What is the secret to successful forex trading?

by David Jenyns on April 22, 2012

Question by valgraphies: What is the secret to successful forex trading?
A complete newbie to forex trading, I am having difficulties figuring out where to look for information, but also what exactly to look for. Commodities? Bank quarterly results?

Best answer:

Answer by Jason Alexanders
I think you need to decide whether the US is fundamentally flawed (like we’re going to do the printing press).

Since loans have been greatly reduced and the money supply will thus shrink, I expect the dollar to appreciate in value.

Thus if I was investing in Forex, I’d be most interested in the US dollar index and maybe even the Canadian dollar.I’d short the Yen and the Euro.

Give your answer to this question below!

daniel tay April 22, 2012 at 11:23 am

So, you want to learn how to trade currency on the foreign exchange market? The process of trading currencies appears very straight-forward on the surface but, there is more to it than meets the eye.

The currency trading tutorial you are about to receive here will give you a basic idea of how things works. However, you must keep in mind that this tutorial is only scratching the surface. The Forex market is complex, fast-paced and requires serious further study if you wish to trade successfully.

Now that we have that disclaimer out of the way, let’s begin by looking at the fundamental unit involved in every trade: the ‘currency pair’.

What are currency pairs?

Currency pairs are units of 2 currencies involved in a foreign exchange trade. For example, if you want to sell U.S. dollars to buy Euros, you would look at the exchange rate quoted for the EUR/USD currency pair. Or, if you wanted to sell Euros to buy U.S. dollars, you would look at the exchange rate quoted for the USD/EUR currency pair.

You might thinking: “Aren’t they the same thing?” Well, they almost are, but you must look at the correct pair, in the correct order, based on the currency being purchased.

There are two reasons for doing this:

First, it is easier to calculate the results of your exchange in terms of how much of the base currency you can purchase with your ‘quote’ currency. Your base currency is the currency you intend to buy, and the quote currency is the currency you intend to sell in exchange for the base.

When quoting an exchange rate, your broker will list the base currency first in the pair, and the quote currency second.

This means that when you see a pair like EUR/USD, you are seeing the cost of 1 Euro in U.S. Dollars. An exchange rate quote of EUR/USD = 1.4436 means that 1 Euro costs $ 1.4436 in U.S. Dollars.

Likewise, the USD/EUR pair indicates the cost of 1 U.S. Dollar in terms of Euros. An exchange rate of USD/EUR = 0.6834 would mean that 1 U.S Dollar costs 0.6834 Euro.

The second reason for looking at the correct buy/sell ordered pair is that you’ll want to know the difference between the ‘bid price’ (exchange rate) and the ‘ask price’ (what the market makers want for the currency).

The difference between bid price and ask price make up what is known as ‘the spread’. Forex traders are subject to spreads when opening or closing trades in the buying position. In other words, you are always subject to a spread when you buy, regardless of whether you are opening or closing the trade.

Open buy -> spread
Close sell -> no spread

Open sell -> no spread
Close buy -> spread

Let’s say that you want to buy the EUR/USD pair. The bid price is 1.4436. The ask price may be something like 1.4440. You must pay the spread of 0.0004 in order to do the trade.

Those are the basics of a currency trade, but there are other factors to take into consideration. In order to make a profit on currency exchanges, you must also know how to calculate the cash value of exchange rate fluctuations in terms of ‘basis points’ – or, in Forex jargon – ‘pips value’.

This currency trading tutorial will not cover pips values, but it is a concept you should investigate further if you want to master the basics of trade on the foreign exchange.

The recipe is, at the opening of the market, choose currency that is there. For a newbie I recommend that it’s best to enrol in a trading platform and programme at http://tinyurl.com/27tymz where you can learn from the experts, have a high accuracy in trading all types of forex instruments and reduce your margin of error. Please email me daniel at danieltayhh@gmail.com if you have any more queries. Cheers! Daniel Tay.

Jay K April 22, 2012 at 11:36 am

Knowledge is power. I recommend you to visit Amazon store http://www.amazon.com and type “Forex Trading” in the search box and select the books category. You will be shown lot of books on this subject. Buy one or two good and affordable books.

My other suggestion is to visit “Youtube.com” and look for quality videos which explain Forex trading.

Jay
http://www.sharetradingguide.com
A leading resource for stocks investment

May Derrek April 22, 2012 at 12:18 pm

Hello,

I also had a similair problem as you have.
I had a good amount of money, and wanted it to grow.
So I looked around on the internet to find something that is:
1) giving me great returns towards a relatively small risk

2) Professional people who know what they where doing with my money.

