are on the right path. But every time your answer is NO, you need to take a step back, figure out where something went wrong and correct it for the next trade.

    Each loss is an investment in your trading education. This is a constructive way of spending your own money. It is an investment with the best Forex trainer in the world – the market.

    They use price action

    Actually, they are using some form of price action as part of their trading strategy.  Because price action plays a major role in any strategy.

    It can develop and make stronger any trading strategy by providing areas to watch for potential entries as well as profit targets.

    A successful Forex trader has defined edge.

    Why the edge is so important?

    An edge is everything about the way you trade. An edge can help you to put the odds in your favor.

    Edge is a combination of the time frame you trade, your risk to reward ratio, the key levels you’ve identified, the price action strategies you use, etc.

    It is also important for your pre and post-trade routine. How do you handle losses or what do you do when you win? All of this, make up your trading edge.

    You don’t have to master all of these factors that make up your edge at once or to start putting the odds in your favor.

    It is better to master one set of factors and then leisurely expand to others to further clarify your edge.

    What are the characteristics of successful traders? 3

    This should be the favorite way to learn. Become a master of two or three factors. You’ll find much less stressful than trying to become good at twenty factors. When you’ve mastered three or four things, expand the others to put together the odds in your favor.

    Successful Forex trader never tries too hard.

    Because the successful forex traders know, trying hard is a sign that something isn’t right. Trying to force a trading strategy to work will only lead to destructive behavior, such as emotional trading.

    I remember the story of my friend when he first started trading Forex. He was spending countless hours studying setups. He spent hours and days and weeks doing so, ending up taking a completely different trade setup only to watch the original setup move in the intended direction without him.  

    He was trying too hard to make it work. As soon as he stopped over-analyzing trade setups and trying to make them work, his profit curve started to rise.

    Now he is spending 20 minutes per day looking at his charts. 

    They think in terms of money risked.

    You’ve never met a successful Forex trader who didn’t know how much money they were risking on any given trade.

    Surprising, the small number of traders don’t think about how much money is at risk before opening a trade. This is because they’re using an arbitrary percentage to calculate risk, such as one or two percent of their trading account balance.

    The trader’s only interested in how much money is at risk – they could care less about the percentage. They always define their risk in terms of money.

    They may use a percentage as an entrance of how much they’re allowed to risk, but when it comes to fully accept the risk before putting on the trade, they think only about money.

    And successful Forex traders know when to walk away.

    Walking away can be especially difficult after a trade. Our emotions are running wild and often take the best of us. Taking a break after a win will allow your emotions to settle. After the win, you may feel excited and proud of yourself.

    Yeah, you have every right to be. But pride and excitement are inadmissible in the Forex market.

    After a loss, you can go straight to the trap if try to go through the charts again looking for a new setup. Remember, your loss in some trade is just feedback. Take it as a signal to look at what you could have done differently. Successful Forex traders never do that.

    The key to becoming successful isn’t about eliminating emotions after a loss, it’s about channeling them in a way that will make you a better trader.

    And let’s go to the top of this article.

    The only way you can fail at becoming a successful Forex trader\ is if you give up. The next time you lose a trade just remember that not giving up is the #1 key to becoming a successful Forex trader.

    And you know what?

    Becoming a successful Forex trader is a marathon, not a sprint. So, keep it in your mind!

    Risk Disclosure (read carefully!)

  • Can you become a millionaire by trading forex?

    Can you become a millionaire by trading forex?

    (Updated October 2021)

    3 min read

    Can you become a millionaire by trading forex?

    Can you become a millionaire through forex trading? Do you know someone who has never dreamed of being a millionaire?

    Everyone can see the lives of celebrities and millionaires every single day. Who wouldn’t like the same lifestyle, expensive cars, luxurious houses, swimming pools, parties…

    All that desires, all that false matters, false emotions, come from media advertising and TV.

    OK, not everything is false. But that causes the other question: can I be a millionaire trading forex?

    Yes, you can become a millionaire trading forex.

     

    calculator>> Check out this Become A Millionaire Calculator 

    But you have to know it is not easy like you see on the internet advertising and TV.

    It depends on how much money you start trading.

    If you start with $5,000 and make 10% of your capital each month, yes, you will be a millionaire after 5 or 6 years. Just 10% of your capital each month can make you a millionaire.

    And if you start with $100K you will be in 2 years. You can’t do that in any other industry.

    Tell me, where you can start at $5K and become a millionaire in a few years.

