InvestMacro FX

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

Further dollar strength came through during the Asia session, as the market continued to digest Fed Chairman Bernanke’s speech from Friday. EURUSD traded 1.3863-1.4006 and USDJPY traded 80.89-81.68. Bernanke provided no new insights into the current state of the FOMC’s thinking, although he did see a case for “further action” and noted that measures of underlying inflation are “trending downwards”. But the absence of detail on the likely size and timing of any future asset purchases proved to be a significant source of support for the dollar, and US 10y yields ultimately closed 8bp higher. Our US economics team still expects a new round of US Treasury purchases will be announced on Nov. 3, composed of $200 bn of purchases per quarter, with a maximum five-quarter program size of $980 bn. Chicago Fed President Evans, who is due to become an FOMC voter in January, said that the US economy is in a “bona fide liquidity trap” and that much more policy accommodation is appropriate “today”. Evans noted that, given the circumstances, “targeting a higher price-level path in an effective, disciplined and limited fashion” could be justified. The US Treasury decided to delay the release of the latest currency report until after the upcoming G20 meetings. Retail sales rose +0.6% in September (cons. +0.4%) while the August and July readings were revised up significantly. The Univ. of Michigan consumer sentiment index slipped to 67.9 (cons. 68.9), while core CPI was flat m/m in September (cons. +0.1% m/m). Industrial production is due and our US economists expect it turned slightly negative in September..
EUR

ECB President Trichet said that a majority of the ECB Governing Council is still in favour of keeping the sovereign bond purchasing program in place. Referring to the ECB’s mandate for price stability he said that raising the inflation target would be “disastrous”, and that he was also “completely against” the idea of raising inflation expectations. Again, he called on Eurozone governments to vigorously implement fiscal reforms.
EU Economic and Monetary Affairs Commissioner Rehn said that the CNY is “very undervalued” and called on China to allow it to strengthen “broadly”. Earlier, US Treasury Secretary Geithner said that China’s actions to accelerate the yuan’s rise had been recognised, but that it was important for this course to be sustained. The IMF announced that a conference of central bankers hosted by the PBoC will take place in Shanghai on Monday to continue with “the ongoing international examination of the policy challenges posed by the global financial crisis”.
Eurogroup Chairman Juncker said it would be premature to discuss an extension to Greece’s EU/IMF bailout plan, and that Greece has no alternative but to implement the terms of the original plan.
JPY

Economics Minister Kaieda said that Japan will study how to increase the quantity of international trade that is invoiced in yen, so as to help better immunize Japanese exporters from currency fluctuations.
GBP

Referring to the BoE’s asset purchase facility, MPC Member Fisher said it is not clear whether the next policy step will be “to sell the assets back or to buy more”. Also, he dismissed the idea of re-investing Gilt coupon payments received to date as “an unnecessary complication at this stage”. He reiterated comments made by Governor King in June that, when the bank eventually decides to tighten policy, it will most likely raise rates first and begin Gilt sales some time later.
Fischer’s remarks echo those of MPC Member Miles who last week was also unsure whether the next policy step would be to tighten or to ease further. So far, only MPC Member Posen has publicly called for further Gilt purchases now. Our UK economist expects the minutes of the Oct. 7 policy meeting, due for release on Wednesday, will show that Posen voted in favour of such action. We remain cautious on sterling as fiscal austerity will likely hold back economic growth and keep monetary policy accommodative.
AUD

Australian Treasurer Swan warned against trying to prevent the AUD making further gains against the US dollar. He said attempting to “artificially depress the value of the currency would be counterproductive” as to do so would risk pushing inflation and interest rates higher.

TECHNICAL OUTLOOK

AUDUSD clears 1.000 psychological resistance.
EURUSD BULLISH Pullback from 1.4159 targets 1.3775, reaction low. However, broader trend is bullish, next resistance at 1.4373 Fibonacci level.
USDJPY BEARISH Sell continues to rally towards 79.75, scope for 77.91 next. Resistance at 81.85 ahead of 83.03.
GBPUSD BULLISH Rise through 1.6018 favors extension of the uptrend towards 1.6201 ahead of 1.6379. Support at 1.5888 ahead of 1.5670.
USDCHF BEARISH Outlook is bearish; break below 0.9500 exposes 0.9225. Resistance at 0.9729 ahead of 0.9918 breakout low.
AUDUSD BULLISH After breaching 1.000 marginally, pullback eyes 0.9709 support. Expect gains to extend towards 1.0166.
USDCAD BEARISH Next support below 0.9981/31 defined at 0.9820. Recovery clears 1.0184 initial resistance thus exposing 1.0273.
EURCHF BULLISH Stalled in front of 1.3494; break of the level would expose 1.3665. Initial support lies at 1.3265 ahead of 1.3072.
EURGBP BULLISH Currently holds resistance at 0.8840 ahead of 0.8894 and 0.9039. Support holds at 0.8689 ahead of 0.8563.
EURJPY BULLISH As long as support at 111.77 holds, expect recovery towards 115.68 ahead of 116.68 Fibonacci resistance.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

