Although ECN-type brokers typically charge a small commission, you can usually get tighter spreads on many currency pairs due to the large liquidity pool available. Risks of trade manipulation are also minimised when using genuine ECN brokers as compared to brokers that operate dealing desks.

This aspect of OTC shifts the odds of success against individual traders, especially if the forex broker acts as a market maker. Since traders have to deal directly with their brokers, the latter will usually hold the opposite side of the transactions. Because of the inherent conflict of interest that exists, this arrangement does not sit well with many individual traders as they fear that the market maker will trade against them, and that is not an uncommon practice in the market making industry.

No information on volume Since buy and sell transactions are not cleared by a central system, there is no way of knowing the total volume of trade. Lack of volume data can pose a challenge to stocks or futures traders who have made the switch to currencies as they may have become used to checking volume. No singular exchange rate at any one time Exchange rates do differ from place to place, screen to screen, depending on which parties are offering what.

Cash transactions take place between countless parties at any one time, and there is no exchange which records all these transactions. Some independent traders are not even aware of this peculiar aspect of OTC dealings. Since there can be a few different prices for a currency pair at any one time, you may not be able to see what is the best available price if you trade through only one market maker.

Generally, though, the rates provided by market makers to retail traders are quite close to the pricing quoted in the interbank market. No standard data Exchange rates differ from one market maker to another because there is no consensus specified by a centralised market. Different market makers have different rates at the same time although usually not differing by more than a few pips.

A trader would have to accept what is being quoted by his broker unless he compares prices with other brokers. Price charts from different price feed vendors will also look slightly different as they each have their own data source. Although, in general, the currency prices are quite similar. The forex trading day Also, being a hour market, boundaries of a trading day are blurred.

Traders from around the world are in various time zones. Traders from, say, Singapore would display a different timing from their US counterparts — who tend to display EST Eastern Standard Timing on their price charts. While the trading arena has had a boost from the CME-Reuters joint venture of a central forex exchange, it remains to be seen if that can benefit independent traders.

Trade manipulation by some market-making brokers is something that is difficult for traders to prove, and something that is easy for the culprits to dismiss. However, despite the limitations that come with the OTC territory, spot forex trading can be extremely financially rewarding for those who are aware of the limitations and know how to deal with them. And trading forex is not one of the easiest ways — despite what many new traders believe. Many traders fail, and they empty their trading accounts before they learn how to exploit the forex market to their advantage.

Although there are also traders who are successful in forex trading, their numbers are small compared to the majority of losers. Many times, traders are not aware that they have the power and might to shift the odds to their favour, that they can dramatically increase their chances of success if they want to.

The main reason why many traders get defeated by the market can be attributed to their lack of knowledge. In this 21st century, where the buzzword is knowledge, it is not just a matter of working hard, but also a matter of working smart. Knowledge is the key that can open many doors — if you have an intimate knowledge of how something works, you can then come up with ways to exploit what you know to your advantage.

This applies to forex trading as well. You need to know how to identify high probability trade setups and how to manage your money wisely. For every transaction in the forex market, there are winners and losers. Your goal is to make more overall profits than losses over a period of time, and to emerge an overall winner. My approach to consistent trading success lies in three main pillars, or the 3Ms: Mind, Money and Method. It is often said that we are our own worst enemy.

Human beings are emotional creatures, and most of our decisions are guided more by emotions than logical thinking. Our mind is capable of playing tricks on us; we can get seduced into unfavourable situations by our emotions. Emotions can work for us or against us. Sometimes they can save us from landing in a pile of sticky mess, but sometimes they can land us in it. We can also turn the tables around by playing tricks on our mind, making it believe whatever we want it to believe.

Do you have the mental strength? Whether you are new to trading currencies or a forex trader who has some experience, here are some questions to ask yourself: Do you really have a strong desire to succeed in forex trading? Sure, every one wants to succeed in something, but do you have the desire to want to succeed in forex trading?

First of all, this field is not for every one, for you must have the passion for it. If you just want to try your luck, or dabble, in trading, you will just end up among the majority who lose their money. You must have the deep desire to want to accomplish your goals, because without this desire, your thoughts will not materialise into action, and it is action that could transform your goals to reality. To be a successful trader, you must be highly self-motivated, have a concrete plan of action, and not be afraid of failure.

Are you prepared to devote a lot of time and effort into picking up trading skills and knowledge? To be really good at anything, you need skills and knowledge in that field.

A huge amount of time, effort and money is required for a trader to attain consistent success in forex trading. Despite the availability of forex trading-related resources on the internet, and in the bookstores, traders can find it quite daunting to learn about trading on their own as they do not know what there is to be known.

I recommend that you check out those which are offered by skilled and practising instructors. Note: Be wary of signing up for courses or seminars that are full of hype, for they can be very misleading. Avoid those that give you the impression that you can attain consistent profits after two days of intensive learning, or those that require you to purchase expensive software. While there are some shortcuts to gaining knowledge via courses or seminars, there is no substitute for honing your trading skills in the market.

