FOREX - Who Or What Decides When To Trade?

When you are looking to find a "system" of trading forex markets, it does not matter how many books you read, how many magazines you invest in or how many websites you browse, trying to find something 'different".
There are basically only two types of Forex trading systems, those that we might call mechanical and those that are human driven or discretionary.
In this article, we shall try to investigate which type of system is better, or, if indeed, either one can be shown to better than the other.
In general, the trading signals that are generated by mechanical systems are usually drawn from normal technical analysis techniques that are applied in an entirely rigid, automated manner.
Human beings, on the other hand, rely on experience, intuition and subjective insights to drive their trading activities.
So, is there any objective test that will tell us that one or the other method of trading works best when applied in the real world?
Well, both trading systems have both advantages and disadvantages.
We might summarize these as follows:
Advantages: Mechanical
A mechanical system, by definition, assumes that the same action will be taken every time the same set of signals occur. Thus, in theory at least, it is very easy to back-test by applying these rules to situations that arose in the past. The rules dictating when trades are entered and exited are fully automated, so everything is completely black and white. The signals tell you that there is a trade or there is not, period. Emotions cannot therefore play any part in trading decisions.
Advantages: Humans
Humans have the ability to adjust their actions to whatever is happening around them. Decisions based on experience are predicated on applying many, many factors to the decision that is made, some of which may change almost daily, and a human is adaptive enough to take this into account
Disadvantages: Mechanical
Although a mechanical system will produce data that is 100% reliable, the trader using this date may not work to the same standards. Forex markets never stand still. They change all the time, introducing new situations that a mechanical system (being based on past data) has never encountered before. Nothing in forex markets ever happens exactly the same twice! Almost exactly the same is not exactly the same, but a mechanically driven system cannot necessarily differentiate, or make allowances for this.
Disadvantages: Humans Systematic back testing is not so easy. Heck, it may not even be the same person making the decision this time as it was last! Experience takes time, and, partially at least, relies on learning from mistakes. This could potentially be an expensive way to learn!
So, which one is better? Well, guess what? Neither is!
Which one is better depends entirely on who you are, how you trade, your ideas about money, risk, reward, and so on.
For some people a mechanical system will work.
For example, like the proverbial rabbit frozen in the headlights of the onrushing car, some people are too paralyzed by doubts and fears to ever make a decision - the dread of being wrong is almost overwhelmingly strong.
The pressure of having to make decisions will almost certainly cause this type of person never to make a decision at all!
A mechanical system, wherein a trade is only taken when the system says so, will remove all of the pressure in these circumstances, and so, for this type of person, this is probably the way to go.
If, on the other hand, you can stay totally on top of your emotions, and are the kind of character that can stick to a highly disciplined regime, then you are almost certainly going to make more money trading forex based on you own instincts and beliefs, assuming that you also boast the necessary experience.
As an example of this 'in action', your innate ability to think on your feet would really comes to the fore if, say, you are in profit, having hit your original target, But, in this case, you believe that you could make more, by staying in the market. Your discretionary approach allows you to do so.
Say you originally set a 100 pip move as your profit target but, once that number has been hit, you clearly sensed that there is still further to go.
In this situation, after applying a few basic security measures like moving your stop loss up, perhaps to your original target if possible (so that becomes the minimum you will make, should the market turn) you just let it ride for a little longer, a decision which is based on your experience and probably also on your 'gut feeling' hunch.
That is what applying discretion can do, but the extra pressure that changing your original decision can bring is not for everyone.
So, the bottom line is that there are advantages and disadvantages to both approaches, and it is entirely a question of horses for courses.
Given that neither approach has, over time, proved noticeably more successful than the other, whichever forex trading style most suits your personality is going to be the best one for you!
One final thing.
Maybe you are reading this now, thinking, well, heck, I don't actually know what kind of trader I am, never having tried it before.
If that is you, I would thoroughly recommend finding a broker who will let you trade a free demo account (which is actually 90% of the online brokerage houses nowadays) so that you can get more idea of where you stand.
But do remember that a demo account with pretend money does not really match the pressures and emotions that are part and parcel of trading with your own real money!
About the Author
After a few years sabbatical, Steve has recently returned to forex trading, and airs his views on the current forex market, amongst other things, at http://webbiz99.com

