By kelly Price
Forex money management is simply seen as a way of restricting loses but its lot more than placing a stop, if you follow the tips in this article, you could increase your gains dramatically...
The aim of forex traders is to take risks at the right time and get the odds on their side and then get as much as the trend as they can - sure you knew that already!
However most traders think high odds trades come around all the time - they don't.
The really great trends maybe come around a few times a month no more but how many traders try forex scalping and day trading? Lots. How many lose? All of them.
The first real rule is to get the odds on your side as much as possible and that means
Cutting your trading down - most traders simply trade too much.
Keep in mind though you don't get paid for how often you trade you only get paid for being right with your trading signal and that's it.
Once you cut you're trading down, you can concentrate on hitting the opportunities you are going to trade harder.
A huge mistake is to diversify why?
It simply dilutes gains. Most traders, also have small accounts and if they take the common wisdom of risking 2%, they have to have their stop so close, their guaranteed to get stopped out.
They have a small loss - but on the other hand, they have no chance of winning.
Sure it's the majority view to risk 2% - but the majority doesn't win!
Risk 10 - 20% and you will stay in the trade and get some meaningful profits.
Next the most common error of all of novice forex traders is to trail their stop to close and get bumped out the trade, by normal market volatility.
If you don't know what standard deviation of price is, make it part of your essential forex education!
Knowing how to trail a stop, outside of normal volatility is the key to huge gains.
If you trade don't trail too quickly and if your long term forex trend following, keep your stop well back.
A good way to do this is to use key trend line support, around the 40 day Moving Average.
Sure you give a bit back at the end of the trend but you don't know when the trend was going to end anyway so don't try and predict - you can't
If you look at a forex chart, the big trends last for weeks, months or years and there worth a lot of dollars in the pocket.
If you trade forex you need to take risk pure and simple. You are not trading in a manner but take calculated risks when the odds are on your side.
If you want to make 10 - 20% you can do it with less risk elsewhere.
If you want 50 - 100% you need to take risks, it's as simple as that.
Most traders try to restrict risk so much they create it. Sure they keep their losses small but they have a lot of them and never make any decent gains.
So in forex money management terms, you need to take risks at the right time hit the high odds trades with your forex trading strategy and milk them for all there worth.
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Article Source: http://www.free-articles-zone.com
Friday, June 20, 2008
Thursday, June 19, 2008
Forex Brokers- How do I Find The Right One?
Author: Ray Caran
As in any other market there are a multitude of brokers to choose.
Points to evaluate:
Low Spreads - The spread, calculated in "pips", is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time. You should know that Forex brokers don't charge a commission, so this difference is how they make money. In comparing various brokers, you will find that the difference in spreads in Forex is as large a spread as you would find in the stock market.
To keep more of your profits keep the spread lower.
Quality Institution - Forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required. Forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You will find this important information on the website of its parent company.
Make sure your broker is backed by a well known and stable institution.
Tools and Research - Forex brokers offer a multitude of trading platforms for their clients. Before committing to your chosen broker, be sure to request free trials to test different trading platforms.
Find a broker who will give you the correct tools you need to succeed!
Questions to ask your prospective broker:
What are the normal spreads?
Are the spreads fixed or do they vary?
Do the spreads differ depending on ticket size?
Do all clients on your platform get the same spreads?
Some types of transactions
Margin Trading
Margin means borrowing money from a broker to buy a stock, or commodity, or currency pair and using the investment as collateral. It is, to all intents and purposes, a performance bond in cash or another means of security deposited by a trader.
Barriers
This is a standard option that automatically cancels out if spot trades through a prearranged knock-out level. This level is set below the initial spot for a call option, and above spot for a put.
Reversals
Reversals are primarily a Floor Trader strategy used to capitalize on minor price discrepancies between calls and puts. As implied by its name, reversals are the exact opposites of conversions.
Types of brokers
Market Operators
This most reliable group includes big commercial banks which are regulated according to bank laws and rules. If you elect to deal with such banks you will need large amounts of money to start. Minimal lot is approximately $1, 000, 000.
