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Soultrader

Mastering The Trade by John F. Carter

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Another great book written by a true trader. I have checked out John and Hubert's trading class in the past and I found it to be one of the best places to learn. The insight and education you will receive in this book is priceless. Although John discusses trading setups that require the use of his custom indicators, the chapters on gaps, pivots, and market internals are well worth the price.

 

In my opinion, the best chapter in the book talks about the use of market internals to judge the "health" of the market. Just as a doctor needs to xray a patient, a trader needs to understand market internals to diagnose for strength or weakness. By gaining the bigger picture, you can then narrow it down to pinpointing your setups.

 

The last chapter focuses on market profile and is written by Alexander Benjamin, a market profile expert. If you are looking for a good day trading book, this is it. I highly recommend it to anyone in the trading field.

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As a relatively new trader, I have a library of trading books all focusing on specific aspects of trading. MTT is as comprehensive a trading book as I have read, covering not only specific trading strategies that I have begun using in my trading, but also an excellent section on developing a business plan - an area that I've not seen covered in any trading book.

 

Reminding ones self when you enter the trading game that it's a business that needs as much planning as any other business seems so obvious and yet is probably overlooked by the majority of aspiring traders. I refer to the book daily and would highly recommend this to both beginners and advanced traders alike.

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Absolutely an amazing book. This is one of the books that I credit with changing my style to something that suits me as an individual. It's an amazing wealth of knowledge and one that I, too, refer to on a daily basis.

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This book covers all the bases.

I really think one of the best parts is where he explains some of the setups that play against the psychology of weaker traders. This book even has a section on physical well-being. John Carter is an excellent trader and very good teacher. He also offers free lessons via his website as well. This book is definitely worth a read or two.

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A very good book indeed. I most liked the last section that dealt with one's health and it even gives a list of foods not to eat. The summary of Market Profile is helpful and particularly the section on multiple timeframe analysis before taking on trades. The rest of the book gives some tools to use for trading various instruments with plenty of charts to explain the methods. The author writes in an entertaining style.

Good work Mr Carter.

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To put it simply, one of the very best trading books around, especially for the very short term futures trader. There is a great deal of sample trade detail, which if you truly wade through it is highly useful and seldom found much in other books on trading. You won't agree with all he says, but that is natural in any work this size. Overall, a great value that was a long time in the preparation I think.

 

Happy Trading :D

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I went and did the 1 week mentorship with his company, they are great people and a coupe of jokers and kids at heart.

 

JC's book, well, I read it before I went there, he touched the subject about psychology but did not go in depth into it. Its not hist forte.

 

I found that his book was more about his trading techniques and stuff about he went through and the stages a trader goes through which is very true.

 

Other than that, pivots, John Person has a book about pivots.

 

I do have a bias towards books about psychology and bits of wisdom and not just techniques.

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I think he should put out a second edition, but I doubt he will. He doesn't seem to trade now quite the same way he describes in the book. Also, the book could have done with a little more proofreading as there are some gaps in the narrative.

 

And now he is trading grains and he doesn't really mention those in the book. I'll bet in a second edition he'd devote a whole chapter to them.

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Guest cooter
WOW! Thats awesome, James. Thanks!

 

Ummm, ok.:confused:

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Ummm, ok.:confused:

 

Oops. Sorry, cooter.

 

That's awesome, cooter!

 

Actually, just reviewed it and though I appreciate their effort and information and I picked up a few interesting tidbits, there wasn't much there I haven't been able to gather from other Carter resources. In a sense that's reassuring because JC's approach to day trading the ags is so simple. But that's even better if it works. So thanks for the heads up. But I'm glad I didn't pay for it. I couldn't believe all the morons in the background chatting it up while Hubert was talking about tape reading.

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Essential. It is somehow surprising that in 2005 one can still write a book on trading that stands tall among all the earlier trading literature. It probably has something to do with J.Carter's passion in sharing his view on trading, that makes his lecture uniquely powerful.

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The book is over-rated.

It may be a good book but definitely not great .

The book contains an assortment of different techniques which

may wet the appetite of an uninitiate. but each chapter lacks depth.

The book essentially becomes a "jack of all trade and master of none"

variety in my opinion.

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Its definitely a good starter book for trading futures and Forex. When I picked up the book, I really didn't know what a futures contract was. I studied the strategies, but most of them were not for me as far as my main strategies go. I've used "box plays", but usually within another strategy of my own. The book also introduced me to Market Profile, which has been a huge addition to my trading career. That led me to Mind Over Markets and somehow I found this site when researching Market Profile.

 

Carter's book is a great book for a novice, but its only a starting point.

