Tag: Day Trading

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Beginners Forex Education Forex Basics

Let’s Get Real: Is Day Trading Really Profitable?

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a […]

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a […]

Day Trading or also known as Intraday Trading can be very profitable. But, many ask: Is Day Trading really profitable? But, it is not such an easy method to perform. And that is, the frustration of losing money can discourage more than one. Although with enthusiasm, a positive mind, a lot of discipline, and a good methodology, everything is possible and you can get good results at the end of the day.

Day Trading is one of the most complicated and complex strategies that exist, so the vast majority of investors or users lose their money trying. But, for those who are more wrestling, skillful, and consistent, your luck will come and you will have very good wins.

What is Day Trading?

Intraday trading is known as a strategy that is applied in a financial negotiation, especially of purchase and sale, which is carried out on the same day of the business. Day traders or intraday traders use this quick trading strategy to try to make daily profits and not have to wait for long-term investments. These traders must close all their positions before the end of the day in the market.

Financial instruments that are included in the day trading include currencies, stocks, options, and futures contracts. If you would like to be a Day Trader, in the beginning, the fundamental thing is to have a good formation.

What is the Profitability of Day Trading?

On the same day of trading, it makes it possible for high profits to occur or, conversely, large losses. Therefore, the profitability of Day Trading is very variable. It can be around an annual average of between 10% and up to 50%.

Although the most pessimistic say, that every day you lose money and at the end of the year, you get less return than making a long-term investment. But, if we get carried away by the statistics of some big investors in history, such as Peter Lynch (in 13 years) and Warren Buffett (in 32 years or so), the average annual return was 29 and 24% respectively.

If you are a person who only trades and does not invest in stocks in the long run or survive the day-to-day, it is said that you do not possess financial freedom. This means that financial freedom is obtained when the income that is received for the assets, manages to properly maintain the lifestyle and you can live from it every month without problems. Therefore, a well-known phrase for determining financial health is how much passive money is received from assets.

Something very beneficial for day traders is that brokers allow a higher margin for daily trade (about 25% for intraday shopping). In that case, a daily trader who has a minimum set in his account (of about $25,000), will be able to buy shares of up to $100,000 during the same day. But, in that case, half of those shares, must come out before the market closes.

Day Trading Benefits and Risks

The results of all trading operations that are carried out daily, can be very profitable or on the contrary, a total failure. In that case, day traders can get large percentage returns from their investment or huge losses, not pleasant at all.

Daily trading can be risky, especially in the following cases:

  • Poor execution of operations.
  • Not appropriate risk capital.
  • Exchange of game or operations.

A very common strategy in Day Trading is to buy instruments using funds that are not their own. This can increase gains or losses, as the case may be, and in a very short time. If we consider the high risk of daily trading, a day trader will be forced to abandon a losing position almost immediately. In this way, a fatal loss, much higher than the original investment or the total assets, will be avoided.

Categories
Forex Forex Education

Transitioning From Your Day Job To Full-Time Forex Trading

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right […]

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right […]

It is a huge decision, moving away from your secure day job in order to become a trader full time. It’s something that a lot of people aim for or join forex in order to try and achieve, so if you are at that stage in your trading career, you must be doing something right and well done so far. It is, however, a huge commitment, it should not be taken lightly and the consequences of it should not be underestimated, there is an awful lot that you need to consider.

As a quick overview, there are many things that will change, most notably will be your lifestyle and your finances, the way you work will need to be adapted to the new situation which could potentially throw your entire lifestyle out of synch. If however, you are coming from a position within the financial world, then you will start off with a little bit of an advantage, but it won’t have taught you everything that you need to know. Even coming from a part-time trading situation, that most likely won’t have prepared you fully for what you are about to undertake. Everyone’s approach to being a full-time trader will be different and everyone will have different abilities and requirements. The first thing that we have to consider is whether or not you are actually ready to become a full-time trader.

In order to work out whether you are actually ready to take the leap into full-time trading, there are a few things that you should consider. Think about a few simple questions, what makes you think that you are ready? Do you have enough capital to go full-time? Are you currently making more than your salary? And are your performances good enough? You

 need to look back over an extended period of time in order to answer these questions, if you made one huge trade that made you more than your salary, it does not mean that you are ready, you need to be consistently making more, not just that once. 

It is important that you get some form of experience before even thinking of going full-time. How long have you been trading part-time? We would not suggest getting involved full-time unless you have been trading part-time for at least six months, and the majority of those six months should be profitable and at a level that is similar to your current salary. You will need to have an understanding of different market conditions and how to trade within them. The markets are always changing, if you only know how to trade within a certain condition, then as soon as it changes, your income will dry up and you will begin to struggle. Be honest with yourself, think about what level you are at, there is no harm in staying part-time for a few more months while you hone your skills, just don’t jump into the decision before you are actually ready.

One of the things that we are all told is that we need to use a demo account before going live, this is certainly the case, but it is simply not enough if you are planning to start trading full time. It is great if you are consistently profitable on a demo account, but the only way that you can be sure that you are ready to go full time is to also be profitable when trading on a live account. The environments differ quite a bit between a demo account and a live account, so being able to trade on one does not mean that you will be able to trade on the other. Ensure that you have experience, and consistently profitable experience with trading on a live account, not just demo.

Next, think about whether you have the appropriate space to trade, if you are planning on doing it full time and to make a living out of it, then you can’t be trading from a laptop while sitting on your living room couch. Get yourself a dedicated space that you can use for trading. A room within our house which is there for nothing but trading, if you do not have the opportunity to do this, then hire out a one-man office somewhere and set that up as your trading room. The space needs to be free from distractions, it needs to only have in it the things that you require to help you trade, and nothing else. When you are in that room, you are there to trade, not to mess about, or watch TV. When you have finished trading for the day, leave that space and do not return to it, keep it completely separate from your family or social life. Also, make sure you have a decent internet connection wherever it is that you are trading, the last thing you want is to lose connection mid-trade.

Routine is vital if you want to be consistently successful, one of the issues with working from home is that it can be very tempting to simply trade and work when you want to work, you are now your own boss, but even bosses need to stick to a routine. Without one, there is a good chance that you could end up becoming a little lazy or spending that extra hour in bed each day. Take a look at your strategy, some strategies have certain periods of time where it is best to trade if yours does, then set your routine and schedule around that, for many strategies, this is around the overlaps of the markets. However you also need to consider where it is you live and the time zone that you are in, do not set a routine to get up in the middle of the night in order to trade, you will begin to despise it and let it slip. Be organized, and be consistent.

You also need to set yourself achievable goals, if you are setting yourself goals to make 20% per week, you are simply setting yourself up to fail, the risks that you will be putting yourself and your account under in order to achieve that are not realistic at all. However, if you were to set 20% for the year, that is something that is a lot more achievable. You will be a lot less stressed, but you will need a larger capital to live off. Try not to set your goals too short term, the markets are not always friendly, but over a longer period of time, you should be able to achieve through consistency.

One aspect of your life that will see a lot of changes is your expenses. You are entering a period of your life where you don’t have the job security that you had before. You need to now learn how to manage your money properly and how to cut back and potentially budget. Before you decide to go full time and quit your day job, take note of exactly what you are spending money on, there are bound to be a number of them that you do not actually need, subscriptions that you have set up that you are no longer using, try to remove as many as you can. This will also give you an idea of how much you will be required to earn each month in order to survive. Separate your living expenses from your trading account, you will need a nice capital sum for trading, do not mix up your living balance with your trading balance. When withdrawing, ensure that you are withdrawing what you need to survive, but also ensure that you have enough in your trading account to continue to trade.

Depending on how you have set up your trading space, there may be some additional costs, especially if you have set up an office somewhere away from home, this needs to be covered by the profits from your trading, if you can get it on a 6 months deal, try to pay it all off when you can, this way you can concentrate on the trading without having to withdraw each month or to worry about covering the costs. The same goes for the internet, phone, and anything else that you require within the office. Just remember to try and budget and to cut back on the expenses that you do not actually require.

