Month: April 2011

By Cedric Welsch

If you want to trade Forex, one thing you need to be clear about is the world Forex trading hours. The Forex market is the foreign exchange trading market, and Forex traders are trading foreign currencies for profit. The market is run entirely electronically, within a network of banks, and runs continuously over a 24-hour period. When you make a trade on Forex you are simultaneously selling one country’s currency and buying the currency of a different country.

In Forex the major markets are London, New York and Tokyo, and the US and UK markets account for more than 50 percent of turnover. The continuous 24-hour market begins on Sunday 5 p.m. Sydney, Australia, time and goes through to 4 p.m. EST, rollover time being 5 p.m. EST. The foreign exchange trading day virtually never ceases apart from a few short periods during weekends, so at any given time somebody, somewhere, is buying and selling currencies.

So if you want to know when you can trade Forex, the answer is that you can trade when you want to. The 24-hour market, combined with the massive liquidity of Forex, means you have the freedom and independence to decide when you want to trade. However, some times are better than others. In order to find the best chance of trading opportunities, you need to look for the times when Forex volume is highest.

Overall Forex volume is determined by what markets are open and the times these markets overlap one another. Forex volume peaks when two of the three major markets have their open or exchange-traded markets open at the same time the exchange-traded markets are the markets in instruments such as futures, stocks and bonds, which adhere to traditional opening times. There are two periods in the 24 hours when two major markets overlap. Between 2 and 4 a.m. EST is when the Asian (including Australian and New Zealand) and European markets overlap, and between 8 a.m. and 12 noon EST is the time when European and North American markets overlap. The markets tend to make their biggest moves during these overlaps, and these are thus the best times to trade.

It has been said that the Forex market never sleeps. Unfortunately, this means that, in some parts of the world, the Forex trader will also get very little sleep. The world Forex trading hours are virtually continuous, but if you can stay awake at the peak times, you have the best chance of profitable trades.

About the Author

The habit of forex news online reading is an investor’s asset.
Many forex trading reviews are read by successful investors.

By David Adams

On any given day, a chart of any e-mini contract will display a number of price action formations. According to statistics (and statisticians vary on their assessment of the frequency of trending patterns and consolidating patterns), the market will spend about 30% to 40% of the time in a trending pattern and about 60% to 70% in a consolidating pattern. The general line of thinking is to avoid trading the consolidating patterns and focus on the trending patterns, and I certainly agree with this assessment.

Trading with the trend has long been a maxim in the e-mini trading vernacular, with good reason. Quite simply, if the market is moving upward it behooves a trader to trade in the direction the market is moving. Of course, the same holds true if the market is moving to the downside. I have taken some rather unfortunate e-mini trading entries with the trend and have been saved by virtue of trading with the trend. In short, these entries were poorly timed but the trend saved the trade from a disastrous result. Such is the nature of the trend.

After a trend reaches its apex it usually retraces a bit and then retests the previous high. It is not unusual for the final stages of a trend to begin a sideways direction and form a consolidation pattern, or channel. These channels can be very difficult to trade and many a small trader as deposited sizable portions of their trading account trying to trade in the channel. The general rule of thumb is to avoid trading and inside the channel and look for potential breakouts or breakdowns.

But there is a problem here, the percentage of successful breakouts versus unsuccessful breakouts is fairly high when trading out of the channel. Why? When the market is in a channel formation the buyer and seller counts are fairly even, or the market can be described as being in equilibrium. Logically, the market is likely to pull a certain portion of breakouts or breakdowns back into the channel or equilibrium. This can be fairly frustrating.

On the other hand, I love to trade certain kinds of channel formations;

• If the channel is at least three ES points wide, there exist some interesting trading possibilities. Though I would caution that this type of trading can be tricky and you need not walk away from your computer for any period of time.
• It is important to shorten their profit targets to six ticks and be happy with that smaller profit objective. Inside the channel, long protracted moves are rare.
• Only take trades when the price action has hit the resistance line or support line of the channel, and you must take a trade in the opposite direction of the price action moving towards the support or resistance line. To say the least, this is a leap of faith.
• You must be aware that at any point the market may, in fact, breakout or breakdown. To be sure, you can count on the market breaking out or breaking down at some point during your channel trading. A quick hand on the flatten button will avert disaster.
• This is high-risk trading and probably best avoided by brand new traders.
• In I often trade this way between 11 AM CST and 12:30 PM CST when the market is not moving very fast and dominated by smaller traders.

