The Three Categories Of Online Forex Trading Indicators

There are three categories of forex trading indicators. Technical indicators are provided by forex platforms to enable traders make the right judgment in determining the next direction of price action while trading. This decision is crucial if the prospective online forex trader is not ready to lose his money.

It is therefore important that anyone wishing to participate in trading currency online must possess adequate knowledge of indicators and their functions.

The three categories listed here are my own personal opinion. If you have knowledge of technical indicators and how they work, and you think differently from my opinion, you are free to give yours. This is a free society and everyone is free to offer his or her own suggestion. No one has a monopoly of ideas.

Now back to our discussion. The three categories of indicators are as follows:

Category one: Technical Indicators That Lag Behind The Price

These are the types of indicators that point to the price direction after the price action has gone beyond that position. In other words they let you know the position the price of a currency pair just moved from a few seconds ago.

One may be tempted to ask if such information is important in currency trading since it is more important to predict the next price position rather than the previous one. I say yes it is relevant because this information will help us discover the next price direction but this is of course in conjunction with what other indicators are saying about the current price position

Category two: Technical Indicators That Tag Along With Price

These are indicators that move in steps with the price action. They neither precede nor lag behind the price. They just move in line with it. On their own, this type of indicator may not look very important but in combination with other types of indicators, they become relevant source of information for us in perfecting our currency trading strategy

Category three: Technical Indicators That Lead The Price

As the title says it, these are important online forex trading indicators. They are very important because their action holds the key to the purpose for which we participate in fx trading online. They give us clue to the next likely price position.

With this knowledge, we make correct decisions while trading. This is in combination with other relevant indicators. Since our purpose of trading forex online is to make profit, this is very important to us.

What are the indicators that belong to each category you may ask? Now, let us get something very clear. There are almost a hundred technical indicators provided in the online currency trading chart. In my experiment with these indicators, I have only gone barely halfway. One significant thing is that these three categories stand out clearly. There is no dispute about that. To complete the categorization is the next task ahead, and the result will form the concluding part of this great information.

One Major Reason Why Many People May Never Get Rich Trading Forex

There is one major reason why many forex traders can never make it big or become rich while doing this currency trading business. Rather than becoming rich, they will continue to lose their money. Let us look at what usually happens to prospective traders.

At the onset a new trader is usually bubbling with great enthusiasm. He puts all his mind and energy into the training. He takes his demo trading very serious and while practicing and learning, believes that everything will be fine. He gets so confident after sometime believing that he has mastered every trick that can ever exist in forex trading. Then he decides to take a dive into live trading.


As a precaution, he will prefer to taste the waters first. He therefore decides to look for forex brokers whose platform allows micro trading or mini trading. These are brokers who tell you that you can start trading with two hundred or three hundred dollars. In fact, some brokers tell you that you can even start with as little as fifty dollars. You decide to gather your fund ready to start.

Many new traders do not take time to read the warning that many forex brokers display on their websites. This warning makes you to understand that trading forex is risky because you have no control over the price fluctuation. They protect themselves from your losses. They tell you not to use money you cannot afford to lose while trading.

Many new traders also do not know that if you wish to trade live with two hundred or three hundred dollars, you must as a matter of precaution trade with 0.01 and not 0.1 lot. By so doing, you will only trade with as little as ten percent of your deposit. This will protect you from the vagaries of drawdown during active trading times when the trade runs in the negative direction.

Unfortunately, many forex brokers set 0.1 lots as their minimum which implies that you will be taking a higher risk if you lose just as you will be making a big profit if trade goes in your favor. This risk is even higher during the period when we have low trading volume. Then when we take the broker’s spread into consideration, the overall risk becomes enormous.

As a matter of fact, many traders may know all these things but they easily forget to stick to the rule while trading because the brokers will not remind you the implication of using 0.1 and higher lots while trading with two or three hundred dollars. To make matters worse, there is no provision for you to adjust the lot downwards on their live platforms. Only very few platforms make provision for it. Metatrader [MT4] platforms have this adjustment in demo trading charts only but not in live charts.

Finding Solution to This Problem

The solution to this problem lies in good fund management strategy. To solve this problem, we must tell ourselves the following truths about forex trading;

1. If you wish to start trading live with two or three hundred dollars, find forex brokers whose platforms make provision for adjusting your lot downwards to 0.01 lots on their live chart.

2. If you insist on trading live on MT4 platform, you need nothing less than seven hundred and fifty dollars. It is best to start with one thousand dollars as this will safeguard your fund during drawdown at 0.1 lots.

3. If you do not have this amount of money to trade, you can open a live account while beginning your demo trading and begin to save your money in installments in your non-trading or transitory account so that when you are ready to go live, you would have saved up to a thousand dollars.

4. Remember the warning that says you must not use the money you cannot afford to lose to trade forex. Take that message serious.
Think about these suggestions and see how they can help to protect your fund. This is to your success in forex trading.

3 Reasons Why Forex Traders Lose Their Deposits and How to Avoid Them

There are many reasons why forex traders lose their deposits while trading currencies.


