Forex Methods That Work

Forex Methods That Work

Forex is known for taken eager traders, chewing them up and spitting them out. Hopefully, this article will save you from being another meal for the sharks that circle the deadly seas of Forex. Forex is a competition, it is a zero sum game, someone has to lose money for you to get paid, normally, it is the new traders who are the losers. The big winners are the global banks who run super computers and who have mathematicians from Ivy League schools on their staff. The average trader doesn't have any advantage in the competitive world of Forex.

Since we do not have an advantage in Forex, we should do everything not to give any more of an advantage to the professional traders. There are several ways that new traders spew money. The first way they spew money is by not having a money management strategy. All you trades should be of the same size and you should never try to make up losses by trading bigger, that is what losers do. Don't be a loser.

Losing trader also give more edge to the professionals when they trade to often. Over trading is a reason why many new and experienced traders lose money. Do not trade just for fun, Forex trading is not a game, and it shouldn't be used for entertainment. Treat Forex like a business and not a money making hobby.

Another way that new traders hand over their money to the professional is by not having a trading plan. You have to trade using a system or a plan that removes all in-trade decisions. You need a system which tells you when to open a trade and when to exit a trade. You should never have to make these decisions on the fly. Discretionary trading is a slave to fear, greed and other human frailties. The professionals use computers to make their trades so that they don't have to deal with emotions or human subjectivity. Computers don't feel fear and don't have greed, they just do what they are programmed to do.

New traders also foolishly try to scalp the markets and they try other short-term strategies that are low probability. It is my belief that they are attracted to these losing strategies for two main reasons, they want instant gratification and they want excitement. Successful trading is boring! Remember that! If you want fun go hangout with your friends.

As you can see, Forex trading should be treated like a business and not used for fun or entertainment. Successful trading is anticlimactic, it's boring and it becomes mundane. Entertainment traders are those who want to put half their account at risks and gamble, they always end up losing their shirt.

Do the opposite of what the losers do and try to imitate the winners and their no frills approach to trading Forex. Making your trading so rock solid, steady and boring that you know everything that is going to happen in every trade.

Trend Trading Forex

Trend Trading Forex

I was an idiot when I first started trading Forex. Like most new traders who eventually lose all their money, I started off as a day trader. I was sitting in front of the computer for 4 hours a day trying to make pips. I was even waking up at 3 AM to trade the London open. I loved the action and the speed of trading on a short time frame but it was very stressful. Not only was it stressful but it wasn't really profitable. I lost more money than I made and at one point I was just happy to break even.

I remember reading the Market Wizards series of books and reading about Richard Dennis, the guy who created the turtle traders. The turtle traders were a group that Richard Dennis put together after a bet with his trading partner. Richard Dennis believed that anyone could learn trading if they had the right rules. He put an ad in the paper and he taught people from all walks of life how to become traders. Many of the people he taught became millionaires and some are even running their own firms.

One of the core principles that Richard Dennis taught his turtle traders is hot to trade the trend. His philosophy was that price action is the only thing that matters in trading, it is the only thing that is true. Technical indicators aren't true and predicting where the market will go doesn't work. Trend traders simply ride the market like a wave. If the marketing is up, they are taking long positions; if the market is down, they take short positions. This sound rather simple but it is psychologically hard to apply when trading. It is difficult to see a trade go against you and knowing that you have to stay in it.

The turtle trading system can easily be applied to Forex because the currency market has some of the longest trends of any market. There are trends that last several years. If you can jump onto just one trade, you can make a ton of money. With this trading system, you will get a lot of false starts and you will often get kicked out of trades because they will turn on you, but it only takes one major trend per year to make you the bulk of your money.

This is the same system that John Dunn uses. He is famous for taking a small investment and turning it into a 300 million dollar fund. His system is always in the market and is always trading. When it gets onto a trend, it stays with it until it ends. There are years when his systems doesn't make any money and years where it makes a killing. As said, it is psychologically hard to trade like this but for those who can, they will see themselves earning more money, while having to spend less time slaving in front of a computer all day.