Are you willing to accept losses as part of trading? Every one makes mistakes, and mistakes are inevitable. Got a trading loss? Then whip out your trading log to record what your mistakes are and what you have learnt from that losing trade. Always have something positive to take away from your losses, and treat it as a learning experience.

Know that there will be other trades coming your way. Are you willing to take sole responsibility for your trading decisions? You read some market analysis, and then trade according to what the analyst is saying. That trade turns out to be a loser, and you turn around to blame it on that market report.

It is dangerous to blame losses on other people, the forex market, or the stars, for you are the only person responsible for pulling the trigger.

And if you blame others you will never be able to find out how you can improve. Fear and greed Fear and greed are the two dominant emotions that affect not just the state of our mind, but also the currency market.

In fact, the fluctuations of these two emotions are the main drivers of the currency market. There are, of course, other emotions that exist in the market such as disappointment, regret and so on, but fear and greed are the principal forces that tilt the scales of supply and demand of currencies.

When traders feel overly optimistic about a country or its currency, they become consumed by the great hope that the currency would appreciate in value against another currency.

They are then guided by this hope and greed to buy the currency pair now so that they could hopefully sell it at a higher price in the future. Greed then grows into euphoria, as traders continue to buy and buy, thus taking currency prices to newer highs. When people are buying a currency with great hope, they are also selling the other currency in the pair with great fear. On the other hand, when currency prices go down, fear and greed are also the main drivers of the move.

All in all, fear and greed are behind the steering wheel of the currency market. So, while you must learn to recognise these emotions in the market, the problem comes when you allow them to distort your logic when it comes to making trading decisions, as most of these decisions will turn out bad, and are likely to cause you to regret your actions later. Since there is no way of banishing these emotions for good, the best thing to do is to control these emotions, instead of letting them control the way you think and act.

Face and control your fears Since greed can be categorised as a kind of fear, which is the fear of missing out, I will discuss the primary types of fears relating to trading, and how they can be overcome. The first step to preventing fears from ruining your trading performance is to recognise the various forms of fear that is connected to trading. And once you recognise the type of fear you are experiencing, the easier it is for you to handle that emotional obstacle so that you can trade better.

That is the key to emotion-free trading. It is not about pretending that those fears do not exist, but how you handle them that matters. Here are some common trading-related fears. Fear of missing out Why do so many people rush to departmental store sales, or rushed to buy technology stocks during the dot-com boom?

Any kind of buying mania stems from a very strong emotion that is commonly invoked in people, and that is the fear of missing out.

In trading, this fear manifests itself especially during a sharp rally or decline of a currency pair. Your heart begins to pound really fast, and you have a million thoughts zipping through your brain, with most of the thoughts urging you to buy now, now, now. I am losing out! Traders suffering from this type of fear are usually the ones who get onto a trend too late. Be disciplined and hold off that mouse whenever you sense that this type of fear is creeping up on you.

Think instead of all those traders who are pouring dumb money into the market, and be glad that you know better than them not to join in the craze. Fear of losses Trading is a game — there will be winners, and there will be losers. Sometimes you win some, sometimes you lose some. Losses are bound to happen, no matter how accurate a trading system may be.

The fear of losing is most prominent in new traders as they do not yet have adequate trading skills and knowledge to help assess and evaluate trading opportunities with a high level of confidence.

This can lead to trading paralysis, whereby traders become afraid of pulling the trigger when it comes to entering or exiting trades as they fear losing money or a big portion of their trading capital. However, if you have a reasonable stop-loss order in place, that is in accordance to your money management rules, you should have no reason of being fearful of damaging the trading account based on just one trade.

That is what stop-loss orders are for — to guard against huge losses. When you do encounter hesitancy in pulling the trigger, evaluate if you have valid reasons for doing so or if you are simply held back by fear. Traders just have to get used to the reality that losses are inevitable. The trick is to ensure that your losses are kept small so that you do not harm both your trading account and your state of mind. A trader does not have to be right.

It does not matter at all whether he or she is right or wrong; what counts is whether he or she is profitable in the long run. Traders should not be hung up on the outcome of single trades, or even a few trades, as trading performance has to be assessed over a period of time.

What matters is that you end up profitable over a period of time. Once you place less emphasis on being correct on a current trade, your fear of making wrong decisions should abate, thus enabling you to make better trading decisions without feeling burdened by the overwhelming pressure to be correct in that trade.

Remember that there will be times of losses and times of profits, which is why it is so important to enter only trades that have a high probability of success. Focus on the big picture Do not get caught up in feeling invincible or pessimistic after a win or a loss.

As trading is a very highly charged and emotional activity, it is very easy for traders to oscillate between emotional highs and lows. The outcome of just one trade should not affect your overall performance, unless you have violated proper risk management guidelines by betting the farm on a single trade or by over-leveraging.

A trade is just one of many trades. When you are wrong on one trade or several trades, try not to beat yourself up or feel regret. Instead, analyze to see where and how you could have done better in those trades or what mistakes you may have made, and record what you have learnt from them. If there was really nothing that could have been preventable, just accept that the market is unpredictable.

The outcome of one or a few winning or losing trades should not be magnified. Other trades will surely come. I strongly believe that once a trader has honed his or her trading skills, the ultimate factor that will affect his or her overall profitability is money management skills.