Despite Friday’s recovery, the U.S. dollar fell for the fifth consecutive week against most of the major currencies. As several releases from the U.S. economy are expected today, the main question is whether the dollar is on its way to erase last week’s losses, or will the greenback drop for the sixth week.

Economic News

USD – Dollar Falls For the Fifth Week in a Row

The U.S. dollar saw an extremely volatile session during last week’s trading. The currency began last week with a bullish trend against most of the major currencies, including a 200 pips gain against the euro and the British pound. By midweek the dollar erased all its gains, and even reached fresh lows against the majors. By the time the weekend arrived, the dollar had corrected some of its losses, but still closed with modest losses.

The greenback declined last week due to speculations that the Federal Reserve will further ease monetary policy, debasing the dollar. In addition, several disappointing economic releases were published in the U.S. last week. The trade deficit widened more than forecasted in September. The gap grew by 8.8% to $46.3 billion, significantly below economists’ expectations for a $44 billion deficit. In addition, the weekly Unemployment Claims report showed that the labor sector in the U.S. continues to deteriorate. The number of Americans filing for unemployment benefits for the first time unexpectedly increased last week. Jobless claims rose by 13,000 to 462,000. As long as the U.S. economy continues to provide poor data, speculations regarding further monetary easing will likely continue to weaken the dollar.

As for the week ahead, many significant economic releases are expected from the U.S. Traders are advised to focus on the Long-Term Purchases, Building Permits, the weekly Unemployment Claims and the Philadelphia Manufacturing Index. Positive results on these reports may prevent the dollar from falling for the sixth straight week.

EUR – Euro Sees Mixed Results against the Majors

The euro saw mixed results against its major counterparts during last week’s trading session. The euro mainly saw ups and downs against the major currencies, without marking significant changes in value. By the end of the week, the currency was trading near its value when markets opened the previous Monday.

The euro began last week’s trading with an upward trend following positive data out of the euro-zone, specifically from the German economy. Inflation in Germany accelerated in September, led by increasing prices for heating oil and food. The inflation rate rose by 1.3% from a year ago after increasing 1% in August. In addition, the euro-zone industry expanded in September, showing gains in most sectors. The total value of output produced by manufacturers, mines and utilities rose by 1.0%, beating expectations for a 0.7% rise. However, better-than-expected British labor reports, followed by positive U.S. Retail Sales data managed to cut most of the euro’s gains, especially against the British pound.

Looking ahead to this week, traders are advised to pay attention to economic releases from Germany. Germany holds the largest economy in the euro-zone and two major reports are expected this week: the Economic Sentiment on Tuesday and the Business Climate on Friday. Positive results will strengthen speculations that the euro-zone is indeed recovering, and is likely to boost the euro.

JPY – Fears of Further Intervention by the BoJ Manage To Halt Yen’s Bullishness

The Japanese yen began last week’s trading with rising trends on all fronts. However, by midweek, the currency started to correct its gains, especially against the euro and British pound. The EUR/JPY pair is still trading above the 113.00 level, and the GBP/JPY is trading near the 130.00 level.

The positive data from the Japanese economy has added to the bullish pressure on the yen. Japanese machinery orders unexpectedly rose, in a sign that a recovery in earnings may encourage companies to spend on equipment. In addition, the uncertainty in global markets continues to support the demand for the yen. The JPY is considered to be a safe asset, and thus when risk-aversion increases, the currency tends to strengthen.

However, investors should always keep in mind that the Bank of Japan (BoJ) may move to devalue the yen, should the currency continue to strengthen. Despite international criticism, Japan has not announced that it will not intervene again. For the moment, the yen appears to have stabilized, although further upward movement may occur.

As for this week, traders are advised to continue following the announcements from Japanese officials. These announcements have had a massive impact on the yen’s value over the past few weeks, as investors look to see whether the BoJ will indeed intervene in the currency’s trading again.

