Category Archives: Trading

Forex Trading Strategy for Conventional Currency Traders

Conventional Forex trading is not the most common type of trading you will encounter today, but it is certainly a very important type nonetheless. Many people who do not have a large amount of money that they can invest over a long period of time will prefer to try day trading for starters and then eventually move over to swing trading when they get the opportunity, but people who end up with enough money that they can make a number of investments for the future will almost unanimously opt for conventional trading as a way to grow their investment over time.

The main reason for this has to do with the idea of stability. One way to look at it would be through the use of statistics. Assuming that conventional trading, day trading and swing trading are all distributed evenly with respect to their statistical probabilities, the main differences between the three types of trading is that the average return per trade goes up respectively, and at the same time, the standard deviation also tends to increase. This means that you might make a better average amount per trade with swing trading if you do it properly, but your losses are also going to be magnified because of the greater diversity and action that happens at the swing level. Over time, however, those sharp movements tend to even out and conventional trading strategies tend to make you more money with larger investments over the course of time.

If you are interested in conventional trading and have the money necessary to make it a worthwhile endeavor, something you are going to have to do is take a close look at the currency you might be interested in buying or selling. You want to have some idea of how the currency is going to do over the long run, and while nobody can predict with certainty exactly what a currency will do over the long run, you can get a good idea of whether it is going to go up or down based on the economy that is backing the currency.

The US dollar is a very good example of this. The US economy up to the present moment has been growing in leaps and bounds because of the fast pace at which they have been expanding credit. Every financial analyst around knew that the US dollar would gain in leaps and bounds because of the credit being offered to the world in US dollar amounts (and therefore making other countries buy US dollars to get the credit), but they also knew that contraction could mean the implosion of that same currency pair. When the credit crunch hit the US in early 2008, it turned out they were correct, and the US dollar dropped significantly in its value. Not every case is as obvious as this one, but it is good enough to illustrate that if you have a general idea about where the economy of a country is going, you also have a general idea about where its currency is going.

Forex Trading Methods Free Analysis, News, & Live Training From GlobalForexTradingEtc.com. http://www.globalforextradingetc.com/category/forex-trading-methods/

Using A Mt5 Expert Advisor For Your Automated Fx Trading

A Metatrader expert advisor (EA) is a computer program you may produce or purchase for the Metatrader 4 trading platform. You can easily create an expert advisor for virtually any operation for instance hiding your stop loss or take profit objectives from your forex broker, having forex trades immediately copied between various accounts, finding fx trading signals or simply managing active positions with specific exit guidelines.

However, the most popular motive men and women use the ea technology would be to produce automated currency trading systems. With millions of forex trades taking place daily in the forex markets using automated computer programs, with a MT5 expert advisor at your fingertips, you don’t have to be a big forex trader or an institutional organization to take advantage of and be involved in the world of automated fx trading systems.

Applying technical analysis principles, a good Ea is smart enough to accomplish in any determined market condition and whilst it may be used to uncover and automatically trade forex trading signals whenever you want during market hours, the most suitable periods would be the London and US sessions.

What makes automatic trading work ? According to your pre programmed forex trading system, a Metatrader EA perpetually monitors the market 24 hours, 5 days a week. You don’t have to be in front of the computer neither will forex trades be missed. When a forex trading signal is found, the EA will instantly place the trade as well as manage that trade till it reaches the take profit or stop loss level. All accomplished depending on everything you had designed it to do.

Expert advisors are excellent since they help eliminate the emotions and psychology which can substantially impact the success of your forex trades. Because everything is automated, the forex trader won’t be at risk of making human emotional trading mistakes that is very often led by fear and greed.

Having a well planned and composed expert advisor can supply many benefits and can certainly help give your forex trades considerably more efficiency. So prepare your thoughts and put together your forex trading system on paper. You do not have to know how to program in order to create a Metatrader 5 expert advisor. Locating a Metatrader 4 coder is actually easy and cost-effective. All you have to do is explain how you will find and trade your currency trading signals and enable the developer take it from there.