Money management is all about managing the possible risks, and it is the defining factor that separates winners and losers in forex trading. Novice traders think of how much they can harvest from the market; experienced traders think of how much they can lose to the market.

Many traders are so eager to trade to make big money that they completely overlook money management. Poor money management also explains why so many traders get wiped out by the market. Money management is about fully optimising your trading capital. It allows you to be proactive in managing risks, and to cope with trading losses — which are part and parcel of the game. It is an essential tool to ensure that you will have more than enough to last another day in the trading game.

No matter how good a trading system may be, there will be times when you will experience a series of losses. Success comes to those who have set down rules for money management, and have the discipline to follow them through their trading. Preserve your capital The shining light that attracts all traders to the forex market is the prospect of being able to grow their money by tapping into the online trading platform as their own in-house money tree.

In almost any field, it is true that most people are drawn to short-term benefits, but are myopic when it comes to long-term planning. Trading is no exception. When risk capital is put aside for trading, you are hoping that this amount of money could be transformed into a much bigger amount; otherwise, what would be the point of risking it? But if this capital runs out, what can you bank on to make your desired profits?

After all, money begets money. To drive home the importance of capital preservation, I will discuss the concept of drawdown, and how that is relevant to money management. In other words, it is the amount of money that you lose — it is usually expressed as a percentage of your total trading equity at any given time. Drawdown is not an indication of your overall trading performance, as it is calculated when you have a losing trade against your new equity high or your original equity, depending on which is higher.

Recovering from drawdown As drawdown gets bigger and bigger, it becomes increasingly difficult to recover the equity. Many people are not aware that in order to recoup the percentage of equity that they lose, they will need to gain a bigger percentage just to break even. The answer is no. It will require an Let me show you with numbers. OK, that is not scary yet, but if you start losing more and more of your capital bigger and bigger drawdowns , the faster you will go down the rabbit hole.

While many traders hope for that One Big Win that will magically transform them into millionaires overnight, they are more likely to be confronted with the One Big Loss that will threaten their survival in the forex market if they do not exercise careful money management.

If a trader has a big loss, he or she will have to spend more time to get back to where he or she was before, instead of using the time to make profits. Traders who burn out quickly in the market are those who do not show respect for risk. On the other hand, traders who have flourished are those who fully understand the importance of stringent money management and incorporate that into their trading approach.

There is no way around to recouping slowly, unless you want to drive yourself to total destruction by risking more and more of your equity to try to make back your losses. Holding on to a losing trade for too long is the biggest cause of a big drawdown. Be well-capitalised Most new traders run out of money even before they see any profits in their trading account.

Indeed, those who are new to trading most likely do not have a good understanding of the risks and dangers that are lurking in the market, and few even know what drawdown means or have even heard of this word. Many of them do know that trading can be very risky if they do not know what they are doing or how things work in the currency market and, to them, one of the obvious but incorrect ways to limit this risk is by allocating just a small amount of money to their trading account. There are also many new traders who begin their trading business with little initial capital as they simply do not have enough money.

Whatever their reasons may be, being under-capitalised will be more than just a mistake; it is often the prelude to trading failure.

Forex traders who want to set themselves up for success must be well-capitalised. Never mind that some retail brokers are offering a minimum account deposit of just a few hundred dollars — a paltry amount that almost every one can afford. Sufficient initial capital must be available to cushion the impact of a string of consecutive losses, so that you do not wipe out your trading account. A series of losses is really not that uncommon in trading, and all traders must be financially prepared for it.

Those with insufficient trading capital tend to set really tight stops, which will naturally then lead to a higher probability of being stopped out. They also tend to have a good chunk of their account eaten away by unreasonably large losses in relation to their trading account, if they do not set tight stops.

So it seems that whichever way they turn, they are setting themselves up for failure, unless they are willing to trade smaller lot sizes.

Looking outside of trading, many other businesses fail because the owners often do not have enough capital to tide them over the initial starting phase. For example, a new restaurant owner must set aside enough money to pay the rent of the restaurant for at least a few months to a few years, assuming that the restaurant would not make any net profits in that period of time. If the owner only has enough to pay for two months rent from his or her own pocket, and the restaurant is still not making enough to cover the rent and other expenses in the third month, how do you think the business is going to sustain itself?

The entire business could fail, not because of the business model, but because of the lack of sufficient capital to keep the business running while the customer base builds up. Trading, as I have mentioned before, must be treated just like any other business, not a frivolous casual pursuit. The point is this: by starting off sufficiently capitalised, you are more likely to adhere to your money management rules and, by doing so, you are really giving yourself a good fighting chance in the market.

Losses are really just part of the trading game. If trading losses are kept manageable and reasonable, they should not dent your trading account too much, provided that you are well-capitalised. Knowing when to get out of a losing position in the currency market is a very important tool of risk management.

Stop-loss orders allow traders to set an exit point for a losing trade, and are the best weapon against emotional trading. While I recommend that traders place a stop-loss order at the time of placing their entry order, mental stops may also be used — but preferably by traders who are more disciplined. From experience, it is much wiser to have a wider but reasonable stop than to have an unreasonably tight stop.