One thing that people like about working for yourself and working from home is the fact that you are going to have a lot more free time, this does not however mean that you should be spending hat free time going out and having fun, of course, you can do that a bit but you need to be using a lot of your new-found free time to learn. There Is always more to learn, no trader knows everything about what it is that they are doing or what there is to know. Of course, take some extra time away, if you are consistently profitable, then you deserve a little time away, but just don’t take the added free time for granted.

Think about where you are psychologically. How do you feel when you have a loss at the moment? If it bothers you, you need to consider that when you have a loss on an account that you are depending on the money from, it will hit you 100 times harder. The money you are losing will be what you need to live off, this also increases the amount of stress that you are trading under, if you do not deal well with stress then you may struggle here. Also, greed, do you often get the urge to want more or to place larger trades? If you do, then this is not a good place for you, as this is something that you just cannot do when trading full time and trading for a living. Ensure that you are able to deal with these emotions and that you are able to remain calm and focused even when going through hard times. This also goes for accepting losses, when you have one, which you will, accept it and move on, do not let it swap you and do not dwell on it, accept and move on.

You will then begin to find some new friends, your current circle of friends are great, but they probably don’t know much about trading and when you try to talk to them about it, it is most likely a one-way conversation. You will need to find some new friends and a circle of support that understands trading and are traders themselves. This will give you an avenue to communicate, to ask for help, and to see how you are doing with honest feedback from people who know what they are talking about. Join some communities and get involved, the information and knowledge within them can be invaluable to your progress and career.

The last thing that we will talk about is the importance of having a contingency plan, something that you can fall back on should things go wrong. If you were to suddenly lose your capital, what would you do? If you didn’t quite make enough each month, how would you survive? This is something that only you will be able to answer, so you need to be able to consider your own circumstances and come up with a couple of plans on what you would do should things not go right.

Those are some of the things that you will need to consider should you decide to go into the world of full-time trading, it is not an easy thing to do, a lot of people take the plunge and then find that it is not quite right for them. Have plans in place and ensure that you are ready and you will be in a good position to be successful as a full-time trader.

Categories
Forex Trade Types

Scalping Vs. Day Trading: Which is More Profitable?

Asking this kind of question reveals one is trying to start with trading and wants to pick up the right path. Of course, profits are an end means mostly, however, the method how you get them defines you as a trader. Where one trader is profitable with day trading, the other is when scalping. To […]

Asking this kind of question reveals one is trying to start with trading and wants to pick up the right path. Of course, profits are an end means mostly, however, the method how you get them defines you as a trader. Where one trader is profitable with day trading, the other is when scalping. To […]

Asking this kind of question reveals one is trying to start with trading and wants to pick up the right path. Of course, profits are an end means mostly, however, the method how you get them defines you as a trader. Where one trader is profitable with day trading, the other is when scalping. To get the whole scope around this question, we would need to understand what these two strategy categories require out of each trader and other pre-requirements. Later on, we would need to tackle the way you fit in your preferred strategy to your personality and lifestyle, and then answer the question in a simplified way, but with a good punchline for every trader who wants to get something out of this game.

Scalping and day trading are trading strategy categories with an infinite number of variations, but they have something in common. They both involve positioning on forex, equities, crypto, and other markets. Now this is getting complicated, not only we have many strategies, we now have many different markets and also many different approaches. Does one particular strategy, market or approach stand out from others in terms of profitability? Certainly, but it is more about the trader behind the wheel than the strategy itself.

Before all, scalping involves shorter time frames while day trading, or intra-day trading, presumably is about higher time frames up to 4 hours. Scalping is more action-packed while intraday- trading does not have to be, yet it depends on how many positions a trader has across different markets and assets. As you can see, we are adding more and more important variables pointing to the answer to this question is – it depends. This answer does not solve anything, just makes things fuzzier. However, there are paths beginner traders can take to discover what fits them and effectively what is more profitable. 

Scalping strategies can also be applied on higher timeframes, however, these strategies deviate from what is usually considered scalping. They are more a mix of several ideas and are the result of a trader or traders looking for ways to improve on the scalping strategy they started with, all according to their life possibilities. Lower time frames require exhausting attention and it is common for traders who have developed scalping strategies to try to automate them. A robot is faster and does not have emotions that could stay in the trader’s way with this type of trading. If you do not know by now, getting emotional while trading is going to adversely affect your financial balance and your mental balance too. So, we have another variable into the definitive answer to the main question.

Anyways, scalping does not have to be automated and then it requires focus during your trading day. This attention is heavy on your body and mind, you may reach a point of saturation and even health problems regardless if your scalping strategy is working or not. Some scalpers work in a team, where the load and attention are shared, however organizing in such a way also requires traders’ goals alignment. Sometimes, successful trades establish firms and employ a workforce that can follow multiple assignments and the main trader just makes decisions. Scalping also requires certain market conditions and, like every strategy, a lot of research where it is performing the best.

On top of that, since it is usually applied on shorter timeframes, the spreads and commissions are also a factor in how profitable it can be. Therefore, research on broker trading conditions is also one of the priorities when developing scalping strategies. Certain scalpers require no more than 1 or 2 points spread to be effective long term. If we compare scalping and other, higher timeframe strategies, it seems scalping requires additional attention and research to other variables that limit them, yet they may not result in better overall performance than intra-day strategies. 

Since scalping strategies do not involve waiting, they are action-packed and fun, many young traders are attracted to them. It is like a beginner trader seeks to get emotional while experienced have set up systems that block them or just have developed skills to keep emotion at bay when they trade. Therefore, we do not advise developing scalping strategies for beginners unless you want to get into a bad emotional state after one or more accounts are down to zero and learn from this mistake first hand. Experienced traders keep an open mind and can try scalping if they see they can expand to trading ranging markets, but know they do not seek trading thrill, just better performance. 

Moving on to intra-day strategies. Now, this is a very broad category, basically, it only points at a certain time frame below the daily. Telling if these strategies are more profitable than scalping is very misleading. Yet, they are certainly less action-packed and they might allow you some screen away time. Emotions are still in, as the prices move in your favor and out so are your feelings, like a controlled roller coaster by the tides of the markets. So now we may have something cleared out, scalping strategies might be more fun but beginner traders do not have the best of chances and will learn out of mistakes, it is just a matter of how much it is going to cost them. Intra-day strategies may learn them patience, yet they are also going to be costly. 

Beginner traders simply have better chances if they learn from the start what to do and what not. There are many sources about this yet people get attracted to the fun stuff about trading such as strategies. That is why the question above is one of the most popular however it is not leading beginner traders in the right direction. Whatsmore, the internet will keep giving you the popular stuff and you may have trouble finding the right answers. Psychology and Money management topics are not popular, they are boring. Whatever strategy, scalping, or intra-day type, traders do not have a chance without the right mindset and risk/money management. 

Now we have some answers to this vague question, however, let us assume you have these two main trading pillars already developed, should you go with scalping or doing the higher timeframes? Your risk management and psychology are a part of your strategy, they are one tangible and intangible system part. Whatever your strategy type is, it is going to work out, just focus on the two main parts first. Considering strategies outside the risk management and the right mindset is like selecting a weapon to shoot blindfolded. You are going to miss most of the time whatever your choice. If we had to pick one strategy type to go with it would be trend following on the daily timeframe. Simply because trend following strategies have some proven records to perform better and daily timeframe because it eliminates some risks out of trading sessions and noise. 

Lastly, let’s mention one step traders should complete having at least some outlines of what trading style they might like and what their strengths, weaknesses, and traits are. Look out for trading personality tests online, they combine some popular personality assessments like Myers–Briggs and others with trading practices. As a result, your trading will have some weaknesses you need to work on and also strengths that should be exploited with a particular strategy. According to this test, you may try to make one that fits your lifestyle. Now, this journey requires a lot of dedication and work. Consider our other articles about how to start your way up using free resources and guides on various topics. The test result is for you only, and therefore the answer to the question that hopefully sets you on the right path. 