Safe Money – How To Spot Stocks To Earn Safe Money

What is a safe money investment?

Safe money investments have two characteristics –
1. Value that will last. Real, significant, durable value.
* No trendy stocks whose price is built on hype and hope.
* You want companies whose assets can be turned into cash.
2. A price well below the stock’s value.
* Buy bargains. If a great company is down, that’s when to buy.
* Great companies bounce back from a down market or a temporary slip.

What is value in a company?

True safe money investments have –
1. Lots of cash.
* Cash keeps the business going when sales dip. It’s insurance.
* Cash pays for sales and advertising.
* Cash pays for research, new equipment, and acquisitions.
* Cash pays for growth.
2. Little or no debt.
* Debt payments take money away from profitable activities.
* When times are tough, debt payments can drag a company under.
* A safe money investment can pay all its debt, with cash left over.
3. Lots of free cash flow.
* Free cash flow is the money that’s left after all costs of operating a business are paid.
* Free cash flow can add to a company’s cash or reduce its debt.

What is the opposite of a good safe money investment?
* A company with huge loans, searching for future earnings that may never arrive.
* A company spending more than it makes.
* Companies like that may succeed, but they often flame out.

When is a price well below the value of an investment?

Here are two definitions of safe stock prices – both work.
1. Price less than 15 times free cash flow.
* Blue chip stocks often sell for around 30 times free cash flow. Half that is a bargain. Your stock could double in price.
2. Price to Sales Ratio below 0.9.
* History shows double digit annual returns for such stocks over 5 years. Price to Sales Ratio over 0.9 returns less than half that.

Two other popular definitions use the Price to Earnings Ratio (P/E), and the Price to Book Ratio (P/B). These don’t work quite as well, because –
* Earnings are often manipulated.
* Book value may not reflect the value of intellectual property such as software and patents.

When to buy or sell.

Now that you know what a safe money investment looks like, you also know when to get out. Never hang on when a company loses its value or gets too expensive. Don’t be afraid to sell, even if you’ve held for years.

Here’s an example from a real company I’ll call ZZZ to avoid bias.
* ZZZ has $20.75B in cash, and $2.5B in debt.
* ZZZ has enough cash to pay its debts with plenty left over.
* ZZZ has $8.26B in free cash flow – enough so that the company could buy itself in a few years.
* ZZZ sells for 14.1 times its free cash flow – a bargain.
* ZZZ does have a high Price to Sales Ratio of 2.72.
* The market may worry about ZZZ’s relatively slow sales growth.
* With all that free cash flow, ZZZ is still safe.

The lesson is that low risk makes for big profits. Don’t gamble, especially with your retirement investments. You’ll make more money playing it safe.

Vince Stanziones How to beat the S+P500 with a simple Seasonal Trading Pattern System

Heres a simple trading system that has a good track record going back to 1945 and a newer twist that can help you profit from weaker months in the stock market

Many of you have heard the old stock market saying “sell in May and go away”. In this report I will delve further into this seasonal pattern and look at ways that you can profit from seasonality studies. We will use the US S&P 500 as our benchmark index not the UK FTSE100 which has not followed seasonality as well.

Before I go any further I have to warn that past performance is no guarantee to future results, however, with a long established track record this system is worth considering. Also, my aim here is to look at the facts and how to profit, rather than speculating why markets tend to be weaker over the summer months.

In brief the S+P500 historically has been stronger between November to April than the May to October period. By staying out of the stock market and going in to cash in on the weaker period a better return can be achieved than a simple buy and hold 12 month strategy. Also your risk can be reduced, remember, each month you are invested in the market you are taking risk, by being out of the market for 6 months of the year you have just reduced your risk by 50%

Source: Standard & Poor’s

A study of price action for the S&P 500 Index from April 30, 1945, through April 21, 2006, shows interesting results. The S&P 500 advanced an average of 7.1% during the November to April period over that span (without dividends reinvested), it posted an average gain of only 1.5% from May through October. What’s more, the November through April period outperformed May through October 68% of the time.