    But remember, if your dream is to become indecent rich in a week or a month, forget about the forex. Go far away from forex.

    Because you will lose all your money, your car, your house and in the end, your family.

    This reality is hidden from you.

    Yeah, I know, every broker will tell you tales about doubling your money overnight.

    Hm!

    True is that they prefer you to lose your money. As soon as possible!

    Contrary, if you follow the correct way for a few years they will not see any considerable profit from you. Over the route of several years, you will be the one taking the true profits!

    And they don’t like that. This is not in their best interest because 90% of brokers are just market makers and have no relation with the market and banks.

    They create a virtual market for you and from time to time let you trade and they make money when you lose.

    And they lose when you have winning trades.

    Their interest is to make you lose as soon as possible, then they try to motivate you to add more funds to your account and lose your funds more and more.
    Can you become a millionaire by trading forex? 1
    If you really want to be a millionaire in the forex market forget about making money on the easy and fast way. Such thing like cold cash in the forex market does not exist. You will need time to learn how to trade forex. To learn how to develop a strategy with more than 60% probability to win. You will have to learn about money management. Actually, you should start trading on a demo account.

    Trading is art.

    People trade to make money in forex but forex trading is not like making money.

    You must understand the way of making money with the positions you are opening and the reasons behind it.

    That’s why you have to be patient!

    Trade for 2 or 3 months on a demo account. If you make success on a demo account, you can open a real account and start real trading.

    But, if you don’t have success on a demo account then something is not right. Perhaps your strategy doesn’t respect money management rules. Or something else you are doing wrong.

    After you see the mistake you can correct it and after that restart trading on a demo account until you get recurring success.
    Can you become a millionaire by trading forex? 2
    It is right to say that the Forex market is only for risk takers. It can’t be a permanent source of income but it can be a decent source of income. But only if you get the right guidance through the right adviser or build up your own knowledge to start trading with high precision.

    If you are new to trading you can start with the small investment.  And you have to keep revising your risk on the higher side to earn more.

    This can be the right approach. But the most important is that you should have the right guidance from the best signal provider.

    For everyone who asks: Can I become a millionaire through forex trading, there are two answers:


    Yes, you can

    and

    No, you can’t.

    Anything is possible in this world.

    However, you will be faced with some challenges like finding a good broker that doesn’t cheat on you. Maybe this is the biggest one.

    Forex brokers don’t let you grow your account systematically, because your profit is their loss.

    And we spoke about this:

    Forex is not a get-rich-quick scheme.

    Currency trading is not an easy way of making money. It is the same with the stock trading and all the other kinds of trading and investments.

    You have to pass some important stages before you become a millionaire.

    There are two things that you have to do to become a millionaire forex trader.

    First, you have to learn and master the trading skills. And you have to have a suitable amount of capital to invest in the forex market.

    No one has never seen one single retail forex trader who has become able to become a millionaire through growing a small account.

    There is no profitable currency trader who trades through the retail forex brokers.

    You have to have enough capital to trade currencies through a bank account. And your capital has to be suitable enough.

    You have to know that.

    Of course, if you don’t believe this you can spend time and money on retail forex trading.

    Unfortunately, it is not possible to start making money right after learning the forex trading basics and a trading strategy.

    To become a pro: PRACTICE to master your trading skills & risk management analytical skills using a free demo account for traders

    You have to consider something at first.

    It is smart to have a source of income that supports your currency investment. You must have some revenue, that covers your expenses and gives you free time to sit at the computer and learn how to trade.

    The lie is that you can make any money through forex trading and any other kinds of trading when you have financial problems.

    If you think that you can learn to make money through forex trading within a short time, and become a forex trader who makes millions of dollars, I have to tell you it is not possible at all.

    You can find so many false forex millionaires stories over the internet.

    Don’t let them deceive you.

    If you want to become a millionaire, first you need a good source of income that makes a decent amount of money that not only covers your expenses. But also leaves some money for your trading and investments.

    Only then you can start learning how to trade.

    You have to learn and practice until you become a profitable trader.

    There are two ways to do that.

    One way is harder. You have to follow too many trading strategies, robots, and time-frames, and sit at the computer for several hours per day.

    This way will hardly take you to your destination.

    The simpler and easier way is learning the Forex trading basics.

    And then a simple and strong trading strategy.

    You have to learn your trading strategy through demo trading. When you achieve success and make profit consistently for 6 consecutive months at least, you are ready to open a small live account and start practicing with it.