Generally, a stop-loss order should not be shifted in the losing direction while a position is opened. A good trader should know beforehand when to cut his or her losses, and also when to get out of the market with profits.

It is indeed the elusive factor that courts the relentless determination of its seekers. Want to know where it lies? It only exists in the creative part of the mind — together with fairies and gnomes. There is no perfect formula or strategy that can achieve that unrealistic goal because people who are involved in the financial markets evolve with changing market circumstances, even though certain old habits die hard.

Despite the non- existence of the magic formula, there are certainly high probability ways of trading the forex market. While the bulk of this book is focused on the Method part, you need to combine Method with both Money and Mind in order to attain success in the trading business. The old question: technicals or fundamentals? There are generally three broad categories of forex traders pertaining to what they base their trading decisions on: 1.

the technical trader, 2. the fundamental trader, 3. the trader who combines both technicals and fundamentals. Each type of trader has a distinctively different way of interpreting the currency market based on his or her own opinions.

Technical trading A technical trader believes that historical data has a big role in the forecasting of future price action, and is thus devoted to currency price chart analysis, making use of various charting tools such as support and resistance levels, trendlines and a myriad of chart indicators to understand past price behaviour so as to predict what the market will do next.

Most forex traders employ some kind of technical analysis to help them make trading decisions. Technical traders assume that everything that is to be known about the market has already been factored into the current price.

Fundamental traders believe that the exchange rate of currencies are largely driven by economic and geopolitical conditions, aside from central bank interventions, and will keep track of economic data such as trade balances, inflation, Gross Domestic Product GDP , unemployment rates, interest rates and so on. They are also concerned about what policymakers have to say regarding the monetary policy of the country, and will keep on top of these when speeches are scheduled.

Combing technicals and fundamentals Since there are advantages of analyzing the forex market from these two different fields, it would be too restrictive to just side with one area and ignore the other. The most effective traders tend to make trading decisions based on a combination of both technical and fundamental factors in order to get a feel of the overall market sentiment, and then decide to either trade that sentiment or to trade against it taking a contrarian approach.

The strategies taught in this book must always be combined with the prevailing market sentiment, which is influenced mainly by fundamentals. Some strategies may work well for some traders, but may not have the same results for others over a period of time.

This may seem puzzling for some people who are wondering that if something works for someone, then it should work for other people as well. In trading, there are so many other factors specific to each trader that can influence the overall trading performance — his or her emotions, psychology, trading time frame, money management rules, lifestyle, trading capital and so on. The strategies included in this book are open to customisation according to your own personal preference.

Many traders do not give themselves the fighting chance and time to stay in the game as they are prone to getting wiped out very quickly. The Ten Rules For Forex Trading I list here ten rules that I think are important for trading forex.

Dos 1. When trying out a new trading strategy, always test it in a demo account, or with a small amount of money, before you commit more money to it. Always keep a record of each of your trades, with details of: why you got in, how you got out and why it turned out the way it did. Have a personalised trading plan and update it as you learn from the market.

If you are unsure of a trade, stay out. It is better to miss an opportunity than to have a loss. When trading, keep up-to-date with both the fundamentals and technicals affecting the market. A trader in the dark is a trader in the red. It will affect you emotionally, and you will most likely lose it to irrational trading. Always know why you are getting into a trade, and how you are going to get out of it. Just be concerned about being profitable. Chances are that your account will be decimated before you can recoup your losses and go into profit.

Vent your frustrations elsewhere after a loss. Do you see it as a big mechanical matrix which is devoid of emotions? Or do you think of it in mathematical and probability terms? Perhaps, you may even view it as just a vast network of computers which are designed to cheat the trader sitting in front of his or her computer and trading electronically. Most traders I know have a love-hate relationship with the forex market, thinking that the market is, in turn, either against them or for them.

To me, the forex market is nothing more than the compressed display of emotions at any one time emanating from currency speculators around the world. It is similar to a big living organism, like a human being, which is made up of numerous cells, with each cell carrying out its own function and interacting with other cells of the body, working to keep the body alive with round-the-clock chemical and biological processes.

The forex market is alive as a macro living organism, which comprises a vast number of market participants acting out their perceptions and emotions, thus driving the blood around the invisible entity.

The participation of each player, whether the player is an institutional dealer or an independent trader, is akin to the individual functioning of a cell, which collectively will constitute the whole organism — the forex market in this case.

Knowing what the market thinks and how it thinks is crucial to trading success because, ultimately, the trader is dealing with other traders out there, and needs to know what they are thinking. Even if you see the market as an enemy, what could be better than knowing the weak points and being able to read the mind of your adversary?

In this chapter, I shall focus on how you can better understand the market, and use that knowledge as one of your trading weapons. Market sentiment is simply what the majority of the market is perceived to be thinking or feeling about the market — it is the most important factor that drives the currency market. This is so because traders tend to act based on what they feel and think of certain currencies, regarding their strength or weakness relative to other currencies.