History shows that the S&P 500’s worst month is September, and that the worst three-month period is the third quarter. October is historically a month in which the market establishes a bottom, so the S&P 500 enters November at a fairly low level compared to other months. This gives the November through April period the advantage of starting at a lower base. January also tends to be a strong month with New Year optimism and pension funds tend to invest new money, April also sees many individuals add to their retirement pension plans.

An interesting study was done by the the Stock Trader’s Almanac which demonstrated the power of seasonality. They tracked what would happen to a $10,000 investment in the stocks that make up the Dow Jones Industrial Average.
Money invested in the Dow stocks (you could use the DIA Exchange Traded Fund or a Wall Street spread bet to get the same effect) in the “best six months” and then switched to fixed income in the “worst six months” over 56 years grew to $544,323. But money invested in the Dow in the “worst six” and then switched to fixed income in the “best six” compounded to a loss of $272.

The chart below shows seasonality on the S&P500 and as you can see the gains come at the start and end of the year, being out of the market from May to 1st November.
How to trade seasonalitys

A simple way would be a Financial Spread Bet. You could buy an up bet on the SPY which is the S&P500 tracking stock from the 1st November to 30th April and switch to cash for the weaker months. Your stop would be around 30% below the index, so if the S&P 500 was trading at 1300 the SPY would be at 130.00 your stop would be 30% below at 91.00. With a 30% stop you would not be worried about shorter term swings.

Another way would be to use fixed odds bets with www.betonmarkets.net You could use Bull bets to bet the S&P to go up from 1st November to 30th April and then use Bear bets to back the S&P to be no more than 3% higher on the 1st November than it was on the 30th April. So if the market is down you would win, if it goes sideways or up less than 3% you would win. You could change the 3% margin but this would reduce your returns, but it would make the bet safer.

What holds up over the summer?

So far we have looked at the whole S&P 500. If we look at the S&P sector indices since 1990 which is as far back as I could find reliable data, we see that defensive sectors hold up better during the May to October period and in fact show a gain.

One of the best sectors has been Consumer Staples, big boring, cash rich companies such as Proctor& Gamble, Altria, Pepsico, Colgate Palmolive and Cocoa Cola

So rather than go to cash during the weaker months you could park your money in the Select SPDR Consumer Staples ETF (XLP). The average return on this has been over 4.8%, so adding this to your 7.1% (the return from the positive months) youre on 11.9% return beating the buy and hold 12 month return on S+P 500. Over 15 years this has given a return of 8.8% per year (without dividends reinvested).

Conclusion
As a trader or investor its worth taking time to study seasonal patterns especially those with long track records. The above outlined strategy at its most basic would allow you to capture the majority of the years stock market gains and still make a return on your investment from interest the months you are out of the market. A slightly higher risk strategy would be to rotate to a defensive sector in the weaker months which can be done cost effectively with an Exchange Traded Fund.

Vince Stanzione has produced a home study course to teach private investors how to benefit from trading financial Spread Bets and Fixed Odds priced at 347. For more information please visit www.fintrader.net

Online Trading Tips For Beginners Venturing Into Stock Business

The foreign exchange market is considered the most profitable market in the world. Because of its faster money making capability, it draws more number of people to start investing in it. Beginners & experts who want to earn their fortune trading profits faster feel equally excited at this option. Though one can enjoy trading in the Stock market for 24/7 but it is not always possible to get desirable profit. Only successful trading tips can help you become the hero in Stock trading business.

Though investment in Stock trading seems attractive & can bring you instant money, a first timer should be little careful while venturing into it. It is only because most of the people hurriedly jump into the online foreign exchange market without proper idea on trading tips in use so that they can become successful. They dont just bother to predict the trends, analyze the Stock data & gather sufficient intraday trading tips & incur losses in investment. So it is always recommendable to take some time off your busy schedule & start learning on trading tips applicable for varied market situation. After becoming fully well versed with them, you can take the risk of investing money in the Stock currency market.