I’m glad to say I finally found a moneymanager who is capable of giving me good returns and give me a great support.
On this blog you can follow up all the results that he is making:
http://my-robottrader.blogspot.com/

My money is working for me, in three months time I already have a ROI of 89%.
So you don’t hear me complaining!
Annyway if you would like to get in touch with my moneymanager to have some more information feel free to contact me you can send an email to me at derrekmay at gmail.com.
Then I’ll give you the email adress of my moneymanager

Hope this has helped you!

Burt Whitley April 22, 2012 at 12:34 pm

Well you could take courses on US and World economics, read some financial economies books and/or know when and the fundamental news that affects price swings are reported. Stay clear during these volatile times because they can take out your stop in a heartbeat and a few beats later go back the other way. And remember that the news could already be mostly priced into the current price.

http://www.forex.com/learn.html
Link will answer many questions and answers you should know. I have 3 accounts (never put all your money/eggs in one account/basket). You can start with $ 500 when you can afford to open account. Since you are just starting you will lose money if you don’t learn the basics, first. #1 best tip, don’t trade your real money until you try trading demo account. When you can trade a demo for about 2-3months daily and make money then if you feel ready slowly start trading real money. So making and/or losing money depends on how well you can trade. For some it very profitable, for many it is not. So trading with the right tools and knowledge can become a very good income(s) for short and long term goals. And trade with the current trend.

I use Lightning Strikes Trading System for trading in any time frame and it works on forex, stocks, bonds, etf’s, mutual funds, etc… They have 3 free training sessions a week and you don’t have to buy the software to join in the live chat and text. They focus their training/trading on the Forex markets major currencies. You can even watch some recorded past live sessions. Here are some past charts that I used.
http://f1.grp.yahoofs.com/v1/MB16R0zjjaZ
http://f1.grp.yahoofs.com/v1/MB16RxjOUQt
There are 7 indicators (2 short, 2 medium, and 3 long term) and if volume is reported another one is added (on balance volume). Plus whatever time-frame is used the 2 green horizontal lines are the support and resistance for that time frame. So when indicators are all touching the bottom price is at or very, very near support. At top is at or very, very near resistance. Which helps my entry/exits and risk/reward ratio.
http://f1.grp.yahoofs.com/v1/MB16R9Wv-wt
http://f1.grp.yahoofs.com/v1/MB16R9wSKdV
http://f1.grp.yahoofs.com/v1/QCt6R2fYIj6
http://f1.grp.yahoofs.com/v1/QCt6R3R0VQe
If you can not view charts above or want to see other charts, I can email them. Or you can view more charts in this yahoo group. http://finance.groups.yahoo.com/group/lightninglive/

Start learning the basics of fundamentals and technical analysis so you will be more informed in your investments. You can find all the basic info you need to learn on websites for free.
This site should give you a good start.
http://finance.yahoo.com/education

Try what you learn on demo sites. They can be a very fun but educational way to learn from mistakes. If you pick 75% right with play money then you might be ready to start slowly investing.
http://simulator.investopedia.com/
http://simulator.zacks.com/
http://www.fxcm.com/open-free-100k.jsp
http://www.alpari-idc.com/en/metatrader4
Or just google for more.

Here are my favorite sites.

http://finance.groups.yahoo.com/group/lightninglive/
Join group to see and discuss LS charts.

http://stockcharts.com/
Has basically all you need from fundamental to technical terms. Plus stock screens, charts, public chart lists, and much more useful info.

https://www.fidelity.com/
Has good learning resources.

http://moneycentral.msn.com/home.asp
In addition to yahoo finance.

http://www.reuters.com/
For news and more.

http://www.marketwatch.com/default.aspx
For news and more.

http://www.valueprime.com/index.php
For rating stock risk/reward ratio and reports.

http://www.barchart.com/
For investing in more than stocks.

http://www.investopedia.com/
For more great learning tools.

http://www.lightninglive.com/
For best software timing your entry/exits any time frame for day traders and long term investors.

Others worth exploring.
http://www.equis.com/
http://www.stockta.com/
http://www.secform4.com/

Best Wishes,
Burt Whitley

dogenzenji April 22, 2012 at 12:35 pm

knowledge, a network of connections; a lot of experience, and a lot of drugs for you to cope with stress

it is a stressful job or business; the stress is not really worth it, because there are more people who are earning more with less stress than traders – so it is not worth it

investors are better than a trader – bec of the stress

gotta.nicole April 22, 2012 at 1:29 pm

There’s a good place to learn called BabyPips.com. The content is really easy to understand, and it is funny!
The “school” section is divided into grades and ranges from basics to more advanced topics. There are forums to discuss forex related topics as well as get help with your trading needs. http://www.babypips.com

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