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I agree that this book is for beginners to daytrading and a few other unfamiliar markets (forex, ags, etc). I think the setups and strategies are for those who haven't found a system and looking for ideas to form one. But the intangibale which other books have not really go in depth is the trading plan. It's a good template to start. I admit I added more content into my already existent trading plan from this book. In the end, it's worth the money on content other than strategies and setups.

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if you get 1 good idea from a book, then it is easily worth a read. this book was not my favorite but there are some good nuggets in there and I did like the Bollinger Band Squeeze Play (Chapter 10) did stimulate some new ideas for me that has turned into a very successful set-up for me.

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if you get 1 good idea from a book, then it is easily worth a read. this book was not my favorite but there are some good nuggets in there and I did like the Bollinger Band Squeeze Play (Chapter 10) did stimulate some new ideas for me that has turned into a very successful set-up for me.

 

Would you care to elaborate.

 

I'm just curious as a newbie to this and trying to decide whether or not to begin futures trading.

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i find that the bollinger band squeeze (not invented by hubert, but popularized for him ) is VERY useful not just as a way to get a good trade, but to AVOID a bad trade. iow, i have setups that i will not take (short) when a long squeeze is setting up

 

this has saved me a lot of money. because when the squeeze sets up and then my fade situation sets up, it's the WRONG time to fade (usually)

 

carter (haven't read the book but watched the videos) started me on my path to profitability. i have him (among others) to thank for that

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On 11-28-07 I felt:

 

As a new trader I am reading it now....I'll have to report on it later...but so far it has been one of the best books I have read as well as enlightening.

 

On 3-8-08 I felt:

 

As a day trader...I liked what the author had to say. I did learn a couple of new things, which made the book worth the price. I have several books about trading, this book is one that I no longer referred to, to check on something I may have read (it stays on the book shelf). If you are new, study something lighter and then take a look at this book-its a little advanced at times. Over all, I would give this book a 8 out of 10 because I did learn something, and that's what counts.

Edited by dowe66
Updating

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I have to admit, this is the book that got me into trading. From a begginer stand point this book is priceless, it touches on many important concepts and setups of trading and leaves the rest for you to discover. I've been a long term subsriber to John's videos and I've learned a great deal from him. I don't think just by reading this book (If you are a begginer) you are going to be able to trade profitably, but it would definately get you on the right path.

 

Just like John said to become professional it takes at least 10 years, so the sooner you start the faster you will be there :)

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I can't agree with you more there.

my next question is why does John Carter charge close to $500 for each of his TTM Squeeze, TTM Scalp, and TTM Brick Indicators like they are some Holy Grail Indicators ? Why doesn't he just give them away ? It sure create the wrong impressionj for a newbie in my opinion.

Or is it that he needs the money because he can't make enough from trading ?

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Its just another way for him to make money, even though I think its not ethical because those indicators are available for free and they are not that complicated. I really hope he does make money trading (he constantly claims that he does and this teaching business is just a side project from trading). ... There is no way of verifing it. I haven't read anything bad about them, eveyone says they are a real deal.

 

P.S. I remember him saying that he hired a programmer to develop those indicators, I'm a little sceptical of that because from my research I found that squeeze was not developed by him and he only changed colors on the indicator and claimed it as his.

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Its just another way for him to make money, even though I think its not ethical because those indicators are available for free and they are not that complicated. I really hope he does make money trading (he constantly claims that he does and this teaching business is just a side project from trading). ... There is no way of verifing it. I haven't read anything bad about them, eveyone says they are a real deal.

 

P.S. I remember him saying that he hired a programmer to develop those indicators, I'm a little sceptical of that because from my research I found that squeeze was not developed by him and he only changed colors on the indicator and claimed it as his.

 

He makes plenty of money trading. Sure he's wrong sometimes and loses money but so does every trader.

 

1 - Don't buy his book to learn how to trade and just like anything else, don't use someone else's indicators unless they work for YOU. He even talks about that in his book.

2 - His book is GREAT from the psychology aspect of trading. If you are new to trading then his book is great for that since it will open your eyes and realize just how harsh it really is.

3 - The section on market internals is awesome. He teaches you how to read internals and apply them to your trading.

 

I have read his book and I don't use any of his setups. I'm glad I read it and I recommend it to anyone who is new to futures. I think his book is very real and that's probably the biggest reason why I actually read the book.

 

You can download most of his indicators on TS forums and even some of them are around here. In his book he basically tells you what the squeeze is so it shouldn't be that hard to make the indicator yourself.

 

If you're looking for setups or anything like that then don't buy his book. Buy his book for a great introduction to trading futures then design a system on your own that works for you (with the least amount of indicators as possible).

