Trading The Currency Market

By Paul Bryant

Day trading the Forex market means to actively buy and sell currency pairs multiple times during a day. Quick wins can be made in Forex trading which makes it a very popular choice for fast traders. The majority of the currency pairs have up to 300 points traded on a daily basis and rise and fall throughout the day.

The Forex market can be unpredictable with big rises and falls coming virtually out of the blue. For this reason, it is important for anyone trading to fully understand what they are doing and construct a trading strategy that actively manages their risk.

Because day trading can make a good trader a lot of money very quickly, it is a very attractive option for people around the world. However, being consistently profitable is not an easy task. There is always a risk that a trade will go wrong and you will lose money. Losses are most common when people try to trade too quickly.

Although quick trades can result in a good amount of profit it is important to realise that many traders making money this way are trading on something that cannot be taught - instinct. You see, predictable trends tend to show over a longer period of time - maybe hours but more likely days or weeks. Therefore the shorter the time-frame of the trade, the more difficult it is to predict and winning move.

To be on the safer side traders should always trade the 15 or 30 minute charts. And following the1 hour charts can deliver even better results. To make the right move you need to understand the trends well.

So, if you want to play it safe then it is definately recommended for you to learn trends and put your knowledge in to action on the longer time-frame charts. By doing this you will be significantly increasing your chances of success in the Forex market.

By far the best way to trade and ensure you manage your risk effectively is to develop your own trading system. This can be adapted to suit your strengths and also the time you have available for trading. Once you understand trends and have been trading a while you will have a much better chance of perfecting your trading system.

It cannot be underestimated how much timing comes in to in Forex day trading. Firstly you have to be patient and be prepared to wait for the exact moment to execute your trade. If you leave it too late or go in too early then you will reduce the amount of profit you make. A successful day trader is able to pinpoint the exact moments to enter and exit trades for maximum profitability.

If you are able to master the arts of timing, trend forecasting, and risk management then you will have the 3 core skills needed to become a successful Forex day trader. - 23222

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If scalping the foreign exchange market and making money from trading currencies online is something that is attractive to you, we advise you check out: Forex Day Trading

What is Kelly Ratio?

By Ahmad Hassam

In my last article we talked about the criteria for developing a good mechanical trading system. The important question is how to develop a trading system, evaluate it and then apply it with real money. There are many factors to consider while testing and evaluating a mechanical trading system.

For each trading system that we test, we need to not only know that the trading system is profitable but also whether it is profitable with limited equity swings. We should know does the trading system have excessive drawdown periods?

Three of the most important elements of mechanical trading systems are: 1) Rules for exiting at profit targets. 2) Rules for exiting at loss targets or how much loss is permissible and 3) Clear cut rules for entry and exit for each trade.

When a string of multiple winners and substantial profits accrue, does the trading system experience periods of time that result in significant losses that give back those gains? Do losses exceed gains more than what is tolerable?

Most traders do not know when to correctly add on a trading position. A money management tool used by system traders is the Kelly Formula or Ratio. John Kelly while working at AT&T Bell Labs had developed the formula in 1956.

Gamblers realized its potential as an optimal betting system in horse racing. It soon became popular with the gamblers. This formula enabled gamblers to maximize the size of their bets on consecutive races.

Gamblers would use the Kelly Formula to determine how much to parlay winnings into the next bet. Kelly Formula used by many traders to determine how much money to place on the next trade.

Kelly Formula is K=W-[(1-W)/R]. K is the Kelly Ratio percent value. W is the winning probability. It is the probability that any given trade that you make will return a positive amount. R is the Win/Loss Ratio. It is the total positive trade amounts divided by the total negative trade amount.

Suppose K is 25% then you can risk 25% of your account on each trade. Kelly Ratio tells you what you should ideally be willing to risk on each trade to maximize your total returns in terms of the percent of your total account.

To be on the safe side you should half the ratio. Suppose K is 25%. You should half it to 12.5%. What it means is that you should not risk more than 12.5% of your account on a single trade. Many traders argue that the Kelly Formula gives too high a figure so half it to be on the safe side.

Kelly Formula can help you in comparing two trading systems and deciding which one is better in the long run. You should look for a trading system that has the highest Kelly Ratio.

Back testing is used to evaluate a trading system and show the strength and weaknesses of each trading system. You can use the back testing results in the Kelly Formula.

So back testing combined with the Kelly Formula can help you achieve in most market conditions, the highest trading profits with the lowest risks. - 23222

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and forex. Know The Candlestick Patterns. Learn Forex Trading.

The ABCs of News Profiteer

By Clark Tomlin

Many retail Forex traders benefit through the efforts of Henry Liu. Although he has never worked for a bank or trader, Liu developed innovative new trading ideas based on fundamental news releases. His theories envision Forex trading through a new lens and assist traders to achieve the most from their businesses.

According to him there is always a technical angle to present to a trader. Various lines of market trends and candlestick charts need to be evaluated. There are also Fibonacci retracements that should be considered. However, these technical evaluations do not prepare the trader for all market uncertainties. There is also a mental angle that needs to be considered. Traders can gain a toehold on money that baits them, which can result in greed and fear.

He also feels that market pundits fail time and time again to accurately account for the impact of specific news items on the FOREX market. His newsletter provides an account of what these pundits miss, while remaining objective and fair.

He believes boardroom dividend reports and important mergers can have a tremendous impact on the market. Therefore, his newsletter provides neutral reviews on trade-related news, including high impact information. In addition, he writes about the details of trade, such as the time of the news release, related figures, and whether it is wise to sell or buy.