Categories
Forex Basics

How Much Do Forex Day Traders Really Earn? The Answer May Shock You!

Ever considered becoming a full-time trader? Ready to quit your day job? Many people dream about becoming a day trader, but most are too worried that they wouldn’t make enough money to walk away from their 9 to 5 jobs. Others might hear stories of day traders making insane amounts of money but assume that […]

Ever considered becoming a full-time trader? Ready to quit your day job? Many people dream about becoming a day trader, but most are too worried that they wouldn’t make enough money to walk away from their 9 to 5 jobs. Others might hear stories of day traders making insane amounts of money but assume that […]

Ever considered becoming a full-time trader? Ready to quit your day job? Many people dream about becoming a day trader, but most are too worried that they wouldn’t make enough money to walk away from their 9 to 5 jobs. Others might hear stories of day traders making insane amounts of money but assume that those are extreme cases. In this article, we will outline what makes day trading so appealing and explore how much one could actually make day trading.  

First, we’ll start off with the perks of day trading. One of the main draws is the ability to choose when one does and doesn’t work, although you’ll need to put in some weekday hours to make a profit. Many day traders start at the beginning of the day and close all their trades out before the end of the day, rather than allowing them to carry to the next trading day. Once all your trades have been closed for the day, you can sit back and relax without worrying about work. There are several other perks:

  • The government won’t tax your ‘paycheck’ because your profit will be made purely from trading. Of course, your broker will charge commission fees and spreads in addition to other potential fees for withdrawals. Still, this will probably come out to be far less than the tax cuts you’ll see with a regular paying job.
  • One of the things that make day trading so great is that you get to be your own boss. Gone are the days where you must play nice with a stressful boss standing over your shoulder. You can take breaks whenever you want or eat lunch while you work, you make your own rules. 
  • You get to work from home. There’s no need to get dressed, take a shower, or deal with a daily commute. You can work at home, in your pajamas, without having to socialize with anyone. 
  • Day traders don’t have to worry about overnight risks or swap fees because trading positions are closed on the same trading day. Other traders need to account for these charges. 
  • Full-time day traders have more time to focus on trading since they don’t have an actual job to worry about. You can spend more time analyzing charts and data, reading trading articles, and so on. There’s also more opportunity to practice strategies like scalping, which require a lot of attention. Part-time traders just don’t have the time to do all these things daily. 

If this sounds like a dream job, you’ll need to know that becoming a full-time trader takes work and dedication. Perhaps you’re already a part-time trader, or you might be starting from scratch. Either way, you’re in the right place. Becoming a day trader takes effort and you’re trying to figure out if it is worth your undivided attention. 

So, how much do day traders really make? First, you need to understand that there are risks involved with this kind of trading. It’s good to have a cushion to fall back on in case of a bad day. Prices fluctuate a lot on any given day and it’s always possible to lose money – this is where a regular job is better than day trading. Traders aren’t guaranteed to make the same amount every week because it isn’t as stable as working. Some professionals advise that you should never risk more than 1% on any trade and you should always use a stop loss to help minimize your losses. 

The amount that you make will depend on how much capital you invest. Someone who puts $5,000 into their trading account can make larger trades than someone with just $500, assuming both traders understand what they’re doing. If you don’t have a lot to start with, that’s ok, but you will want to invest more as your capital builds up over time to come away with enough profit to support yourself. Knowledge is another key to success with day trading – you can never do enough research, analyze enough charts, or get enough practice. Even the absolute best of traders can always learn something new, so be sure to take advantage of all the free resources available on the internet. A good strategy is essential for successful day trading, especially one that minimizes the losses one might make. 

Day trading takes time and determination, it isn’t a get rich quick scheme or something that will make you a millionaire overnight. It’s impossible to give an exact figure of how much you’ll make because factors like your starting capital and risk-management strategy will change those results. 

Here’s one example from an article written by day trader Cory Mitchell:

If you start with $30,000 capital and you make around 100 trades per month (about 5 trades a day over 20 days a month) you could make around $3,750 minus any commissions or other fees charged by your broker. You would walk away with something like $2,750 after all deductions are made. 

Keep in mind that this example revolves around a $30,000 beginning deposit. If you don’t have that much to invest, you’ll make less. Over time, the idea is that the trader would begin to bring in more profit and could therefore make larger trades and earn more per month. It would be a good idea to save up more before quitting your regular job so that you can invest more in the beginning. 

Day trading can be an excellent alternative to working a 9 to 5 job, and it comes with great benefits. Nothing beats being your own boss and setting your own hours. However, this isn’t something one can learn overnight. If it were easy, everyone would do it. Our best advice is to practice and educate yourself fully before even thinking of trading full-time. When you’re ready, make sure that you have a cushion to fall back on and consider your initial investment. Everyone needs a different amount of income to survive – so be sure that you will make enough money to support yourself or your family and to pay all your bills before becoming a full-time day trader. Try to have a safety net to fall back on in case you don’t make as much as you thought at first.

Categories
Forex Course

169. Which Trading Timeframe Should I Choose?

Introduction 

Introduction 

Introduction 

In the previous lesson, we covered how to trade multiple timeframes in the forex market. So, what timeframe should you choose to trade?

The timeframe you chose to trade will be entirely determined by the type of forex trader you are. Therefore, in this lesson, we will cover the timeframe to trade depending on the type of forex trader you are, i.e., position trader, swing trader, day trader, or a forex scalper. It is worth noting that you should consider trading three timeframes in Forex.

Timeframes for a Forex Position Trader

If you are a forex position trader, it means you intend to have your trading position open for several months to years. Therefore, you should trade the monthly and weekly timeframes. These frames give you a long-term perspective of the market trend while filtering out the hourly and daily “noises” of the price spikes.

Timeframes for Forex Swing Trader

For a forex swing trader, your goal is to have your positions open overnight to just a few weeks. With such a strategy, while performing your multiple timeframe analysis, you should start with the daily timeframe to establish your selected currency pair’s dominant trend.

On the chart, the daily timeframe will cover several weeks, which will help you establish the support and resistance levels over this period. With this perspective, you will quickly identify the high and low extremes. Narrow down to a 12-hour timeframe to see if this timeframe lines up with the observed trend, then finally use the 4-hour timeframe to find the entry point for your trade.

Timeframes for Forex Day Traders

If you are a forex day trader, that means you enter and exit all your trades within 24 hours. In this case, you should trade the 4-hour, 1-hour, and 15-minute timeframes. With the 4-hour timeframe, you will be able to establish the support and resistance levels for the past few days for your selected currency pair. The 1-hour timeframe will help you identify if the intra-day price trend aligns with the observed dominant trend. Finally, the 15-minute timeframe will enable you to narrow down the best entry and exit points for your trades, depending on the current price trend.

Timeframes for Forex Scalpers

For the forex scalpers, the smallest minute-by-minute price spikes count. Therefore, you should trade the 30-minute, 15-minute, and 5-minute timeframes. With the 30-minute timeframe, you get to identify the prevailing short-term trend with the selected currency pair. The 5-minute timeframe narrows down the tend to show how the most current price spikes build-up to the short-term trend. This timeframe also serves as your trigger timeframe for entry and exit.

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Categories
Forex Course

168. Learning To Trade Multiple Timeframes In The Forex Market

Introduction 

Introduction 

Introduction 

In our previous lesson, we discussed multiple timeframe analysis in forex means. Now, let’s find out what forex trading with multiple timeframes means. In case you are wondering, trading multiple timeframes in forex does not mean that a trader is opening several positions using different timeframes. We are not saying you can’t do this, you if you have the money; but that is not what trading with multiple timeframes in forex means.

Trading multiple timeframes in Forex means using different timeframes to establish the trend and support and resistance levels of a currency pair to determine the best point of entry and exit of a trade. Let’s use a few examples to show how trading with multiple timeframes in forex occurs.

