Trader's Psyhology

“The good things happen to those who believe, the better ones happen to those who are patient, and the best ones – to those who do not give up” – Anton Chekhov.

Along with the three main posts discussed in the Forex Technical Analysis, there are two additional ones that define market trends as primary, secondary and small. With an upward primary trend, the market is bullish and bearish – bearish. To illustrate the situation, one can take an example with a currency bear market. Buying signals appear in points A and B, where the price is higher than the previous maximum. The cyclical change in currency prices is an indication of the likelihood that the market is going to repeat at certain times.

To illustrate what has been said here, the bear market can be used.

The primary trend is divided into three stages: accumulating, up / down and distribution. At the staging stage, the smartest traders discover their new positions. In the second (drop / upward) phase, most participants “watch” the movement and each time they try to take advantage of it. In the distribution phase, the most likely players close their positions by winning. At that time, traders’ activity declined and the market declined.

The secondary trend performs a correctional function on the first one. It is able to reduce the price change achieved in the movement of the primary movement to 1/3, 1/2 or 2/3.

By identifying cycles that periodically have the ability to repeat, one can have a powerful tool in their hands. It can be very useful in both positions – short and long (on sale and purchase). Cycles play an important role when buying more than a number. The peak of the cycle is accepted to be called a comb, and the bottom of the bow.

Cycles are considered to have features that are used as signals. They are in the form of amplitudes, periods or phases. The amplitudes indicate the heights of cycles, ie the range from the ridge to the paddle. The periods are the lengths of the cycles or, in other words, the length between two successive slopes, and the phases represent how the wave heights are located.

Another important construction is that the trend confirms the volumes and is present until a breakthrough is not confirmed.

The main laws for price changes are:

1) The current trend is more likely to continue its direction than to change it;

2) The trend moves in one direction, until it decreases its strength.

The most important thing in analyzing the trend is the level of support and resistance. Typical of the level of support is that buyers (bulls) exercise control over prices and thus do not allow their unwanted change in the future.

The level of resistance, in turn, is characterized by the fact that prices are regulated by sellers (bears) and they do not allow them to increase at the final stage.

The level of support points to a price at which traders hope to grow. Resistance levels point to a price at which participants expect it to decline.

When a resistance breaks through, it is transformed into a level of support. Similarly, when a successful breakthrough occurs at the level of support, it becomes a level of resistance.

The reason for these specifications is due to vulnerable bulls who do not buy at a price drop. In the course of time, however, they are activated and bought at each price return of the previous levels.

Similarly, if prices fall below the level of support, it is easily transformed into a level of resistance that is almost impossible to overcome. When prices are close to the prices of the previous level of support, traders are actively trying to sell to reduce their losses.

I have not failed. I just discovered 10,000 ways that something can not happen. “- Thomas Edison.

This post will attempt to describe the most important aspects of leverage trading

Forex leverage is a credit line that allows the individual trader to penetrate into trading contracts that require huge investment. Leverage is especially useful when the nominal value of real money the trader has at his disposal is insufficient to use his strategy or take advantage of certain opportunities.

Forex leverage is the amount of money received through credit that is usually provided by brokers. The leverage ratio determines the agreed amount of the marginal deposit account.

 

 

Building a reliable strategy

An intelligent trader should develop a strategy to use the leverage option wisely. Leverage allows merchants to gain access to a larger amount of capital, but it is not wise to risk the entire amount available in a deal. This means that the careful implementation of the diversification strategy is good with small amounts of the total amount of the forex deposit.

Installing Stop Loss

Critical losses in terms of losses are another very effective technique used to minimize exposure to risk. The technique is used to limit the loss in forex trading and its limit is determined by the trader. For example, when opening a USD selling position and buying EUR for $ 1.1245, a trader can limit the loss of a particular order by creating an automated $ 1,1238 loss stop command. Trading will close automatically when the currency pair reaches $ 1.1238.

Taking the Take Profit option

In the case of a favorable position in the open position, ie when the trader wins progressively through currency trading, he can use this method when he does not directly view the chart or is absent. This feature is based on the fact that this situation continues for some time. Using leverage at this point may increase the trader’s profit.

Terminology FOREX

“You will have failures. You will get hurt. You will make mistakes. You will have periods of depression and despair. Family, education, work, everyday life problems – all this can interfere with your workouts. However, the inner arrow of the compass must always show the same direction – towards the goal. “- Stuart Macrobrot.

