From Newbie to Veteran: Journey of a Trader

Reality of Demo Account vs. Live Account

Wed, 10 Mar 2010 00:13:57 -0600

Reality of Demo Account vs. Live Account:

Many of us have become successful traders paper trading. When real money is involved, the psychology of losing money changes our way of trading. This is a great article on how to ease the transition from paper trading to live trading.

Canadian Dollar Hits Six-Week High

Mon, 08 Mar 2010 15:32:16 -0600

Canadian Dollar Hits Six-Week High:

A larger-than-expected rise in housing starts helped push the Canadian dollar to a six-week high against its US counterpart. The Loonie touched C$1.0257 on news that the number of housing starts…

Creating a Trading Plan

Mon, 08 Mar 2010 13:22:37 -0600

Creating a Trading Plan:

If you fail to plan you plan to fail.

Have a look at this article from GFT Forex about the importance of creating a trading plan.

Suze Orman Advises Mark Zuckerberg Against Buying Twitter [SPOOF VIDEO]

Thu, 04 Mar 2010 21:09:45 -0600

Suze Orman Advises Mark Zuckerberg Against Buying Twitter [SPOOF VIDEO]:

Twitter may be valued at $1.4 billion, but it’s definitely not a smart buy in Suze Orman’s opinion. Well, that is if you’re Mark Z., a 25 year-old degree-less professional with…

The Euro’s Next Battleground: Spain

Thu, 25 Feb 2010 17:55:04 -0600

The Euro’s Next Battleground: Spain:

Shared by Andhi
Now the British look pretty smart when they decided not to join the single currency of the EU. The French and German Governments will have to bail out the P.I.G. nations (Portugal,…

Euro Falls in Forex Trading

Thu, 25 Feb 2010 17:55:04 -0600

Euro Falls in Forex Trading: Currency trading with the euro

The euro is falling in forex trading as Europe frets about the situation in Greece. Moody’s warned that Greece faces another downgrade to its sovereign debt…

Why Gold Will Keep Falling: Currency Strategist

Thu, 25 Feb 2010 01:16:27 -0600

Why Gold Will Keep Falling: Currency Strategist:

Gold prices have dropped nearly one percent over the past week-and the decline could continue, said Ashraf Laidi, chief currency strategist at CMC Markets. There’s more downside for the precious…

What Does This Pattern Mean For Cable? A very interesting...

Thu, 25 Feb 2010 01:16:27 -0600

What Does This Pattern Mean For Cable? A very interesting...:

What Does This Pattern Mean For Cable?

A very interesting consolidation pattern on the hourly chart for the GBP/USD. A rectangle is a continuation pattern. So since this pattern occurrs after a…

Making a Tough Call [Quotables]

Tue, 16 Feb 2010 13:15:29 -0600

Making a Tough Call [Quotables]:

“When faced with two choices, simply toss a coin. It works not because it settles the question for you, but because, in that brief moment when the coin is in the air, you suddenly know what you…

Best Time To Trade

Fri, 12 Feb 2010 09:00:00 -0600

Best Time To Trade:

Knowing what currency pair to trade is as important as knowing when to trade. Most traders make money in times of high volatility. Although the FOREX market is open 24 hours a day, it does not mean that any hour of the day is optimal for trading.

There are four major markets that trade currencies: Sydney, Tokyo, London and New York. The highest liquidity hours are found when two markets overlap.

Oanda created this little tool that helps traders visualize market hours in the appropriate timezone.

Traders make $8bn bet against euro

Thu, 11 Feb 2010 11:17:11 -0600

Traders make $8bn bet against euro

Forex4noobs

Wed, 10 Feb 2010 18:28:26 -0600

Forex4noobs:

On my previous post I recommended 2 websites for newbies to FX trading. Here is another one.

Get An Education!

Tue, 09 Feb 2010 13:56:59 -0600

The barrier of entry to retail FX trading is very low. All you need is money to fund your account and an opinion on the markets.

Even though the tools for trading FX are within the reach of most aspiring traders, staying profitable is a goal that only a few traders can say they’ve achieved. What makes a trader successful? We can debate that for ages. In his book “Way of the Turtle: The Secret Methods That Turned Ordinary People into Legendary Traders,” Curtis M. Faith says, “trade with an edge, manage risk, be consistent, and keep it simple.”

Instead of funding their account, most new FX traders fall into the trap of spending a small fortune on expensive, exclusive workshops or seminars where supposedly the “secrets” of FX trading are shared.

The reality is far more simple. There is no big secret or a strategy that is fool proof. All you need to be successful is a method that statistically puts the odds of winning in your favor over the long run.

It is important, however, to get acquainted with some statistical concepts such as positive expectations and game theory.

The following websites offer comprehensive free courses. - http://www.babypips.com/school/- http://www.fxstreet.com/education/learning-center/

Knowledge is key, but experience is really the best teacher.

CFTC New Forex Leverage Regulation Explained

Fri, 29 Jan 2010 12:18:55 -0600

CFTC New Forex Leverage Regulation Explained:

CFTC has proposed to lower the leverage offered by US Forex Brokers from 100:1 to 10:1. This video explains how US forex traders will be affected if that proposal becomes law.

FX Trader Profile

Wed, 13 Jan 2010 18:55:30 -0600

FX Trader Profile:

Bloomberg.com had a good segment about trader profiles. It is paramount to know what kind of trader you are. Find your style and stick to it.