Market sentiment sums up the overall dominating emotion of the majority of the market participants, and explains the current actions of the market, as well as the future course of actions of the market. The trend adopted by the forex market is actually a reflection of the current market sentiment, which in turn guides the trading decisions of other traders, whether they should long or short a currency pair.

In the process of making educated trading decisions, traders have to weigh a multitude of factors which could influence the bias of a currency, before making up their minds about the current and future state of certain currencies.

There are three main types of sentiment when it comes to forming opinions in the forex market: 1. bullish, 2. bearish or 3. just plain confused. If the majority of the market wants to sell that currency, the market sentiment is deemed to be bearish; if the majority wants to buy that currency, the market sentiment is bullish; and when most market participants are unsure of what to do at the moment, the sentiment ends up being mixed.

Market sentiment acts like a fickle lover, capable of changing its mind based on certain incoming new information which can upset the existing sentiment. One moment everyone could be buying the US dollar in anticipation of a stronger dollar; the next second they could all be dumping it as they fear the dollar would start to weaken due to the impact of some new piece of information, which is almost always some fundamental news.

Interest rates Trends in interest rates are one of the most significant factors influencing market sentiment, as interest rates play a huge role affecting the supply and demand of currencies. Every currency in the world has interest rates attached to them, and these rates are decided by central banks.

Some currencies have higher interest rates than others, and these are usually the currencies that attract the most attention from savvy international investors who are always looking across the global landscape in the continual search for a better interest rate yield on fixed-income investments. This, of course, also depends on the geopolitical or economic risks of that particular currency. Just like when a bank lends money to a higher-risk borrower, high-risk currencies require a significantly higher interest rate for investors to consider keeping money in those currencies.

What causes fluctuations in interest rates? The value of money can and does decrease when there is an upward revision of prices of most goods and services in a country.

The nice word for this erosion in value is, of course, inflation. Controlling inflation Central banks are responsible for ensuring price stability in their own country, and one of the ways they employ to fight inflationary pressures is through the setting of interest rates. If inflation risks are seen to be edging upward in, say, the US, the Fed would raise the federal funds rate, which is the rate at which banks charge each other for overnight loans.

When the overnight rate is changed, retail banks will change their prime lending rates accordingly, hence affecting businesses and individuals. An increase in interest rates is an attempt to make money more expensive to borrow so that there will be a gradual decrease in demand for that currency, thus slowing down an overheated economy. Interest rates and currencies The most important way in which interest rates can influence currency prices is through the widespread practice of the carry trade.

A carry trade involves the borrowing and subsequent selling of a certain currency with a relatively low interest rate, then using the funds to buy a currency which gives a higher interest rate, in an attempt to gain the difference between these two rates — which is known as the interest rate differential. The trader is paid interest on the currency he or she is long in, and must pay interest on the currency he or she is shorting.

This difference is the cost of carry. Therefore, a currency with a higher interest rate tends to be highly sought after by investors looking for a higher return on their investments. The increased demand for that particular currency will thus push up the currency price against other currencies. For instance, in there was a strong interest among Japanese investors to invest in New Zealand dollar-denominated assets due to rising interest rates in New Zealand.

The then near-zero interest rates in Japan forced a lot of Japanese investors to look outside of their country for better yields on cash deposits or fixed- income instruments.

See Figure 5. When forex traders anticipate this kind of situation, they become more inclined to buy that high-interest-rate currency as well, knowing that there is likely to be massive buying interest for that currency. So, in general, rising interest rates in a country should boost the market sentiment regarding the currency of that country.

The opposite is true too: when interest rates are cut in a country, that would result in quite a bearish sentiment regarding the currency of that country, and traders would be more willing to sell than buy that particular currency.

Economic growth Besides interest rates, economic growth of countries can also have a big impact on the overall currency market sentiment. Since the United States has the largest economy in the world, the US economy is a key factor in determining the overall market sentiment, especially of currency pairs that have the USD component. A robust economic expansion, coupled with a healthy labour market, tends to boost consumer spending in that country, and this helps companies and businesses to flourish.

A country with a strong economy is in a better position to attract more overseas investments into the country, as investors generally prefer to invest in a solid economy that is growing at a steady pace. Forex traders, expecting this consequence, will put on their bullish cap to buy that currency before the investors do.

Gross Domestic Product GDP , 2. Another popular day trading strategy is news trading. Traders, who choose news trading, monitor the market events permanently, analyze the currencies behavior in different cases.

Usually news trading requires an insight learning of market development and a proper trade experience accumulation. Day trading can be a source of a nice income through the readiness to devote most of your free time to trading. Now here are the advantages and disadvantages of day trading. This style is suitable for traders with endurance and quick reactions.

Intraweek Trading Intraweek trade has no such furious market movements as in intraday trade. It may seem that the market is motionless. But it is just at the first sight.

Probably, every trader can find additional styles, but the two that we've mentioned here are probably the most common. Forex Trading Risk Management Your first concern when trading Forex should be not to risk too much money on any given trade.

Unfortunately, many traders start trading Forex without thinking about the risk that they are taking - only about the potential rewards. If you want to succeed in Forex you must take into consideration the maximum percentage of the total trading money that you should risk in any one trade.

