Tuesday, August 22, 2006

Trading Tips

THE TRADE DECISION

1. Never add to a losing position.

2. Always determine a stop and a profit objective before entering a trade. Place stops based on market information, not your account balance. If a "proper" stop is too expensive, don't do the trade.

3. Remember the "power of a position." Never make a market judgment when you have a position.

4. Your decision to exit a trade means you perceive changing circumstances. Don't suddenly think you can pick a price, exit at the market.

THE MARKET HAS CHARACTER

5. In a Bull market, never sell a dull market, in Bear market, never buy a dull market.

6. There are times, because of lack of liquidity, or excessive volatility, when you should not trade.

7. Trading systems that work in an up market may not work in a down market.

8. There are at least three types of markets: up trending, range bound, and down. Have different trading strategies for each.

9. Up market and down market patterns are ALWAYS present, merely one is more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped out time and again. Select trades with the trend.

10. A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.

11. It's always easier to enter a losing trade.

12. In the "blowout" stage of the market, up or down, risk managers are issuing margin call position liquidation orders. They don't check the screen for overbought or oversold, they just keep issuing liquidation orders. Don't stand in front of a runaway freight train.

13. You are superstitious; don't trade if something bothers you.

NEWS

14. Buy the rumor, sell the news.

15. News is only important when the market doesn't react in the direction of the news.

16. Read today's paper tomorrow. When you read yesterday's paper each day with the knowledge of what the market already did, you will affirm that this mornings paper with yesterday's news has nothing to do
with today's market.

A TIME TO TRADE

17. On the open, never enter a new trade in the direction of a gap. Never let the market make you make a trade. (Closing an existing position is obviously ok.)

18. The first and last tick are the most expensive. Get in late and out early.

19. When everyone is in, it's time to get out.

20. Never trade when you are sick.

TRACKING YOUR TRADES

21. Size kills. Only change your unit of trading under a plan of attained goals. Also, have a plan for reducing size when your trading is cold or market volume is down.

22. Confidence kills. Remember, you really don't know anything. Respect the market every second of every day. Expect the unexpected. Always know your position and exit your trade immediately whenever you feel uneasy.

23. Measure yourself by profitable "days in a row," not by individual trades.

24. The best way to break a streak of "losing days in a row" is to not trade for a day.

25. Don't stop trading when your on a winning streak. "When your hot, your hot."

26. Three strikes and your out! Don't turn three losing trades in a row into six in a row. When you’re off, turn off the screen, do something else. "When you’re not, you’re not."

27. Scalpers reduce the number of variables effecting market risk by being in a position only for seconds. Day traders reduce market risk by being in trades for a matter of minutes.

28. If you convert a scalp or day trade into a position trade, by definition you did not consider the risks of the trade.

29. Don't ever fret about a missed opportunity. There is always another one just around the corner. Besides, several just happened that you didn't even know about.

MARKET OPINIONS

30. If you look for market secrets you will only find things that no one cares about. Use the conventional tools.

31. Never ask for someone else's opinion, they probably did not do as much homework as you.

32. When the market is going up, say "the market is going up." When the market is going down, say "the market is going down." Say it without qualifications, no "buts" attached. This is a reality check, you'll be amazed at how hard it is to say what is literally going on in front of you when your mind is full of preconceived opinions.

33. THE DAILY MARKET COMMENTARY: I've never had an opinion I didn't like, however, successful day trading requires flexibility. Do your homework not to develop a market opinion, but rather to understand the potential for both sides of the market. This will allow you to make your trades based on what the market is doing at the time of the trade.

34. Here is a quote to remember: "When you wake up, your instincts are wrong."

SOME FINAL THOUGHTS

35. When you make a mistake of discipline, whine like a fool to anyone that will listen. Errors in discipline are mistakes you will keep on making for many years. Wearing ashes and sack cloth may help extend the time before you do it again.

36. If you squirmed and moaned while you read this list, then you share two obvious characteristics with many of us:

A. You have traded long enough to recognize that you (not the market) make mistakes, and you try to overcome them.

B. Now this is ugly, you have become part of the market and you can never leave.

No matter where life takes you, you will always check the market and always want to continue being a part of it. It's like that first true love, it will always be there no matter what the distance, no matter whether they are alive or dead.

Monday, July 31, 2006

Investment in FOREX trading

Why is the Spot Forex Market Attractive for Investors?

Professional investors for individual accounts have dramatically increased their level of participation in the cash Forex markets in recent years. Add to this the growing use of cash Forex by individual investors and you have a rapidly growing investment arena. An appropriate way to close this short presentation and summarize what has been discussed is to touch on the many reasons professional investors have flocked to this market.

Liquidity This market can absorb trading volumes and per trade sizes that dwarf the capacity of any other market. On the simplest level, liquidity is a powerful attraction to any investor as it suggests the freedom to open freedom to open or close a position at will.

Access A substantial attraction for participants in the Forex market are the 24-hours nature of the market. In Forex, a participant need not wait to react to an unfavourable event, as is the case in many markets.

Flexibility Settlement Many professional investment managers have a particular time horizon in mind when they establish a position. In the Forex market, a position can be established for a specific period of time, which the investor desires.

Execution Costs The cash Forex market traditionally has no brokerage charges, only a natural market bid/offer spread.

Execution Quality Because the market is highly liquid, most trades can be executed at a single market price. This avoids the problem of slippage found in futures and other exchange-traded instruments where limited quantities can be traded at one time at a given price.

Trending Over long historical periods currencies have shown substantial and identifiable trends. Each individual currency offers a unique historical pattern of trends providing investment managers diversification opportunities within the spot Forex market.