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We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair     Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake David Rodriguez 11-14 minutes We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Reward to Risk ratios play a vital role in capital preservation Why do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article, we look at the biggest mistake that forex traders make, and a way to trade appropriately. Why Does the Average Forex Trader Lose Money? The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult. We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain. Percent of All Trades Closed Out at a Gain and Loss per Currency Pair   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time. If traders were right more than half of the time, why did most lose money? Average Profit/Loss per Winning and Losing Trades per Currency Pair Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades. Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades. What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution. Cut Losses, Let Profits Run – Why is this So Difficult to Do? In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. When your trade goes against you, close it out. Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later. If a trade is in your favor, let it run. It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains. But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology. A Simple Wager – Understanding Human Behavior Towards Winning and Losing What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?         Expected Return Gains Choice A 50% chance to Win 1000 50% chance to Win 0 Expect to win $500 over time   Choice B Win 450   Win $450 Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.         Expected Return Losses Choice A 50% chance to Lose 1000 50% chance to Lose 0 Expect to lose $500 over time   Choice B Lose 450   Lose $450 In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time. Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards. The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains. It feels “good enough” to make $450 versus $500, but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around. This doesn’t make any sense from a trading perspective—500 dollars lost are equivalent to 500 dollars gained; one is not worth more than the other. Why should we then act so differently? Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success. Avoid the Common Pitfall Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely? When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book. Typically, this is called a “reward/risk ratio”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio. If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades. What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio. That way, if you are right only half the time, you will at least break even. Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series. Stick to Your Plan: Use Stops and Limits Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor). Managing your risk in this way is a part of what many traders call “money management”. Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading. Does Using 1:1 Reward to Risk Really Work? Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it. Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent. Traders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference. dont forget- like subscribe Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com   Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015. Game Plan: What Strategy Can I Use? Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account. The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away. We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders. *Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015. Interested in developing your own strategy? On page 2 of our Building Confidence in Trading Guide, we help you identify your trading style and create your own trading plan. View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com     View the next articles in the Traits of Successful Series: Trading Leverage - A Real Look at How Traders May Use it Effectively Do the Hours I Trade Matter? Yes - Quite a Bit Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.com
    • Waiting for one constructive comment from you guys..anyone dont forget to like and subscribe