There is no doubt that many people who work online including forex traders work from home. It is one way of saving funds we can invest in our businesses.

I have categorized these reasons into 3 because the rest of the reasons are off shoot of these ones.

1. The psychological effect of the difference between demo trading and live trading.

2. The impatient factor in reading and interpreting the daily chart correctly.

3. The problem of wrong application of trading rules.

In the first reason, forex trading platforms provide free virtual funds for new entrants to use and learn how to trade. These practicing forex charts usually have between five thousand and ten thousand dollars for demo trading. Therefore when new traders make losses while learning, it hardly affects them psychologically, even when they use high lots to trade. They know that the money is not real fund.

From my personal experience I only feel bad for a short time when I lose money while trying to develop a new trading strategy that will protect my live funds, while using my demo account. In this case you can then imagine how new entrants who have never traded live will feel when they lose money while figuring out how to trade forex with demo account.

When they begin to trade with live funds, the feeling becomes different. They keep remembering that their hard earned money is at stake. They begin to get fidgety and panic whenever there is a draw down. This often leads to erratic decisions which eventually produce negative results.

What then is the solution to this problem? It is simple. Trade with smaller lots in your demo account as you will do with your real money or live funds. Regard your profit as real profit and your loss the same way and trade with only 10% of your fund as in live funds. Get used to it. It will pay you off at the long run.

In the second reason, some traders can not be patient enough to read and interpret the daily charts correctly. This often leads to wrong trade decisions, which eventually lead to losses. Correct reading and interpretation of daily charts helps you to find out the possible direction of trade for the day. Forex traders lose their deposits when they enter trades in a wrong trade direction for a particular currency for the day.



The solution to this problem is that forex traders should patiently read, understand and correctly interpret the chart for the day

The last reason why forex traders lose their deposit is the problem of wrong application of trading rules. Sometimes, it will not be enough to read and interpret the charts correctly. The result has to be applied correctly too.

Once I made such an error and paid dearly for it. I patiently read the chart. However I noticed that there was a difference in trade direction as predicted by higher time frames as against the lower ones. I followed the lower time frame and made my entry. When the direction of the lower time frame completed its runs, I failed to take action to close my trades and take profit. The result was bad for me.

MAXIMIZE YOUR FOREX TRADING PROFIT WITH THIS SYSTEM

To solve this problem, I developed a chart for the time frames with arrows showing the directions of each in the morning. I make reference to this chart as my trade progresses in the day. This got that problem solved.

To you who work at home trading forex, make the best of this information and improve your trading strategy. This is to your success in forex trading.

FOREX SCALPING SYSTEM

How To Trade The Scalping System Without Getting Caught By Your Broker.

Scalping in forex trading is a method of picking up little profits again and again such that a trader gradually accumulates substantial gain over a given period of time.

It is an act of placing short time trades instead of the long term ones and picking up tiny profits consistently. A short term trade is a forex trade that is placed and executed between
1 min. and 5mins of trading time.

It is exactly opposite to position trading where a trade lasts for many days or months before closing. There are hardly forex trading courses that teach scalping because many beginners will not find it easy to put into practice.

Let me make it clear here that trading the forex scalping system requires being fast. It demands sharpness in reflexes and response time.

I really do not understand why some forex brokers reject scalping. I say this because they get their pips from the spreads without hindrance once a trade is successfully executed.

Executing successful scalping trade requires sharpness in:

[i] reading and interpreting the trend of a currency pair at any given time.

[ii] knowing when to place a trade and when not to.

[iii] knowing when to exit a trade and when not to.

[iv] in keeping your reflexes at alert and remaining focused.


What to Do When Your Broker says NO to Scalping

When your broker says NO to scalping, you will observe that placing a trade on the 1 min or 5 mins time frame will take your entry point far away from the actual entry point. This will not happen when it is allowed.

What it means is that the spread is usually large and unable to accommodate short term trades. To overcome this what I usually do is to go ahead and place the trade on the one hour scale or less but not below the 15 min time frame.

I then return to 5 mins time scale where I close the trade when the trade matures, and take my profit. With that your broker will not catch you red handed.

Do not let your broker make you poor while he gets rich whether you gain or lose in your forex trading business.

The Forex Market Compettition Between Banks, Financial Institutions And Small Time Retail Traders.

Can Banks and Financial Institutions Diminish profits of Retail Forex Traders?

There is this notion that many retail forex traders are ignorant of the fact that banks and other financial institutions influence the direction of the currency market movement.

As a result only a handful of them who are aware of this, just about 2 percent of forex traders, take advantage of it and make significant profit from the market.

In other words those who make profit place forex trades based on the knowledge of pending orders from the banks and other financial institutions who as it were are believed to have control over eighty percent of daily forex trading volume.

The question then is how do you know when these banks and other financial institutions are placing their orders? Placing orders for foreign exchange transactions in banks and other financial institutions can not be an extraordinary event. It must be as routine as normal banking transactions.