As we had mentioned in our previous lesson, the timeframes you use for your analysis depends on which type of forex trader you are. The best way of trading multiple timeframes in the forex market is by using the top-down technique. With this approach, you first observe the longer timeframes for the general market trend, then use the smaller timeframes to establish more current trends.

Let’s take the example of a forex day trader. You will start by using the 1-hour timeframe to establish the primary market trend. Say, a day trader wants to open a position on September 9, 2020, at 11.00 AM GMT, using the 4-hour timeframe, the market shows an uptrend.

4-hour timeframe for EUR/USD

1-hour timeframe for EUR/USD

The 1-hour timeframe confirms that the pair’s intermediate trend is consistent with the uptrend observed in the 4-hour timeframe.

15-minute timeframe for EUR/USD

The 15-minute timeframe can then be used to select the best entry point.

Determining the market limits: the longer timeframes will enable you to determine the support and resistance levels of a currency pair. The resistance levels help you set your exit points while the support levels will help you timing your market entry.

Establish the trend momentum: While the larger timeframe gives you the overall market trend, the smaller timeframes will help you establish the spikes in the price of the currency pair. These spikes will help you to establish the short-term strength of the trend compared to the longer-term trend.

Helps avoid the lagging effect of some technical forex indicators: Most technical Forex indicators are lagging, meaning trend changes signaled by the indicators lags the real change in the price of the currency pair. Therefore, price-action can be said to be leading the technical indicators in the forex market.

We will cover these three reasons in detail in our subsequent lessons.

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Categories
Forex Basics

Just How Much Does a Day Trader Earn?

Day traders typically buy and hold several positions per day for short periods of time, oftentimes from a few minutes to several hours before selling them. As the name suggests, this trading strategy mostly takes place during the daytime hours, and positions are usually closed before the end of each trading day. Becoming a full-time […]

Day traders typically buy and hold several positions per day for short periods of time, oftentimes from a few minutes to several hours before selling them. As the name suggests, this trading strategy mostly takes place during the daytime hours, and positions are usually closed before the end of each trading day. Becoming a full-time […]

Day traders typically buy and hold several positions per day for short periods of time, oftentimes from a few minutes to several hours before selling them. As the name suggests, this trading strategy mostly takes place during the daytime hours, and positions are usually closed before the end of each trading day. Becoming a full-time day trader has inspired many people to ditch their desk jobs in favor of flexible hours, the ability to work from home, and many other unique benefits. Of course, you would need to make a significant amount of money trading to be able to support yourself entirely if you were considering taking up this career. If you’ve considered becoming a day trader, you’ve likely wondered how much money you could actually make over a period of time. 

First, there are a few things you should know. If you want the best chance of success, you’ll have to start off with good education and knowledge about the forex markets. Know that starting without enough knowledge is one of the main causes of failure when it comes to trading. If you need resources, you can find articles, videos, webinars, seminars, and other sources of information online for free. The great news is that you only need to invest time into learning how to trade, it doesn’t require a monetary investment unless you’d like to participate in a paid learning experience, like a forex course.

Second, the amount of your initial deposit also influences the amount that you can make. A trader that makes a $5,000 deposit will have more buying power and will make more money than someone that starts off with $100. This doesn’t mean that you can’t start small, but you’ll want to keep this in mind when comparing how much other traders make to the amount that you want to make. It isn’t likely that you will be able to make enough money to support yourself without making a good-sized investment. Still, you can start small and invest more over time, take up day trading part-time, or allow your profits to build up to increase your investment power. Another solution would be to purchase a forex robot that could automatically trade for you if you can’t afford to quit your job just yet, or if you’d prefer to do both.

Now, let’s talk about how much money day traders actually make. The truth is that results can vary widely depending on a number of factors, such as:

  • The amount of money that is invested
  • Trading knowledge
  • Strategy and the use of indicators or other tools
  • Risk-management precautions
  • Leverage

As you can see, these factors have the potential to make a big difference in the numbers. However, we did find one example that could give you a basic idea of how much you might make: With a $30,000 deposit, 100 trades per month (5 trades per day/20 days per month), you could make around $3,750 per month, which comes down to nearly $1k a week. If you compare that with the salary at a regular job, you’ll likely find that trading will make you more money. Still, there are some problems with this example. It likely assumes that each trade is profitable, without going into detail about other measures that are used to minimize risk and so on. If your income is completely reliant on day trading, there is a downside in that the exact amount you make is never guaranteed. You might make extra money one week but find yourself struggling on a week when you need to pay rent or other important bills.

Our final advice for those wishing to become day traders is to do it but to be very conscious about how much money you can afford to invest and how much you could actually make. We don’t recommend quitting your job immediately. Instead, start off trading for a few months to get an idea of how much money you’re going to make personally. As you continue to trade and invest more money, you’ll likely find that your profits grow to the point that you can make a decent income from trading.

Categories
Beginners Forex Education Forex Basics

Home-Based Forex Trading: Pros & Cons

Becoming a forex trader that works from home sounds like a dream job when you hear some successful traders talk about the benefits, while others struggle with adjusting to trading from home. This might leave you wondering if this is the best job in the world or just a waste of time. Is home-based trading […]

Becoming a forex trader that works from home sounds like a dream job when you hear some successful traders talk about the benefits, while others struggle with adjusting to trading from home. This might leave you wondering if this is the best job in the world or just a waste of time. Is home-based trading […]

Becoming a forex trader that works from home sounds like a dream job when you hear some successful traders talk about the benefits, while others struggle with adjusting to trading from home. This might leave you wondering if this is the best job in the world or just a waste of time. Is home-based trading for you? Take a look at our pros and cons to find out!

PROS

  1. Working from home! No need to commute, no boss to answer to, you get the luxury of working from home in your pajamas all day if that’s what you’d prefer. 
  2. Saved money: Since you don’t have to use gas to go to work, you’re likely to save upwards of $30-$50 a week (if you usually had a commute to work) that can then be deposited into your trading account. You’ll also be more likely to simply eat lunch at home instead of going through a drive-through every day.
  3. Flexibility: If your kids are sick and need a ride home from school or something comes up, you don’t have to ask for time off. If you want to sleep in, there’s nobody to answer to but yourself. This is one of the main benefits of forex trading, which can be done from virtually anywhere as long as you have a working phone and internet connection. 
  4. Making money: Although you could lose money, you also have the benefit of possible surprises when you make much more profits than you expected to. You might even decide to get away for the weekend to celebrate this surprise bonus.  

CONS

  1. Distractions are everywhere! A tv playing in the background, your children running through the house, your dog barking outside, and it doesn’t help if your spouse is trying to have a conversation while you’re trying to concentrate. Then again, you don’t have to worry about this as much if you live alone, but you still might be tempted to play on Facebook or take part in other distractions during work time. 
  2. Finding an office space: Do you want to work at the kitchen table, or is it covered in food from your kid’s lunch? Laptop in danger of having juice spilled on it if you sit it down on your living room coffee table for even just a second? Maybe you’re lucky enough to have an office or to live alone, but those that don’t may struggle to find a good spot to work. 
  3. Too much flexibility: Since you don’t have a set work schedule and no boss to explain yourself to, it might be harder to say no if your friend wants you to come out for lunch or if you just have the urge to get out of the house. Sure, you can trade from your phone, but the increased freedom might leave you trading less often than you should because of these distractions.
  4. Working in an environment that is trading friendly: Do you get fast internet connection where you live? In some rural communities, this isn’t always an option. You might even find that your internet connection barely works when others are connected, so you’ll have to battle your spouse watching Netflix or kick your kids off their tablets if this is an issue. 
  5. Profits aren’t guaranteed: With a regular job, you know you’ll be bringing home a paycheck at the end of the week. Trading is more subjective, and you never know if you’ll come out up or down.

