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*The FOREX Lab*

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Last Post: 4/18/2012 7:39:26 AM - Followers: 51 - Board type: Free - Posts Today: 0

~THE FOREX LAB~

 What is FOREX?

 

If you've ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet (if you're a dude) or purse (if you're a lady) or man purse (if you're a metrosexual) into the currency of the country you are visiting.

You go up to the counter and notice a screen displaying different exchange rates for different currencies. You find "Japanese yen" and think to yourself, "WOW! My one dollar is worth 100 yen?! And I have ten dollars! I'm going to be rich!!!" (This excitement is quickly killed when you stop by a shop in the airport afterwards to buy a can of soda and, all of a sudden, half your money is gone.)

When you do this, you've essentially participated in the forex market! You've exchanged one currency for another. Or in forex trading terms, assuming you're an American visiting Japan, you've sold dollars and bought yen.

Before you fly back home, you stop by the currency exchange booth to exchange the yen that you miraculously have left over (Tokyo is expensive!) and notice the exchange rates have changed. It's these changes in the exchanges rates that allow you to make money in the foreign exchange market.

The foreign exchange market, which is usually known as "forex" or "FX," is the largest financial market in the world. Compared to the measly $74 billion a day volume of the New York Stock Exchange, the foreign exchange market looks absolutely ginormous with its $4 TRILLION a day trade volume. Forex rocks our socks!

 

Why bother trading FOREX?

 

There are many benefits and advantages of trading forex. Here are just a few reasons why so many people are choosing this market:

No commissions

No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail brokers are compensated for their services through something called the "bid-ask spread".

No middlemen

Spot currency trading eliminates the middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair.

No fixed lot size

In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces. In spot forex, you determine your own lot, or position size. This allows traders to participate with accounts as small as $25 (although we'll explain later why a $25 account is a bad idea).

Low transaction costs

The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions. At larger dealers, the spread could be as low as 0.07%. Of course this depends on your leverage and all will be explained later.

A 24-hour market

There is no waiting for the opening bell. From the Monday morning opening in Australia to the afternoon close in New York, the forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep.

No one can corner the market

The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control the market price for an extended period of time.

Where to get started?

 

Jumping into Forex can be a bit overwhelming at first. It seems everyone is trying to market the "Holy Trading Grail" that is guaranteed to lock in profits, beach houses in the caribbean, and a few Lambo's in your driveway. The truth- don't get your hopes up. Like anything, learning Forex takes time. Becoming a profitable trader takes more time. Making enough money to quit your day job takes more time. Don't jump into this market expecting to become rich in a few years. Set your expectations at a reasonable level, and work up from there. 

 

Step 1- Technical Analysis

Technical analysis is simply the analysis of past price changes in the hope of forecasting future price changes. These past price changes are forecasted onto charts. These charts are then analyzed by traders, each in their own style. There is NO right way of charting. If there was a surefire way to do it, then quite simply, everyone WOULD be doing it. You must develop a technique that works for you. It takes time. It takes patience. But in the end, it can pay off, very well. Below are several educational links that I have found to be most helpful in learning how to use technical analysis. It can be overwhelming at first, so take a few deep breaths. Get ready to put in a lot of effort and study hard. You are on the path to learning a new language. Remember that you must develop a style that works for you. Get creative, KEEP IT SIMPLE, and remember that if it sounds too good to be true, it probably is.

 

http://stockcharts.com/help/doku.php?id=chart_school

http://www.babypips.com/school/
 
http://www.candlesticker.com/
 
http://www.elliottwave.com/education/
 
 

Step 2- Demo Accounts

I recommend that EVERYONE start trading with a demo account. A demo account allows you to learn the market without risking your own capital. Forex is brutal. You do not want to be getting margin calls your first week of trading because you thought you were smarter than the system. You are not. A demo account will give you virtual money in which you can trade with and develop a sound strategy for becoming a profitable trader. I recommend trading with a demo account for AT LEAST a month, before throwing your own money in. Study your successes and failures. Learn from your mistakes! Below are the brokers I recommend for both demo and cash accounts. 

fxtrade.oanda.com/

www.etoro.com/

 