There are instances where traders, speculators as well as investors have invested carefully & made a lot of profit. Thus profit can be made if you have sufficient knowledge on trading tips. By gathering trading information from reliable sources, one can easily avoid the failure & reach at the destination.

The beginners should first concentrate on learning the past history as well as the present trend of the Stock market. By analyzing the past Stock market records, they will be able to predict the chances of such patterns arising in the future. Even at times they may feel confused to find rapid ups & downs but knowing the trading tips can really prove out to be useful for them in minimizing the investment losses & generate gains.

The next step is that one should try to learn the tit bits of Stock market. It would be better if he/she makes a detailed study & does not adapt any short cut means. The trading tips give them the lesson to realize the value of their hard earned money first & then consider investing it in Stock market. However, introduction of online Stock software has made Stock investment a lot easier these days & just pushing of buttons can do the same.

Many professional share broker firms are nowadays providing stock traders with highly essential intraday tips to help them make regular profits from day trading in stock market. They use advance technology & sophisticated Stock software to evaluate the data of important stocks. They prepare intraday tips after carefully scrutinizing, analyzing & selecting stocks on various criteria. The stock traders can just follow these highly accurate intraday tips to come out successful in day trading.

forex trading

With a forex trading account, you are able to invest and trade with people all over the world with different currencies and products. There are different kinds of forex proprietary trading accounts that you may be interested in. Depending on your expertise and experience level in trading, you may want to choose a managed program or you may want to manage the account on your own. If you have a lot of knowledge about futures trading and know already what kind of investments that you are looking to trade, you can manage your own account and have it be secure.

If you have been interested in having an offshore trading account but have not yet started, you should consider opening a Forex trading account. These accounts make it easy and affordable for anyone, no matter what the expertise level, to easily trade and manage their own trading accounts. The security and privacy that you can have with owning your own offshore account is reason enough to move your investments and assets. It also makes it very fast and easy to do all of your transactions for personal or business account needs.

With a forex proprietary trading account, you are able to have access to the foreign market on a larger scale than you would if you only invested in the stock market. People, who have opened up a forex account, have discovered a lot of options, as well as the benefits of learning all about other country’s currency rates. The rates fluctuate greatly from day to day, and it is important to have an understanding of the value of one type of currency versus another.

Whether you have never invested before and had a trading account, or if you have only been trading on the stock market, you should check out the potential that you have to earn money on your trades through the foreign exchange. With a forex proprietary trading account, you have access to the large market of foreign trade options. You should learn about the currency trading values, as they can differ from day to day, and you should know that the value of one type of currency may hold a different value for another type.

Opening a forex trading account can be one of the best financial decisions that you can make. If you are tired of losing your money through poor investments and feel limited with what your money can do in the market, open a forex account and see the difference.

How To Draw Trend Line For Stocks

In trading, it is important to develop a strategy that will give you an idea which direction the market is heading. One of the simplest yet effective ways to check the direction of the market is to use trend line. Basically, trend line shows the direction of the market by connecting two points of previous reaction high or connecting two points of previous reaction low. Trend lines are drawn on a chart to determine directions. Once the direction is drawn the trend can be determine.

The trend line can be drawn on many different time frames. Trend lines can be drawn on a monthly, weekly, daily, intraday chart or tick chart. Trend line will help trader know when to enter the market or when to exit the market. There are many different types of trend line. When a trend line is connected from the top of two previous reactions high and connected with two previous reaction low, it has established a channel. The channel can be an uptrend channel or a downtrend channel. Channel is also known as continuation pattern.

If a trader decides to go long on an uptrend he would buy at the bottom of the trend line and if the trader decides to short he would buy at the top of the trend line. This is also known as support and resistance trading. Traders believe that trend line give the market some type of continuation to go upward or downward. The probability of the trend line succeeding depends if it can continue on the trend. Sometime a trend may exhaust and reverse. This happens when the trend line break and the trend can no longer continue.