Conclusion 

Trading from home comes with a lot of pros, after all, it really allows you to be your own boss, gives you the option to be lazy when you want to be, and doesn’t confine you to a strict schedule or force you to ask to be off work if you want to attend an event or take a sudden vacation. On the downside, some traders have issues keeping themselves disciplined once all this freedom sinks in, and this can have a negative impact on your profits. You also never know if you’ll come out with more or less money at the end of the week, some weeks you may be down, while at other times you could find yourself celebrating record profits. If you think you can keep yourself disciplined enough and you have some money to fall back on in case of bad luck, home-based trading might just be for you.

Categories
Forex Basics

Three Key Factors that Day Traders Should Consider

30Day trading is a popular trading strategy that involves placing multiple short trades per day, with each trade being closed out before the end of the trading day. It is known as a profitable, yet demanding trading strategy that can give good results when practiced effectively. Of course, each trading strategy comes with its own […]

30Day trading is a popular trading strategy that involves placing multiple short trades per day, with each trade being closed out before the end of the trading day. It is known as a profitable, yet demanding trading strategy that can give good results when practiced effectively. Of course, each trading strategy comes with its own […]

30Day trading is a popular trading strategy that involves placing multiple short trades per day, with each trade being closed out before the end of the trading day. It is known as a profitable, yet demanding trading strategy that can give good results when practiced effectively. Of course, each trading strategy comes with its own strengths and weaknesses, along with things that should be considered. If you feel that day trading is the right strategy for you, be sure to consider the following:

Factor #1: Money

Just how much cash do you have available to deposit into a trading account? As a day trader, you’ll need to open at least a couple of trades each day, so you’ll probably want to deposit enough money to keep you afloat for a while to avoid quickly reaching a $0 account balance. This is especially true if your broker charges fees for making a deposit. You’ll also want to set some realistic expectations related to how much money you’re planning to make. If you start out with a $25 deposit, you won’t be making thousands of dollars right off the bat. Meanwhile, a larger deposit of around $30,000 might leave you with returns around $3,000 per month. Of course, everything is subjective when you’re trading, so it isn’t wise to set specific monetary goals. Still, you’ll want to figure out how much you can afford to deposit and be sure to have a realistic idea of how much money you might make. 

Factor #2: The Cost of Trading

Each broker charges a different amount for spreads, commission charges, transaction costs, and so on. Some brokers offer competitive pricing, including low spreads and possibly even fee-free withdrawals. However, others will charge you an arm and a leg to trade and might even throw in some nasty surprises like inactivity fees, account maintenance charges, etc. In order to wind up with more money in your pocket, you have to be able to make enough of a profit trading that your winnings aren’t gobbled up by these fees before you ever even receive your withdrawal. Fortunately, you only need to invest a little time into finding a good broker with attractive costs to avoid this problem. Be sure to read the terms & conditions for each option you’re considering to look for information about these hidden fees and avoid brokers that aren’t upfront about their charges, as this is a sign that a company is trying to scam you. 

Factor #3: Stress

Did you know that short-term traders like day traders and scalpers are actually exposed to more stress, which can lead to psychology-related trading issues? This is mainly because you have to work quickly while taking in a lot of information. The timed pressure can make it easier to make mistakes along the way and you might find that your head feels like its spinning after a really tough trading session. If you already struggle with anxiety on a daily basis, you’ll probably have a difficult time adjusting to the pressure that comes with this type of trading strategy. One thing you can do to help take some stress off is to make sure you aren’t crowding your charts with unnecessary indicators, take a break if trading becomes too much to handle, etc. However, day trading might not be right for you if you can’t keep up with fast-paced trading. In that case, you could consider swing trading or another strategy that isn’t as stressful.

Categories
Beginners Forex Education Forex Basics

Are You Fully Prepared for Full-Time Trading?

Something that a lot of new and experienced traders aim for is to be able to trade full time, to be able to get rid of that 9-5 or longer job, and spend your time making money on the markets. While it is a possibility, many people are not fully prepared for it. In fact, […]

Something that a lot of new and experienced traders aim for is to be able to trade full time, to be able to get rid of that 9-5 or longer job, and spend your time making money on the markets. While it is a possibility, many people are not fully prepared for it. In fact, […]

Something that a lot of new and experienced traders aim for is to be able to trade full time, to be able to get rid of that 9-5 or longer job, and spend your time making money on the markets. While it is a possibility, many people are not fully prepared for it. In fact, many people do not fully understand what it actually means to be a full-time trader, the lifestyle changes, the time it takes, the money required, and the risks that come with it.

So we are going to briefly look at the sort of things that you will need to prepare for in case you wanted to make the leap to becoming a full-time trader.

Are you prepared to leave the stability of a job?

Having a job can be a pain, especially if you do not enjoy your job, but are you prepared to get rid of it? Think about the things that it gives you, stability, and a form of financial safety are some of the main ones. You have a guaranteed income at the end of the month, would you be able to give that up for a salary that could be more, but also could be a lot less. Not having that stability can mean that some bills may not get paid, would you be able to survive that with savings or any other incomes?

Are you actually prepared for it?

So you may say that you are ready, but are you prepared for it, how is your strategy holding up? How long have you been trading with it successfully? We have seen traders in the past have a good month and then want to become a full-time trader, you will need years of consistent results to get to that stage, not just a month. You need to ensure that your strategy and finances are prepared for the change in dependency on them over a job.

Set realistic goals:

While you may wish to become a full-time trader, do not set your goals too early, you need to have realistic goals instead, ensure that you are able to give yourself enough time to gain enough knowledge and do you have enough money in your account to sustain you? Bear in mind that it takes most people years to get to that stage, so you should be setting your goals at a similar timescale.

Can you handle the lifestyle change?

Stepping away from the 9-5 job and your usual routine can be a big change, a really big change. In fact, it is not something that everyone is able to deal with. Are you able to motivate yourself to work? That is a big question as a lot of people will say yes, but when it comes to actually doing it, they don’t have the motivation. Not only is it quite difficult to motivate yourself to get up and work, but it can be difficult to get yourself motivated to stay working for a full 8 hours or so. So you really need to ask yourself if you are able to do that before you think of going full-time.

Can you treat trading like a business?

Once you go full time, it is important to understand that you are no longer working for you, you need to be able to treat your trading as a business, you need to get the understanding that this is no longer you playing with your own money, but it is your livelihood. Treat it like a business, work with the money and with risk management similar to you would if working for someone else, would you take those risks if you were still employed, if you are not able to control yourself and cannot take out those additional risks of working for yourself then you probably shouldn’t.

So those are some of the things you need to consider, it is a huge thing to go full-time, something that we would not recommend to the majority of people due to it being such a huge change and the pressures that it can put on you can cause a lot of frustrations and problems for those that are not properly prepared.

Categories
Beginners Forex Education Forex Basics

Can You Make A Living By Forex Trading?

Can you earn a living from Forex trading? The short answer is, of course, yes, the forex markets offer fantastic opportunities with its high level of liquidity, 24-hour availability and the ease that there is in accessing the markets in the first place. It allows anyone with a dream to get involved and to allow […]

Can you earn a living from Forex trading? The short answer is, of course, yes, the forex markets offer fantastic opportunities with its high level of liquidity, 24-hour availability and the ease that there is in accessing the markets in the first place. It allows anyone with a dream to get involved and to allow […]

Can you earn a living from Forex trading? The short answer is, of course, yes, the forex markets offer fantastic opportunities with its high level of liquidity, 24-hour availability and the ease that there is in accessing the markets in the first place. It allows anyone with a dream to get involved and to allow people to trade at any time that suits you, so those all over the world are able to be involved with the markets. These things make it an incredibly attractive prospect for those looking to get out of their current day job.

It is important that before we look at how much you can make from it, we need to understand how it actually works. Forex is basically just the transaction and exchanging of currencies, someone will buy a currency for a certain price and so someone else is selling, the price moves, and that person that purchased the currency will then sell it on to someone else, this happens thousands of times per second with millions of different traders both buying and selling. The markets move for all sorts of reasons, natural disasters, political movements, tweets, institutions selling, and many other reasons, pretty much anything in the world has the opportunity to affect how traders feel which will then cause the markets to move. We aren’t going to go into any form of education here, as we would be here all day, but getting a general and basic knowledge of what trading is and how it works, what pips are, what spreads are, and more before even considering placing your first trade. There is so much to learn, so we suggest that you start as soon as possible.