    • enjoy.. good profits in forex dont forget to like and subscribe          
    • try again..   1. MakingMoneyin ForexTradingTheForexmarkethasadailyvolumeofover $4trillionper day,dwarfingthevolumeof theequityandfuturesmarketscombined.Thousands ofpeople,allover theworld,are tradingForexandmakingtonsofmoney.Whynotyou?All youneedtostarttradingForexis acomputer andanInternetconnection.Youcan doitfrom thecomfortofyour home,inyour sparetimewithoutleavingyour dayjob. Andyoudon'tneedalargesum ofmoneytostart,youcantradeinitially withaminimal sum,or betteroff,youcanstartpracticingwithademoaccountwithouttheneedto depositanymoney.OnceyouconsiderstartingForextrading,oneofthefirstthings youneedtodois chooseabroker,choosingareliablebroker is thesinglemostcriticalfactor toForex success.We currently trade at eToro platform. After testing several Forex platforms we find this one to be the best. What made the difference is a unique feature that allow us to watch and copy the strategies and trades of the best performing traders on the platform. You can actually see each move the "Guru" traders make. This method works nicely for us. Since we started trading at this broker we noticed an increase of our successful trades and profits when compared to our former brokers. You may want to check them out.Please note that all trading involves risk. Only risk capital you're prepared to lose. Past performance does not guarantee future results. This post is for educational purposes and should not be considered as investment advice.NowIwouldstronglyencourageyoutogoandvisittheabovebroker's siterightnow evenifyouarenotyetdecidedwhether youwanttogointoForextrading.Why? Becauseitprovides tons offreeeducationmaterials,videosandbestofall ademo accountthatallows youtopracticeForextradingforfreewithouttheneedtodeposit anymoney.Simplygotothesite,registerforafreeaccountandstart"trading"-by actuallypracticingandexperiencingitfirsthandyou'll beabletodecidewhether Forex tradingisfor you.Inanycase,beforestartingtotradefor real,itis advisablethatyoupracticewithademo account.Onceyoubuildsomeskill andfeelmorecomfortablewiththesystemyou can starttradinggraduallyfor real money.GotoTo2.WhatisForexTradingForeignexchange,popularlyknownas 'Forex'or 'FX',is thetradeofasinglecurrency for another atadecidedtradepriceontheover-the-counter (OTC)marketplace.Forex is definitelytheworld's mosttradedmarket,havinganaverageturnover ofmorethan US$4trillioneachday.ComparethistotheNewYork Stock Exchange,thathasadailyturnover ofabout US$70billionanditisveryobvious howtheForexmarketisdefinitelythelargest financialmarketontheglobe.Inessence,Forexcurrencytradingis theactofsimultaneouslypurchasingoneforeign currencywhilstsellinganother,mainlyfor thepurposeofspeculation.Foreigncurrency values increase(appreciate) anddrop(depreciate) towards oneanother asaresultof varietyoffactors suchas economics andgeopolitics.ThenormalobjectiveofFXtraders is tomakemoneyfrom thesetypes ofchanges inthevalueofoneforeigncurrency againstanother byactivelyspeculatingonwhichwayforeignexchangerates arelikelytoturninthefuture.Incontrasttothemajorityoffinancialmarkets,theOTC (over-the-counter) currency marketsdoes nothaveanyphysical placeormainexchangeandtrades 24-hours every dayviaaworldwidesystem ofcompanies,financial institutionsandindividuals.Because ofthis,currencyratesarecontinuouslyrisingandfallinginvaluetowards oneanother, providingnumerous tradingchoices.Oneoftheimportantelements regardingForex's popularityis thefactthatcurrency tradingmarkets usuallyareavailable24-hours adayfromSundayeveningrightthrough toFridaynight.Buyingandsellingfollows theclock,beginningonMondaymorningin Wellington,NewZealand,movingontoAsiantradespearheadedfrom Tokyoand Singapore,aheadofgoingtoLondonandconcludingonFridayeveninginNewYork.Thefactthatprices areavailabletodeal 24-hours dailymakes certainthatprice gapping(whenever apriceleapsfrom onelevel toanother withnotradingbetween) is less andmakes surethattraders couldtakeapositioneachtimetheydesire, irrespectiveoftime,eventhoughinrealitythereareparticular 'lull' occasions when volumes tendtobebelowtheir dailyaveragewhichcouldwidenmarketspreads.Forexis aleveraged(or margined) item,whichmeansthatyouaresimplyrequiredto putinasmall percentageofthefull valueofyour positiontosetaforeignexchange trade.Becauseofthis,thechanceofprofit,orloss,fromyour primarymoneyoutlayis considerablygreater thaninconventional trading.Currencies