One of the blessing of being house bound with broken leg [& stroke] was I could give my Forex Trading hobby full time attention. This is like the Stock Market but it's trades 24 hours a day and nearly 6 days a week through out the world. The Forex Market is the biggest market in the world. Currencies between 2 to 3 trillion dollars change hands every day. It starts off in Asia time zone with Australia, New Zealand & Japan etc, moving on to the European zone with London & Zürich time zones being the biggest, when it merges with the New York, American market later. Then when the USA market is closing, it's time for the Asian market to start a new day again.
Any currency can be traded against another one, but the popular one are the Euro verses USA Dollar, Gt British Pound verses USA Dollar and the USA Dollar verses the Japanese Yen. Followed by the USA Dollar verses Swiss Franc, British Pound verses Japan Yen and the Euro verses the Japan Yen. Then the Australian Dollar verses USA Dollar, USA Dollar verses Canadian Dollar brings up the rear on the popular currencies traded. But they many more, about every currency can be traded against another one somewhere in the thousands of Brokers and Banks doing this around the world.
The Forex Market is the largest market in the world. The amount of transactions dwarf what is traded on the Dow & S & P in America, probably reaching some 3 trillion dollars every day. But that's the problem, nobody knows how big it really is, because there is no actual physical market held in one place or city. All the currencies are traded in thousands of places in the Banks and Brokers all over the world. Many of 'the opposite side' of any transaction may [& can] be taken by the Bank or Broker and in the smaller transactions are.
This has caused many disputes in the past, but now most are 'somewhat' regulated by the major countries involved, like the USA, Europe & Japan and others. But it doesn't stop the Broker or Bank still taking the 'opposite side' of your trade or transaction. And why should they not? It is because of the very nature of Forex Trading and its leverage, 90% of traders loose. So if you have the 'side' of the trade, statistics prove that 90% of the time you make a profit. Remember, for any trade in anything there has to be 'two sides', a buyer and a seller, to make it happen. In the Stock Market most trades find another trader [perhaps], but in the Forex Market this doesn't always happen. The Brokers and Banks do not have to pass the trade along. First of all they is no physical market and secondly perhaps they want to trade for there selves. Being as most traders loose [90%] what better way than is there but to take the opposite trade/position for there selves.
Now I don't agree that this a good thing. I make sure any Broker I deal doesn't do this. In fact I much prefer to deal with a Broker that does not have any dealing desk and charges a small commission for every trade. This instead of the normal practice of building their fees and charges into the price of the Bid & Ask of the currencies. Most professional traders do this, where as most amateur traders will not pay commission. It is a state of mind when you start trading. You can't believe that the price can be manipulated by the Brokers & Banks. But when you had a few trades that either you were 'stopped-out' at the exact price and then the price reversed, or where the 'Spread' of the Bid & Ask was far too large, you start thinking again.... A Stop Loss is a price you put on your trade, so if the trade goes 'the wrong way', you get 'stopped out before losing too much. Well that's the theory of it. A few years ago some of the less from honest Brokers [& Banks] would manipulate the price to get traders 'stopped out'. Then the price would reverse without your trade.
In Forex you can 'Buy' or 'Sell'. Most [but not all] Share trading is just buying to sell later at a higher price. But in Forex you can 'buy or sell' straight away because you are trading against another currency. You can go either 'Up' or 'Down'. So if you think the American Dollar is weak. You Buy another currency and that is the same as selling the USA Dollar. It doesn't matter if you want to Buy, go Up [go Long] or Sell, go Down [go Short] it's easy with Forex.
The biggest thing to watch, apart from being wrong with direction of your trade is the Leverage that Forex Brokers 'give' to you. This might be 100 to 1 up to 500 to 1. The more Leverage means you can make more profit sooner, but when a trade goes the 'wrong way' and you start losing the Leverage will quickly turn your account into zero, if your not careful. Most new traders go and get the biggest Leverage they can. This is wrong it will contribute to them losing all the money. You should get the minimum, 100 to 1 and start really small.
Most new traders now use Metatraders free charting available here; http://www.metaquotes.net/en/metatrader4 or though most online Brokers. For trading 'Intraday' you can use 1min, 5min, 15min, 30min 60min and 4 hour chart. If you want to trade on a Daily basis, you can use the Daily, Weekly or Monthly charts. There are many 'indicators' in the Metatraders chart and thousands more online.
