Posts Tagged ‘currency-trading articles’
Two Timeless Rules in FOREX Investing
RULE #1) ~ Cut your losers; let your winners ride.
One important thing that every new trader must know before entering this highly profitable business is that life is not perfect, even in FOREX land, and you should always know one fact: YOU WILL HAVE LOSING TRADES.
Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW(based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don’t keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).
Let’s face it – you can’t turn a sow’s ear into a silk purse. You can’t change the spots of a leopard and you can’t turn chicken poop into chicken salad. The best trades are usually “right” immediately (the techniques, rules, methods and strategies you can learn in our resources list will be your best indicator for just what a “right” trade really is).
Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there’s going to be another trade. Cut your loses short and compound those winning positions.
RULE #2) ~ Thou Shall Not Trade the FOREX Without the Placing of a Stop Loss Order.
When you place a STOP order, right along with your ENTRY order, via your online trade station, you’ve just automatically prevented a potential loss from “running” too far.
Before initiating any trade, if you haven’t already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn’t be putting on the trade in the first place.
Show us a FOREX trader who doesn’t use stop loss orders and we’ll show you someone who loses a lot of money.
Omar Vargas
Forex trader and freelance writer
http://www.1-forex.com
The Meaning of FOREX Price Charts and How to Use Them
There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important factor that must be always present in the trader’s portfolio, is the ability to read the charts.
The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They’re a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall street analysts and shareholder demands.
And, unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it’s more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.
The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:
Bars Charts – Price bars are a linear representation (a line)of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. For example they can be one minute or five-minute time intervals depending on the system you are using. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.
Candlesticks – Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these “candlesticks” and many books have been written on the art of interpreting these bars ( Visit: http://www.1-forex.com).
So, the main thing to keep in mind between the two types of price charts is this:
Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.
Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why many experts recommend you become intimately familiar with Candlestick charts.
Omar Vargas is a freelance writer with articles published in a number of places. You can learn more about Forex trading and its great advantages over other kind of business at this useful website: http://www.1-forex.com