Should you trade or should you invest?

Thu, 07 Jan 2010 09:21:19 -0600

This is difficult to answer because it all depends on the investor/trader. Trading and investing both work on the following premise: A particular security will either increase in value or decrease in value within “X” amount of time for the a number of reasons.

Knowing “X” will tell you if you are a trader or an investor. If you think “X” will occur in a very short time frame (minutes, hour or days), you should consider yourself a trader. If you think “X” will occur in a longer time frame (weeks, months, years), you should consider yourself an investor.
The above two scenarios are not mutually exclusive. A trader can be an investor and an investor can execute a few trades. The key is to know prior to making the trade. Personally, I consider myself a trader. I do not think I have the patience nor the tolerance to wait weeks or months to see if a trade is going my way. I usually trade on a 5 minute time frame and my average trade lasts about 7 minutes. On rare occasions I will enter a trade that I expect to last for hours.

Whether or not you consider yourself a trader or an investor is not that important. What is important is how you approach each decision you make and not confuse the two.

Intuition vs. Systematic Trading

Fri, 18 Dec 2009 11:57:57 -0600

Is trading an art or a science?
One crucial component of science is reproducibility. It is described as the ability of a test or experiment to be accurately reproduced, or replicated, by someone else working independently (Wikipedia.org, 2009).
The reality, though, is that if one novice trader sits next to an experienced one and mimics his trading patterns, somehow the success will not be duplicated.
Trading involves a lot of math and psychology. Each of these disciplines are well established in the scientific world, but knowing when and how to apply those rules requires a lot of intuition. That’s why I believe that trading is more of an art than a science. I would compare a trader more to a musician than a mathematician.
Are great traders also artists at heart? Who is a better trader: a scientist or an artist? And should a trader forget about rules and only trade on intuition? As for the latter, I don’t think so. There are days when a trader is in the “zone” and all the trades seem to be profitable, but the majority of trading days will challenge the confidence of a trader. Rules and discipline are the only tools left to keep your emotions in check.
Knowing the rules of trading is easy. A couple of books and seminars will teach you all of it. It’s like poker or chess. It takes 10 minutes to know the rules, but a lifetime to master them. A good trader should spend a lifetime improving the craft and never be satisfied. The markets are not static; the moment we think we have it figured out, it is the moment we become irrelevant.
That’s why I think automatic trading systems cannot work over the long term. They need to be implanted with market models by their programmers. It can work for a short time, but due to the ever changing nature of the markets, a static model cannot survive. We are not at a point yet where the computer models are self adapting and become better at predicting behavior economics.
So, which one is better: Intuition or Systematic trading? Giving a universal answer would be contradictory. What ever works now for you, keep doing it. If your trading P/L is not as high as you hoped, then you should consider changing something.
Good luck in your trading.

If the EUR/GBP breaks the support, we’ll have a nice short...

Thu, 17 Dec 2009 20:51:20 -0600

If the EUR/GBP breaks the support, we’ll have a nice short opportunity in the next couple of days. Something to watch for.

When Ego Gets In The Way

Thu, 10 Dec 2009 12:33:00 -0600

I have been trading currencies for about 2 years with my ups and my downs. When I first started I thought it was my straight ticket to riches. What I did not realize is that the journey had multiple stops along the way. I still believe that a trader can live off his or her trading activities, but before it happens, the trader should expect many years of disappointments, small successes and great frustrations.

The act of trading is extremely simple. There are only two major actions: going long or short. If it’s that simple, then why do so many aspiring traders fail? I don’t think I have the definitive answer, but I know it must include a lack of understanding of the markets, the instruments being traded, and finally, a lack of understanding about ones self.

The markets and the instruments can be taught through books, DVDs, seminars and workshops. Unfortunately the most crucial part of trading, knowing yourself, is not easily taught. Malcolm Gladwell’s book, “Outliers: The Story of Success” touches on the idea that it takes time to master a skill. In his book, he promotes the idea that 10,000 hours of work are needed before something becomes second nature, as trading should be.

Ego has probably cost traders millions of dollars in bad trades this year. A certain amount of confidence is necessary when it comes to trading, but the moment a trader becomes overconfident, the market will teach the trader a lesson about humility. Trade the market you have and not the market you want or think you have in front of you. Make sure the reason why you don’t have a clear picture of the market is not caused by your unchecked emotions.

Correlation in Forex

Sat, 28 Nov 2009 21:38:36 -0600

One of the reasons why I chose trading currencies over trading equity is the amount of information a trader is required to process in order to make an informed decision. In Equity trading a large percentage of the security price action is not due to the security itself but rather external factors such as overall market, industry reports etc…
As Forex traders, we are asked to think a bit more globally and follow the economy as a whole. A successful equity trader focuses on one industry, sometimes even only in one stock. A forex successful forex trader usually follow less then 5 pairs.

In this trillion-dollar a day market, correlations between currencies and commodities are very helpful. No correlation can last indefinitely, but knowing how currencies react to one another can give the trader an edge.

Kathy Lien over at FX360.com wrote a great article titled The Strongest Forex Correlations. I invite every trader novice and veterans to read this article. She explained how Oil and Gold affect the Loonie, the Aussie and the Kiwi. How the US dollar and the Euro react to the S&P 500.
Knowing correlation will not make you a rich trader but it is one more tool we can put in our trading arsenal. Having the tools will make you prepared knowing when to use them will make you a successful trader.