Step 3- Cash Accounts

So, you've learned how to use a chart, you've developed a profitable trading strategy with virtual money, and now you think your the next Gordon Gekko. Whoops. Not yet pal. AFTER you have done both of these things, it is time to put some real cash on the table. You will soon find out that trading with your own money tends to be slightly more nerve-wrecking than throwing $50,000 worth of virtual money into XAG. You will find yourself becoming much more picky in your entries. At least I hope so. This is why a demo account is so important. You NEED to have confidence in a technique you have developed. Without this confidence, you will be second guessing your decisions, wearing extra strength deodorant during your trading sessions, and before you know it your account balance will read a big fat ZERO. You cannot let emotions interfere with your technique. Greed, anger, fear, despair, hope, all of these will leave you bankrupt before you can say "Son of a Bi***". You need to become a machine and conquer your emotional impulses. This is what separates the successful traders from the failures. Do not start out with a six-figure account balance. I would not invest more than 5k into your first forex account. Take it SLOW. Small gains add up into large lump sums over time. If in a year you have a finely tuned system that has been consistently profitable, you can invest more of your capital. But start out slow with an amount that will not affect your life if you lose it all (which you probably will end up doing). Good luck!

The Most Liquid Currency Pairs

USD/CAD EUR/JPY
EUR/USD EUR/CHF
USD/CHF EUR/GBP
GBP/USD AUD/CAD
NZD/USD GBP/CHF
AUD/USD GBP/JPY
USD/JPY CHF/JPY
EUR/CAD AUD/JPY
EUR/AUD AUD/NZD

 

 

 

 

Notice how they are essentially an inverse of one another.

 

 

 

 

INSIDE BARS

www.learntotradethemarket.com/forex-trading-strategies/inside-bar-forex-strateg/

www.youtube.com/watch 

PIN BARS

www.learntotradethemarket.com/forex-trading-strategies/pin-bars-forex-trading-definition/

www.forextofreedom.com/pin-bar-candlestick-reversal-pattern/

www.youtube.com/watch

QUAD TUNNEL

investorshub.advfn.com/boards/read_msg.aspx

investorshub.advfn.com/boards/read_msg.aspx

FIBONACCI CONFLUENCE

www.stock-charts-made-easy.com/fibonacci-confluence.html

www.trading-naked.com/Confluence.htm

PIVOT POINTS

www.tradejuice.com/forex/pivot-point-trading-mm.htm

www.actionforex.com/markets/pivot-points/standard-pivot-points-2010040848154/

www.investopedia.com/articles/forex/07/pivotpointstrategy.asp

DBLHC BARS

investorshub.advfn.com/boards/read_msg.aspx

Yes trading can be tough.

 "To be a successful trader you need to trade without fear. When you use fear as a resource to limit yourself, you will create the very conditions you are trying to avoid. Or to say this another way, you will experience your fears." Mark Douglass

The Psychology of Trading

www.traderslog.com/trading-psychology/

www.youtube.com/watch

 

 