    If you make a profit for 6 consecutive months with your live account, all you have to do is that you keep on trading with your live account to grow it.

    3 of the most common patterns in Forex trading –  Head & Shoulders pattern, Pin bar and Double Top / Bottom

    How to use Head & Shoulders pattern:

    Head & Shoulders pattern is an easy way to develop trading skills.
    The first thing you must know is that Head and Shoulders is a reversal pattern. Meaning, when it’s uptrend, the price goes up, doing its shoulders and head patterns and then reverse for a downtrend.

    Those are somehow easy to locate when using this image to see what we should look for in an actual chart.

    In the image below, you can how it looks on a real EUR/USD chart:

    How to use Pin bar pattern:

    One of the most important candlestick patterns you should pay close attention to.
    If a pin bar appears it means that there is a very high probability that trend may reverse or pullback. The pin bar is often called “Pinocchio” bar, and it looks like this:

     

    How to use Double Top / Bottom pattern:

    Often, if you see a double top like in the following image, it can mean there’s a downtrend on the way.

    Forex trading is an investment opportunity.

    It isn’t a full-time job. You should already have an income to become able to invest in the currency market.

    Turning a small $5,000 account into a million dollar account is possible theoretically.

    It is theoretically possible to turn $5,000 account into a million dollars.  But if you want to become a millionaire forex trader you have to have a good backup.

    When you become a profitable forex trader, you’ll have enough money to open a professional live forex trading account to trade professionally and earn real wealth.

    For example, 1000pip Builder’s automatic trading system aims to target 350pips per month. Usually that should be enough, especially for the new Forex traders.

    As you can see, it requires both time and money, commitment and persistence, but ultimately it pays off.

    Or you know a different story?

     

  • Entry Trading Strategies That Make It Easier – Forex Trading

    Entry Trading Strategies That Make It Easier – Forex Trading

    2 min read


    Entry trading strategies can be very complex but simple too. Forex traders have many activities working against them, and among them, the biggest enemy is – traders themselves. Basic mistakes, lack of planning and weak or ineffective strategies, are the major cause of high forex failure rates.

    One of the trader’s mistakes is entry trading strategies complexity.

    The best entry strategies are those that are simply designed and simple to perform. The biggest enemy of effective trading is complexity. You should never identify complexity with quality. If you think the more moving parts in a strategy can give you the greater chances of profit, you are totally wrong.

    For example, you have an entry signal that has a 10 point checklist to trigger. And you want to apply that in live trading on a minute chart.

    What are the chances that you can keep track of all 10 checklist criteria?

    If you can’t identify that trade in real time, you will gonna miss it.

    And it will cost you money.

    What this means is, complex strategies lead you to missed trades.

    Your forex entries will be more effective if you keep them simple. Stay stick to this wisdom and you will be able to create a durable forex strategy.

    The second enemy in your entry trading strategies can be the timeframe.

    Entry Trading Strategies That Make It Easier - Forex Trading
    Jumping from timeframe to timeframe in order to find the perfect one is not the most effective way. Also, many traders choose the first one that grabs their attention – wrong too. Forex time intervals are a personal choice connected with trader’s character, personality, and nature.

    If you are impatient you would like to see your trade spread rather soon than later. And you wouldn’t wait for trades that take a long time. That means that faster timeframes suit you better.

    But faster timeframes also means you have to stay more engaged so you don’t miss key setups. And be careful, every extra second is a chance to do something emotional, like move a stop or take profits too early.

    The faster the timeframe, the less chance for mischief.

    But maybe the slower timeframe better suits you.

    Maybe you enjoy to plan and manage the trade with less furious tempo. Slower timeframes give you time to think.

    That can be a great advantage if you like having time to analyze.

    Especially if you want to put on more than one trade at the same time.

    Slower timeframes may give you more time to manage trades and perform them well. With longer time frames, you have more spare time.

    No timeframe will ever be perfect.

    If you choose well, it can be a good match for your trading style. And most importantly, you’ll have taken a step towards your own Forex strategy.

    One of the most important aspects of any trade is its size.

    This represents the amount of money in initial size and in total risk.

    General truth in trading is to keep your risk small and constant.

    Where is the point if you win on 3 trades making $400 each and if the fourth one loses $5000.

    Forex is the market with the greatest ability to sizing money risk. But only if you plan ahead. If you want to risk $1000, make sure you size your position to risk $1000. Don’t try to sensate your way into a trade.