This post will give a light on what a leverage trade is. The main difference between trading on the Forex market and with other types of assets or commodities is the use of leverage. In this sense, currency trading in foreign exchange markets offers the greatest opportunity for a multiplicity of capital increases. Leverage in this context can be defined as a loan that is given to a Forex trader by one of the brokers who offer an online platform related to the international financial market.

While the deal is open, you can set your rates at any time.

Due to the fact that market conditions could change abruptly very quickly, it is essential that setting a 100% advance would be absurd. It may happen that the market suddenly changes and people who are involved in Forex trading are not able to make the pre-set rates mainly because of the commercial environment that will be particularly unfavorable and out of control.

What do things look like when using leverage?

Although they may be tempted to generate big profits without leaving too much of their own money, it should always be borne in mind that very high leverage can cause huge losses. Safety measures applied by professional traders can help reduce the risk of fundamental leverage Forex trading.

Traders are well advised to minimize their losses. In order to make big profits in the near future, it is important to know how to reduce their losses. Minimizing losses is good within the manageable range, so that one can get out of the allowable range rather than let it too much to undermine its capital.

Beginning traders are nice to make sure they put their critical Stop-Loss and Take-Profit stops right.

It is important for each player to take advantage of the critical stops in the 24 hours Forex market. His position can be severely affected by the passing of several hundred pips only within one bedtime and waking up the next morning. Tracks are used to protect profits and also to ensure that losses are kept to a minimum.

 

Traders should not be too confident

Doubling or other extreme interventions should not be a means of getting out of a losing position. Huge trade losses can arise when a trader chooses to stick to his own understanding without complying with the rules. As a result, it can trigger the negative emotions caused by the losing position to make desperate and extreme measures that eventually become extremely large and become a catastrophic loss. The merchant may eventually be right, however, it is usually too late to recover the losses. Therefore, it is better to reduce losses and trade another day than the man hopes for something different when things are obviously not going well and he can not return the huge loss.

Selecting the right lever provides comfort

An unfavorable 2% rate move can destroy all stocks or margins by leveraging 50: 1. Using a low leverage like 5: 1 or 10: 1 is much more convenient if you are a careful investor or trader .

Despite the high risk and high volatility in trading on the Forex market, the possibility of using the leverage, called leverage, boosts return on investment. Taking into account the precautions used by the professionals, traders will be able to reduce the risks. Putting the stops further helps to control the trade.

Forex banks

“I never say,” I can not do it because I do not know how to do it. “I always try. And I do not let the stupid rules stop me. “- Richard Branson

Have you ever wanted to trade Forex like the big banks and other big institutions? Well, it is possible for retailers to imitate the transactions of these large institutions and therefore benefit from some of the trade-related advantages in this way.

Hedge funds and other large institutions use a certain type of investment style that it is possible to use as a guide or inspiration for forex traders.

I F retailers are able to establish exactly what positions banks and large institutions do in the forex market, and when they enter the market they will be able to inspiration and trade more effectively than ever. Since these institutions control the foreign exchange market, it makes sense only to follow their strategies and take advantage of some of the benefits.

 

 

Hedge Fund Tracking Strategy

One of the most investment styles used by hedge funds is the use of several brokers to execute their transactions. In this way, they are able to increase their potential for profit based on the fact that they have a greater chance of trading with the stock broker who offers the lowest current market spread or the broker who offers the best performance Transactions (current market depth – liquidity). Hedge funds execute orders in thousands of lots can get slip of several or even dozens of pips, so performing transactions is extremely important – as it should be for retailers as well as forex.

It is also a fact that the largest hedge funds are executing orders through several brokers with the main purpose of hiding their true intentions and expectations. If the largest hedge funds will execute orders through only one brokerage company, brokerage firm employees can see all hedge fund orders and express expectations. By applying the so-called “iceberg” technique, the real expectation and real orders placed in the market to make money from hedge funds are always hidden for brokers.

Arbitrage trade

In some cases, hedge funds can make purchases in one exchange and sell to another exchange at the same time, using arbitrage as a means to capture more profits. Market pricing and different prices for individual liquidity providers can also provide excellent opportunities for arbitration. These opportunities arise simply because it is the most Forex OTC (over-the-stock) market – so any currency pair does not cost the same at the same time anywhere.