Liu's e-book suggests excellent ways to remain on the best end of the system, resulting in as many as twenty-five or thirty pips per trade. The news profiteer system effectively eliminates the inconsistency scale associated with trading.

People find it especially helpful when Henry Liu focuses on a larger or smaller number than the amount of pips. It is then that his knowledge in the field truly shines. Within any possible time frame he can trade London or Nikkei. And through his new profiteer review he also gives us the opportunity to trade and profit from it. Generating 25-30 pips per trade is no small feat, but it is possible by paying attention to fundamental news releases.

According to Liu, there are two types of traders. The first learns all the technical jargon and understands its execution. Those people grace forums and online trade rooms, but there are never enough shekels in their live accounts. The second understands the theories of rally and correction and support and resistance. If they also understand the effect of fundamental news on world Forex trade they will be the eventual winners in the market.

The news profiteer will help traders gain the most important and necessary knowledge to make their trading a success. The information they will learn includes market cycles, exact times for entering and exiting the market, as well as other essential information. If you believe in the power of news releases, there are untold fortunes in your future. - 23222

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Learn What Millionaires Do!

By Dan Gazaway

Who wants to be the next millionaire? I think all of us want to make a lot of money for a variety of reasons. Most people are unsure how to go about making a fortune and feel they will never have the opportunity to make a lot of money. However, today there are many ways to make money, particularly on the internet. Success Leaves Clues! Lets take a look at some of the most common characteristics most millionaires have.

We can learn a great deal from Millionaires about creating wealth. Because all successful people have left certain clues as to how they have created abundance and lost millions; we have the privilege of learning from their successes and failures. This tends to save the average Joe a lot of time trying to figure this out all by themselves. That is why most millionaires have mentors. They understand the value of their time.

Millionaires are also workhorses. Most millionaires are millionaires because they create a business around their passion. They dont feel like they are working. In fact, someone once said that if you choose to work for yourself in a field that you are passionate about, you will never work a day in your life. These same millionaires also have learned how to leverage their time by hiring around their weak areas so they focus on their strengths to keep the business fun for them. Otherwise, why do business in the first place if it isnt enjoyable to you.

Another common trait the majority of millionaires share is the fact that they are very conservative in spending and aggressive investors. Most real millionaires arent flashy people who try to keep up with the Joness. They are often purchasing used cars, furniture and even clothing. They truly understand the value of the dollar.

Although there are thousands of ways to create a life of abundance, my personal preference is making money on the internet. I absolutely love it! I have had amazing days, weeks and months online and continue to plug away at it. Although it hasnt always been easy, I stick with it because it is so much fun. If you have tried many businesses that have failed, you are not alone. I have failed miserably before. I have learned Real Estate is not the way to go for me. Most millionaires have been bankrupt at least once, if not several times. Hopefully that will give you some determination to carry on. Every failure is really a success. Keep on plugging away and stay positive. You will reach your millionaire status before you know it. - 23222

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Penny Stocks - Stocks Ready To Soar

By Marco Davies

Penny stocks are ordinarily offered up by a concern that has been established for less than three years and has not greater than 5 million dollars in solid assets, or a business that has at the very least three years of operation, and has not more than two million dollars in tangible assets or a company has 6 million dollars tax revenue for three years. There's a fully fledged market place for the penny stocks, yet these stocks have very specific liquidity. This is just one of the reasons for the penny stock market's unpredictability, nevertheless these marketplaces stay very popular.

Penny stocks, are sometimes also referred to as as micro-cap, are low priced stocks and shares ordinarily bought and sold in the over the counter market. Almost all of the stocks or shares are for sale for a penny that is why these are referred to as penny stocks.

OTCBB: OTCBB provides accurate details for more than 3000 stocks including real time, quotations presentation, last sale price and volumes. These equities are ordinarily not dealt with in any leading stock markets. The OTCBB electronically furnishes real-time quotations for home as well as foreign stocks and shares, plus it shows past days dealing activity in DPPs. There is in excess of two hundred market makers are certified at the OTCBB with over the counter or OTC bulletin boards chosen over pink sheets.

Pink Sheets: Pink sheets is issued and maintained by Pink Sheets LLC and it displays bid and wanted cited terms of various penny stocks. Companies named in pink sheets are the most high-risk as the majority of the businesses easily meet the minimal requirement for listing, even though penny stocks at pink sheets are thinly bought and sold. A great many businesses pay brokers] for dealing these penny stocks and thus some brokers|agents] employ deceptive activities to trade the stocks and shares and cheat funds from individuals.

In a number of the instances, just a couple of market makers are actively involved in a specified penny stocks and obtain and sell these specific securities only. Dealing with a market maker is preferable, as the market maker not only sells the specific stocks but it in addition buys the shares. Close to two hundred and thirty market makers are approved by the Over The Counter Bulletin Board and these market makers buy and trade stocks on a frequent basis. It is also preferable to observe that a larger number of market makers are accessible for specified stocks because the less market makers there are available, will often determine or control the particular stocks. In these instances the investment funds in the unique penny stock is risky as these few market makers can manipulate the costs of the shares and thus can maintain a wide spread between the sale and buying terms of the stock. Not too long ago a few of the market makers were found to be engaged in deceptive activities.

There is a seasoned market of penny stocks that are bought and sold at Over The Counter Bulletin Board and pink sheets. Over The Counter Bulletin Board is governed by the rules of the SEC of the U.S.. - 23222

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