How To Read Forex Economic Calendar – 8 Most Important Steps to Successful Forex Trading

March 1, 2012 by  
Filed under Forex Trading

How To Read Forex Economic Calendar

After months of practice and learning, every struggling novice trader begins to wonder whether the decision to enter forex trading was actually a big mistake. Why do other traders make money and I don’t? Do these successful individuals possess any special qualities? Can I improve myself in order to finally start making money?

How To Read Forex Economic Calendar

In order to become profitable in forex, you need to not only learn and practice, but work hard in improving yourself. Below are the major characteristics needed in order to become successful. If you already possess the essential traits – good for you! Just keep practicing and soon you will see the cash flow. If you don’t have the necessary traits yet – don’t give up. Start working on yourself. It is possible to craft yourself into a trader.
So, here goes:
1. Don’t Copy

Copying others is absolutely useless in forex. Every trader is unique and his/her strategies fit their personality and goals. You cannot rely on anyone else but yourself.
2. Be Disciplined

Stick to the plan, even when your self-esteem is over the top. Use your experience and knowledge of the market to make the right decisions, instead of irrational i-can-make-a-million-right-now conclusions, without skipping any important steps in your trading plan.

3. Accept Losses with Grace

Losses are not necessary a bad thing – write down the unfortunate experience in your trading journal, analyze why this happened and voila! You have received one of the valuable lessons by learning from your own mistakes. Practice makes perfect – so don’t freak out over the losses. Instead, learn from it and move on. The main difference between a successful trader and a novice beginner is in accepting the loss. The sooner you learn to lose, the faster you earn money!

4. Be Patient and Reasonable

Know exactly why and when to enter a trade. And here is a great tip – say all those reasons out loud. It is a great way to give a last glance before you make a final click.
Don’t expect the profitable opportunities to pop up all day long. Sometimes, it is wise to give it a break and start again the next day with a clear head. Don’t worry about missing out either, because forex market is always on the move. Not catching the big wave doesn’t mean you will be left out without any profits for ages! How To Read Forex Economic Calendar

5. Control Your Money

Forex is not just about making more and more money, but also keeping what you have already made! You need to have very strict money management rules in order to keep your losses at minimum:
· Never trade what you cannot lose
· Determine your target gains and losses before opening a position
· Use stop/loss orders to minimize the risks

6. Keep It Simple

You don’t need to use all available forex indicators and create a one of a kind Michelangelo-like-masterpiece trading strategy. Keep trading ideas to the minimum – know when to get in and out of the trades and stay away from sentences such as “Let’s stay a bit longer and see what happens”!
· Try trading daily during the same hours in order to get full grasp of currency behavior, liquidity and volatility changes.
· Don’t trade on Sundays, holidays and opening/closing of the specific market.
· Stay informed – read the news, follow the economic calendar, keep your eyes on unemployment rates, decisions on interest rates, gross domestic products, industrial production price, index consumptions, retail sales etc.
· Follow the trend – don’t try to find something that there isn’t, just follow the rend and identify the point of inversion.

7. Develop Strategies

Use free demo accounts to develop your own strategy and a good trading plan. List out several possibilities (plan a, plan b, plan c) – and always have a clear instructions from getting out of troubles. The key to success in forex is to know how to behave in different situations, instead of trying hard to predict what market will bring us today.

8. Control Yourself!

Here is the tough part – the psychological issues related to trading. It is important to stay as cold-blooded as possible by controlling your emotions.
Most importantly, don’t blame the market – blame only yourself! Are your losses still greater than profits? Stop trading right now and start analyzing your strategy. There is a flow somewhere and it is up to you to fix it. How To Read Forex Economic Calendar

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Option Trading Strategies For Long Term Investors

September 27, 2011 by  
Filed under Option Trading

Option trading is typically associated with three different investor types.

There are hedging strategies employed by large institutional investors, income-producing strategies for cash flow investors, and more aggressive trading strategies favored by speculators. But where the does the long term investor fit in?

Are there any option trading strategies that the conservative investor can employ to enhance his or her long term returns? In fact, there are. Leveraged Investing There are actually a number of option trading strategies that can be employed by the long term investor. Leveraged Investing is the name I’ve given this approach, and these are the strategies I use myself.