I have a few hundred myself, so if you email at dm@easy-success-online.com I will send them to you free. But there is no easy way to find out 'what works' and 'what doesn't', only hard work through testing. Because Forex trading is an Art, not a Science and every trader has a different idea on the use of an indicators. There are many sites online with free instruction, but one the best is BabyPips. The site can be found here; http://www.babypips.com/ They have a very free 'school'. If you thinking of trading, check them out.
Also Metertraders have a system called Expert Advisors. This is a way that an automatic system called be made or adapted to trade automatically for you. That's in theory.
Many Expert Advisors etc can be found at Forexisbiz here; http://www.forexisbiz.com
But see my earlier blog post about 'I am a real idiot to trade automatically.'
If you start trading, best of luck.
Showing posts with label Forex trading. Show all posts
Showing posts with label Forex trading. Show all posts
Tuesday, November 9, 2010
Thursday, November 4, 2010
I must be an Idiot to Trade Forex Automatically
Trading Introduction
I have been a Trader of Shares, Futures and Foreign Exchange [Forex] for longer than I care to remember. I have made a lot of money and I have lost a lot of money. But throughout all the years, say 14, I have longed for an automatic system to trade for me.
14 or 15 years ago this was unbelievable to even think about, but now in trading every body is using them. Or trying to use them. I say trying, because although I have used, tried, tested many, many automatic systems 99 to 100% of them fail.
In Forex it is understandably the rage, because this market trades for 24 hours nearly six days a week. It takes a lot of willpower to 'stare' at a pc screen for even 5 or 6 hours. But most Forex Intraday Traders are 'glued' to their screens 12 to 15 hours a day. Believe me, I have done this for many years and I know hundreds of traders that do the the same. It plays havoc with a social or a married life. But there are thousands of traders doing this week in, week out.
With Forex anybody with $50 can start trading. Most [but not all] traders use Technical Analysis/Trading. Where the Foreign Exchange Currency are displayed on a chart in various time scales, from 1 minute to 1 day or 1 week.The most popular Intraday time frame is 5 minutes to 60 minutes. Those who don't use Technical Analysis use Fundamental Analysis. The means rather than plotting a chart with things like Support & Resistance or Moving Averages & other Indicators the Trader uses the physical news about the currency. The 'chart' packages are freely available from any of the thousands of brokers, especially the ones promoting Metatrader. This is a free charting package and is used from many thousands and probably millions of amateur and professionals alike.
The Forex Market is the biggest market in the world. Currencies of between 2 to 3 trillion dollars change hands every day. It starts off in Asia time zone with Australia, New Zealand & Japan etc, moving on to the European zone with London time zone being the biggest, when it merges with the New York, American market later. Then when the USA market is closing, it's time for the Asian market to start a new day again.
Forex trading has leverage for the trader. This means you can trade 100 to 200 times [or more] your account balance. This is great when your are winning, but it soon makes your account zero when you loose.
Automatic Trading
So most of the traders, especially the 24 hour Forex traders, want to find an automatic system. Metatrader makes this easy with software. They have built into it a function called an Expert Advisor, called an EA or Bot for short. Software writers make thousands of EA to try to trade like a person, or try to trade better than a human trader. In theory this is very manageable. An auto EA will take out all of the stress and the difficult decisions and just trade the market conditions as the software writer planned. That is in theory. I like many thousands of traders know in practice this isn't so. We have tested and tested thousands of EA Bots, all of them we hoped would set us free from watching the screen for many hours.
It doesn't matter if the auto EA is free or costing a lot of hard earned cash, most do not work. It is a sad fact of life they are hundreds of auto EA being sold online for $77, $97 or more, but 99% do not work. Or do not work for long, like 3 months or so. And to try to get these auto EA to work they ALL have a very big Stop Loss. That means for example, the EA will win say $10, but every time it losses it probably has a loss of some $200 or more!!
Part of trading is to accept a loss. That's OK, you cannot win 100%, I know plenty of traders that have a win to loss less than 50%. But their wins are bigger than their losses. That is the 'secret' of trading. But in all the thousands of EA I have tested and used, it is the other way around. So you back is 'against the wall' before you start. In many cases an EA will have a winning run of some tens of trades, but for a small amount and then when you are thinking, 'this is easy', the EA will have a huge loss, sometimes wiping out you whole account. Believe me, it happens every day.