Learn Forex Trading to Expand Opportunities

Capitalize on the opportunity to learn forex trading so you can begin the process of branching your portfolio out of domestic stocks and into the global market. Any financial advisor worth his weight will tell you that it is important to diversify your investment portfolio and this is by far the largest volume market in the world. Daily, it does nearly four times the volume of trading than the New York Stock Exchange does.
Anyone who holds a basic understanding of how money is converted and exchange rates work can learn forex trading. The sale or trading of currency is at the heart of what forex is. Using one currency to buy another means that your counterpart is using their currency to buy yours. As exchange rates fluctuate and the economies of nations surge and recede, these investments in cash behave in value very much like a traditional stock.
As with any new venture, you will need to master the vocabulary that is an inherent part of forex. When you begin to learn forex trading you will be introduced to terms like pip, spread, cross, base currency and trade currency. Foreign exchange trading does have some unique terminologies. While they may be new to you, you will learn them quickly because they describe certain parts of forex quotes that you will need to understand in order to trade.
There are quite a few resources available to those who wish to learn forex trading. The reliability of internet access has opened the door to online forex trading, which means that more investors have the ability to participate in trading activity. Since the foreign exchange trade is considered a spot market, the ready availability of internet access is crucial. Business is done on the "spot," thus the name.
You can capitalize on many benefits when you learn forex trading. The availability of a 24-hour a day market is one. Since forex involves the trade of currency at banks across the globe, the market never closes. The market is also remarkably liquid, meaning that you will never have trouble finding trading partners. Since most of your trading partners are banks and the medium is cash, you will never be at a loss for customers. Another benefit is the lack of commissions. Since you make the trades on your own, you don't have to spend part of your profit on brokerage commission fees.
Taking the time to learn forex trading opens one more investment door for you. As you continue to realize the importance of diversifying your investment portfolio, it may be a good idea to begin looking at what kinds of opportunities are available to you in foreign exchange trading. You may be surprised to see who else is capitalizing on this market and just how easy it is.
About the Author
For more information on forex trading, please visit http://www.forextradingexplained.co.uk

How To Become A Successful Forex Trader

Gone are the days when forex trading are meant for the "big guys" - institutions, big companies, banks and financial institutions. Today, the man-in-the-street can access facilities to trade in the privacy and comfort of his home! He can earn a living trading forex from the comfort of his own home.If you are someone intending to be involved in forex trading, there is available a lot of help and assistance to get you started off. Let us consider 4 main guidelines that are important to you if you intend to make money as a forex trader.Firstly, is forex trading for you?Forex trading involves study and gaining skills to trade. Generally, a quick style of trading is needed for day trading of the forex. On the contrary, if you are someone who cannot spend too much time on the trading screen, then swing trading is envisaged. Both styles require you to spend time to study technical setups peculiar to these styles. Check your own risk profile. If you cannot tolerate risk that is opened for long periods, then day trading, which may involve trading within mere seconds or minutes is suitable for you.Secondly, are you capitalized for trading forex?With the advent of leverage, and min-forex, capital is no longer an issue in trading. Unless you are a swing trader, where you intend to open your trades for a longer period, you really do not need a very big amount of capital. This is more so because as a beginner to forex trading, you will start off small, and build up experience as you go along. Check with your brokers to comply with their levels of capital requirements, and check out the possibility of conducting mini forex trades.Thirdly, are you going for a technical approach or a fundamental approach?Most forex traders are technical traders. By this, they look at charts to spot any technical trading setup, and if prices have reached a certain level they would buy or sell as the case might be. Charts feature a lot on their trading systems. There are those who adopt trading signals based on fundamentals. This will include the news release, reports of economic trends, treasury news and so on. There are those who blend their technical systems together with news releases as well. No matter whatever approach you use, make sure you identify properly the proven profitable trading setups and concentrate on trading these until you are an expert.Fourthly, be aware that forex trading can be a most exciting career move - you can earn a living trading forex online. Much as the rewards can be great, there is a learning curve to follow. You can accelerate your learning skills by following a structured course of learning forex or getting a mentor who is willing to show you his secrets and pass on knowledge of his techniques.So be prepared to learn, spend time to paper trade your trading systems until trading is second nature to you and until you become a consistent winner even during simulated trades. Until you find that confidence and high win-loss ratio, continue to paper trade.
By following these 4 guidelines, you have the best chances to become a profitable forex trader.
By: Peter Lim
Article Directory: http://www.articledashboard.com
Discover how you can fast track into a successful forex trader earning a 5 figure income from home by visiting the author's blog at forexguidehowto.blogspot.com