    Decide up front the maximum it will cost if it goes against you.

    Sizing control is a fantastic attribute of the Forex market.

    But this attribute can be a benefit if used in the right way.  You have to plan ahead to cap your risk at the right level. If you do this right, your Forex entries will be more in good shape.
    Entry Trading Strategies That Make It Easier - Forex Trading 1
    And start with fixed outcomes. A fixed outcome is a pre-set plan for how you will exit a trade and usually it comes in as stop limit or profit taking the order. A fixed outcome is a pre-set plan for how you will exit a trade and usually it comes in as stop limit or profit taking the order.

    The fixed outcome will reduce the risk of changing your mind and moving the stop to take on more risk, your profit aim will be set and you can relax without wondering when to take profits. It’s a good habit in case something drags you away from your screens. Your trade can function without you right from the start. Fix your outcomes in order to cut down impulsiveness in your trading.

    Forex strategies can be a great deal simpler and more effective than many traders make them. 

    If you have not yet mastered a trading method, you will not be able to get good entries into the market. Thus, the first step is taking some time to get proper training in an effective trading strategy. Find some good one!

    And good luck!

    Risk Disclosure (read carefully!)

  • Avoid Bad Investment Moves – Strategies that work

    Avoid Bad Investment Moves – Strategies that work

    2 min read

    Strategies to Avoid Bad Investment Moves

    It is possible to avoid many bad investments.

    If you know what “catches” to look out for and which clarifying questions to ask.

    Most bad investment scenarios can be avoided by following simple rules.

    First of all, you have to avoid emotional and personal investing mistakes, wisely avoid.

    Many investors, even the well learned, can confirm they made a rushed and impulsive decision and didn’t avoid a bad investment.

    Also, many have made decisions while high on emotions so as to score instant satisfaction.

    The danger of making bad investment choices cannot be overemphasized. You can use an extensive set of control strategies that people use to limit bad decisions.

    What are some of the bad investment choices you can make?

    * Failures of rationality – This represents the lack of possibility to see the bigger picture. The investor considers decisions in isolation and doesn’t include their impact on an entire portfolio.

    The consequence is that you can invest too much in a single asset class, industry, Or geographic market. Yes, because you know a lot about it and are comfortable with such decisions. 

    * Using a short-term decision horizon – when an investor is ignoring the appropriate goal of long-term wealth accumulation.

    The favor is short-term returns. 

    But you are here to stay. Right?

    The consequence is that losses are more likely in the short run. Much more than over longer time periods.

    People are twice as sensitive to losses as to gains. This behavioral phenomenon is known as “myopic loss aversion”. And their inclination to take short-term risks is too low.  So they often make the wrong investment decisions.
    Strategies to Avoid Bad Investment Moves 3
    * Buying high and selling low – means doing what’s comfortable amidst either bullish or bearish market conditions. The consequence is that when you are buying while markets are high or selling when markets are low is a risky strategy that fails to take advantage of market opportunities. A buy-and-hold strategy turns out to be superior.

    * Trading too frequently – this is the result of multiple emotional and personality-driven characteristic. That produces an irrational tendency toward action.

    The consequence is that investment costs are higher.  As the frequency of making the other types of poor decisions is increased.

    Strategies to Avoid Bad Investment Moves 4
    The experts recommend these seven self-control strategies. They can help counter your tendencies to make bad decisions and avoid a bad investment. The use of these strategies was not limited to investments and often included other behaviors and other important lifestyle decisions.

    Here are the seven strategies and their application to financial decisions:

    1. Limiting options – Purchase illiquid investments to avoid the urge to sell investments when the market is falling.
    3. Avoidance – Avoid information about how the market or portfolio is performing to stick to a long-term investment strategy.
    4. Rules – Use the rules to help make better financial decisions, such as only spending out of income and never out of capital.
    5. Deadlines – Set your own financial deadlines aiming to save a certain amount of money by the end of the year.
    6. Cooling off – Wait a few days after making a big financial decision, before executing it.
    7. Delegation – Delegate your financial decisions with others, allow your investment advisor to manage your portfolio.
    8. Other people – Use the help of other people to reach their financial goals. Make some appointment with your financial advisor to make and execute a financial plan. Certainly, you don’t want all your money in just one kind of investment. So you can safely choose a single advisor or firm to handle a range of investments.