aredesignatedbythreeletter symbols.Thestandardsymbolsfor someof themostcommonlytradedcurrencies are: EUR –EuUSD –UnitedStatesdollar CAD –Canadiandollar GBP–BritishpoundJPY–JapaneseYen AUD –Australiandollar CHF –Swiss francForextransactionsarequotedinpairsbecauseyouarebuyingonecurrencywhile sellinganother.Thefirstcurrencyis thebasecurrencyandthesecondcurrencyis the quotecurrency.Theprice,or rate,thatis quotedistheamountofthesecondcurrencyrequiredto purchaseoneunitofthefirstcurrency.For example,ifEUR/USD has anask priceof1.2327,youcanbuyoneEurofor 1.2327USdollars.Thereareso-calledmajors,for whicharound75%ofallmarketoperations onForexare held:theEUR/USD,GBP/USD,USD/CHF,andUSD/JPY.Aswesee,theUSdollar is representedinall currencypairs,thus,ifacurrencypair contains theUSdollar,this pair is consideredamajorcurrencypair.Pairs whichdonotincludetheUSdollar arecalled cross currencypairs,or cross rates.Thefollowingcross rates arethemostactively traded:EUR/CHF = euro-franc EUR/GBP= euro-sterling EUR/JPY= euro-Yen GBP/JPY= sterling-Yen AUD/JPY= aussie-Yen NZD/JPY= kiwi-YenTogiveyouatasteofwhatis happeningintheForexarenaherearesomehistoricalForexevents.Oneofthemostinterestingmovements intheForexmarketinvolvingtheBritishpound tookplaceintheSeptember16,1992.Thatdayis knownas BlackWednesdaywiththe BritishPoundpostingits biggestfall.Itwas mostlyseenintheGBP/DEM (BritishPound vs.theDeutschemark)andtheGBP/USD (BritishPoundvs.theUSdollar) currency pairs.ThefalloftheBritishpoundagainsttheUSdollar intheperiodfrom November toDecember 1992constituted25%(from2.01to1.51GBThegeneral reasonsfor this "sterlingcrisis"aresaidtobetheparticipationofGreat BritainintheEuropeancurrencysystemwithfixedexchangeratecorridors;recently passedparliamentaryelections;areductionintheBritishindustrialoutput;theBank of Englandeffortstoholdtheparityratefor theDeutschemark,as well as adramatic outflowofinvestors.Atthesametime,duetoaprofitabilityslant,theGermancurrency marketbecamemoreattractivethantheBritishone.All inall,thespeculators were rushingtosellpoundsfor Deutschemarks andfor USdollars.Theconsequencesofthis currencycrisiswereas follows:asharpincreaseintheBritishinterestratefrom 10%to15%,theBritishGovernmenthadtoacceptpounddevaluationandtosecedefrom the EuropeanMonetarySystem.Asaresult,thepoundreturnedtoafloatingexchange rate.Another intriguingcurrencypair is theUSdollar vs.theJapaneseYen(USD/JPY).The USdollar andJapaneseYenis thethirdonthelistofmosttradedcurrencypairs after theEUR/USDandGBP/USD.Itistradedmostactivelyduringsessions inAsia. Movementsofthis pairareusuallysmooth;theUSD/JPYpair quicklyreacts totherisk peakingoffinancialmarkets.From themid80's theYenratings startedrisingactively versus theUSDollar.Intheearly90's aprosperouseconomic developmentturnedinto astandstill inJapan,theunemploymentincreased;earnings andwages slidas well as thelivingstandardsoftheJapanesepopulation.Andfrom thebeginningoftheyear1991,this causedbankruptcies ofnumerousfinancialorganizationsinJapan.As a consequence,thequotes ontheTokyoStockExchangecollapsed,aYendevaluation tookplace,thereafter,anewwaveofbankruptcies amongmanufacturingcompanies began.In1995ahistorical lowoftheUSD/JPYpair was recordedat-79.80.TheabovestartedanAsiancrisis intheyears1997-1998thatledaYencrash.It resultedinatumbleoftheYen-USdollar pair from 115YensforoneUSdollar to150.Theglobaleconomic crisis touchedalmostall fields ofhumanactivities.Forexcurrency marketwas noexception.Though,Forexparticipants (central banks,commercialbanks, investmentbanks,brokers anddealers,pensionfunds,insurancecompaniesand transnational companies) wereinadifficultposition,theForexmarketcontinues to functionsuccessfully,itis astableandprofitableasnever before.Thefinancial crisis of2007has ledtodrasticchanges intheworld's currencies values. Duringthecrisis,theYenstrengthenedmostofall againstall other currencies.Neither theUSdollar,nor theeuro,buttheYenprovedtobethemostreliablecurrency instrumentfor traders.Oneofthereasonsforsuchstrengtheningcanbeattributedto thefactthattraders neededtofindasanctuaryamidamonetarychaos.Askand BidWhentraders wanttoplaceanorder ontheForexmarkettheyshouldbeawareofthe currencypair as well as thepriceofthispair.AForexmarketpriceofacurrencypair is denotedbytwosymbols,Ask andBid,whichhavespecific digitAsk priceis thehighestpriceinthepair’s quotationatwhichatrader buys thecurrency, standingfirstintheabbreviationofthecurrencypair.Consequently,atrader sells the