Trading a trend line break can give trader the signal of a trend reversal. Trend line break normally is a stop of a continuation and exhaustion. For example, if an uptrend line break, it is an exhaustion of buying and sellers are looking to exit to market to capture profit and if a bottom trend line break it is an exhaustion of sellers and buyers are looking to step back into the market. Trading is type of strategy has a high probability as many professional are looking at these trend line support and resistance.

In technical analysis trading, traders expect that a trend line will continue. Sometimes the continuation can last for a few hours in an intraday chart or months on a daily chart. Trend line is one of the price actions that is widely followed by the general population of traders. Trading trend line gives traders a useful insight and expectation of price action. Price action should be use in conjunction with trend line and together can increase the odds of success. Trading trend line is one of the strategies of many different strategies. Whatever the strategy are, trade at your own risk and use careful judgment when trading.

Foolproof Stock Trading Strategies That Work

If you have enough savings and you wish to make profits out of it, one option is to invest in the stock market. In its simplest sense, stock trading is generally about buying and selling stocks. You can choose to invest your money anywhere, but of course, a healthy amount of risk is always involved. The stock market is a very flexible system, and stock prices can go up or down like a roller coaster.

To be a successful stock trader, it is imperative to educate yourself with the basic principles in the stock market. Investors are in search for the magic formula that would help them pick the best stocks, but the truth is there is no hard and fast rule that could ensure maximum profit in a short span of time. Many factors are at play in the movement of stocks in the market, and most of these are simply beyond your control.

Even if you wanted to, you cannot directly influence the trends in the financial arena that would determine whether a company would fly high or sink low. Your best allies as a stock trader are usually just careful planning and effective strategizing.

1.Acquire an adequate amount of market knowledge. The advent of online trading has now made it possible for ordinary individuals to get involved in the stock market. Anyone can participate in stock trading online, but before you buy shares in the market, familiarize yourself with the principles of stock trading first. You need not be an expert on all the technicalities of trading. You just need to be a diligent learner. Do your research, read up, and study stock related terms. Look for articles online or subscribe to an online stock trading newsletter to get the latest news and expert tips from veteran traders.

2.Choose a good online stock company to set up your account with. In order to buy and sell stocks on the internet, you need to have an online account. Open an account with a reputable stock company to have access to their services such as stock charts, online brokers, and market analysis tools. You just need to pay a commission fee for every transaction you make, but this is minimal considering that you can get a lot of useful information on the company website and their online stock trading newsletter.

3.Hire an effective broker. If you are relatively new and inexperienced in the stock market arena, you would do well to get the services of a good stockbroker. A broker serves as a sort of adviser who will guide you in making decisions, alert you to the latest news in the financial world, explain the trends, and can do the transactions for you.

Again, you must remember that there is no single way to know which stocks are most profitable to invest in. Just take advantage of useful tips, lessons and advises that you encounter along the way, and use these to come up with your own unique strategy that will work for you.

Basic Technical Analysis For Forex Trading

If you are a forex trader, you are probably aware of the monumental profit potential of trading the foreign exchange market. Trading this huge market is really like trading the global economy itself, and the huge profits come from taking advantage of something called ‘leverage.’

Let’s say that you noticed that the real estate market in a particular area was really booming, so you wanted to work with a bank to acquire as many properties as possible in this area. The bank told you that instead of paying for all the homes yourself, you would only need to pay 1% and the bank would pay the other 99%. Not bad, eh?

This is an example of leveraging money, and your forex broker will allow to do the same thing while you are making trades. The most common leverage level is 100:1 or 1%, meaning that with $1,000 you could potentially trade up to $100,000.

But all of this money is of no use if you do not know how to place profitable trades, so today we will cover the basics of a popular form of picking trade opportunities called ‘technical analysis,’ as well as cover a few of the most widely used technical indicators.

In technical analysis, we are only concerned with the numbers. We are concerned with only the ‘what’ of the exchange rate prices and not the ‘why.’ We do not care about why the currency rate is at a new high or low, but only about the steps that the price fluctuations took to get there.