Not all the trading public will agree with this trading methodology, but I can attest to the fact that it can be very effective if the channel is wide enough and the price action is bouncing between support and resistance. It’s important to reduce your profit targets as you can generally only capture six ticks in each move. It’s worth considering, and you might even give it a shot sometimes. Under the right conditions, it can be an effective trading method.

In summary, we have discussed a method for trading inside the channel and listed some criterion that will facilitate channel trading. The channel ought to be at least three ES points wide and it’s important only take trades at the extremes, or at support and resistance. These traits should be in the opposite direction of the price action. Good luck with channel trading and trade smart.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By David Adams

I am having an ongoing discussion with one of my traders who is struggling with proper exit strategies on both winning and losing trades. It has been a frustrating battle, but has been beneficial for my own education. The market offers, at times, some handsome profits and can deal out devastating losses. The question becomes when to exit a bad trade and when to take profits on a good trade.

A good number of trading education books suggest that letting your profits run is a great idea. I can’t say I disagree with this notion, but in practice it is less than easy to implement. Say you are trading an ES contract with a three-point target (12 ticks) and the market begins to stall or reverse at 10 ticks. What do you? Do you let your profits retrace past your breakeven point? Do you immediately take the money and run?

As a scalper, this is a very difficult question to answer. I know what my answer would be. I would take my profit at 10 ticks and look for another profitable trade. One of the axioms I try to implement in all my trading is: Never let a winning trade become a losing trade. Of course, you might move your stop loss up to plus five and settle for small gain, and that is not necessarily a bad strategy. But for me, I would take the 10 ticks. Good trades come and go throughout the course of the day and my job is to find another quality trade, not wring every last tick out of my current trade. Then again, I don’t feel great about myself when the market careens in my direction another three points; this is money I could’ve had. When I was at 10 ticks though, I didn’t know that the market was going to continue in my direction. What I did know was that I had banked a solid gain, and in my mind that’s good enough.

Stop losses, on the other hand, are even more difficult to handle. When executing the trade most traders believe that it will be profitable. Unfortunately, some trades do not move in the proper direction and the trader must decide how much he is willing to lose, or risk. I have had many trades go with than one or two ticks of my stop loss and come back to be solid gainers. On the other hand, just as many have exploded through my stop loss target with little regret. Here is the point, it is not necessary to hit your stop loss to exit a trade. When a trade starts to go horribly wrong, why not just exit and look for a better trade?

It sounds very easy to exit a trade; unless you initiated the trade expecting it to be profitable, which is where the problem is rooted. It can be difficult, and for some even humiliating, to exit a trade early because the market has changed. I don’t have a hard and fast rule on when to exit a trade. In my mind, when I enter a trade I have an expectation of what is going to happen. If that event does not occur within two or three bars, I am generally looking for a way out of the trade. The longer you stay in a trade that has not met your initial expectation the more likely your chances of winning or losing becomes a matter of luck. Why? Well, after your initial expectation failed the market is developing new internals that may or may not be beneficial to your trade. If you’re lucky, the market moves your way, and vice versa. It’s not a good way to trade.

Oddly enough, I have watched many traders get far out of the money only to have the price retrace back to within one or two ticks of their breakeven price. Instead of flattening with a $25 loss, I have seen, time and time again, a trader let the price reverse direction and they hit their stop loss. What in the world? At an intellectual level it makes sense to accept a small loss and move on to another trade. At the emotional level, I believe some traders want to at least break even. This is a confusing situation, yet I see it very often. The problem lies in the trader’s emotions and his or her unwillingness to accept even a small loss. It’s a common problem; traders become emotionally invested in their trade and make illogical decisions.

In summary, we have discussed exiting trades on both the profit and loss sides of the trading equation. This is an area where emotions play a huge role. I have stated I prefer to take my profits and run, while I have noted many traders tend to hang on to their trade till the bitter end. It all boils down to emotions and emotional attachment to your trade. Your trade may not do what you expect it to do, but you can make the best of what the market offers by thinking clearly.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By James McKee

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.

