Forex Trading Myths – Why Buying Low Selling High Will Lose you Money!

This may seem odd as it’s an accepted wisdom, but if you try and apply it in your forex trading strategy you will lose money. If you don’t realise why this is - read on and we will explain why. Of course, the aim of all traders is to buy in at the bottom of trends and sell out at peaks – but it’s impossible to do and the way most forex traders do it means they lose. The key to understanding why you can’t do it, is to realize that you have to predict in advance where prices will go or buy into a low or sell into a high and “hope” the levels hold.Fact is you can’t predict where forex prices are likely to go and if you rely on hope then you shouldn’t be trading forex. What you have to do is not predict but get confirmation of price momentum changes, above the level of support - BEFORE executing your forex trading signals. A simple example will show you how to do this. Many Forex traders watch a support level such as, Fibonacci level, pivot point etc, and as prices come to perceived support; they simply buy into it just above the level. There logic is, they are in at a low “if” the level holds – of course the important word here is “if”. Support lines, Fibonacci levels, pivot points break frequently, so if you try and buy into them just hoping they will hold you will buy the low will see you lose.A better way to trade:Is to use price momentum to check that support and resistance will hold - and then trade on confirmation. Trading on confirmation gets the odds on your side trying to predict will see you lose it’s as simple as that. So how do spot changes in price momentum? Great indicators to use are the stochastic and relative Strength Index (RSI) You simply watch for prices to move to support and then turn up supported by RSI or stochastic. You won’t buy the bottom you will miss a good bit of the move, but by trading in this way you will get stopped out less and always trade with the odds – this means bigger forex profits longer term. “Buy low sell high” is an accepted investment and many traders accept it at face value trade and lose. Over 90% of forex traders lose and “buying low selling high” without confirmation will see you join them, don’t fall into this trap

Moving Averages – Use Them Correctly for Bigger Profits

Moving averages are used frequently by forex traders and are a useful tool if used correctly.Many traders however don’t know how to use moving averages correctly and lose. Here we will look at their advantages and disadvantages and how to apply them correctly. There purposeMoving averages (no matter what period is used) all have the same aim:They identify trends over specific periods smoothing out the day-to-day price fluctuations that are simply caused by market volatility.The equation is simple:The closing price is added up and divided by the period of the moving average.Popular moving averages200 Day moving averages are popular for tracking longer term trends and 20 to 60 Day moving averages are used to identify intermediate trends.5 to 20 Days are popular for short cycles.Below you will find two common errors made by novice traders when trading with moving averages.1. Using Them as a leading Indicator When using moving averages novice traders frequently use them as a leading indicator to place trades in the market. If using moving averages you need to understand this:Moving averages are a lagging indicator NOT a leading indicator.They therefore should not be used on their own to initiate new trades. The fundamental error many traders make is to simply buy dips to the moving average and “hope” they hold. Just like buying dips to support at a trend line (without evidence of a change in price momentum) this trading method leads to losses. Moving averages should not be used as a leading indicator and you should time entry with a momentum indicator such as the stochastic. 2. Using moving averages in short time periods We all have time frames we like, We personally use 18, 40 and 200 day averages to help us identify trends, but today we have seen a rise in people using moving averages in time frames that are simply to short. Using moving averages for a few days or less is pointless. I have even seen people using hourly moving averages! This is crazy and recipe for disaster. Many day traders use moving averages, but the periods are so short their meaningless and they give moving averages a bad name! They lose and blame the indicator but it’s their fault for being stupid and using the indicator incorrectly. The correct way to use moving averages Experiment with timescales, but you can use moving averages to indicate layers of support and resistance and alert you to a potential trading opportunity to trade. You can with moving averages isolate areas to enter trades with good risk to reward and then time your entry with a momentum indicator.