currencystandingsecond.Bidpriceis thelowestpriceinthequotationofthecurrencypair,atwhichatrader sells thecurrencystandingfirstintheabbreviationofthecurrencypair.Respectively,atrader buys thecurrencystandingsecond.Seemcomplicated?here'sanexample:Let's assumethatwehavethecurrencypair ofEUR/USD withthequotationof1.3652/1.3655.Thismeansthatyoucanbuy1eurofor1.3655dollars or tosell1euro for 1.3652dollars.ThedifferencebetweentheBidpriceandtheAsk priceis called spread.Thespreadisactually thecommissionofthebroker.TheSpreadsinForextradingare actuallyverysmall comparedtocurrencyspreads atbanks.Aterm thatyou'll seealotwhiletradingForexis "pip"and"pips"-a“pip” standsfor “PercentageinPoint”.Apipis thesmallestpricemovementofatradedcurrency.Itis alsoreferredtoasa“point”.Itis veryimportantthatyouunderstandwhatapipis inthe Forextradingbecauseyouwill beusingpips incalculatingyour profits andlosses..For mostcurrenciesapipis 0.0001or 1/100ofacent.Whenacurrencymovesfromavalueof1.2911to1.2914,itmoved3pips.Whenapip has avalueof$10,youhavegained$30.Thereis anexceptionfor quotationsfor JapaneseYenagainstothercurrencies.For currencies inrelationtoJapaneseYenapipis 0.01or 1cent.Another termthatyou'll needtounderstandinrelationtoForextradingis “Lots”.Alotis theminimal tradedamountfor eachcurrencytransaction.For regular accounts onelot equals 100,000unitsofthebasecurrency.Howeveryoucanalsoopenminiandmicro accounts thatallowtradinginsmaller lots.Understanding thePip Spread -Thespreadis closelyassociatedwiththepipandhas amajor importanceforyouas atrader.Asmentionedabove,Itis thedifferencebetweenthesellingandthebuyingpriceofacurrencypair.Itis thedifferenceinthebid andask price.Theaskis thepriceatwhichyoubuyandthebidis thepriceatwhichyousell.SupposetheEUR/USDis quotedat1.4502bidand1.4505ask.Inthis casethespread is 3pips.Thepipspreadis your costofdoingbusiness here.Inthecaseaboveitmeans yousustainapaper lossequal to3pips atthemomentyouenter thetrade.Your contracthastoappreciateby3pipsbeforeyoubreakeven.Thelower thepipspreadtheeasier is itfor youtoprofit.Generallythemoreactiveandbigger themarket,thelower thepipspread.Smaller and moreexotic markets tendtohaveahigher spread.Mostbrokers willbeofferingdiffere thats better dont forget to like and subscribe  
    • or how about... 1. MakingMoneyin ForexTradingTheForexmarkethasadailyvolumeofover $4trillionper day,dwarfingthevolumeof theequityandfuturesmarketscombined.Thousands ofpeople,allover theworld,are tradingForexandmakingtonsofmoney.Whynotyou?All youneedtostarttradingForexis acomputer andanInternetconnection.Youcan doitfrom thecomfortofyour home,inyour sparetimewithoutleavingyour dayjob. Andyoudon'tneedalargesum ofmoneytostart,youcantradeinitially withaminimal sum,or betteroff,youcanstartpracticingwithademoaccountwithouttheneedto depositanymoney.OnceyouconsiderstartingForextrading,oneofthefirstthings youneedtodois chooseabroker,choosingareliablebroker is thesinglemostcriticalfactor toForex success.We currently trade at eToro platform. After testing several Forex platforms we find this one to be the best. What made the difference is a unique feature that allow us to watch and copy the strategies and trades of the best performing traders on the platform. You can actually see each move the "Guru" traders make. This method works nicely for us. Since we started trading at this broker we noticed an increase of our successful trades and profits when compared to our former brokers. You may want to check them out.Please note that all trading involves risk. Only risk capital you're prepared to lose. Past performance does not guarantee future results. This post is for educational purposes and should not be considered as investment advice.NowIwouldstronglyencourageyoutogoandvisittheabovebroker's siterightnow evenifyouarenotyetdecidedwhether youwanttogointoForextrading.Why? Becauseitprovides tons offreeeducationmaterials,videosandbestofall ademo accountthatallows youtopracticeForextradingforfreewithouttheneedtodeposit anymoney.Simplygotothesite,registerforafreeaccountandstart"trading"-by actuallypracticingandexperiencingitfirsthandyou'll beabletodecidewhether Forex tradingisfor you.Inanycase,beforestartingtotradefor real,itis advisablethatyoupracticewithademo account.Onceyoubuildsomeskill andfeelmorecomfortablewiththesystemyou can starttradinggraduallyfor real money.GotoTop           2.WhatisForexTradingForeignexchange,popularlyknownas 'Forex'or 'FX',is thetradeofasinglecurrency for