By Cedric Welsch

If you are looking for forex trading basics, there are a number of websites and books that you can turn to for assistance. This article will explain the basic concept of forex trading and then it will offer you a link to help you get started.

Forex is a shortened version of the terms “foreign exchange”, and it refers to the process of making money through the strategic trading of foreign currency from one currency to another. The currencies used are not of particular importance, and the advice in this article can be used regardless of which types of currencies you are trading.

There are several types of forex trades. The most common one is usually referred to as a SPOT trade. This is when money is traded on the spot as in when you draw money from an American checking account out out of a foreign ATM (automatic teller machine). The bank immediately converts the US dollars into the currency that you are drawing out of the machine. They may also add a surcharge. Another example of SPOT trading is when you trade one country’s money for another country’s money at a currency exchange office at a airport or in a train station. Perhaps the only way to make money with this sort of trade is by sticking the currency in a shoe box under your bed, waiting for the currency values to change, and then, trading the money back to the original currency.

However, that example will not yield a lot of profits so the primary way that investors attempt to make money from forex trades is through options. Basically, options means that you make a projection about a certain currency relationship. You project a trade and a date. For instance, you may project that a United Kingdom pound will be worth two United States dollars on a certain date. You will also commit to an amount of pounds that you are willing to trade on that date. When the date arrives, if the exchange rate is actually one pound equals one dollar and sixty cents, you will make your trade and you will profit forty cents for each pound that you agreed to trade.

For more information, you should visit the finance section of your favorite search engine. On Google, for instance, the webpage is http://www.google.com/finance. Once on that page, you may search for forex. Then, they will link you to a page that will give you forex trading basics including tutorials and videos.

About the Author

How many forex trading news are you regularly reading?
Make sure to include forex trading review sources on your list.

By David Adams

There are many styles, methods, and systems to trade the various e-mini contracts currently available. As a trader, you are in a position to decide what system is or style best suits your needs and abilities. It is my opinion that choosing a system that best meets your personality and psychological makeup is of prime importance.

Choosing a system to trade involves considering a wide variety of very important variables. Some of these variables are, but not limited to:

• Your personal investment objectives
• deciding upon the e-mini contract that is suited to your objectives
• evaluating and choosing a system that works with the e-mini contract you choose to trade
• evaluating your personality style and risk tolerance and match those variables with both your chosen system and chosen e-mini contract
• How much time do you want to spend in front of a computer screen?

As you might infer from the above mentioned bullet points, it is my opinion that the methodology you opt to trade and the contract on which you concentrate your efforts are closely linked to your personal personality type. I realize that this is a rather esoteric discussion, and only through time and experience can you truly make an educated decision on how to effectively trade the e-mini contracts.

For lack of a better example, I’m going to use myself as an example. I possess a reasonable amount of patience, but can become very impatient after a period of time. But to be sure, I would describe my personality in relation to trading closely as linked to immediate gratification. For me, then, holding contracts overnight is a stressful and uncomfortable feeling; so I am in cash every night. Year s ago I decided to concentrate my trading efforts on the intraday methodologies. As I got older (and I suspect I became less patient) I focused my trading efforts into an even tighter trading style called scalping. For me, scalping became the ideal vehicle for my trading efforts. I feel very comfortable scalping for a number of reasons:

• All my money is in cash at the close of every trading session
• I am in and out of trades in relatively short periods of time
• The results of my trading efforts are immediately available to me for evaluation
• By virtue of my short investment horizon, I feel comfortable in making trading decisions
• I risk only small portions of my trading account and losing trades (which are inevitable) but do not take an emotional toll beyond my risk tolerance

I want to point out that I am not advocating scalping as your trading style, but illustrating the decisions I made relative to my personality and risk tolerance, and choosing the scalping trading style. For example, more patient traders with large trading accounts may choose swing trading as their preferred style. Swing trading involves holding positions overnight for several days or longer. It is my opinion that swing trading can be more profitable than the scalping, but my psychological makeup does not allow me to be comfortable swing trading.

There are even methodology issues to consider in your trading. Will you confine yourself to being a strict technical trader? Will you base your trading on price action? You might also consider trading based upon the news and other fundamental factors. These are all important variables to consider when choosing the style of trading that best fits your needs.