Crude Oil – Crude Oil Drops Below $81 a Barrel

Crude oil fell to its lowest level in two weeks on Friday, reaching as low as $80.75 a barrel. Crude began last week’s trading around $82.50 a barrel, and was able to go as high as $84.10.

Crude oil fell close to the weekend as a result of the strengthening dollar, which reduced the appeal of commodities as an alternative investment. The dollar gains came following better-than-expected U.S. Retails Sales results in September. It appears that if the dollar will continue to strengthen against the major currencies, especially the euro, crude oil may drop further. At the moment, it has the potential to drop below $80 a barrel before the end of the week.

Looking ahead to this week, traders are advised to follow the major news releases from the U.S. and the euro-zone, as these tend to have the biggest impact on crude oil trading. In addition, traders should pay particular attention to the U.S. Crude Oil Inventories report, scheduled for Wednesday, as this release usually has an instant impact on the market.

Technical News

EUR/USD

After peaking at the 1.4155 level, the pair has consistently dropped and is currently trading around the 1.3890 level. As the RSI on the 4-hour chart has dropped below the 30 line, the pair is likely to continue with its bearish trend, and has the potential to reach the 1.3800 level.

GBP/USD

There is significant technical evidence that that the pairs recent downward trend may be coming to an end. A bullish cross has recently taken place on the 4-hour chart’s Slow Stochastic, suggesting that an upward correction might take place. Going long with tight stops might be a good strategy today.

USD/JPY

The pair’s bearish trend failed to gain momentum over the last few days, and the USD/JPY is still trading above the 81.00 level. That being said, the MACD on the weekly chart continues to provide clear bearish signals, indicating that the downward trend still has room to grow.

USD/CHF

The pair appears to be approaching the end of its bearish trend, having dropped as low as 0.9460. Technical data is showing signs of an upward correction. A bullish cross on the daily chart’s Slow Stochastic indicates that upward movement is likely. Going long might be the right choice today.

The Wild Card

Gold

After reaching a record high at $1,386 an ounce, gold is slowly dropping and is currently trading around $1,360 an ounce. Now, all oscillators on the 4-hour chart are pointing down, indicating that the bearish correction may continue today. This may be a great opportunity for forex traders to join the trend at its beginning. Going short is the recommended strategy today.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By David Shaw

Having the basic knowledge of Forex trading, you can already start trading on Forex demo account for virtual money. Usually every Singapore Forex broker provides with a free demo account with a real rates. So that a trader can get familiar with a trading platform and the Forex market. Practicing in demo provides with the basic skills of trading and stops being afraid to trade. The market moves only in two directions: either down or up. Sometimes it confuses the new traders as they apply a gambling approach to Forex trading: sell or buy? Fortunately, years of research and experience of other traders gave our generation a lot of indicators, tools and strategies together with the opportunity to improve them. For example, one of the most popular and simple indicators is the moving average. It can be a good help in your online trading. Set one moving average for a long period, another for a short period. At the point of intersection of both lines of the indicator you open a trading position and wait for profits.

During the training period when a trader is practicing on demo account, the trader has a great chance to practice different trading strategies and approaches. At this stage he is learning, that’s why no risks are involved and it is a great time to develop and test different trading methods. Therefore it is not necessary to calculate all possible ways where the market will move and be under the pressure because of the coming news that can shake up the market and cause the losses. A simple method of moving average will help a trader with a probability of more than 50% predict the behavior of the market in the near future. If a trader reaches the result where the total profitable positions will be more than losing ones, then together with the implementation of some rules of money management, you can make profit. Though you make a virtual profit at this stage, it is also important, because thus you will become more confident in Forex trading and your own knowledge and skills. You don’t need to be a genius to discover a right point to open a trading position, and there is no need to climb Mount Everest to start trading Forex. It is simple and easy, sipping coffee in the morning, pushing the right button when receiving a signal.

Usually Singapore brokers provide their potential customers with an access to tutorials, seminars and trading courses to help the beginners get started on the Foreign Exchange market. Every Singapore trader can participate in different long term training courses, which may last up to 3 months. After finishing a course it will be possible to start trading on Forex market for real money with confidence. You will be able to develop your own trading strategy, optimize the use of indicators and create your own automated trading system.

As you can see Forex trading gives a great potential for any trader to make profit. Trading platforms offer different tools to help the traders. Everything you need is to learn to use them and know how to analyze the currency market and charts.