A good forex technical analyst can look at a chart of price history and see potential trading opportunities, as well as completely separate any emotions such as fear or greed from said trading opportunities. This ability of looking at your money without emotion can be very difficult to learn, but it is really the key to successful technical analysis and making profitable trades.

The three technical indicators we will cover today are Moving Averages overlaid onto price data, the Relative Strength Index, and Moving Average Convergence/Divergence.

First, let’s talk about how these indicators will actually look when they are set up on the chart. The moving average itself will be on top of the candlesticks or bars that give the price data, and the MACD and RSI will be below the price data on a small separate graph.

The RSI will give you a good idea of the strength of a certain trend, as well as the current overall volatility of the market. This indicator will show you the ‘relative strength’ (duh!) of the market at the present moment. In setting your RSI indicator on your chart, two of the most popular periods are 14 and 21.

What this whole ‘time period’ business means is that the indicator will track back a certain number of bars or candlesticks from the present one (14 or 21 in this case), and the indicator will be based on that data. When the RSI is at a high value (usually above 70), this can indicate high volatility, and a good time to trade is when the RSI is climbing.

Next, we will talk about moving averages, and there are two different types: one that is one top of price data, and one that is separate from price data.

Both indicators, simply called a moving average (on data) or a MACD (off data), really try to tell you the same basic thing, and that is whether or not the current price action is significantly different from recent price action.

If the way the prices have been moving within the last hour is much faster than how they have been moving earlier that day (if you had maybe 30-minute bars or candlesticks), this is definitely a potential trading opportunity.

To identify forex trading opportunities with a regular moving average (you may want to try a period of 10-20 with this), you will see the price data cross over the moving average line and keep going in that same direction. This shows you that this move is different from the way the market has recently been moving, and can be a good chance to make some money.

The MACD uses the same basic concept, but you have a short-period and a long-period moving average instead of a moving average overlaid on price data. The CD in MACD stands for convergence/divergence, and this indicator will show you short-term price action compared with long-term price action.

The periods of each moving average on the MACD are generally 12 and 26, and the same basic concept applies: if short-term action is significantly different from long term action (divergence in the two averages), this can be a profitable trading opportunity.

Day Trading Articles – How To Find The Best Authors

With the rise of day trading online, there are a lot of day trading articles on the net. If you want good information you want day trading articles that have been written by people who actually trade and thats what were going to look at here.

The vast majority of articles written on day trading are not written by traders at all. There normally written by people who are simply trying to make money by appealing to traders to visit their site where they have ad words or products from vendors for sale.

These products appeal to people who are looking for an easy way to make money in forex and they lose.

The fact is day trading simply doesn’t work.

As an experienced trader, I find it amusing that people actually believe what some authors say in terms of day trading, here are just some examples:

“Predict market tops and bottoms with 90% accuracy”

“Scalp profits everyday”

“Earn $10,000 a month with this system”

Of course these day trading systems don’t work as the track record that comes with them will have the disclaimer below (or a similar one), read it carefully:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

What this means is a vendor can make up any track record they like in hindsight, knowing the closing prices – but trading is actually a little more difficult, you have to trade without knowing the closing prices!

You will never see a day trading system with a track record of real gains, audited with account statements over the longer term. If you do – let me know because I have been trading for 25 years and never seen one.

Day trading forex day trading stocks, day trading commodities, day trading CFD’s – it doesn’t matter – day trading does not work in any of them due to the following:

All volatility in short term time frames is random and prices can and do go anywhere, meaning that if you try and use support and resistance levels they wont help you with your trading signal or help you get profitable market timing.

You therefore can’t get the odds in your favour and will lose over time.

This is fairly obvious when you consider that the price in any financial market is made by a vast diverse group of traders.

You simply cannot predict what this vast mass of people will do in a period of a few hours – the time period is simply to short.

If you want to make money trading then you need to trade longer time frames, where you can calculate and get the odds in your favour. This means swing trading or trend following.

So the next time you read a day trading article you should be aware that the person writing it has probably got no experience on the subject they are actually writing about. There are lots of day trading articles and the vast majority of the authors have simply never traded.

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