    The stock market’s tendency to produce large gains and losses. So there is no shortage of faulty advice and irrational decisions. 

    As an investor, the best thing you can do to pad your portfolio for the long term is to implement a rational investment strategy. The one you are comfortable with and willing to stick to. 

    If you are looking to make a big win by betting with your money, try the casino.

    You should be proud of your investment decisions in the long run. In that way, your portfolio will reflect the solidity of your actions.

    You would this: Bargain Hunting – The Holy Grail of Investing

    Risk Disclosure (read carefully!)

  • Forex Trading is Profitable. Right or wrong?

    Forex Trading is Profitable. Right or wrong?

    2 min read

    Is Forex Trading Profitable?

    Forex trading is profitable but the market isn’t endless, you have to know that.

    The size of your trade has an important impact on how you can bring a trade out.

    Don’t look at the percentage of what a so-called pro-trader does. People like to think in percentages way too much.

    Percentage of what?

    When you start, you can have someone who would be your ideal or paragon. But you always have to keep in mind that such trader is already experienced in trading.

    She or he does some things spontaneously, and you are the one who just stepped in on this scene. But if you’ve mastered some trading skills and have tested them well on some free demo account, you may have even one advantage.

    The experienced traders have more money, it is a blessing and a burden at the same time. But you can be more flexible to trade with high precision very close to how the market moves.

    What I want to say is, you should never underestimate a “small” position. Forex trading is profitable even in that situation.

    For the FX market, you can be small fish.  

    But that “small fish” can make a couple of hundred USD per pip. Is it good enough for you? Well, that’s why comparing percentages without comparing the actual pot is an unnecessary exercise. 
    Is Forex Trading Profitable? 1
    But it isn’t easy. Hard and smart work lies behind it. Of course, you have to involve a bit of luck to find the right stocks, right things while your motivation is still on the top. But when you make any success, you will see it is worth it.

    But you have to be dedicated to trading in order to be able to trade when markets move the most. If you live in a European time zone it is from the early morning to the afternoon. But if you live in some other part of this lovely planet I would recommend to your attention, one of my older posts.

    Some traders said: I’m trading short term on the 1-minute candlestick chart.

    Take this as a recommendation:

    Average holding time depends on what the markets offer you but it is rarely under 6 minutes and rarely over 20 minutes.

    Stay focused on reversal signals and have pay attention to good ones and fake-signals apart. Support/resistance areas play a role but you need to practice to be good at it.

    You have to treat trading as a profession or a business.

    Only in that way success will come.

    Why I’m saying this to you?

    Is Forex Trading Profitable? 2I have a friend. Forex trading has been an expensive venture for him, indeed. In his first 2 years of trading, he lost $30k. He almost went bankrupt because he was naive and greedy. His main problem was, he entered at the wrong time and exit at the wrong time. No matter what he did he was always on the wrong end. At that moment we couldn’t talk about how forex trading is profitable, right? This improved drastically when he found his own method. (And maybe this is the secret of any successful trader.) Now he has been profitable for over 15 months.

    Forex trading is profitable but not for everyone

    But I’ve seen a numerous amount of people lose everything in trading.
    Hundred and thousand times you should ask yourself:

    Why do I trade? To become rich? Is it a hobby?

    Do I love it or I hate it? Is forex trading harmful to me?

    Why I am forcing myself to all of this? Just for a chance to be a member of the profitable 5% club?

    Did you ever hear the saying: “If you don’t know who you are, the market is an expensive place to find out.”

    And the most important question is: Is trading really worth the effort invested?

    Trading attracts mostly because of the freedom it provides.


    Trading Forex isn’t a “get rich quick” method.

    With constant profits in order to make enough money not only to live but to build up a constant surplus.

    So, you can move on with your plans and plan your life. Maybe your focus on how much money you can make per year isn’t the best.

    You may think you can see better, you know better and you can believe in that. But that is a great paradox and tiny line.

    If you cross it, it can be the biggest tragedy. In every single moment, you have to take care of risk control.

    It doesn’t matter what you see or you think you know.

    Risk control! Double-check! Opened eyes! Use the excel.

    Sometimes, even the things you wrote before can be very helpful. Having some downloaded system is useful but money management is KEY to success.

    To gain knowledge of how to make a profit is much much more than what you can learn from a job in the corporate world.

    The knowledge has to be the goal.

    Yeah, I know. Time is money.

    Forex trading is profitable for me.

    Is it worth it? Yes!