As a final note, within each trading style there are dozens of variations and systems available. I am proficient in five or six different scalping styles, and there are dozens of scalp systems with which I am unfamiliar. Swing trading has a wide variety of variations in methodologies and systems available. As you can see, it takes a considerable amount of effort to refine your trading style and then adopt a methodology that fits within your psychological parameters. It’s no small task, yet I believe it is one of the most important variables in trading. If you are uncomfortable with the system you are using, your chances of success diminish.

In summary, we have discussed a number of variables that traders might consider when deciding how he or she will approach trading. I have stated my personal opinion that trading style and methodology are closely related to a trader’s psychological/emotional makeup. I have also stated that it takes a considerable amount of time and experience to understand which style and/or methodology you, as a trader, will be most comfortable. Finally, I believe that using a trading system in which you are uncomfortable may well lead to unprofitable trading.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By James McKee

China’s outspoken distaste with how the US government has been handling its finances has not bee a secret to anyone, however they are now claiming that the way out of this quagmire is to buy other currencies. China’s thought is that other currencies (probably NOT the Euro) will be easier to control, since the United States government is not listening to anyone at the moment. China’s lack of political support for US incursions in Libya definitely does not help the situation either, and while political occurrences alone would not prompt China to move away from the dollar they certainly do not help.

If China does go forward with their plan to exchange the US dollar for other currencies look for the US dollar to drop through the floor on Forex charts. It is not going to be a good day for the US economy or most economies on the planet for that matter since the US dollar is the reserve currency of most nations. Every country’s government however is waking up to the fact that the United States has no real interest in preserving their financial solvency. While all countries will not “dump” their USD holdings all at once even an incremental sell off would be disastrous.

The only solutions to this problem lay in the United States doing everything it can to preserve ties with China and make a real effort to gain the trust of this economic giant. If the United States fails to do these things look for the USD to begin a massive slide sometime very soon after China begins its selloff. The USD will fall against most other majors on Forex charts if China does decide to sell off and many other economies and their currencies will be adversely affected as well, these are dark times for the USD.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.

By David Adams

When discussing trading oscillators in relation to e-mini trading, there is certainly no shortage of opinions as to how well they perform. To be sure, there are traders who rely solely upon the information derived from oscillators to enter and exit trades. On the other end of the spectrum, some traders abstain from using oscillators in any form. In my opinion, the best results are derived from using a combination of trading oscillators and chart reading. In this short article, we will discuss various types of oscillators and how they function.

In its basic form, and trading oscillator is a set of data points derived by using an algorithm or formula to a dataset of prior market prices. Like any formula or algorithm, the variables (or input data) can take several forms, especially when it comes to trading. Some formulas use the opening price, others use the closing price, and still others use the range of a given series set of bars. It is not unusual for individual traders to have preferences as to which variable they believe yields are the truest reading for setups they prefer.

While trading oscillators are broken down into several different categories, for the sake of discussion we will classify oscillators as leading indicators and lagging indicators. Even this classification is a topic of debate because all oscillators use earlier data to produce a given data points. I could easily argue that all oscillators are lagging indicators because they use historical data, even if the data is only seconds old. On the other hand, I am not in the majority position on this issue so we will stay with mainstream thought on trading oscillators.

Leading Trading Oscillators

Proponents of leading indicators claim that these trading oscillators are able to lead price action. These oscillators are generally referred to as momentum indicators. Most momentum indicators utilize the rate of change (ROC) of a given security or index. For our discussions, we will be referring to futures indexes. As the name implies, the faster a security increases/decreases in price will cause momentum to increase up or down. Some well-known momentum, or ROC indicators are:

• Commodity Channel Index
• Momentum Indicator
• Relative Strength Indicator
• Stochastic Indicator

While these oscillators calculate rate of change with different methodologies, they all fall into the category of momentum indicators. By definition, momentum indicators seek to precede actual price action. In my trading, I have found the Commodity Channel Index to be an effective trading oscillator and I utilize it often. There are times when I have used all of these indicators, depending upon market conditions. Leading indicators are especially effective in range bound markets.