In fact, I believe that forex requests are placed as demands come in. However after midday probably, daily requests may be closed. If that be the case then it is as simple that between 9 a.m and 12 p.m. retail forex traders can as well make their own small profits as banks cart theirs away in millions of dollars.

It is then left for individual forex traders to take advantage of the trading times- opening and closing times of the various global forex markets. These markets include the European Market from London, the American Market in New York, the Asian Market at Tokyo, the Australian Market at Brisbane etc.

The over $3.0 trillion dollars in the daily forex market cannot be exhausted by banks and other financial institutions such that small time retail traders cannot make their own million of dollars too.

All it requires is proper training, being focused and exercising self control over greed and other hindrances.

I suppose that retail forex traders pay great attention to fundamental and technical analysis, [which the banks and other financial institutions do not do probably due to the volume of funds they bring into the market], simply because it guides their decisions making processes while trading on a smaller scale. So it is safe to say that these tools are forex trading precision tools.

In conclusion I make bold to say that no matter how much the big banks and other financial institutions influence the market price movement and direction, by virtue of the volume of dollars they bring into the market, the small time retail forex traders will always cart away their own thousands hundreds of thousands if not millions of dollars.

FOREX TRADE INDICATORS- HOW TO USE THEM TO TRADE AND MAXIMIZE YOUR PROFIT

FOREX TRADE INDICATORS

One great advantage of the MT4 forex platform is the numerous currency trading indicators provided in the chart. These indicators are very helpful and guide the trader in making decisions while trading,as fast as possible.

Every forex trader knows that due to the volatility in price and fluctuations in the currency pairs, it is necessary to correctly predict the next move of a currency pair to be able to take a trade successfully. That is the main function of forex indicators. They help you see and read off any divergence from the path of
the trade and take necessary action to safeguard and secure your investments.

HOW TO APPLY INDICATORSInstallation.



Forex trading indicators are applied, averagely in combination of two, three or at most four per chart to successfully predict the next move of a currency pair. If you trade with three indicators, the third one should act as a confirmation of what direction the other two are pointing to the trade. Likewise for a combination of four indicators, the last two indicators should simply confirm what direction the other two indicators are signifying as the possible way the trade will likely go. With this you will be able to secure your investment rather than leaving it to the vagaries of absolute guess work.

CHOICE OF INDICATORS

I have experimented a lot on the possible combination of indicators to trade with and make profit. My choice may differ from that of other traders but one thing is certain, every trader must develop the use of a system of indicators to guide his or her trade.

Apart from the:
Bollinger Band and
Parabolic SAR, which are basic indicators the others I mostly use are
MACD [Moving Average Convergence Divergence],
Momentum,
Stochastic Slow,
Relative Strength Index [RSI] and
Commodity Channel Index [CCI].

On the average, the first three indicators and the last, all give satisfactory performance by correctly predicting the direction of price action. The only time the system may not correctly perform is when there is a breakout as a result of news action.

THE ORDER OF ARRANGEMENT OF INDICATORS

There is no fixed order of arrangement that is preferred in any currency trading chart. For convenience however, I place the MACD first, followed by Stochastic Slow, Commodity Channel Index and Momentum last. This gives me a quick picture of the state of the market trend at a glance from the chart. It also provides a quick opportunity to enter a trade or to exit a trade faster before the trend is reversed.

TRADING CURRENCY ONLINE- BASIC INFORMATION

It is important to state here at the outset that in as much as trading currency online can be financially rewarding, it carries with it potential risks. You must be properly informed of such risks as well as the likely gains.
Once you understand this and you are ready and willing to accept them, then you can go ahead and invest. Your investment will cover trading in currency, features as well as the options market.

It is not advisable to trade with money you cannot afford to lose. This is due to the uncertainty of the trend of the trade at any given time. The probability often exists that one could sustain total loss of his initial deposit made to a broker while trading currencies in the forex market. This has happened to so many online forex traders.

When this happens, you will be required to make additional deposit of funds to maintain your position and continue trading, or be shut out of trade.Therefore proper training in currency trading is very important at the onset.


Leveraging Installation.



The leveraged nature of online foreign currency trading implies that any market movement will equally have a proportional effect on the traders deposited funds. Much as this can work for any trader it can as well work against him, particularly when trading on a higher lot.Therefore it is advisable at the onset of trading that a newbie forex trader should limit his trading to lower lot.

The areas where considerable exposure to risk is generally pronounced in currency trading transactions include: leveraging, credit worthiness, limited regulatory protection and, the market volatility of a currency pair.

Since online trading is implemented on a leveraged basis, it then implies that a small amount of fund deposited with a broker can be increased in ratio to enable a small time trader to participate in the trade and make profit.

Finally, if the trader fails at any time to meet the margin requirement in trading currency in the forex market, his position may be liquidated and he will be responsible to offset any additional costs.


NEVER TRADE FOREX WITH FUNDS YOU CANNOT AFFORD TO LOSE. TAKE A MINIMUM OF SIX MONTHS OF DEMO TRADING CURRENCY AND CREATE A SOLID FOREX TRADING SYSTEM.