Forex Swing Trading – Swing Trade your Way to Regular Profit

The rise of online forex trading means that anyone can swing trade for short term profits, Its not only profitable, its easy to learn, good fun and that's what trading should be. Forex swing trading online provides the ideal market for the methodology of swing trading.So why are currency markets the ideal for swing trading? Lets first of all define what forex swing trading actually is Forex Swing trading aims to identify intermediate swings in price, that can last from anywhere from a few days, to a few weeks. This is not day trading – day trading has no reliable data as the period is to short and you cant make money. Swing trading here means still looking at short time frames, but the data is reliable enough for you to get the odds in your favor.The following conditions make FOREX swing trading potentially such a lucrative way of trading1. Liquidity Each day the global forex markets see trillions of dollars transacted.This is a 24 hour market and is the world’s biggest investment marketplace. The huge size of the markets allows traders to open and close transactions quickly, to lock in profits and minimize losses.2. Volatility Currency markets are volatile and this is why a short term trading method such as forex swing trading can be so profitable. A volatile moving market is essential for swing trading. This volatility means a large number of potential opportunities that are presented to forex traders. 3. Transaction costsLow transaction costs that were once the preserve of large institutions, now any trader can get 3 – 5 pip spreads meaning short term trading is viable for any trader Swing trades come regularly While currencies present long term trends, there are many profitable swing trading opportunities within them.These shorter trends last for a few days to a few weeks and they offer regular high reward low risk trading opportunities for forex swing traders 5 Psychology is easy to learnMany traders lack patience and want to have quick action well that’s exactly what you get with forex swing trading. FOREX swing trading offers them a lot of trades regularly and you don’t need the patience of a long term trend follower. Swing trades tend to either run to profit quickly or loss, keeping the trader interested, motivated, disciplined and focused. This is an ideal way of trading for someone who loves trading. Forex swing trading is also Easy to learn you can simply use support and resistance lines with some confirming momentum indicators. For example, we use just stochastics and RSI – It’s simple and a stress free way of trading and best of all can make big profits with low risk.FOREX Swing trading is fun and very profitable and that’s the way trading should be.

Forex Trading – a Simple, Easy Tip to Increase your Profits

Forex trading is all about getting the odds in your favor to reduce rsik and increase reward. The simple tip below is ignored by most traders - yet if you include it in your trading plan, will see your risk decrease and profits increase and that’s what all traders want!Most novice traders don’t use this tip and lose. Learn the significance of this tip and use it and it is simply: Trade with Price MomentumMany traders like to predict where prices are going to go – but they should really be trading on the facts and that’s exactly what looking at shifts in price momentum does. It gives you clues to where prices may go next.Lets Loom at a common error that novice traders make to illustrate the point. Many traders love to buy dips to support and many will use trend lines or moving averages. As prices approach the support level, they buy into the support and hope that it holds. This is a huge mistake! If you rely on “hope” you are going to lose. This is why looking at price momentum is so important. If the momentum of price starts to weaken into support and turns the odds of support holding have increased. Acting on the FactsTo watch prices come into support and rather than diving in and taking a position - WAIT for price momentum to weaken into support and turn back up away from support. This is the clue to take a position, as price momentum is now moving away from support and odds favour the bulls.Why dont traders fo this more often?Traders find this hard to do, as they don’t like the fact they missed a bit of the move by waiting, but this is the only way to get the odds on your side. Consider this: Support obviously can either hold or break and you don’t know which will occur in advance it’s impossible to predict – you are simply guessing and that’s a good way to lose. If you look at price momentum you will be acting on confirmation that the odds are in your favour. A trader who is patent and disciplined and acts on confirmation has a far better chance of success than one who guesses or predicts where prices may go. So what are good indicators to look at? The best indicator by far in our opinion is the stochastic indicator – we don’t have enough room to cover it in detail here but it’s a great indicator for graphically showing shifts in price momentum. We like to combine the above indicator with the Relative Strength Index(RSI), another great momentum indicator. We never take a trade unless price momentum points the same way as our trade. Forex trading is an odds game and by using momentum indicators you will increase your chances of success and of course your profit potential.