The point of Leveraged Investing is to use options to acquire stock for a discount and then to generate additional returns above and beyond the actual performance of the stock itself. Here are just two examples: [Please note: in the interest of simplicity, commissions have been excluded from all examples. ]

Example #1 – Writing Covered Calls. Writing covered calls is a popular, and generally conservative, income-producing strategy. A call option gives the holder the right, but not the obligation, to purchase 100 shares of the underlying stock at a certain price (strike price) by a certain date (expiration date). Conversely, when you write, or sell, a call option on shares that you own, you sell (you receive a premium in the form of cash) someone else the right to purchase your stock at a certain price at or prior to the expiration date. If you own 100 shares of a stock trading at $28/share, you could write a $30 covered call expiring in one month. If the stock closes above $30/share, you’ll be obligated to sell your shares for $30/share. But if the stock closes at or below $30/share, the call option will expire worthless and you’re free to repeat the process. Either way, the premium received is yours to keep.

Writing covered calls is a great way to generate additional income from your investments, but the long term investor must take extra precautions to avoid being called out and forced to sell his or her long term holdings (I call one such precaution, The 1/3 Covered Call Writing Strategy–it basically consists of writing covered calls on only a portion of your portfolio in order to give yourself greater flexibility and protection against sharp moves higher by the stock).

Example #2 – Writing Puts to Acquire Stock at a Discount. A put option, in contrast, gives the holder the right, but not the obligation, to sell 100 shares of the underlying stock at a certain price by a certain date. When you write, or sell, a put, you’re essentially insuring someone else’s shares against a drop below the agreed upon strike price. Like writing covered calls, writing puts can be a great source of income. In fact, the risk-reward profiles for writing puts and writing covered calls are essentially the same. Whereas call writers may write calls out of the money, at the money, or even in the money (the most conservative approach), put writers will typically write out of the money puts (e. g. writing a put with a $30 strike price on a stock currently trading at $32/share).

But for the long term investor, income is of less importance than the opportunity to buy a stock at a lower price that what it’s currently trading at. Writing an at the money put will greatly improve the likelihood of acquiring the stock, and you’ll also receive the most pure premium. Example: Suppose you write an at the money put on a stock that you really like. If the stock is trading at $30/share and you write the put at the $30 strike price for, let’s say, $2. 50 in premium (or $250 in cash since each option contract represents 100 shares of the underlying stock) you’re setting yourself up for a win-win situation.

That’s not to say you can’t lose money on the deal, but look at the two possible scenarios. If the stock closes at $30/share or higher, you keep the original premium you received (which, in our example, represents an approximate 8% return in one month). You’re then free to write another at the money put for additional premium. If the stock closes below $30/share, factoring in the premium you received, you end up purchasing the stock for $27. 50/share. Obviously, if the stock gets cut in half, the premium you received will be small consolation, but what if the stock merely slips down to $29. 50/share? You thought it was a good deal at $30/share and now you’ve acquired it for $2. 50/share less.

Conclusion:

As they say, options involve risk and may not be suitable for everyone. But not all option trading strategies have to be high risk propositions. Some approaches, in fact, may offer substantial benefits for the conservative investor. If you are a long term investor, it may be worth your while to conduct additional research to see if there should be a place in your portfolio for options.

Want to know more? Check out this site for more information on the topic above!

Forex Currency Trading With Forex Software

August 10, 2010 by  
Filed under Currency

The forex currency trading system has its own strategies. While you may be familiar with the concepts of pairing, trading, buying and selling, there are a large number of other signals that can come into play. Too confusing, just use forex software. Automated forex trading has become a reality in the forex trading market. Here are some of the most popular trading signals used in the forex market that your system will handle for you. Daily signals. Daily signals in online forex trading are the most significant signals you may study when you learn forex trading. Foreign exchange rates vary on a daily and not an hourly basis. The forex software will identify pairs for you to use in your trades. The best daily signals present the best trading opportunity for each currency pair. Automated signals. Technology has made it possible to rely on an automated forex trading system. With these forex software tools, you can trade anywhere day or night. In an automated forex currency trading system, you may choose the signals for each currency pair or you can ask the forex software to choose. The forex trading training you get from utilizing the software also makes a significant difference. The rules have changed in our economic reality. Are you willing to work for 40 hours per week plus at least 50 weeks a year for 40 years to get to the cashflow you need not to work? Would you rather learn a way to create monthly cashflow that is enough for you to retire in the next two years? The goal is cash flow, not saving a big nest egg that you can lose overnight in the stock market. The secret is the cash flow despite what you learned in school over the years.

Automated Forex Trading is a tool you should check out. Find out more about how you can get your own automated forex robot.

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