Actually, your ability to limit your losses is equally as critical or even more critical as your success in managing winning trades. The goal of practicing a good Forex money management is to minimize risk and increase payouts. For starters here are 3 quick tips: First, Trading Forex is fun and exciting and money can be made; but you must also keep in mind that like with any other trading there is the risk of losing. Hence, Forex trading rule number one: do not trade with money you can't afford to lose.

Second, never borrow money while trading, trade only with your own money this does not apply to leverage that is provided by your broker. And third, set and stick to a budget. Write it on your forehead if you have to, but no matter what, when you hit that number, quit trading for the day.

Good money management calls for adopting a conservative investment strategy that means that you should never risk your entire capital. When you enter a trade no matter how great it may be , always ensure to only invest conservatively. Forex trading like any other investing is not a sure thing, there is always a risk factor involved. A conservative investment strategy helps you to conserve your money when things go wrong.

Forex trading offers a lot of choices to the trader. A good money management strategy requires diversification. The volatility that accompanies trading currencies is much distinct from say trading commodities as well as stocks. Obviously, the payouts may vary depending on the currency pair which is selected.

As the saying goes, never put all your eggs in the same basket. Losses in a trade should be accepted on a positive note. The effects of a trade that goes against you are able to impact the future or successive trade decisions. Expecting losses whilst investing can assist traders in identifying the areas which may happen to be unnoticed.

Losses needs to be seen as a stepping stone instead of having it affect you. Start off slow and scale up - this has a significant role particularly for beginner traders. Certainly do not fall for the emotions and commit your entire amounts right away on one trade. Investing in small amounts continually helps you to take a self-disciplined approach. The majority of Forex brokers allow for a small minimum trade sum. Use this advantage and be sure to trade with patience.

Do not expect to make gains with Forex trading as soon as you made your first deposit. Trade in small amounts until you have the sense of the assets that you're trading.

This can gradually build your self-confidence levels and helps to automatically be aware of the indicators and be able to prepare your investing strategy and ultimately help reduce the losses.

One of the important things that specifies successful traders has to do with using a good money management strategy. There is a fine line between gambling and trading. To 'gamble' is to take a high risk with limited chance of achieving your expected pay out. To 'trade' is to take a calculated risk which will nevertheless provide you with a good return as well as keep you in the game for the long run.

Not only will pursuing this kind of strategy truly enable you to improve your outcomes, it will as well help your mental well being. When starting any type of trading you shouldn't be in a position in which you are sweating on a contract winning.

Aiming and sticking with a strategy which offers successful money management does not just make sure you are not kept up at nighttime; it will as well make sure that a loss will not signal the end of your investing career.

There are many websites that tell you differently. They make you think that you just have to sign up for an account, start trading and voila, become a successful trader. Well, life is not that easy. Like in many other areas, you need a solid knowledge before you get started.

Hopefully you'll get some of it here in this guide. Be aware, though, that just reading this guide will not automatically make you an instant millionaire. For starters you need to learn how to read the charts. Charts are your main weapon in winning the Forex wars well, maybe I'm a bit melodramatic here. But seriously, charts are a vital resource for a serious FX trader, actually any valid strategy involves reading and analyzing charts. Basically, the charts allow you to predict the future course of a currency by finding patterns in its past price movements, and after all this what we need to win a Forex trade.

Don't be intimidated by the charts, actually they are not that hard to read and understand. Strategies that are based on reading and analyzing charts are part of the technical analysis area. Technical analysis follows a straightforward set of rules freely available on scores of websites. Happily, the simplest rules in charting tend to be the most reliable. In a later chapter we will go over several strategies that you can apply in your trades.

The most basic form of technical analysis would be to look for support and resistance levels that markets have struggled to break through in the past. Charts in this way works best in moderately volatile markets. Technical analysis is also useful in identifying trends.

Another simple way of using charts is to look at moving averages, such as the average price over 10 days. The idea is that this gives you a better representation of what the price is doing over a longer period of time.

Another simple pattern is based on the so-called relative strength index RSI. This highlights situations where a market is overbought or oversold and warns of a potential reversal in the trend. The RSI is the total points gained on up days, divided by the total points lost and gained, multiplied by Technical Analysis As a Tool for Forex Trading Success In order to be able to develop effective Forex strategies you need to understand technical analysis. This chapter is design to acquaint you with the basic terms and concepts of technical analysis.

So what is Technical Analysis? Basically, technical analysis is the studying of investor behavior as well as its influence on the price action of financial instruments. The primary information which we have to carry out our studies would be the price histories of the instruments, along with time and volume data.

All these allow us to make our predictions, depending on objective data. Technical analysis keeps track of and analyzes the ways by which investors behave. This kind of behavior is collectively called sentiment. Technical analysis practitioners believe that this analysis holds the real key to tracking investor sentiment.

In technical analysis we use charts to predict asset price movement and develop our strategies, this is why it is extremely important that you will be knowledgeable as to the various charts types that are being used in technical analysis. Generally there are numerous ways to present price charts.