Forex Trading Profits - A Forex Trading Method for Huge Gains

The logic of this forex trading methodology is simple, can be understood by anyone and applied for big forex trading profits.
If you use this forex trading system, you will have the potential to catch the big trends that make the big profits.
Let s take a look at the logic of this method and why it works.
We have all heard this phrase as an accepted wisdom:
Buy low sell high
The real way to make forex profits however is to:
Buy high and sell higher
Trading this way you will have bigger profits and less risk. Let s see why.
If you want to buy low and sell high you have problem:
You have to PREDICT where a market is going to bottom and this is hard as the old investment saying goes:
If you are a bottom picker you will soon become a cotton picker
Trying to pick a bottom in a leveraged market such as forex will make you poor! Consider this:
A currency suddenly breaks its highs and accelerates away.
Investors who want to buy low and sell high sit and watch it they will wait for the market to pullback and get in at a cheaper price.
but the pullback never comes, the market simply goes higher and these traders never get on board. FACT:
Most of the big trending moves in any market start from new market highs.
It s hard to buy a breakout as you know you have missed a slice of the potential profit, but if you grit your teeth and accept this you will in most instances be rewarded with big profits.
You didn t get the exact turn, but that s impossible to do unless you re lucky and your major aim is profit and breakouts give you high odds trades if significant resistance is broken.
You are acting on Confirmation
A breakout system does not try to predict a market bottom it gives you confirmation that the move is in progress, so remember the old saying:
A trend in motion is more likely to continue than reverse
If you are positioned to get in as the breakout occurs, your risk is low, and your rewards are high.
Many traders don t can t to do this, it s to uncomfortable for them.
They think they are chasing the move, and wait for a pullback - it never comes, and they miss the big trends and profits.
Big Currency Trading Profits with breakouts!
Here we have looked at the concept, and why it s successful, and you can see how uncomfortable it is to do - no one likes to miss a bit of the profit, but that s exactly why it makes money.
Trade this method on important resistance levels longer term and you could soon be piling up big profits to.
FREE ESSENTIAL TRADER PDF's
On how the markets really work as well as features, systems and much more, go and grab your FREE Forex Trading PDF's visit our website at http://www.net-planet.org/index.html
Article Source: http://EzineArticles.com/?expert=Kelly_Price

Forex Tester - professional training software for Forex traders.