About the Author

Daniel Shaw has many years of experience in online Forex trading. Visit his site Trading in Singapore to learn more about Forex Singapore .

By Daniel Shaw

In order to succeed trading Forex, every trader must create and follow a trading plan that will help him systemize his trading activity:

1. Market’s analysis 2. Making a trading plan 3. Entering the market, opening a trading position 4. Closing a trading position 5. Analysis of the trading results.

Market’s analysis. Your goal is to find a good situation to enter the market. In order to do that you can use either fundamental or technical market’s analysis tools to understand the market and find the entry moment. This stage is very important as the success of your trading depends on your decision and the ability to find an entering moment that has high potential to make profit. To find this moment requires a lot of practice and trading skills.

Creating a trading plan. After you have found a potentially good situation to enter the market, you can proceed to creation of the trading plan. According to the market’s situation you decide on the conditions you open a trading positions, its reasons, and tools that will help you to open and carry a trading position. Levels of stop loss and take profit orders. Risk management for your position that includes the size of transaction, the balance of free margin, leverage, etc. The possible conditions for changes of your trading plan.

Entering the market. The plan you have written will play a role of a direct instruction for actions and will relieve you from stress and emotional pressure while opening a trading position. What you need to do is just to follow your own instructions for opening the trading positions and placing the stop loss and take profit orders.

Closing of a trading position. This is a moment, when you need to close a trading position according to your plan. It may be executed manually by yourself or achieving a take-profit order. Whatever method of closing a trading position you choose, here is a time for the last stage of trading.

Analysis of your trading activity. When transaction is closes and there is no any reason for pressure and stress, it is a time to analyze your action regardless to the results of your trading. Try to pay attention to the following points. Did you include everything to your trading plan? Have you found new circumstances that must be considered in the future? Did you follow the plan? Answering these questions will help you improve your trading strategy and make it more successful.

Now you can understand what a successful Forex trading means. Most of the time trading is a tedious work and not everyone is able to do that. Only for the diligent work you get rewarded, otherwise your funds will be lost. If you don’t afraid of the difficulties, start acting now. For the beginners who don’t have a trading account yet, we recommend to start from choosing a good broker to open a trading account and practice in demo before trading for real money. There are many Forex brokers around that are legitimate and trustful.

About the Author

Liked this article? Visit our website Singapore Forex to find the answers on most of your Forex trading questions and review the most popular Singapore Brokers.

By Daniel Shaw

When working on developing of your own trading strategy, don’t forget to take the volatility of the Forex market into your consideration. Forex in Singapore as well as other parts of the world is open 5 days a week, 24 hours a day, which allows any trader from any part of the word take part in the global Forex trading and not to miss any good opportunity to increase your capital. Every trader must understand and take into his account the timing of various trading sessions since the foreign exchange market at different times of a day may behave differently.

Each currency pair that is traded in Forex market has some volatility where it experiences the biggest movements and price changes. It usually takes place during the certain hours of a day when the country is active and many events happen. Usually every part of the world has biggest influence on its currency, so knowing the time of each trading session may give you a clue which currencies it is better to trade.

London (European) session is the largest forex market and is more volatile than any other sessions. During the London session about 30% of daily transactions are done on forex market. The average price change for all currency paris during the London session is about 80 pips. For example, thedaily range of currency pairs as GBP/CHF and GBP/JPY is about 140 pips. In addition to these pairs, the most traded pairs in Forex market at this time condisdered to be USD/CHF, GBP/USD, USD/CAD and EUR/USD. Understanding of volatility for each traded currency pair allows you to set levels of risk, stop-loss orders and take-profit more correctly.

It is a fact that after the London session is over, many large investors prefer to transfer their investments from the European currencies to the US dollar. As at that time the New York (USA) session starts that is the second largest turnover in the Forex market. Knowing the time of different sessions and their features, can become the basis for the development of the trading system. The New York session is open from 12.00 to 20.00 GMT. The highest volatility during the day is seen in the period from 12.00 till 14.00 when both European and American sessions are open.

After the USA session is over the Tokio session starts, which runs from 0.00 to 8.00 GMT. This session includes all Asia and such big financial centers as Singapore Forex trading and Hong Kong. The greatest attention during this time is paid to the currency pairs GBP/CHF and GBP/JPY at an average daily range of about 100 pips. Forex in Singapore is also focused on AUD, SGD and NZD currencies. Taking into the consideration the preference of different sessions to the specific currency pairs, you can build a trading strategy that takes into account time zones when the appearance of a trend is most likely. Using the time factor of trading sessions and some proven technical indictors is the key to creating a successful trading system.