In the case of arbitrage trade, hedge funds are looking for options to buy from one liquidity provider lower while selling to another liquidity provider higher (or vice versa) and taking immediate profits. However, these options are usually not available to retailers.

 

Forex investments

“You have the power to determine your fate with every banknote you take in your hand You and only you have the power to do it Spitters are stupid, so you have chosen to stay poor Spend it for liabilities and join the ranks of the middle Invest it in your mind and learn how to get assets, then you have chosen wealth as your goal and future. “- Robert Keyossaki and Sharon Lehter.

Capital management is one of the most important factors for investor success. The main component is to create a personalized strategy based on specific rules.

Leverage is the relationship between the amount of own funds and the size of the open positions. The next important component is the timely identification of risk parameters or, otherwise, at what limits leverage becomes dangerous for the designated forex participant. For example, if a player holds $ 20,000 and finds a $ 60,000 position, that means his leverage is 1: 3.

Approximately 95% of unfavorable events for traders are due to incompetent use of too high a leverage. In principle, market makers provide the opportunity to participate in the forex market and in extremely dangerous relationships, for example 1: 199, but that does not mean that one can use them in their usual interventions. In practice, risk is subordinate to management when there are competently regulated leverage levels.

When understanding how the maximum levels should be understood, several aspects have been taken into account. The first is in all cases the desired annual yield, and the first dependencies between profitability and tolerable risk. They are straightforward, i. High yield is associated with a high risk and vice versa. Consequently, investment management is a matter of maximum high yield and permissible risk level.

When a person defines their main goals as a forex investor, he identifies his “horizons”. Statistics show that a longer horizon can ensure steady development. Unfortunately, a significant portion of Forex players at the beginning have great results, but only after half a year come out of the game.

When you create your own forex trading system, it’s good to consider some personal specifications. Everyone uses certain patterns of behavior that are not very realistic to hope that they can change but can realize and build their way of working by taking them into account. For example, if a person is impatient by nature in other areas of life, we can not hope that as a position open he will behave in a rarely different way, even on the contrary. Such people can adjust their system based on their psychological characteristics.

On the other hand, there are, albeit a small number of people who have a calm temperament and are based on a different prerequisite in their positioning and realization of the strategies. There is also a mixed type in which the trading system is based on mixing the principles of the above two models.

The main components of the system’s creation are:

Orientation of the trading system;

Ability to filter the noise of the market;

Optimal good positioning of the international currency market;

Risk Management;

Competent use of sliding spins;

Re-enter the market (reversal methodology)

An important aspect in setting up the system is to take into account the amount of financial resources that will initially start participating in the forex market. It is good to know that the small deposit makes it possible to build a style of play, the middle one – the other, and the big one almost as long as the rules of leverage are not violated.

 

 

Forex strategy

While the relationship between attention and excellence remains hidden for the most part of time, it reflects strongly on almost everything we are trying to do. Therefore, not the person himself, but the information consumes the attention of his recipients. It can be concluded that rich information generates a lack of attention, which leads to the need to distribute the attention to the wide variety of information sources whose data it consumes daily.

One of the most popular strategies in the forex market is the turtle strategy. There are a variety of predators in nature – the leopard is so fast that no animal is able to escape, the lion is waiting for the loot and the crocodile is waiting for it for days. The forex market also applies to the “law of the jungle” in which either you win or lose. While some hit and run, others are preparing for the big hunt for years.

The most patient forex traders are called “turtles”. These animals are known to be able to wait extra-long and are one of the greatest longevity. In this sense concepts as patient and slow as a tortoise are interchangeable.

The story remembers the case with the two friends and adherents Richard Dennis and William Eckhard who, in 1983, are betting whether the traders are born or are born. Richard Dennis is betting that with proper preparation everyone can become a successful trader, and William Eckhard claims that these abilities are inherited and therefore predetermined.

In December, Dennis began one of the most interesting experiments in Forex history with a group of 13 traders. They are not trained and have no experience but are extremely motivated to win. The effect is a record because for four years the result is a yield of 80% per year.

Each of them signs a ten-year contract of confidentiality certifying that they will not provide information they have acquired to other people.

Nowadays, the majority of the “first-class” brutes continue to earn from their own funds. The strategy of the “beaters” is of the “break-out” type – it breaks through a key level of support or resistance and is only played in the direction of the trend. When prices “capture” the next predetermined places, new positions become available. Only profits at significant levels in the opposite direction are profitable. To play with a similar style, you really need the “patience” of a turtle. Such a campaign lasts for two or three years.