The currency market Forex has already ceased to seem exotic, as well as the profession of Forex-trader elite business. The opportunity of participation in the largest market of the planet seems tempting and temptation to make fast money and to grow rich, in fact, was promised by advertising leaflets of all dealing centers and it was impossible to resist. In game there were involved representatives of different layers of the society. However, the statistics eloquently testified: up to 90 % of traders of the Forex market have been losing the money. What is the reason of such results? The basic one is lack of traders' training.
There was the need for the instrument which would allow the trader to be trained not losing his funds (working on an actual account) and not wasting time (training on a demo account). Often to test their trading system traders spend months, pay solid money for round-the-clock access to the Internet and after the lapse of time they found out that this system is unprofitable. The trader changes parameters of the system and all begins again. As the result after a year of such work at the best disappointment of the Forex market arises and in the worst the person loses the savings and creates debts.
Considering the aforesaid, Forex Tester (www.forextester.com) is a professional simulator of the Forex market which eliminates the listed lacks was developed allowing the trader to get necessary skills of work in Forex in reasonable terms and without loss of money. The software emulates the terminal of the trader and does not demand connection to the Internet. Now the trader can test the trading systems calculated for years within hours. The software is intended both for training to trade manually and for testing the automated trading strategies. The user can expose manually comprehensible speed of receipt of quotations, do stops for the analysis of the market situation and in case of acceptance of wrong decisions allows to make recoil back and again to comprehend the situation and to make the true decision. A big set of market indicators and also a set of instruments for graphic analysis are incorporated in the software.
We asked the author of the software, Michael Koshelev, to share with us the sight of the mentioned problems: "The profession of the trader, as well as other professions, demands the appropriate training. At the first sight trading in Forex looks very simple; it is enough to press a couple of keys in the terminal of the trader to give the order on fulfillment of the transaction. Often the beginners are lucky initially and they make some profitable transactions, they feel unjustified confidence of their forces and people hasten to invest serious money. But profitable trading during a long time interval is science, art and craft. The market is a certain environment with the internal rules. Therefore it is necessary for the participant of the market to correspond to the market process: to modify his own behavior, to adjust his/her own preferences to the market laws. Psychology is an exclusively important component of the successful trade. The trader should break the stereotypes borrowed from other spheres of life as trading in many respects is unique - there is no competition as such, no direct dependency between activity and productivity - at times, on the contrary, who does less movements, yields the greatest profit. The trader should understand that he trades not against the depersonalized market, the trader trades with himself - with his expectations.
To help the trader to improve the trading skills and to develop the profitable strategy of work, Forex Tester, which is a simulator of Forex market, has been developed by us. The software is developed in view of the wishes of traders. It is pleasant that it was found useful not only by the beginners, but also by the skilled traders who are trading profitable during several years.
In the software three basic functional blocks are combined: trainings, testing and analysis. At present the training block was already implemented which allows to make transactions on historical quotations with adjustable speed of their submission and the adjustable size of ticks (packages of quotations), once submitted in the schedule. All the perfect transactions find reflection in the list of transactions, there is the automatic calculation of statistics and schedules of the equity, balance, involved margins and drawdown are being displayed. All that allows to trace productivity of the made trading decisions. The trader receives fast feedback between the factors which have induced him to open the position and result of the perfect operation. At training on the demos-accounts offered by Forex-brokers, there are many distracting moments which disseminate attention. These are reading of news and independent analytical articles. Expectation of the outcome of the transaction pushes to infringement of ones own rules discounting the potential of the systematic work. Also the beginning trader replaces his priorities during training in conditions of real time: instead of profitable trading on the first place the desire to appear right in forecasting the market behavior is deduced to prove himself the opportunity to guess the direction of movement of exchange rates. And the process of "guessing" at greater extent is connected with self-deception: the transaction was already closed as unprofitable, only then the rate was displayed and went in the "right" direction, and the trader speaks: «Nevertheless I was right! Next time it will work out". Such an approach prevents to look objectively at things and to estimate ones own abilities.
The accent should be put not on the single result but on the process of trading. This or that approach should provide the statistical advantage. Having made thousand training transactions in our software the trader will start perceiving the trading in another way. The correct attitude to the market will be created. Nothing supernatural is expected from him. The understanding of the inherent restrictions connected with trading in the market comes; more precise reference points on expected potential profitableness are formed, risks are evaluated; and in this connection expectations and behavior are corrected - the purposes are targeted which are possible to aspire and which are really achievable.
The software is supplied with the convenient intuitive interface. Forex Tester allows saving time at training of skills and testing of the approaches not formalized completely with subjective multiplier. First of all the strategies related to recognition of patterns, levels of support/resistance, trend lines, generally speaking - the classical technical analysis.
The software makes the trader to think of the market as about the game and about the rules of this game. The accent on achievement of certain productivity is displaced instead of the abstract reflections about the destiny of the world economy, current market news, forecasts of fundamental analysts. When you think of game, you think - how to win? However, the most important, - there should be no passion - this is a direct way to defeat. Think about Forex as about chess and do not hurry up as in the racing, get yourself prepared for marathon... "
Familiarize with Forex Tester you can on the website - www.forextester.com
About the Author
by Marat Sabirov