So we want to make enough to live off, to have as our full-time income, we need to consider how much capital we need to begin with. Yes, you can start trading from as little as $10 or even $1, but can you really expect to make much from a $10 account? Even a 10% increase would only be $1. Many traders state that you should start with at least $1,000, not only does this mean that you can make some profit, but it also means that you are able to use proper risk management. Having said that, you still aren’t going to be making enough for living off an account that small, it does mean however that if you stick with it, this pot can grow to an amount that you may well be able to use to live off.

Ultimately, the more money that you have in your trading account, the more money you can make, but you need to ensure that you are applying proper strategies and proper risk management, as you need to be able to protect what you have if you want to make that amount grow. The moral of the story is simply that you need money to make money, so feel free to start with a small amount, just do not expect yourself to be making enough to quit your job with a small capital balance.

In order to be successful and to be able to make enough profit to live on you will need to have a pretty solid trading strategy and plan in place. You need to work out what your own preferred style of trading is as each of us has a completely different personality and so different styles would be suited to us. Along with the style, you will need your strategy within that style, this is basically the rules that you are putting in place that you need to follow in order to ensure that your trades are the right ones and that you aren’t simply putting on random trades.

Finally, there is your risk management plan, this is how you protect your account when to take losses and how much of your account to risk with each trade. Without all three of these things in place, you will have pretty much no chance of surviving long enough to make the money that you require. It is important to keep in mind at if you have proper strategies and risk management in place, you don’t even need to be right for 50% of your trades in order to be profitable, some strategies you only need to be right 25% of the time, so ensure that it is in place properly and that you know what you are doing.

So how much can you actually make? The good news is that there is not actually a limit, you can go as high as you need or want to. Of course, you do not want to instantly jump up to trying to make thousands a month straight away, you need to start small, it will also expand on the capital that you have in your account, the more you have the more you can potentially make. If we look at what many other traders go for, some are going for 5% per month, some 10%, and some even as high as 20% (slightly more risky). So your increases won’t be seen in monetary value, instead of as a percentage. So let’s assume that you make 10% per week, with an account of $1,000 you will be making $100 per month, the second month though your account balance is $1,100 so you will now make $110 per month ad so on, this will continue to increase as long as your account is still in tack and as long as you are sticking to your plans. With this increase, it won’t take too long before you will be making enough to live off, of course, the higher your starting balance, the higher your profits will be each month, increasing the further.

Another thing to think about is the stress that comes with trading for a living, when you are trading part-time with a full-time job as well, the pressure of needing the money within the account is pretty much negated, you have your income and so you will be able to survive whatever happens. The problem with trading for a living is the fact that you need that money, if things aren’t going well then it will cause all sorts of stress and anxieties, how will you buy food? How will you pay the rent? All questions that will cross your mind. So you need to ensure that you have some money on the side that can help cover these costs should you need them and you need to ensure that even on a bad month, you would be making enough to cover those costs, do not jump into full-time trading when you simply make just enough, you need to make more than enough each month.

Trading is however full of risk, and a lot of it. You need to get a good understanding of the risks involved and how to help negate them. Every penny that you put into your account is at risk, there is always a chance of losing it and so any money that you put into your account you should try to consider that as a loss, this will help you to remove at least some of the emotions from your trading. Developing your strategy around these risks and to help reduce them will make your journey a lot smoother. Do not go for quick profits, as this will only lead to losses and bad trades down the line, so stick to your pan and manage your risk, protect your account over making quick profits.

So the original question that we had was whether or not you are able to make a living forex trading, the answer is again yes. It Does however come with a few hurdles to get over, to have rough money in the first place, to understand the different risks involved and how you can help avoid them, and finally that you will need to build up your account over a long period of time, you will not make enough overnight, so stick with it and you may well be able to leave that 9-5 jobs of yours in order to trade full time.

Categories
Forex Trade Types

Day Trading Vs. Swing Trading: Which is Better?

Every trader might have individual goals – but we all have the same major goal at the end of the day: making a profit. There are a lot of different strategies and methods that traders use to try to accomplish this goal. Some prefer scalping, naked trading, breakout trading, using pivot points, and so on. […]

Every trader might have individual goals – but we all have the same major goal at the end of the day: making a profit. There are a lot of different strategies and methods that traders use to try to accomplish this goal. Some prefer scalping, naked trading, breakout trading, using pivot points, and so on. […]

Every trader might have individual goals – but we all have the same major goal at the end of the day: making a profit. There are a lot of different strategies and methods that traders use to try to accomplish this goal. Some prefer scalping, naked trading, breakout trading, using pivot points, and so on. Two of the most popular trading methods are day trading and swing trading. While traders using these methods have the shared goal of making profits, they go about this in very different ways. If you’re going to become a trader yourself, you’ll need to know about these popular strategies. 

Day Trading

Day traders make multiple trades per day, and almost always close out every single trade before the end of the day. In order to be considered a day trader, you’d need to make at least four trades per every five days. This trading style requires more attention than some other methods, with many traders becoming professional day traders in lieu of working a regular 9-5 job. This is because you need to actively monitor the market so that you can open and close your trades during the day. Day traders tend to make decisions based off of some of these factors:

  • Price discrepancies
  • Fundamentals
  • Quantitative reasons

As you can see, day traders often consider hard numbers when making decisions. If you want to be a day trader, you’re going to need an impressive account balance. In order to follow the “pattern day trader rule”, you’ll need to maintain a minimum account equity of at least $25,000 each day that you plan to trade. This is probably one of the main disadvantages of day trading, as many traders won’t be able to meet that requirement. You could always trade with less, but it may be difficult to open and close enough trades to truly be considered a day trader, or to make enough profit for a substantial living. 

Swing Trading

Swing trading is essentially the opposite of day trading. It involves buying securities and holding them for longer than a day, oftentimes for days or even weeks before selling. Many swing traders make decisions based off of:

  • Graph patterns 
  • Technical analysis (this involves looking at a price’s past history on charts)
  • Macroeconomics 

Swing traders often look to graphs and technical analysis, although some numbers and other factors can be considered as well. This type of trading doesn’t require as much time and attention as day trading, making it a better option for those that don’t have the time to monitor their trades as often. Swing trading also doesn’t require a large starting deposit, unlike with day trading. One of the downsides to choosing this method is that is can lead to overtrading and it produces less in returns than long-term buy-and-hold investors make. You’re also apt to pay more fees and commissions for holding your trades overnight. 

The Bottom Line

Should you become a day trader or swing trader? Here’s a quick summary to help pinpoint which style is right for you:

  • If you want to be a day trader, you’ll need an account balance of around $25,000. If you can’t possibly come up with this or don’t want to, swing trading is the way to go.
  • Swing traders will wind up paying more fees to their brokerage. 
  • Many day traders trade full time instead of working a regular job, as it requires your attention multiple days a week and trades must be actively monitored. Swing trading is better for those that might work a regular job or whom just don’t have that much time to spend trading in a given day.
  • Day traders typically make decisions based on numbers and fundamentals, while swing traders focus more on graphs and technical analysis. You might already have experience with one of these types of research. 

You might feel drawn to one of these methods, but if you don’t, then that’s okay too. There are a variety of other trading strategies out there and the best thing to do is to familiarize yourself with as many of them as possible. If you do decide to become a day trader or swing trader, we’d highly recommend performing a lot more online research to be sure that you completely understand how to perform the strategy successfully.