Each has its unique advantages, however overall it is up to the person to determine which offers the best visual picture and is likely to be of most in discovering trends early on. We will look at the most widely used four types utilized by the pros: Line Charts This is actually the most basic chart format and is produced simply by using a line to join the data points.

As their name suggests, bar charts use vertical bars to represent price action for that day, drawn from the lowest price to the highest price. Bar charts have indicators for the high and the low price of the asset. Bar charts scales can be modified to show daily, weekly or monthly bars. A down day is indicated by a black or shaded box. The "box" shows the open to close range. Candlestick charts are generally plotted over a one-day period but technical analysts also use weekly and monthly candlestick charts to provide a valuable picture of the longer-term price action.

Candlestick charting is one of the oldest methods of technical analysis, with Japanese and Chinese both claiming that rice traders were using candlestick charts over years ago. Candlestick appeal lies in its ability to give a clear visual representation of the price action during a period, leading to easy-to-recognize pattern recognition. Here is a sample of a candlestick chart:; Support and Resistance Being familiar with the models of support and resistance is essential in creating a disciplined Forex trading strategy.

Prices are dynamic, highlighting the ongoing change in the balance between supply and demand. By determining the price levels at which of these balances change we are able to plan the price level where to buy. Even though these levels could be created by the markets subconsciously they signify the collective views of the individuals in the markets. Support represents the level where buying pressure is powerful enough to absorb and overcome the selling pressure.

Resistance is the opposite of support and is the level where the volume of selling supply exceeds the volume of buying demand. These mini-levels may change frequently but over time a visible pattern comes out and firm levels come to be set up. Here is a sample of support and resistant levels: The Concept of Trend We all know that prices do not rise or fall in a straight line but rather move in a series of zigzags which resembled waves.

Now, the relative positioning of the peaks and troughs in these waves define the trend. For a currency to be in an uptrend, it must make successive higher peaks highs and higher troughs lows. For a currency to be in a downtrend, it must make lower peaks highs and lower troughs lows. Simply by figuring out these types of peaks and troughs, we are able not just to explain the present trend and set it in its historic framework but, equally as important, figure out when it is changing.

We do this by looking at the patterns created by the peaks and troughs. The primary benefits of moving averages is first of all that they smooth the data and therefore offer a sharper visible picture of the present trend and subsequently, that moving average signals can provide an accurate answer as to what the trend is. The primary downside is that they are lagging rather than leading indicators.

There are actually two major types of moving average: The simple moving average calculates the average price over a specific moving time period. For example, a 50 day simple moving average will calculate the average mean price from the last 50 days closing prices..

The exponential moving average also averages the last x days closes but designates a greater weight to the more recent prices which makes it more sensitive to present price action thereby decreasing the lag impact. Developing a Forex Strategy and Entry and Exit Signals The Forex strategies featured here are based on technical analyses.

This guide is intended to serve as a primer and a starting point. To take full advantage of these strategies you need a level of technical analysis knowledge that is beyond the scope of this guide.

However, you can easily find information online to complement your knowledge. Once you want to apply any of the strategies listed here simply run a Google search using the title of the strategy as the search term and you'll find plenty of information that will allow you to obtain the knowledge you need to put that strategy into effect.

The Moving Averages Strategy Moving averages gives you a hint as to the direction of the market, this is useful in identifying a trend. A trend is a good entry signal. A disadvantage of moving averages is that they tend to leg the market thus you need to use short period moving averages, such as a 5- or 6-day moving average, to reflect the current price action. Moving averages are the most basic and most utilized technical indicator. They are used for smoothing the price movement.

Moving averages are used as a trend line which adapts to price changes, not just as a regular trend line. The Moving Averages strategy gives you the following signals: If the closing price moves above the moving average - this is a buy signal. If the closing price dips below the moving average - this a sell signal. The Crossover of Moving Averages Strategy Crossover of Moving Averages is another strategy that can help you identify a trend. The slow-moving average needs to use a larger amount of days than the fast one.

A crossover is regarded as a basic form of signal and is preferred amongst numerous investors since it eliminates all emotion. The standard kind of crossover is when the price of an asset moves from one side of a moving average and closes on the other.

Price crossovers are employed by investors to spot changes in momentum and can be used as a simple entry strategy. A close above a moving average from below may suggest the beginning of a new uptrend. The Crossover of Moving Averages Strategy gives you the following signals: When the fast-moving average crosses the slow moving average from below - that's a buy signal.

When the fast moving average crosses the slow moving average from above - that's a sell signal. Here's a sample of moving averages crossover The Turtle Trading Strategy The Turtle Trading strategy is quite popular among many traders, search the internet for explanations as to how to make full use of it. In essence, the turtles evaluate the high and the low over the past 20 days. The Turtle Trading Strategy gives you the following signals: When the current prices move higher than the high of the previous 20 bars - that's a buy signal.

When the current prices move lower than the low of the previous 20 bars - that's a sell signal. The Moving Average Convergence Divergence Strategy MACD The MACD strategy is another indicator that is useful in identifying trends.

This indicator take advantage of the relationship between two moving averages of prices. Most traders use the difference between a bar exponential moving average EMA and the bar. This difference is then plotted on the chart and oscillates above and below zero.