Forex Currency Trading Beginners Tips

Currency trading as a simple definition is the buying and selling of foreign currencies, exchanging one for another at a profit (or loss). The purpose of the sale and purchase is to make profits. But to benefit from profits you need to be informed and fully aware of when, where, and how a market movement will occur. The most successful traders are aware of all things that may effect one currencies price against another.
If you are serious about making money from Forex trading then you need to take on board many of the currency trading tips the experts can offer. You can learn to understand about market trends and its movement. You can learn about the meaning of trends moving up or down or sideways.
Furthermore, you can, and in fact should, learn what the trends within trends are, such as short term or long term or intermediate term trends. If you take on board the many hints and tips of Forex trading then you will be on the path to be a profitable foreign exchange trader.
Currency trading never sleeps and expects you to be on your toes all the time. The market is open for trading 24 hours a day, 7 days a week thanks to overlapping world timezones. Most brokers offer trading without taking any commission since they earn money from the spread they offer, however, you must ensure that there are no delays in execution of your orders.
Perhaps the biggest currency trading tip for the new trader is to start off small. Big money can both be won and lost in Forex so if you are a newbie then start with one of the free demo accounts that most brokers now offer. A Forex demo account allows you to practice in a real market scenario without the fear of losing any money. This helps you to get an idea about charts and quotes and streaming news. It is a good learning ground.
A free demo account is also a great way to learn how to use a brokers software and to get an idea of whether that broker is right for you. If you are not comfortable with it, tell the company, perhaps they can do something about it, perhaps they cant but if you don't ask you don't get! Afterall, if it doesn't suit you, find another broker.
Another tip for you to consider when choosing a Forex broker is whether to go for one that offers a client based or a web based software. Web based software is installed on the computer of the broker and you recieve a unique id and password with which you can operate your account from any computer with an internet connection. The advantage lies in the fact you can use any PC to access the software but the downside is that you are relying on a good connection to the brokers software.
On the other hand, client based software has to be downloaded and then installed on your own system and as such couldn't be used from any other system. The advantage here is that providing your own PC works you have everything set up ready to go at the click of a button, the disadvantage is that you cannot trade from any PCs that do not have the software installed.
There is one more currency trading tip about brokers. Check out their customer service, sometimes you might need a quick reply to a problem or question and the speed of their response could make or break a trade. If you find that the broker is not very prompt in replying to your queries then you should think very carefully before starting to trade with their software.
Another currency trading tip would be to have a fast internet connection. A slow dial-up modem could make trading almost impossible, in this day and age broadband is available pretty cheap so if possible ensure you have broadband installed before starting your trading career.
Give time to research online brokers. Taking advice from friends, acquaintances, and respectable websites that are in the same field would also be a good idea. After all it is your money and you should be careful about it.
About the Author
For independent advice on choosing the right Forex broker please visit Forex Broker Reviews. If you are still undecided about trading Forex online then you can visit Forex Trading Resources for more information and advice.