Categories
Forex Basics

How to Successfully Start Your Forex Trading Career

18With many things in life, it is actually beginning which is the hardest thing to do. So the question that you see pretty much everywhere that you go is simply “How do I get started?” or something along those lines. The reason that this question comes up so much is simply that people have been […]

18With many things in life, it is actually beginning which is the hardest thing to do. So the question that you see pretty much everywhere that you go is simply “How do I get started?” or something along those lines. The reason that this question comes up so much is simply that people have been […]

18With many things in life, it is actually beginning which is the hardest thing to do. So the question that you see pretty much everywhere that you go is simply “How do I get started?” or something along those lines. The reason that this question comes up so much is simply that people have been blasted with adverts and promises about the profits that they can make and how much it can change your life. They are then looking towards these profits before they actually know the basics, what a pip is, or even what a broker is.

Trading is a huge beast, and when you are thinking of starting out, it is a daunting beast, a huge one which anyone coming into will not really know where to start. There are certain things that you need to do before you jump in iht both feet, things to learn, and things to set up. Some of those promises are of course a little or even greatly exaggerated, but there is certainly potential out there to get things right if you start out on the right fit. So we are going to be looking at some of the things that you can do in order to get the best start possible for your trading journey.

It is important to point out that there is no one perfect strategy, here is not on holy grail, and there is not a single order that you should be doing things in. every trade is different, so something that works for someone, may not work for you. So do not take this list as gospel, the same that you should not use anything that anyone else says as gospel, simply use it as a way to get an idea of what it is that you could be doing and as a way to get elf on the right fit, rather than simply follow it blindly in the hope of becoming a successful trader. So let’s jump in and see what some of the things that you could be doing in order to start your trading career.

Learn the basics:

Seems a little obvious this one, but you would be surprised at how many people actually seem to skip this, we are talking about the basics of the basics here. Do you know what a pip is? Do you know what a broker actually does? Do you know how to work out your profit and loss? These seem like they would be incredibly basic things, things that any trader should know, but there are people out there trading with real money who do not know one or more of these very obvious questions.

Think about it, would you enter a swimming race if you hadn’t yet learned how to actually swim? That may be an extreme example but it plays out pretty much the same way, you are entering something that is incredibly competitive, yet you have no idea how any of it actually works. You need to ensure that you have learned at least the basics, get an understanding of pips, leverage, risk management, all of these things before you even think of signing up anywhere and especially before putting any of your money anywhere., Take a look around to see what people are doing, indulge yourself in knowledge and just try and learn.

Trade on a demo account:

When you do finally decide to sign up with a broker (which you should have done a lot of looking around and research to find the right one), you will want to ensure that you are on a demo account. The demo account will try to mimic the trading conditions of a real account the best that it can, but the main advantage for trading on this account is that you will not be risking any of your own money.

The demo account is perfect for trying out new strategies or when you are just starting out, it is perfect as a way to get a better understanding of how the trading platform works, but also how trading actually functions. How to put on trades and how to close them. It is recommended that you trade on a demo account for at least the first few months, six months is the number that we often see thrown about. Use the demo account to learn what you are good at and what you need to work on. You won’t make money, but if you are not able to become a profitable trader on the demo account, then there is no point in moving to a live account as you will only lose money. So stick to dem until you are profitable for at last a few months in a row,

Learn to recognise trading and forex patterns:

This will come with doing things over and over and using that demo account that we mentioned above can certainly help with this. You can also do this by looking back on the charts, how far you go will depend on the timeframes that you are thinking of trade. If you are going to trade on the 5-minute charts then look back a few weeks to see if you can see any patterns if you are trading the daily charts, then you may need to look back an entire year or more in order to see if you can recognise the patterns.

I can take time, and it can be quite difficult to begin with to actually recognise what it is that you are looking for. You will need to put this time and effort into working this out if you want to be successful as it is these patterns that will be allowing you to trade successfully when you do finally go live. Do not be afraid to get explanations from others for the sort of patterns that you are looking for, but it is vital that you are able to recognise them yourself before going live.

Create a trading system:

One of the primary things that you would have been told when you were thinking of starting was that you need to create a trading system. This system will have a number of different aspects in it, it will detail what you need to trade, what you need to look for, your risk management, the profit to loss ratio and more. This is basically what dictates your trading. If this has not been created properly there is very little chance that you will end up as a profitable trader. Many people start out by trying to use someone else’s strategy as a shortcut, but you do not understand it, and should the markets change, you will not know how to adapt it properly.

You need to create your own, it is not an easy or quick process but it is one that is vital and it is also vital that you do this while on your demo account. This is important because you will be making mistakes and you will be making a lot of losses as you are creating it. Even the best readers in the world would have had a hard time creating this and would have made a lot of mistakes as they are doing it. So take your time, get it right and it will really help you to get on the right path.

Ready your mind:

If you want to trade like a trader then you are going to have to think like one too. You need to remember that everyone is there for exactly the same thing, so having a new and unique view of the markets does not necessarily mean that you will do any better, traders think in a particular way because that is how you need to think in order to become successful. This is not something that you will be able to do overnight, it will take time, through both practice and by reading or observing others. Learn what it is that you are looking for, how you analyse what it is that you are seeing. Try getting involved in a trading community or two in order to talk to others that are actually trading in order to get their views and opinions on the things that you are looking at.

Track and journal your progress:

This Is the part that most people miss out, yet it is also probably the most important thing that you can do. Creating a trading journal or at least writing down what it is that you are doing. When we say to write things down, we mean everything. The reasons you have entered and trade and the reasons you have not, why you closed a trade, the results, how long you help it, and more. All of these little bits of information will give you a real insight into your trading. This allows you to see both your strengths and weaknesses, it will tell you how you are trading and whether you are following your strategy properly.

This seems like a lot of work and it is, but if you want to be a successful trader then you need to be doing this, and the earlier that you start the better. If you want to be successful then you need to do this, you need to understand why you are trading what you are trading and how you are performing when you do it.

So those are some of the things that you can be doing to help yourself get off on the right foot. Trading is not an easy beast to tame, many will try and subsequently fail. What is important is that you do what you can to get yourself going and to help yourself become successful in the long run. It is a long and hard process, but if you really want it and are willing to put in the time and work, there is no reason why you cannot become a profitable trader.

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Beginners Forex Education Forex Money Management

Plan to Scalp Or Day Trade? Here’s What You Should Know…

The majority of new traders that are now starting out in trading are looking towards using either a scalping or day trading strategy. These sorts of strategies have been published a lot more than any others have and so people come in with the impression that they are the two go-to strategies to try out, after all, putting on multiple trades a day will increase your chances of winning rather than once every few days or one per week.

The majority of new traders that are now starting out in trading are looking towards using either a scalping or day trading strategy. These sorts of strategies have been published a lot more than any others have and so people come in with the impression that they are the two go-to strategies to try out, after all, putting on multiple trades a day will increase your chances of winning rather than once every few days or one per week.

The majority of new traders that are now starting out in trading are looking towards using either a scalping or day trading strategy. These sorts of strategies have been published a lot more than any others have and so people come in with the impression that they are the two go-to strategies to try out, after all, putting on multiple trades a day will increase your chances of winning rather than once every few days or one per week.

Trading shorter timeframes means that you can get in and out a lot quicker, make some profit, and then still have time for your social life or work, so it is far easier to fit it in around your everyday life and the other things that you are already doing. Unfortunately, it doesn’t always work like this, putting on more trades does not mean that you will be successful, especially if the work behind each trade has not been put in.

If you go to a shooting range if you take your time with each shot and only get three shots out, but they all hit the target. You would have done far better than you would have to unload a full automatic magazine of 20 bullets but didn’t bother actually aiming it. This is similar to how trading works, you need to carefully aim and analyse your trades, and not just simply quickly fire a load of trades out there in the hope that you will make some profits.

Having said that, these shorter-term trades certainly can be profitable and some people make a lot of money from them, it is just important that you are able to bring down your expectations and to ensure that you put proper trade management in place before making any trades. So we are going to look at some of the things to consider before you make the decision to trade in one of these styles.