    Should you continue trading? Yes!

    Should you continue with your studying? Yes!

    Should you continue looking for a job? Yes!

    Can you manage to do all of these things at the same time? It is up to You.

    The main factor for success is your permanent education and training. You have to believe in yourself and find what works for you.

    The only thing that brings you to your failures may be your ego.

    And if you aren’t ready to keep going after a series of losses, Forex probably isn’t for you.

    Risk Disclosure (read carefully!)

  • Investing in Cryptocurrency – The Pros and Cons

    Investing in Cryptocurrency – The Pros and Cons

    2 min read

    The Pros and Cons of Investing in Cryptocurrencies 2

    Investing in cryptocurrencies is generally a risky investment. Investing in cryptocurrency could be a good investment, or it could not. It depends on you and your attitude. In crypto’s early days there is no yes or no answer about the wisdom of investing in cryptocurrency. With this in mind, we will cover some pros and cons and give friendly advice. Remember, this isn’t professional advice, we don’t offer professional legal, investment, or tax advice.

    If you don’t just want to buy, sell, or invest in cryptocurrency. If you want to invest in cryptocurrency, you have several options.

    First comes first: You need to start investing in cryptocurrency with some flexibility. You have to be prepared to lose everything you invest in cryptocurrency. It probably won’t happen, but be careful. The least risky coins are the coins that are present the longest time and have the highest market cap and highest volume. Anything other than Bitcoin, Litecoin, or Ethereum is riskier. Bitcoin is the current top coin for resilience, market cap, and volume. Also the most expensive.

    There are several pros and cons to review before investing in cryptocurrency.

    CONS:

    The cryptocurrency market has been very volatile since its beginning. The price of Bitcoin can swing up or down hundreds of dollars in one day. We have already seen a few bubbles and busts in the past. There is a risk of the venture on a given coin even if cryptocurrency is prosperous. Even if cryptocurrency is a good long-term bet, we don’t know if any coin will be the one that sticks around. Even more true for the countless less popular coins with smaller market caps.

    The Pros and Cons of Investing in Cryptocurrencies 1Those with low-risk tolerance have a difficulty; they are inclined to getting weakness and pulling out at a loss while the market is fixing up or going down. An investor needs to be prepared to take a loss or sit on a loss for a while if the market goes down. That requires a certain type of mindset and expendable funds. There are some psychological factors to consider along with economic ones.

    The only way to trade cryptocurrency on the stock market is to buy GBTC (Grayscale Bitcoin Investment Trust), which trades at a premium. The simplest way to buy a cryptocurrency for a novice aside the stock market is via some company. They charge some fees for that, but the lowest fees are on the open exchanges of the internet. Between premiums and fees and finding a broker, all options for trading have costs and it isn’t easy to calculate.

    Spirit level of crypto investors is changeable. Like the Moon. Bad news in term of regulations can send crypto value to drown in one day. But the same news another day may have no effect. If you join some cryptocurrency group on social media, and you’ll note it goes from hot-to-cold with the weather. The market is a bit fussy, I think.

    PROS

    The cryptocurrency market is still young, and the most optimistic investors are predicting future prices, some of them claim that it can be for e.g. Bitcoin, $220,000 by 2020. Cryptocurrency is a very risky but potentially rewarding bet. More, if cryptocurrency is in a bubble, the trend could very well be toward cryptocurrency being an important medium of exchange and store of value in the future if the current price is lower than the highest price we will ever see. That makes it a good long-term bet. You can often buy high low and sell high. There is money to be made.

    The Pros and Cons of Investing in Cryptocurrencies 4
    Despite all its risks, crypto is possible the most exciting asset 21st century. It is decentralized, works on blockchain technology which is here-to-stay. You can find billions of motives about why everyone has to be excited about crypto. As much as reasons to be conservative in your investment.

    Don’t dump your whole saving into crypto, but don’t hesitate to put a small investment you are ready to lose, just to learn and have fun on your beginning. Later you will have the know-how.

    TIP

    If it is the bubble, then pop it!

    One of the reasons for taking extreme caution is the current potentially high price. If the price goes back down to 2015 levels, then the number of PROS will increase. The unknowns and high price and volatile market make it risky, but there are plenty of reasons to be excited despite all that especially long-term.

    Investing in cryptocurrencies is very risky, markets are volatile and the technologies are still quite young.

    But, they are still a great opportunity for anyone interested in investing.

    Treat them as you would any investment and do your own research.