Forex Day Trading Day Trading Doesn't Work So Don t Try It

The logic of day trading is totally flawed and will never make you money over the longer term and will wipe out your equity. If you want to prove it ask anyone who says it does to give you a real time track record of profits and you won t get one. Why? Because day trading does not make money. Before we begin, you may ask yourself why there are so many people claiming they make money at day trading? Well the answer is it s a good story and appeals to peoples greed.This creates system sales and revenue for the vendor OF these day trading methods so they make money you lose. Here are the reasons day trading does not work: 1. Time Period A day is to short a time period to judge market trends accurately. Think about it. Trillions of dollars are traded everyday and prices can go anywhere and there is no way of guessing what the volatility in a day will be or the direction. Short term moves are simply random.
You could probably flip a coin and do as well as most day traders. 2. Stops Day traders use the daily range to buy and sell and set stops. Stops therefore tend to be close to entry by the very nature of day trading. Volatility in a single session is impossible to judge and most times simply picks off the stops and creates small losses which add up.3. Banking profits early Most day traders are looking to scalp a few pips here and there. They do have some wining trades (more by luck than by judgment) but of course they break the fundamental rule of trading leveraged investments which is:Run your profits to cover your inevitable losses. As they have a lot of losses and marginal profits the net result is the erosion and eventual wipe out of account equity. Day Trading is a good story, but in reality day trading doesn t work over the long term. Simply ask any vendor who sells a day trading system for this:A real time track record of their profits over 3 years and see the answer you get. The conclusion from all of this?
You guessed it Avoid day trading if you don t want to lose your money.
By: Sacha Tarkovsky
Article Directory: http://www.articledashboard.com
FREE FEATURES AND ESSENTIAL TRADER PDF DOWNLOADS On all aspects of becoming a profitable trader and more on profitable forex trading methods visit our website at www.net-planet.org/index.html

The ABCs Of Forex Trading

The Typical Market in FOREX Currency Trading
The environment of foreign exchange is the market where currencies are purchased and sold against one another. Individuals may somehow refer to this market under different names, including foreign exchange market, FOREX market, fx market, or the currency market.
As an investor, you will discover how energy packed a FOREX market is. Individuals from all walks of life are making the whole market offer major turnovers.
The primary dealing centers at the time of writing are: London with about 30% of the market, New York with 20%, Tokyo with 12 percent, Zurich, Frankfurt, Hong Kong as well as Singapore with about 7 percent each, followed by Paris as well as Sydney with 3% each.
The "Produce"
You might get the hint that it is complicated to do foreign exchange business. That idea is wrong, only that you simply need to manage with the various market ups and downs. In foreign exchange, you don't have to have any product or service to market. After all, it's the currencies that are bartered. So if you possess Canadian dollars, you trade it in FOREX market to convert it to Austrian or U.S. dollars. Because currencies change from time to time, universal currency converters found online will come in handy.
Do You Profit from FOREX?
Where could you perhaps earn profits in a common business? Only with markup, right? Similar logic goes to foreign exchange. If you indeed want to earn in foreign exchange, then you must be aware of the currency fluctuations--that is where earning most of the time sets in. This is a risk, yet the potential of what you reap as always been huge, even attaining a ratio of 1:200.
Things to Consider in FOREX
What's nice about foreign exchange is you don't often, if not never, attain less than what you actually put in. Commonly, you gain substantial amount of income. Nevertheless, as a wise investor, you must only invest what you consider extra since the market itself is vulnerable to fluctuations. The FOREX currency trading system can give you a better picture of the whole trading process.
How Do I Begin Trading?
There are a few individuals you can rely on just in case you are still learning the ropes of foreign exchange trading. First, there will always be a professional FOREX broker who can do the trading for you. A regulated FOREX broker can just conduct business on your behalf. Learning FOREX glossary definitions can also assist you a lot. You can even participate in a FOREX Trading lesson so you can learn from the veterans.
If you think like you can already take on the challenge of foreign exchange, then by all means, simply do what you have to do. A credit card is used to create your first foreign exchange transaction.
How Do I Monitor My FOREX Currency Trading?
A foreign exchange software is great in monitoring foreign exchange currency. Most of these FOREX prediction software can help you lessen losses and increase income. You can monitor your foreign exchange trading online, from anywhere, anytime. You have full control to monitor status, confirm scenarios, modify some rules in the trade, or close it. It is further important to stay abreast with most recent daily FOREX market news so you are aware of what is happening at all times.
About the Author
By Will Kamer - Advisor Regulated FOREX Broker FOREX Courses FOREX Currency Trading