And the most attractive fact is that the Forex currency trader stays in cash at any time, no matter is he "long", "short" or out of the market.



Risk Warning

Please note that Forex Investing is not for everyone.
By law, only sophisticated investors, who are capable of understanding the risks and rewards of a particular investment are allowed to invest in currencies. If in any doubt about the suitability of these investments, please consult your financial advisor.
If you are willing to withstand above average risks in order to achieve outstanding returns, Forex speculation is an excellent investment option.

Thursday, July 20, 2006

Forex Market

Forex (Foreign Exchange) is the name given to the "direct access" trading of foreign currencies. With an average daily volume of $1.4 trillion, forex is 46 times larger than all the futures markets combined and, for that reason, is the world's most liquid market. In the past, forex trading was limited largely to enormous money center banks and other institutional traders. But in just the past few years, technological innovations and the development of online trading platforms allow small traders to take advantage of the significant benefits of trading foreign currencies with forex.
In contrast to the world's stock markets, foreign exchange is traded without the constraints of a central physical exchange. Transactions are instead conducted via telephone or online. With this transaction structure as its foundation, the Foreign Exchange Market has become by far the largest marketplace in the world.

Buying and Selling

In the forex market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade. For example, if you believe the value of the euro is going to increase vis-á-vis the U.S. Dollar, then you would go long on EUR/USD instrument (currency pair). Obviously, the objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought / sold one currency pair and has not sold / bought back the equivalent amount to effectively close the position.

Orders and Positions

When you want to open a position you need to place an "entry" order. If and when the entry order executes, the position becomes "open" and starts its life on the market. At one point in time, you will place an "exit" order to "close" the position. A position can be "long" (entry order is to buy and exit order is to sell an instrument) or "short" (entry order is to sell and exit order is to buy an instrument).
At the point when you place your entry order, you need to define price level at which you want to buy or sell certain instrument. You also need to specify type of the order and quantity of the instrument you want to trade. There are 3 order types:

Market Order
Placing a market order means that you will buy at your broker's current "ask" (or "offer") price, or sell at your broker's current "bid" price, whatever that price currently is. For example, suppose you are buying EUR/USD. The current market, as quoted by your broker is 1.2934 / 1.2938. This means that your broker is willing to buy EUR/USD from you at 1.2934, and sell it to you at 1.2938.

Stop Order
Initiating a trade with a stop order means that you will only open a position if the market moves in the direction you are anticipating. For example, if USD/JPY is currently 108.72 and you believe it will move higher, you could place a stop order to buy at 108.82. This means that the order will only be executed if the market moves up to 108.82. The advantage is that if you are wrong and the market moves straight down, you will not have bought (because 108.82 will never have been reached). The disadvantage is that 108.82 is clearly a less attractive rate at which to buy than 108.72. Opening a position with a stop order is usually appropriate if you wish to trade only with strong market momentum in a particular direction.

Limit Order
A limit order is an order to buy below the current price, or sell above the current price. For example, if EUR/USD is trading at 1.2952 / 56 and you believe the market will rise, you could place a limit order to buy at 1.2945. If executed, this will give you a long position in EUR/USD at 1.2945, which is 11 pips better than if you had just bought EUR/USD with a market order. The disadvantage of the limit order is that if EUR/USD moves straight up from 1.2952 / 56, your limit at 1.2945 will never be filled and you will miss out on the profit opportunity even though your view on the direction of EUR/USD was correct. Opening a position with a limit order is usually appropriate if you believe that the market will remain in a range before moving in your anticipated direction, allowing the order to be filled first.
For both entry and exits orders you can specify price levels at which you want them to be executed. You have to specify entry levels when you place you entry order, while most brokers would allow you to specify exit levels at any time.

Calculating Profit

The objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit.
Let us assume that you open a long position by buying USD/JPY for 107.58 (quantity of 100000) and few hours after that, you close the position by selling USD/JPY for 107.74 (quantity of 100000). These two trades would bring you profit of (107.74 - 107.58) * 100000 = JPY 16000 (JPY is the counter or quote currency in the USD/JPY pair). You can than convert the profit to a currency you like, for example JPY 16000 = 16000 / 107.74 = USD 148.51.
We can also say that these two trades would bring you 16 "pips" profit. A "pip" is the smallest increment in any instrument. For asset types other than forex, the smallest increment is often called "tick". In EUR/USD one pip is 0.0001, in USD/JPY one pip is 0.01. Expressing position profits in pips is often very useful for quick calculations and estimates.
One pip, from the example above, would bring you 0.01 * 100000 = JPY 1000 profit, or JPY 1000 = 1000 / 107.74 = USD 9.28.

About Marketiva

Marketiva is a financial services corporation specialized in providing traders with high quality online spot forex trading services. With a team of dedicated financial specialists and technical support personnel, Marketiva operates globally as a market maker and principal counterparty to retail clients trading in the foreign exchange market. Marketiva has established itself as an industry leader by relying on its groundbreaking internet trading platform and its superior customer service.
Marketiva's mission is to harness the power of the internet and provide forex traders with exceptionally effective trading tools and outstanding customer support. Forex traders using Marketiva enjoy the most advanced online retail foreign exchange trading front-end in the world, the Streamster™ software, renowned for its ease of use, flexibility and reliability.
Marketiva is a market maker for instruments traded on the over-the-counter foreign exchange (forex) markets. Through Marketiva, you can buy or sell instruments like EUR/USD, GBP/JPY and others. Marketiva also provides services like discussion channels, latest forex news, trading signals and alerts, charting services and many more.

To open an account on Marketiva, and start trading Forex with $1:





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