PostSubject
#1113  Sticky Note The Magic of Compounding Giantsbran1227 12/13/10 08:40:10 PM
#1053  Sticky Note The 5 Steps to Becoming a Profitable Trader Giantsbran1227 12/12/10 02:18:53 AM
#942  Sticky Note Hey guys. Well I am feeling somewhat better. Giantsbran1227 12/10/10 01:21:01 AM
#1645   USA - FOREX - 1:500 LEVERAGE ACCOUNT IS POSSIBLE Den 04/18/12 07:39:26 AM
#1644   put a buy on eur/usd here at 14357 Smarttrader 06/10/11 11:01:17 AM
#1643   Anyone still alive around these parts? Giantsbran1227 05/26/11 02:05:59 AM
#1642   $USD Chart On Verge Of A Breakdown Matt_Chart 02/25/11 11:03:19 PM
#1641   Cool. Thanks! hfields 02/16/11 06:50:41 PM
#1640   over two years in live acct im happy tickettoride 02/16/11 05:38:28 PM
#1639   Anyone here recommend Oanda for live trading...I'm using hfields 02/16/11 05:12:02 PM
#1638   The weekend is the perfect time to brush tickettoride 02/13/11 07:24:42 AM
#1637   Thanks. I got back into xag/usd long late hfields 02/10/11 11:32:07 AM
#1636   nice trading tickettoride 02/10/11 06:41:43 AM
#1635   I made two successful trades (paper trades) the hfields 02/09/11 12:04:39 PM
#1634   XAG/USD: 1. Short 51k shares @ 30.306 hfields 02/08/11 03:21:35 PM
#1633   I decided to do a short against xau hfields 02/08/11 02:48:53 PM
#1632   Is XAG/USD silver vs us dollar pair? TIA hfields 02/08/11 01:47:28 PM
#1631   I opened a demo account w/ oanda on hfields 02/08/11 01:42:30 PM
#1630   Just looking in,I am very happy it is loniee 02/07/11 06:18:41 PM
#1629   EURAUD - Looks good to me from here kiwisteve 02/07/11 04:10:54 PM
#1628   http://www.currencytradermag.com/downloads/index.php tickettoride 02/02/11 06:59:30 PM
#1627   Nice quick short from 1.0140 on aud/usd today, Smarttrader 02/01/11 04:18:44 PM
#1626   LOL yea we breed them, it's fun,, alot giterdnn 01/30/11 04:24:00 AM
#1625   Wow, 9!? That's one heck of a litter. Giantsbran1227 01/29/11 11:01:02 PM
#1624   Good for you and do, giterdnn 01/29/11 10:23:18 PM
#1623   Just adopted a black lab. The shelter was Giantsbran1227 01/29/11 07:55:24 PM
#1622   nice to here it tickettoride 01/29/11 05:47:00 AM
#1621   Anyone else ride the XAG train today? Holy Giantsbran1227 01/29/11 02:06:09 AM
#1620   did you trade it today ? tickettoride 01/28/11 03:02:25 PM
#1619   nice trading tickettoride 01/28/11 07:14:47 AM
#1618   I just hit the silver retracement for over dirt man 01/27/11 11:44:14 AM
#1617   Not again! Another snowstorm hits US Northeast tickettoride 01/27/11 05:41:55 AM
#1616   long xag tickettoride 01/26/11 05:41:47 AM
#1615   In forex, what are the typical lot sizes hfields 01/25/11 07:35:12 PM
#1614   There was some news relevant to the euro. kermit42 01/25/11 09:18:29 AM
#1613   Well, I closed all my LONGS yesterday as MuddBuddha 01/25/11 07:23:54 AM
#1612   $EURUSD: The pair has slipped back from a tickettoride 01/25/11 05:53:23 AM
#1611   it is sitting right now on 1H downchannel line stargate 01/25/11 05:39:54 AM
#1610   I wont go long till I see it tickettoride 01/25/11 05:34:48 AM
#1609   26 is good for a long? stargate 01/25/11 05:31:11 AM
#1608   http://www.dailyfx.com/forex/market_alert/2011/01/25/Cold_Weather_Chills_UK_Grow tickettoride 01/25/11 05:23:43 AM
#1607   $GBPUSD: The pair has jumped off a cliff tickettoride 01/25/11 04:51:14 AM
#1606   well xag going down tickettoride 01/25/11 04:25:41 AM
#1605   china not alone in its buying tickettoride 01/24/11 05:39:17 PM
#1604   Thanks Giants, that is what I need to know giterdnn 01/24/11 11:05:06 AM
#1603   GOOD LUCK BUD ! ! ! auroradude 01/24/11 11:00:17 AM
#1602   Oanda has been fantastic for me. I love Giantsbran1227 01/24/11 10:59:15 AM
#1601   Nice job buddy. No trading for me today. Giantsbran1227 01/24/11 10:57:21 AM
#1600   Nice movement today. MuddBuddha 01/24/11 10:46:11 AM
#1599   Thanks for the info guys,, just shopping around giterdnn 01/24/11 09:30:39 AM
#1598   I've had no problem withdrawing $$ from Oanda. Sidney 01/24/11 09:24:25 AM
#1597   How is their withdraw policy? giterdnn 01/24/11 08:00:06 AM
#1596   hello tickettoride 01/24/11 07:50:08 AM
PostSubject