Market-makers
Market makers are financial which work with smaller broker companies and offer probable opportunities of Forex trading to individuals whose trading capitals exceed $50,000. They offer lower cost of Forex market trading. The minimal size of the bill is $50,000.
Small brokers
Smaller brokers working with individuals' small capital - which ranges from hundreds up to several thousand dollars. Risks of carrying out of deals begin when these little broker enterprises clear orders of their clients and work with the dealer or a market-maker.
Kitchens
The scheme of "kitchen" works fine if somebody doesn't start to win all the time. Their founders know that many clients just lose their money. And the profit of "kitchen" is these clients' losses. Then "kitchen" is closed with the remnants of clients' money and about two months later appear under other name. The scheme usually works like that. They offer to teach you for free and to learn how to trade in Forex market. Be aware that anytime money is involved, some one will try to help themselves to it.
Hopefully, I have helped to whet your appetite for Forex Trading.
There are some amazing Forex Trading Autopilot programs available. Do your research.
Article Source: http://www.articlesbase.com/finance-articles/forex-brokers-how-do-i-find-the-right-one-455290.html
About the Author:
Go here for an amazing Automatic Forex Trading System Forex Profits While You Sleep
As in any other market there are a multitude of brokers to choose.
Points to evaluate:
Low Spreads - The spread, calculated in "pips", is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time. You should know that Forex brokers don't charge a commission, so this difference is how they make money. In comparing various brokers, you will find that the difference in spreads in Forex is as large a spread as you would find in the stock market.
To keep more of your profits keep the spread lower.
Quality Institution - Forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required. Forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You will find this important information on the website of its parent company.
Make sure your broker is backed by a well known and stable institution.
Tools and Research - Forex brokers offer a multitude of trading platforms for their clients. Before committing to your chosen broker, be sure to request free trials to test different trading platforms.
Find a broker who will give you the correct tools you need to succeed!
Questions to ask your prospective broker:
What are the normal spreads?
Are the spreads fixed or do they vary?
Do the spreads differ depending on ticket size?
Do all clients on your platform get the same spreads?
Some types of transactions
Margin Trading
Margin means borrowing money from a broker to buy a stock, or commodity, or currency pair and using the investment as collateral. It is, to all intents and purposes, a performance bond in cash or another means of security deposited by a trader.
Barriers
This is a standard option that automatically cancels out if spot trades through a prearranged knock-out level. This level is set below the initial spot for a call option, and above spot for a put.
Reversals
Reversals are primarily a Floor Trader strategy used to capitalize on minor price discrepancies between calls and puts. As implied by its name, reversals are the exact opposites of conversions.
Types of brokers
Market Operators
This most reliable group includes big commercial banks which are regulated according to bank laws and rules. If you elect to deal with such banks you will need large amounts of money to start. Minimal lot is approximately $1, 000, 000.
Market-makers
Market makers are financial which work with smaller broker companies and offer probable opportunities of Forex trading to individuals whose trading capitals exceed $50,000. They offer lower cost of Forex market trading. The minimal size of the bill is $50,000.
Small brokers
Smaller brokers working with individuals' small capital - which ranges from hundreds up to several thousand dollars. Risks of carrying out of deals begin when these little broker enterprises clear orders of their clients and work with the dealer or a market-maker.
Kitchens
The scheme of "kitchen" works fine if somebody doesn't start to win all the time. Their founders know that many clients just lose their money. And the profit of "kitchen" is these clients' losses. Then "kitchen" is closed with the remnants of clients' money and about two months later appear under other name. The scheme usually works like that. They offer to teach you for free and to learn how to trade in Forex market. Be aware that anytime money is involved, some one will try to help themselves to it.
Hopefully, I have helped to whet your appetite for Forex Trading.
There are some amazing Forex Trading Autopilot programs available. Do your research.
Article Source: http://www.articlesbase.com/finance-articles/forex-brokers-how-do-i-find-the-right-one-455290.html
About the Author:
Go here for an amazing Automatic Forex Trading System Forex Profits While You Sleep
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