another atadecidedtradepriceontheover-the-counter (OTC)marketplace.Forex is definitelytheworld's mosttradedmarket,havinganaverageturnover ofmorethan US$4trillioneachday.ComparethistotheNewYork Stock Exchange,thathasadailyturnover ofabout US$70billionanditisveryobvious howtheForexmarketisdefinitelythelargest financialmarketontheglobe.Inessence,Forexcurrencytradingis theactofsimultaneouslypurchasingoneforeign currencywhilstsellinganother,mainlyfor thepurposeofspeculation.Foreigncurrency values increase(appreciate) anddrop(depreciate) towards oneanother asaresultof varietyoffactors suchas economics andgeopolitics.ThenormalobjectiveofFXtraders is tomakemoneyfrom thesetypes ofchanges inthevalueofoneforeigncurrency againstanother byactivelyspeculatingonwhichwayforeignexchangerates arelikelytoturninthefuture.Incontrasttothemajorityoffinancialmarkets,theOTC (over-the-counter) currency marketsdoes nothaveanyphysical placeormainexchangeandtrades 24-hours every dayviaaworldwidesystem ofcompanies,financial institutionsandindividuals.Because ofthis,currencyratesarecontinuouslyrisingandfallinginvaluetowards oneanother, providingnumerous tradingchoices.Oneoftheimportantelements regardingForex's popularityis thefactthatcurrency tradingmarkets usuallyareavailable24-hours adayfromSundayeveningrightthrough toFridaynight.Buyingandsellingfollows theclock,beginningonMondaymorningin Wellington,NewZealand,movingontoAsiantradespearheadedfrom Tokyoand Singapore,aheadofgoingtoLondonandconcludingonFridayeveninginNewYork.Thefactthatprices areavailabletodeal 24-hours dailymakes certainthatprice gapping(whenever apriceleapsfrom onelevel toanother withnotradingbetween) is less andmakes surethattraders couldtakeapositioneachtimetheydesire, irrespectiveoftime,eventhoughinrealitythereareparticular 'lull' occasions when volumes tendtobebelowtheir dailyaveragewhichcouldwidenmarketspreads.Forexis aleveraged(or margined) item,whichmeansthatyouaresimplyrequiredto putinasmall percentageofthefull valueofyour positiontosetaforeignexchange trade.Becauseofthis,thechanceofprofit,orloss,fromyour primarymoneyoutlayis considerablygreater thaninconventional trading.Currencies aredesignatedbythreeletter symbols.Thestandardsymbolsfor someof themostcommonlytradedcurrencies are: EUR –Euros   USD –UnitedStatesdollar CAD –Canadiandollar GBP–BritishpoundJPY–JapaneseYen AUD –Australiandollar CHF –Swiss francForextransactionsarequotedinpairsbecauseyouarebuyingonecurrencywhile sellinganother.Thefirstcurrencyis thebasecurrencyandthesecondcurrencyis the quotecurrency.Theprice,or rate,thatis quotedistheamountofthesecondcurrencyrequiredto purchaseoneunitofthefirstcurrency.For example,ifEUR/USD has anask priceof1.2327,youcanbuyoneEurofor 1.2327USdollars.Thereareso-calledmajors,for whicharound75%ofallmarketoperations onForexare held:theEUR/USD,GBP/USD,USD/CHF,andUSD/JPY.Aswesee,theUSdollar is representedinall currencypairs,thus,ifacurrencypair contains theUSdollar,this pair is consideredamajorcurrencypair.Pairs whichdonotincludetheUSdollar arecalled cross currencypairs,or cross rates.Thefollowingcross rates arethemostactively traded:EUR/CHF = euro-franc EUR/GBP= euro-sterling EUR/JPY= euro-Yen GBP/JPY= sterling-Yen AUD/JPY= aussie-Yen NZD/JPY= kiwi-YenTogiveyouatasteofwhatis happeningintheForexarenaherearesomehistoricalForexevents.Oneofthemostinterestingmovements intheForexmarketinvolvingtheBritishpound tookplaceintheSeptember16,1992.Thatdayis knownas BlackWednesdaywiththe BritishPoundpostingits biggestfall.Itwas mostlyseenintheGBP/DEM (BritishPound vs.theDeutschemark)andtheGBP/USD (BritishPoundvs.theUSdollar) currency pairs.ThefalloftheBritishpoundagainsttheUSdollar intheperiodfrom November toDecember 1992constituted25%(from2.01to1.51GBP/USD).     Thegeneral reasonsfor this "sterlingcrisis"aresaidtobetheparticipationofGreat BritainintheEuropeancurrencysystemwithfixedexchangeratecorridors;recently passedparliamentaryelections;areductionintheBritishindustrialoutput;theBank of Englandeffortstoholdtheparityratefor theDeutschemark,as well as adramatic outflowofinvestors.Atthesametime,duetoaprofitabilityslant,theGermancurrency marketbecamemoreattractivethantheBritishone.All inall,thespeculators were rushingtosellpoundsfor Deutschemarks andfor USdollars.Theconsequencesofthis currencycrisiswereas follows:asharpincreaseintheBritishinterestratefrom 10%to15%,theBritishGovernmenthadtoacceptpounddevaluationandtosecedefrom the