    Step into this new world while is time.

    Risk Disclosure (read carefully!)

  • What is the best day trading strategy?

    What is the best day trading strategy?

    What is the best day trading strategy?
    Day trading is connected to great risk but also with great potential to profit.

    By Guy Avtalyon

    So, let’s see what is day trading.

    Day trading points to the rapid purchase and sale of stocks throughout the day. With the goal that purchased stocks will climb or fall in value for the short frame of time, seconds, or minutes.

    Day traders believe that through certain day-trading strategies, they can add up small daily wins into long-term profits.

    Day traders have their own jargon and terminologies, online communities for day-trading tips, support, and strategies.

    But you have to know – day trading is risky and only for speculative investors.

    The day trading strategies

    Scalping Strategy This is the philosophy of how small wins can add up to a lot of money at the end of the day. The scalper sets a buy and sells target and sticks to these levels.

    The scalping strategy is fast and traders make buys and sell within a few seconds. This is one of the best day-trading strategies for traders who can make quick decisions and act on them without regret or doubt.

    These traders have enough discipline to sell immediately if they see a price decline. In that way, they are minimizing losses. This strategy isn’t for people with short nerves. But still, it is very popular.

    Momentum Trading Investor jumps on a stock whose price is moving up. When to use the momentum day trading strategy?
    This strategy is very popular for beginners because it focuses on news and recognizing strong trends.
    Stock movement of 30 to 40%, smaller stocks, which trade faster due to the reduced number of outstanding shares, a unique and major move in price, driven by a catalyst like a surprise earnings growth, a drug company’s huge, new treatment launch or news that a small company will be acquired by a larger firm. Option stop – loss is required as insurance.
    Just hold your position and wait to see indicators of reversal and simply get out. Also, you can decrease the price drop and round your price target at the moment the volume starts to decline.

    The most important part of this kind of day trading strategy is to be extremely aware of the expected news and earnings reports. If you execute it correctly, you’ll be able to profit from each trade. And you trade just short as few seconds per trade. Wonderful!.

    Breakout Trading – When the stock price rises above the former top resistance price you can use this strategy. You should monitor the level of stock trading volume or how many shares are changing hands. Breakout trades on high volume are more likely to be sustainable at the new higher price than those breakouts with less volume. It’s not as easy as looking at a chart, recognizing the resistance, and then buying after a breakout.

    Breakout trading focuses the point when the price clears a particular level on the chart. Also, you have to notice that the volume is increased. So, you have to enter into a long position after the stock breaks above the resistance level. The other possibility is to enter a short position when the stock breaks below the support level.

    To explain this more detail, after the stock trades beyond these levels, the volatility will increase and the stock price will usually follow the trend, meaning it will move in the direction of the breakout. Always keep in mind these two levels: resistance and support. You have to see how frequently the stock price hits them. More hits, more volatility, more important the levels become.
    Plan your entry point according to which level the price hits. If the price is set close or higher than the resistance level is, you’ll need to take a bearish position. The contrary is when the price hits the support level or move below. In that case, you’ll need to take a bullish position.

    Your exits should be set reasonably. Calculate the average recent changes in price to set your price target. For example, if the average price is 3 points more than the last few swings, your price target will be rational. When the stock price hits your target price, just exit the position and take your profit. You had a winning trade.

    Day trading on news

    News Trading – You must be keeping an eye on the business news, day traders can capitalize on the popular daily stories.

    If the news is bad, you might short the stock during the day by “borrowing” shares of the stock from the investment firm. And then selling those borrowed shares.

    Similarly, if the stock price declines as expected, you should buy the shares back at the lower price and profit from the difference less a commission payment. If the news is good, you go long or buy the stock outright and sell the shares after the price rises. 

    Pullback Trading – The first step is to look for a stock with an established trend. Then, monitor the trend until there’s a price decline from the trend. If the established trend is upward, then the pullback is an entry point for the day trader to buy.

    If the trend completely reverses after you buy-in, there’s no need to panic. The trend usually continues in the trending direction for a long time.

    You may find pullback ”candidates” from the stocks making the biggest gains.

    Is there any risk involved

    But be aware!  ”Day trading is extremely risky and can result in substantial financial losses in a very short period of time,” according to the SEC website.

    And one advice: If you’re afraid to try your hand at day trading, only invest money that you can afford to lose.
    Or don’t try this!

    Read more about Strategies to Avoid Bad Investment Moves