Your Account Balance

Many people are now coming into trading thinking that they can turn $10 into $10,000 in a short period of time, this is not their fault, it is the fault of the thousands of people who exaggerate or outright lie about their results, bringing in more people who wish to emulate those results, even though we know it will never happen. So just because some brokers allow you to open up an account with just $10 it does not mean that you should. In fact, it has been recommended that you will need a balance of at least $1,000 if you wish to be successful. This is even more important if you are planning on using one of these quick-fix or multiple trade strategies, every single trade will reduce the leverage that you have available, too many open trades can cause an account to blow without even having traded in the negative, so be sure that you have enough capital to survive the strategy that you are planning to use.

Commissions and Transaction Costs

Traders are always going on about spreads, looking for the brokers with the lowest spreads because that will give you the most profit, the problem is that this is not the complete truth. Yes, lower spreads do mean that you make more per trade, but those brokers with very low spreads add a transaction cost otherwise known as a commission onto their trades. The standard commission going around is currently around $6 per lot traded, so to make our examples clear we will be trading 1 lot each time. So a broke with a low spread, let’s say 0 pips but has a commission of $6, a trader will see that they currently have a profit of $5 so it looks good, they close it expecting to make that $5, but then they are left with -$1, what happened The trader simply did not understand that a commission would come out once the trade closed. In terms of pips, there is no point having a strategy that takes 1 pip profit each time if there is a 1.2 pip spread, it just won’t make any money. So consider your broker’s charges and compare it with your strategy to ensure that you will actually make money on winning trade.

Different Strategies

There are a lot of different strategies out there, there will be some that suit your own style of trading and some that will certainly not. You need to be able to identify what your storing points are as well as your weak points and then take a strategy that best suits your own style of trading. The strategy also needs to be able to suit your psychology, if you are an impatient person, then there is no point in going for long trades. However, if you are someone with not a lot of time on their hands, the slightly longer-term day trades can allow you to put on a trade, go away and then come back later to update it. Just ensure that you are choosing a strategy that suits you and that it is one that you will be able to maintain over a longer period of time (we are looking at months to years).

Trading Psychology

We touched on this very briefly above, but trading psychology takes a big role when it comes to shorter-term trading styles such as scalping and day trading. The expectation from a lot of traders is that they will be able to come in and make some very quick and very easy money. This is the expectation that is being put out there by some brokers and a lot of scammers. This is just not the case when it comes to being successful at trading. There is a lot of money to be made, but it is the expectation and the pressure that people put on themselves to become profitable quickly that gets them into trouble. If you are trading a short term strategy like scalping, then you will do a lot of your trading in a short period of time, if you are easily distracted during that time then you will be destined to make mistakes and some losses, so prepare yourself, ensure that you understand what it is that you need to do and what your strategy requires of you. Focus on your trading and lower your expectations to be more in line with reality rather than your dreams.

So those are some of the things that you should consider when taking on one of the shorter term trading strategies. Of course, there are many other things and factors that have an effect, preparation is one of the key things as well as having an understanding of your own abilities and what the strategy actually requires and offers. Take your time to learn, take your time to master the strategy and you will put yourself in a fantastic spot for being successful in the future.

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Forex Course

132. Rules Of Trading Divergence

Introduction

Introduction

Introduction

Divergence is used by traders to determine if there is going to be a reversal or a trend continuation. They sometimes work exceptionally well and, at times, goes entirely in the anticipated direction. Thus, to increase the consistency of divergence, we have listed out some rules for trading divergence.

#1 Focus only on four price patterns

For legitimate divergence to exists, their price pattern must be either of the following:

If spot a divergence on the indicator that does not have either of the above price action, then the divergence will not work.

Several times, the price consolidates and shows divergence on the indicator. But there will not be any proper top or bottom to confirm that the divergence is real. Thus, such divergence must be ignored.

#2 Connect the lines only for significant highs and lows

Now that you know, we are concerned with one of the four patterns – higher high, lower low, equal high, and equal low. When it comes to drawing the trend lines, you must make sure the highs and lows are major enough to be considered. A little bump up or dips that may look like a higher high or lower low must be ignored.

#3 Mark the corresponding highs and low

Always start by drawing the highs and lows from the price charts. Then you mark the highs and lows on the indicator corresponding with the highs and lows with the price.

Pro tip: Draw two vertical lines to perfectly mark the corresponding highs and lows.

#4 Compare the length and strength of the pushes

This is one of the most important points to consider. In a trending market, the price makes higher highs or lower lows. But, when there is a divergence for a particular push, you must make sure that the momentum is weaker, and length is smaller than the previous trend sequence.

In the above chart, we can clearly ascertain that the lower low, which had divergence was much weaker and shorter than the previous push. As a result, the market reversed and had a big bull run.

#5 Do not try catching a falling knife

There are times when the market does not consolidate before reversing its direction. There could not be any entry for such trades. But there are traders who chase the market and end up buying at very high prices, which could be bad for business. Thus, you be patient and wait for the right opportunity, because buying at higher prices, could hinder the risk to reward ratio, leading to a high risk for small profits.

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Categories
Forex Market Analysis

Forex and Indices – Daily Update 02.08.18

Fundamental Overview

In today’s session, market sentiment is led by the preference of risk protection assets facing the expectation for the US employment data, which will be announced on the Friday 03rd session. The US Dollar and Japanese Yen, which advanced 0.30% and 0.30% respectively. Within the commodity currencies group, the oceanic currencies are the hardest hit; the New Zealand Dollar is the worst performer which falls 0.49%, followed by the Australian dollar that drops 0.45% in the trading session.

Source: Forex Academy Collection

 

 

Technical Analysis

EURUSD

EURUSD in the 1-hour chart is moving bearish, below the weekly pivot level. For short positions, the price should break under the 1.1657 level with a profit target in the confluence zone between the first weekly support and the Lower HHL at 1.16061 level. For long positions (reversal case), the price should break above the breakdown candle at 1.1691, with a profit target between the confluence zone between the first weekly resistance and the Upper HHL at 1.1729.



GBPUSD

The pair GBPUSD is moving slightly bearish below the weekly pivot consolidating between 1.3090 and 1.3140. A breakdown below 1.309 could drive to the pound to the first weekly support at 1.3050. The bullish case, if the price breaks above 1.3140, the potential target is the first weekly resistance located at 1.3189.




USDCHF

USDCHF in the hourly chart is consolidating as a triangle pattern; this chart pattern suggests more upsides. For long positions, is essential that the price breaks above the weekly pivot level at 0.9937, with a profit target at the third daily resistance at 0.9974. Short positions should be valued if the price breaks under 0.9917, the potential target is the HHL at 0.9880.



EURGBP

The EURGBP cross is running bearish and is consolidating as a flag pattern. For bearish continuation, the price could drop to the confluence zone between the second daily support and the first weekly support at 0.8860. For long positions, the price should break above the weekly pivot level at 0.8897 with a potential move to the HHL at 0.8928.


GBPNZD

The GBPNZD cross is running sideways with a bullish bias in the last sequence which started from the first weekly support at 1.76318. For long positions, the price should break above the first daily resistance with a mid-term target placed on the confluence between the second weekly resistance and the third daily resistance at 1.7864. Short positions should be valued if the price closes below the daily pivot level at 1.77059, and the potential target is at the first weekly support at 1.76318.


DAX 30

DAX 30 is moving slightly neutral in the weekly pivot level at 12,746 pts. For short positions, the price should break below 12,707 with a potential target in the first weekly support at 12,604 pts. Long positions should be regarded if the German index closes above 12,800 pts, with a potential profit target at 12,920 pts.



FTSE 100

The FTSE 100 index shows bearish signals closing below the weekly pivot level at 7,687.9 pts. Continuation of the previous bearish move should be valued if the price breaks under the first weekly pivot at 7,635.2 pts., with a profit target in the confluence zone between the HHL and the third weekly support at 7,521 pts. Long positions could be valued if the price breaks above the weekly pivot level, with a potential target in the first weekly resistance at 7,754 pts. Additionally, note that if the price plunges to the third weekly support, it could be an interesting reversal level.