Lagging Trading Oscillators

Lagging indicators fall under the classification as trend following indicators or oscillators. These oscillators seldom lead the price of the futures contract or security. For obvious reasons, these oscillators/indicators are of most use when the market is in a trending mode. As a note of caution, using lagging indicators in a non-trending market will lead to many false indications because of the lag time that is inherent in lagging indicator/oscillator calculation. Some very popular lagging indicators are:

• Moving Averages (exponential, simple, or weighted)
• MACD

Once you have entered a trend, lagging indicators are useful in keeping you in that trend. It is relatively easy to see the trend weaken as the moving average begins to flatten. As this flattening begins, most traders began considering their exit strategy.

In summary, we have talked about oscillators and indicators and their application. In range bound markets, leading indicators are especially effective while lagging indicators will create many false entries and exits. On the other hand, lagging indicators are especially effective in trending markets and can assist a trader in gauging the strength and longevity of a trend he or she is following. In short, trading oscillators have a variety of uses and applying the correct oscillator to given market conditions may help the trader be more profitable.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By Cedric Welsch

Unlike the old days of investing, when almost everything was entirely done manually and technology was still in its prehistoric era, nowadays investing is so simple like clicking the mouse of your computer. Indeed the sudden rise of computers and the internet has created a whole new ball game in terms of making profits out of investment opportunities. And one of the most popular forms of investment today that can easily be accessed by anyone through the internet is the stock market. So many wannabe investors are flocking the internet with a quest in mind to learn about stocks and how they can make real profits off it.

Any individual can now invest in stocks very easily because of the internet. The most important step that any stock investor will undertake in the quest of making profits off of stocks is when finding the perfect company to buy stocks from. Obviously this one step needs a lot of researching to do. But then again, investors can find all the information they need on the internet for free. Companies literally list down every asset they got on the web to attract more investors. It is a mutual agenda between companies and investors to find each other. Companies want to find the right investors, while investors want to find the perfect company to put their money in and make profits.

Finding The Right Company To Buy Stocks From

So as an investor, what should be your major basis for choosing the right company to invest in? This is surely the most intelligent question that any investor who is really that serious to making big profits off of stocks, could ever ask himself. And answering this profitable question is the very reason why research is so important for every individual wanting to invest in stocks.

The most important data you would want to find out about a company is regarding its stability. The more stable a company is, the more qualified it becomes as a target prospect for investment. To find out whether a company is stable or not should be easy. First, see the company’s historical data. Find out how old is it already as an established business entity. Then you would want to check its growth history. Has it been progressively expanding over the past years? Has the growth been gradual and steady? Obviously a sudden spurt of progress in any short period of time is not what you want to see. You are after a company that’s showing consistent and steady growth in all recent years.

If you will be able to accurately find that target company to buy your share of stocks from, then you are definitely in for a start on gaining that momentum at earning more investment profits in the years to come.

About the Author

Do you want to know the cheapest online stock trading techniques? Now you can sure learn cheap online stock trading easily.

By James McKee

The tsunami that occurred just off the coast of Japan has continued to cause waves throughout the island nation’s economy, this is due to the ever-present threat of nuclear meltdown. Workers have been working around the clock in an attempt to resolve trouble with a nuclear reactor that has been going into meltdown for a couple weeks now. Readings from the power plant have been scary to say the least and today Japanese officials learned that the data was misinterpreted and that engineers made a mistake. Japanese energy employees are being pushed to the breaking limit and it is likely that more mistakes will happen in the near future.

The rest of the world has continued to contribute to Japan’s emergency funds in an effort to avert disaster not only in Japan but also on a global level. Nuclear particles have been found as far away as Iceland and this is concerning for the global community. If the nuclear trouble persists the Japanese Yen will surely see much instability on forex charts in the near future, just remember that the Japanese Yen is ideally weak against other majors so in this time of crisis it will likely rise in value.

Pairing the Japanese Yen with a weaker major like the CHF or USD is a good idea, stay away from the GBP/JPY pair as it has been smashing through resistance and support on forex charts a lot lately. In these times of uncertainty fundamental trading really comes in handy in addition to technical trading, keep your eyes glued to your charts and stick to small time frames where possible. Intraday trading for the JPY is not recommended currently unless you have done extensive research and have the proper TP/SL stops in place, take comfort in the fact that what goes up must come down.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.