The main plus of the Butterfly strategy is that it eliminates all emotions. The goal is set and followed, and smaller price fluctuations are considered to be of minor importance.

Another large group of forex traders have another style of play. They are included in the forex market in the range of half a minute to five minutes and are assigned 10 to 15 “pips. This killing of pips takes place at least 7 or 8 times a day. They are known as “scalpers” as they compare with Indians who for a moment remove the scalp of their enemies in a handshake. With such transactions, as we can suppose, adrenaline is extremely high, but the results are not always satisfactory. An unsuccessful deal can “erase” 3-4 already received “scalp”. The key here is to capture the exact moment of positioning. In this way, the scalp loses focus between the larger number of operations with less reliable signals and fewer operations but with quality signals. The correct answer is probably in the middle.

About 90% of forex traders are simply dealers. Many of them want to become “wandering” or “scalpers”, but few succeed. However, people who want to have no reason to give up, because Richard Dennis is not hopeless once he succeeds.

Forex Strategies

Newton argues that gravity is due to the presence of gravitons. Einstein proves that the attraction between the material bodies is due to the contraction of the space around them. Thus, Einstein does not completely deny Newtonian physics, but develops it. He denies only some of his postulates.

In the same way, Forex, originating from traditional economic matters, is based on some of its laws, mechanisms and instruments, but some of them are outdated as we already live in the time of digitization and the global digital market. This publication will attempt to describe what scalping is in the context of the forex trading system.

Scaling is one of the methods of trading in currencies. It is based on technical analysis and recognizes its main purpose of winning by buying and selling currency pairs for super-short time intervals. This method is used to make a series of transactions with small profits. This method is characterized by a relatively low risk, making it very attractive to traders. The most famous scalping strategy is one minute. It is especially suited for beginners. The experience will show whether it is appropriate for a particular person and whether it corresponds to his or her personality and understanding. It is suitable for people who have a good ability to concentrate for an extended period of time and require the investor to devote a significant amount of time to it. This is at least for a few hours every day.

The one-minute strategy is “daturt” and is considered one of the easiest strategies in Forex. It represents the opening of the position and targets the profit in several pikes, after which the position is closed.

Of great importance for using this method is the volume of transactions. Traditionally, the scalper is that he performs an extremely large number of transactions within the same day (their number may even be over 100). In connection with this aspect, it is good to choose a reliable and correct broker if he likes the scalping strategy. The other two aspects are spreads and commissions. It is desirable to choose a broker in which the spread is optimally narrow and the commissions are as low as possible.

Looking at this method, it is good to analyze its main elements. This is the time when scalping, the indicators and the validity of the strategy itself.

1) Validity of the scaling strategy: each of the currency pairs.

2) Timeframe of the trading system – a graph for a period of 1 minute.

3) Indicators: Stochastic 5, 3, 3, and 50 EMA, 100 EMA found on MetaTrader 4.

4) Preferred trading sessions for using scalping strategy: London, New York – characterized by high volatility.

Experts advise the trader to look at the entry points and stops needed to reduce losses when the strategy is launched.

When a person has enough free time, he can test this strategy, even if he has stopped on another type of strategy or thinks he will not like it. Moreover, even if it is not suitable for an investor, at least the risk of losing funds is negligible. Trying it, it will increase your sense of market, as it will gain experience over something completely new. In this way he will start to look at the strategies he uses in a different way.

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10 golden rules of trade:

1. Before you open a new position, make a plan to enter and exit the market. Stick strictly to your plan, and do not succumb to emotions when they suggest you change it on the move.
2. Never open positions with all your free funds. Use no more than 20-25% of them for all your open positions and no more than 5% for each individual deal. Otherwise, in the case of sudden market movements, the risk to you is extremely high.
3. Never add to a losing position.
4. Use Stop orders to limit possible loss on all open positions.
5. Try to gain from the trend instead of trying to catch the top and bottom of the movement.
6. Bet on the market, not against it. The market is always right!
7. Successful speculators usually BUY in bad news and SELL with good news.
8. Do not try to close any profit position, that’s impossible. The end result is important.
9. Watch the whole picture. Even if you trade in short periods, always keep track of the long-term trend.
10. Become a habit of reviewing your transactions. This way, you will be able to keep track of both your profits and your losses and to find any mistakes made by you.