A 9-bar EMA of the MACD, called the "signal line," is then plotted on top of the MACD, functioning as a trigger for buy and sell signals. The MACD strategy can be used in various ways, however the most popular is to use the signal line for entry signals as follows: When the signal line crosses the MACD from below - that's a buy signal. When the signal line crosses the MACD from above - That's a sell signal. Its purpose is to help identify overbought and oversold positions in the market.

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Technology Provider. Platform Provider. Market Data. Copy Trading. Payment Provider. Turnkey Solution. Back Office Systems. License for Sale. Brokerage for Sale. Other directories. About us. Forex Trading For Beginners PDF Post author By George Rossi Post date August 18, No Comments on Forex Trading For Beginners PDF Forex Trading Beginners in Forex Trading Learn Forex Trading PDF Best Beginner Forex Platforms Forex Trading Platform List UK Forex Brokers US Forex Brokers Kenya Forex Brokers South Africa Brokers MT4 Forex Brokers Beginner Forex Trading App Beginner Copy Trading App.

What is Forex Trading? There are two primary ways forex traders make money: Taking profit from the change in the exchange rate Making profits or losses from the interest rates differentials of two currencies Beginners in Forex Trading? Some of the areas where the brokers are focusing more to attract beginner traders are: User-friendly trading platform interface Excellent educational material Low trading fees Transparent services Excellent customer service The offering of a demo account Out of all the focused areas, educational resources offered by the brokers are the most important to getting beginner traders started.

Forex brokers have now started to offer detailed education for both beginner and advanced levels to traders with: Forex PDFs Forex courses Trading Video Tutorials Trading Webinars Newbie traders also need to master the craft of trading, so the offering of a demo account has also become normal, see best demo accounts apps.

Learn forex trading pdf PDFs Portable Document Formats are one of the most popular document types used for learning forex trading. Some of the most popular trading topics for PDFs are: Forex Trading Tips for Beginners Who Want to Earn PDF Forex Leverage for Beginners PDF Advanced Forex Trading Strategies PDF Trading Forex on MT4 and MT5 PDF Here are the pros and cons of PDFs: Pros Cons 🔐 Secure 📝 Unable to Edit 💽 Portable 📁 Layout Limit 📖 Easy to Read 📊 Not Suitable for SEO 📚 Small File Size 🖼️ Poor Photo Quality Best Brokers Forex for beginners PDF To select the Best forex broker for Beginners with PDF materials and trading platforms suitable for beginners, we tested and reviewed several forex brokers.

XM — Best Platform CFD trading for beginners pdf RoboMarkets — Best MT5 Forex trading pdf Broker Capital. com — Best Forex Trading Guide for Beginners PDF CMC Markets — Best Demo Account for Forex Trading Best Platform CFD trading for beginners pdf We have picked XM as the best forex broker for beginners with edycation PDFs for CFD Trading.

XM offers trading services on MT4 and MT5 and also provides a demo account. Best MT5 Forex Trading pdf Broker We have picked RoboMarkets as the best tutorials on forex trading MT5 Broker. Best Forex Trading Guide for Beginners PDF We have picked Capital.

Best Forex Trading Demo Account Beginner We have picked CMC Markets as the best demo account for forex trading and PDF education resources. Forex Trading Platform for Beginners List Apart from the shortlisted brokers, here is a complete list of forex brokers that offers excellent services to beginners along with PDF books and materials, which we have tested and reviewed.

Top Beginner Forex Brokers in the UK Demand for retail forex trading has jumped in recent years, and this prompted many beginners to jump into the trading markets. Some of the top Financial Conduct Authority-regulated forex brokers in the UK suitable for beginner traders and good edudcation PDFs are: IG Markets CMC Markets XM Top Beginner Forex Brokers in the US with free PDF education Forex brokers in the USA must be registered with the Commodity Futures Trading Commission CFTC and be a member of the National Futures Association NFA.

Some of the US-regulated forex brokers that offer suitable services for beginner traders are: Forex.

You should consider whether you can afford to take the high risk of losing your money. Want to become a Forex Trading expert?

Well, this might be your lucky day!!? We have finally decided to put all of our experience and knowledge into this Forex Pdf. This Forex Trading PDF is written in such a way that even complete beginners can understand it and learn from it. In other words, we have read tons of Forex books, opened and closed thousands of trades; have filtered out? all the needed basics for beginner traders, and simplified them. So all you have to do is to take this FREE knowledge and start your online currency trading journey!

TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits? The best times for trading Currencies online? Learn how to read charts? Tips and warnings when using leverage? Learn whats the difference between Fundamental and Technical Analysis? Information is gold and we believe the more you have, the more you should share. That is why the only thing we ask you to do if you like what you have read is to share this PDF book with your friends and family.

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Author of this review I am a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader. Bad news may cause an uptrend to swing down and good news may cause a downtrend to swing up. Doing your homework before trading any currency can help you make better decisions. In order to operate in Kenya, forex brokers must be registered and authorised by Capital Markets Authority CMA. edu no longer supports Internet Explorer.

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