EuropeanMonetarySystem.Asaresult,thepoundreturnedtoafloatingexchange rate.Another intriguingcurrencypair is theUSdollar vs.theJapaneseYen(USD/JPY).The USdollar andJapaneseYenis thethirdonthelistofmosttradedcurrencypairs after theEUR/USDandGBP/USD.Itistradedmostactivelyduringsessions inAsia. Movementsofthis pairareusuallysmooth;theUSD/JPYpair quicklyreacts totherisk peakingoffinancialmarkets.From themid80's theYenratings startedrisingactively versus theUSDollar.Intheearly90's aprosperouseconomic developmentturnedinto astandstill inJapan,theunemploymentincreased;earnings andwages slidas well as thelivingstandardsoftheJapanesepopulation.Andfrom thebeginningoftheyear1991,this causedbankruptcies ofnumerousfinancialorganizationsinJapan.As a consequence,thequotes ontheTokyoStockExchangecollapsed,aYendevaluation tookplace,thereafter,anewwaveofbankruptcies amongmanufacturingcompanies began.In1995ahistorical lowoftheUSD/JPYpair was recordedat-79.80.TheabovestartedanAsiancrisis intheyears1997-1998thatledaYencrash.It resultedinatumbleoftheYen-USdollar pair from 115YensforoneUSdollar to150.Theglobaleconomic crisis touchedalmostall fields ofhumanactivities.Forexcurrency marketwas noexception.Though,Forexparticipants (central banks,commercialbanks, investmentbanks,brokers anddealers,pensionfunds,insurancecompaniesand transnational companies) wereinadifficultposition,theForexmarketcontinues to functionsuccessfully,itis astableandprofitableasnever before.Thefinancial crisis of2007has ledtodrasticchanges intheworld's currencies values. Duringthecrisis,theYenstrengthenedmostofall againstall other currencies.Neither theUSdollar,nor theeuro,buttheYenprovedtobethemostreliablecurrency instrumentfor traders.Oneofthereasonsforsuchstrengtheningcanbeattributedto thefactthattraders neededtofindasanctuaryamidamonetarychaos.Askand BidWhentraders wanttoplaceanorder ontheForexmarkettheyshouldbeawareofthe currencypair as well as thepriceofthispair.AForexmarketpriceofacurrencypair is denotedbytwosymbols,Ask andBid,whichhavespecific digital notations.     Ask priceis thehighestpriceinthepair’s quotationatwhichatrader buys thecurrency, standingfirstintheabbreviationofthecurrencypair.Consequently,atrader sells the currencystandingsecond.Bidpriceis thelowestpriceinthequotationofthecurrencypair,atwhichatrader sells thecurrencystandingfirstintheabbreviationofthecurrencypair.Respectively,atrader buys thecurrencystandingsecond.Seemcomplicated?here'sanexample:Let's assumethatwehavethecurrencypair ofEUR/USD withthequotationof1.3652/1.3655.Thismeansthatyoucanbuy1eurofor1.3655dollars or tosell1euro for 1.3652dollars.ThedifferencebetweentheBidpriceandtheAsk priceis called spread.Thespreadisactually thecommissionofthebroker.TheSpreadsinForextradingare actuallyverysmall comparedtocurrencyspreads atbanks.Aterm thatyou'll seealotwhiletradingForexis "pip"and"pips"-a“pip” standsfor “PercentageinPoint”.Apipis thesmallestpricemovementofatradedcurrency.Itis alsoreferredtoasa“point”.Itis veryimportantthatyouunderstandwhatapipis inthe Forextradingbecauseyouwill beusingpips incalculatingyour profits andlosses..For mostcurrenciesapipis 0.0001or 1/100ofacent.Whenacurrencymovesfromavalueof1.2911to1.2914,itmoved3pips.Whenapip has avalueof$10,youhavegained$30.Thereis anexceptionfor quotationsfor JapaneseYenagainstothercurrencies.For currencies inrelationtoJapaneseYenapipis 0.01or 1cent.Another termthatyou'll needtounderstandinrelationtoForextradingis “Lots”.Alotis theminimal tradedamountfor eachcurrencytransaction.For regular accounts onelot equals 100,000unitsofthebasecurrency.Howeveryoucanalsoopenminiandmicro accounts thatallowtradinginsmaller lots.Understanding thePip Spread -Thespreadis closelyassociatedwiththepipandhas amajor importanceforyouas atrader.Asmentionedabove,Itis thedifferencebetweenthesellingandthebuyingpriceofacurrencypair.Itis thedifferenceinthebid andask price.Theaskis thepriceatwhichyoubuyandthebidis thepriceatwhichyousell.SupposetheEUR/USDis quotedat1.4502bidand1.4505ask.Inthis casethespread is 3pips.Thepipspreadis your costofdoingbusiness here.Inthecaseaboveitmeans yousustainapaper lossequal to3pips atthemomentyouenter thetrade.Your contracthastoappreciateby3pipsbeforeyoubreakeven.Thelower thepipspreadtheeasier is itfor youtoprofit.Generallythemoreactiveandbigger themarket,thelower thepipspread.Smaller and moreexotic markets tendtohaveahigher spread.Mostbrokers willbeofferingdifferent  
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