About the Author

Daniel Shaw is a proud author of many popular materials about Forex trading. Visit his portal Singapore Trader to find more information about Forex Trading in Singapore and Mustafa Forex.

By Cedric Welsch

Before you travel between Europe and the United States, you’re going to need to convert your Euro money to American money. This will make purchasing everything you need much easier while you’re abroad, as opposed to traveler’s checks which are only accepted by a limited number of retailers. If you need some tips on how to convert your money, this article can help.

Monitoring the exchange rates on a regular basis is very important. This is because they are constantly changing. In addition to fluctuating each and every day, they also change several times throughout the day. These rates are affected by many different things, so keep a watchful eye on them regularly to see how they are changing.

Finding out what the most current rates are is very easy. By searching the Web, you can find the rates for the Great British pound, Euro, and US dollar in an instant. Many websites also show the rates as they change in real time, so you can rest assured that you have the latest facts and figures before you decide to exchange your cash.

The best thing you can do before you travel is exchange your Euro money to American money. You don’t want to get caught in a foreign place without any cash. Always travel with the right currency on you, so you can pay for your food and shelter while you’re away from home.

Before exchanging your money, find out how much you will need for your trip. Do a Web search to find out where you’re going to stay and how much it’s going to cost. Also, think about where you’re going to eat and if you plan on buying any gifts and mementos for yourself and for friends and family members. After you’ve figured out what you’re going to spend your money on, all you have to do is add up the numbers. You may want to add a little extra to the final total, however, to account for unexpected costs.

Do not exchange your money until you’ve shopped around for the best deal. It is a common misconception that all businesses will give you the same rate, but this simply isn’t true. Each business will either charge a flat fee or will ask for a percentage based upon how much money you exchange. Some businesses may take a fee and a percentage.

Fortunately, it is easy to find the best deals nowadays. Doing a simple Web search will help you find tons of businesses that exchange money and they will also let you know what their commission rates are. If you put in the time and effort to search for the best rates on converting Euro money to American money, you can rest assured that you’ll have more money for your travels than if you didn’t.

About the Author

Do you want to really make profits with forex? Make sure you get fresh updates ahead of everybody else here: Forex News

Also, you need to know how to read and analyze the trading market well. Learn Currency Trading News

USDCAD breaks above the falling price channel on 4-hour chart, suggesting that lengthier consolidation of downtrend is underway. Further rally towards 1.0232 key resistance is expected in a couple of days. As long as 1.0232 resistance holds, downtrend is expected to resume, and one more fall towards 0.9930 (Apr 21 low) is still possible. However, a break above 1.0232 will indicate that the fall from 1.0672 has completed at 0.9979 already, then the following upward move could bring price to 1.0600 area.

Written by ForexCycle.com

By James McKee

The Obama Administration announced today that it will be lifting the deep water oil drilling moratorium which was put into place after an underwater oil rig exploded on April 20th of this year causing unimaginable damage in terms of lost life, lost wages and, overall damage to the environment near the Gulf Of Mexico. It has been cited as one of the worst ecological disasters in history, and the moratorium was supposed to act as incentive for the oil companies to take extra measures in the future to avoid any further catastrophes. Now that the hole in the well has been plugged and the political storm has settled somewhat the moratorium has been lifted. It is lifted under the assumption that oil companies abide by safety regulations and possess the equipment necessary to prevent further accidents, the return of offshore drilling signals a decrease in US dependence on foreign oil.

Oil is present in every transaction in any economy on any given day, some might be more indirect than others but oil is necessary to provide transportation for goods, parts of goods, to transport employees to manufacture the goods etc… etc… This article is not here to draw attention to the oil crisis but rather the economic impact of cheap oil in the United States. To put it simply it will be a positive impact where the US dollar is concerned, and I believe it is a good idea to keep your eyes on the USD for the next month or so as the oil rigs come back online to see how large of an impact this event will have.

I would say that considering the GBP’s poor performance as of late against a number of other currencies would certainly make the USD|GBP a pair to keep an eye on. Something I would proobably avoid is the USD|CHF in the short term due to the CHF’s recent breakout comparisons to the EUR, the USD, and the GBP. In any event the USD is looking to kick up some dust in the eyes of the other majors and traders should definitely take note of this.