Conclusion
If you thinking about trading, be very careful. It is the hardest job I have ever done and that includes being a commercial pilot. But it can be rewarding, if you learn to walk before you run. Actually you should never run at trading. There are Bold Traders and Old Traders, but never the same....
And do not put your trust into an automatic EA, until it's proved itself for 3 to 6 months on a Demo account.
I do not want to stop people from trading, it's a 'fun' way of making some money, but it is hard and it's very unforgiving, especially for the new people. There is no real structured learning path. Every one has to find a way from all the 'stuff' online or from a broker or a mentor.
I have been a Trader of Shares, Futures and Foreign Exchange [Forex] for longer than I care to remember. I have made a lot of money and I have lost a lot of money. But throughout all the years, say 14, I have longed for an automatic system to trade for me.
14 or 15 years ago this was unbelievable to even think about, but now in trading every body is using them. Or trying to use them. I say trying, because although I have used, tried, tested many, many automatic systems 99 to 100% of them fail.
In Forex it is understandably the rage, because this market trades for 24 hours nearly six days a week. It takes a lot of willpower to 'stare' at a pc screen for even 5 or 6 hours. But most Forex Intraday Traders are 'glued' to their screens 12 to 15 hours a day. Believe me, I have done this for many years and I know hundreds of traders that do the the same. It plays havoc with a social or a married life. But there are thousands of traders doing this week in, week out.
With Forex anybody with $50 can start trading. Most [but not all] traders use Technical Analysis/Trading. Where the Foreign Exchange Currency are displayed on a chart in various time scales, from 1 minute to 1 day or 1 week.The most popular Intraday time frame is 5 minutes to 60 minutes. Those who don't use Technical Analysis use Fundamental Analysis. The means rather than plotting a chart with things like Support & Resistance or Moving Averages & other Indicators the Trader uses the physical news about the currency. The 'chart' packages are freely available from any of the thousands of brokers, especially the ones promoting Metatrader. This is a free charting package and is used from many thousands and probably millions of amateur and professionals alike.
The Forex Market is the biggest market in the world. Currencies of between 2 to 3 trillion dollars change hands every day. It starts off in Asia time zone with Australia, New Zealand & Japan etc, moving on to the European zone with London time zone being the biggest, when it merges with the New York, American market later. Then when the USA market is closing, it's time for the Asian market to start a new day again.
Forex trading has leverage for the trader. This means you can trade 100 to 200 times [or more] your account balance. This is great when your are winning, but it soon makes your account zero when you loose.
Automatic Trading
So most of the traders, especially the 24 hour Forex traders, want to find an automatic system. Metatrader makes this easy with software. They have built into it a function called an Expert Advisor, called an EA or Bot for short. Software writers make thousands of EA to try to trade like a person, or try to trade better than a human trader. In theory this is very manageable. An auto EA will take out all of the stress and the difficult decisions and just trade the market conditions as the software writer planned. That is in theory. I like many thousands of traders know in practice this isn't so. We have tested and tested thousands of EA Bots, all of them we hoped would set us free from watching the screen for many hours.
It doesn't matter if the auto EA is free or costing a lot of hard earned cash, most do not work. It is a sad fact of life they are hundreds of auto EA being sold online for $77, $97 or more, but 99% do not work. Or do not work for long, like 3 months or so. And to try to get these auto EA to work they ALL have a very big Stop Loss. That means for example, the EA will win say $10, but every time it losses it probably has a loss of some $200 or more!!
Part of trading is to accept a loss. That's OK, you cannot win 100%, I know plenty of traders that have a win to loss less than 50%. But their wins are bigger than their losses. That is the 'secret' of trading. But in all the thousands of EA I have tested and used, it is the other way around. So you back is 'against the wall' before you start. In many cases an EA will have a winning run of some tens of trades, but for a small amount and then when you are thinking, 'this is easy', the EA will have a huge loss, sometimes wiping out you whole account. Believe me, it happens every day.
Conclusion
If you thinking about trading, be very careful. It is the hardest job I have ever done and that includes being a commercial pilot. But it can be rewarding, if you learn to walk before you run. Actually you should never run at trading. There are Bold Traders and Old Traders, but never the same....
And do not put your trust into an automatic EA, until it's proved itself for 3 to 6 months on a Demo account.
I do not want to stop people from trading, it's a 'fun' way of making some money, but it is hard and it's very unforgiving, especially for the new people. There is no real structured learning path. Every one has to find a way from all the 'stuff' online or from a broker or a mentor.
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