Remember that when dealing with a volatile pair you should always keep an eye on the way your trade is moving along within the currency exchange, forex is always an unpredictable place to carve out a living but in situations like this extra caution is needed. Look for trends, be patient and make sure to keep solid SL/TP limits in place. Happy trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date on the latest developments and always make the most of your ability to utilize the best forex exchange rates as much as possible when trading!

By Warren Seah

Most people have an innate drive to achieve their personal best, to develop their abilities to the fullest. This drive, along with the pleasure of the game and the lure of money, propels traders to challenge the markets.

Successful traders keep honing their skulls, trying to reach their personal best is more important to them than making money. The trouble with self- fulfillment that many people have a self-destructive strait. Markets offer unlimited opportunities for self-sabotage, as well as for self-fulfillment.

Traders who are not at peace with themselves often try to fulfill their contradictory wishes in the market. If you do not know where you are going, you will wind up somewhere you never wanted to be.

Fantasy versus Reality

If you hear a beginning trader wanted to replace his working income by his trading profits, it is often a very challenging tasks even for intermediate traders. Firstly, i will assess on how much trading capital the beginning trader intends to put in his trading account. If he can achieve a return of 2 % of his trading equity consistently for the next 3 months, this will bring him to the top tier of all the traders. The fact is 95% of the traders destroyed their first account within the first 6 months of trading.

For a $50,000 account, you may have a small chance to replace your working income. Any amount below $50,000, you are considered under-capitalised (to replace your income in such a short time) and forcing yourself to achieve your goals may mean that you take on more risks, over leveraging and over trading. These will harm your trading equity if not done correctly.

A successful trader is a realist. He knows his abilities and limitations. He sees what is happening in the markets and knows how to react to them. He analyses the markets without cutting corners, observes his own reactions, and makes realistic plans. A professional trader cannot afford illusions. They identify these fantasies and get rid of them.

The Under-Capitalisation Myth

Many people would think that they would have a better chance of success if they could trade with more trading capital. It happens that people get into a bad trade without a proper stop loss. They aren’t willing to close the trade and take the losses. They would often hold on to the bad trade until it more or less wipe out his trading account. At that time, he would be experiencing so much emotional pain when he decided to close the trade. Often, after the amateur is sold out, the market reverses and moves in the direction he expected. This made him think had he survived another day, he might have made a small fortune!

The real problem isn’t about the holding power, it is about controlling losses, getting out of bad trades early and holding on the winners as long as possible. An amateur trader can destroy a big account almost as quickly as a small one.

LEARN FROM CHEAP MISTAKES

It is recommended that as a beginning trader, do not start an account bigger than $20,000, and do not lose more than 2% of your trading equity on any single trade.

A professional traders will achieve the discipline of a strict money management plan, acting fast to cut losses from a bad trade when necessary.

The Autopilot Myths

Traders who believe in the autopilot myth think that the pursuit of wealth can be automated. Some try to develop an automatic trading system, while others buy one from the experts. Often, they are driven by greed and laziness. Some of the systems do work, but it required a trader some work in order to identify the truly profitable ones. In addition, it requires a person to be educated in investment and trading before he has the foresight to identify the good systems out there. This will take time and increase with the number of mistakes you made in your pursuit. Sadly, some would give up after a few times.

Autopilot is not for everyone. An autopilot system used by an amateur trader may still be not profitable. It is because the amateur trader may not have the capacity to handle losses. This will cause him to interfere in the system trading and human intervention into an autopilot system will render its effectiveness.

There are good trading systems out there, but they have to be monitored and adjusted using individual judgement. Knowing what system parameters to adjust upon the changing market conditions will give you the edge to successful trading. Most of the trading systems will need to be adjusted to perform in the changing market conditions.

BOTTOMLINE: If you want to believe in autopilot, do your homework before you find one!

Market Gurus Myth

When all things failed, people turn to gurus in search of the answers to profitable trading. The fact is it’s not the guru’s first priority to make you rich! Their first priority is to make themselves rich first before anything else. You can learn much faster from attending some of these guru’s courses. However, this does not mean you will start profiting from trading the market within the first few months.

A trader requires hard work, discipline and working smart to achieving a consistent returns in the long run. The public wants gurus, and new gurus will come. As an intelligent trader, you must realise that in the long run, no guru is going to make you rich. You have to work on that yourself!

About the Author

Warren Seah

Warren examines commercial trading systems and has researched and analysed systems to uncover systems which bring in consistent profits.

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