The Most Common Trading Error

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The most common trading error is not using a trading plan.

Before even starting trading, a trading plan should be developed. The trading plan should definitely include information about when to buy and sell a stock. Especially the selling is important. This is the point where most traders fail. By not determining a selling point before starting to trade.

A trading plan can be quite plain or it can be very complex. This is something that every trader has to determine for himself, if he wants it plain and simple or complex. Mostly a plain and simple trading plan will do. And is probably even better than the complex one, since when it really get’s hot and you are losing money, simple rules makes it easier to know what to do at that moment.

How to construct a trading plan can be found in many places. Forex trading secrets is one of them.  There are also some books on the market that describe how to make a trading plan.

It is important to make the trading plan in writing. Otherwise it’s not really a plan, it’s only wishful thinking. And of course, you have to have the discipline to follow your plan. This is the next most common trading error. Not following the plan. Then it doesn’t matter how good the plan is, if you are not going to follow it anyway.

Determine what you want to reach with your trading. How large risks can you handle? Can you afford losing all your money, or only a portion of it? What is the time range?  All these questions have to be answered before writing the plan.

To be able to make good trading plans, it is a good advice to look at what other people have done. Try to find about about the forex trading secrets, and you will learn to write profitable trading plans.

Knowing When to Close Your Forex Position

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Investing in Forex can be a bit of a minefield, particularly for the novice trader or investor. There is so much conflicting advice out there about what to trade, when to trade, how long you should hold your position, which technical signals you should look for on the charts, which news items are likely to affect currencies, etc, etc. It can all be quite mind-boggling if you are new to the whole thing.

It can also be pretty scary too. Dipping your toe into the water for the first time when making your first forex trade can be an exhilarating, but also gut-wrenching feeling as you watch the currency exchange rate move either in your favour or against you.

So once you have actually made that move and opened up a position, how do you know when to close it? This is one of the trickiest questions that novice investors face.

The temptation is to close the position as soon as it is showing a small profit so you at least have something tangible to show for your efforts. Equally tempting is to hold on to the position if the price moves against you, in the hope that it will turn around and move back in your favour.

Neither of these approaches is recommended. Any successful trader will tell you that what you should always do is cut your losses and let your profits run, not the other way around. The best way to do this in practice is to enter a stop order immediately after you have opened your position. A stop is an order to sell if the price moves below a certain level (if you are long), or to buy if the price moves above a certain level (if you are short).

By entering a stop order, you are limiting your losses if the price does move against you. If, on the other hand, the price moves in your favour, you can move your stop order in line with the price movement to follow the trend. That way you are letting your profits run until the market turns, at which point your stop will be triggered and you will collect your profits.

So the moral of the story is, if you use stop orders in the right way, you don’t actually need to know when it is time to close your forex position, because the stops will take care of that for you.

Learn Forex The Right Way With A Forex Training Course

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Forex or foreign exchange trading is where currencies are converted and traded in a global market. It is the world’s largest financial market where about half a trillion dollar worth of currency is traded everyday. Forex trading allows transactions between different countries. It also gives an opportunity for average individuals to earn extra. But since forex trading is an investment, there is a risk of losing your investment with bad trades. Before venturing into the forex trading world, therefore, you should prepare yourself with the technical abilities and the discipline to be able to make the right calls at the right time.

You can learn forex through a variety of ways. There are free forex training courses available online. You can also buy a magazine or a book about forex trading. This is where you’ll be able to know all about the basics of forex trading. It is important that you undergo an effective forex training course for forex trading success.

Forex training starts with the basics. Then after mastering the basics, forex trading systems are explored. It is then practiced through free forex training simulations. With a forex training simulation, you can experience how it is to trade without risking real money. This is where you can modify or formulate an effective forex trading system that can guide you to forex trading success.

Since a lot of people are intrigued about forex and most of us would explore any income generating venture, forex training courses online have sprouted. There are also those who offer free forex training. In choosing what your forex training course provider, you should be smart and responsible. Reading reviews and doing some research about the forex training company would help you determine their reliability. It is better if you can find free forex training since you won’t have to spend a single penny. Seeking the advice or the tutelage of experienced traders would also help you fast track your forex training.

For forex trading success, you should remember that you are the one who is in control of your losses or your profit. Whether you learned forex through a free forex training or in a paid forex training course, you are the one to responsible for your trade decisions. Most succesful traders have practiced discipline aside from the fact that they have mastered the technicalities of forex trading. Discipline plays a vital role when it comes to trading. Making impulsive trade decisions is not advisable because you are more likely incur losses instead of profit when you make impulsive trade decisions.

Basic Forex Trading Strategies

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Forex trading strategies are amongst the more important aspects of your trade. In fact, they are considered to be the key to a successful online currency trading or FX trading. Now, having a good understanding of what these strategies are and how they are used would certainly give you and edge over the other investors.

As you may or may not already know, FX trading is actually very different from trading in stocks and as such, when it comes to significant short term profits, you would definitely need a good grasp of Forex trading strategies. Here are some of the most common ones to help you get started.

Leverage – This FX trading strategy was designed to enable online currency traders to get their hands of more funds than what they have deposited. In doing so, they are actually able to maximize the FX trading benefits that would have been unavailable to them without the additional funds. When you use this strategy, you would be able to use about 100 times the amount that’s in your account that should help you invest in higher yielding transactions this giving your better trading results.

Stop Loss Order – This is perhaps one of the most commonly used when it comes to the different Forex trading strategies because it actually helps investors when it comes to protecting their investment. This strategy would allow them to minimize any potential loss by creating a predetermined point at which he or she would no longer trade. This is extremely beneficial especially to those who tend to forget the limits that they have set for themselves.

All of these Forex trading strategies were designed to help the investor and protect their investment from possible loss. There would always be risks whenever you enter a transaction in the FX market thus it is important for an investor to familiarize themselves with these strategies.

Options Trading Strategies | The Long Put

The buyers of a put think about how to benefit from the falls of price of the underlying one or be protected from them. They have a downward vision of the market and usually hope that it should increase the volatile nature.

New York - "GREED STREET or Wall Street.....
New York – “GREED STREET or Wall Street…U decide?” Colorful tags below (Photo credit: David Paul Ohmer)

The long put option strategy is a basic strategy in options trading where the investor buy put options with the belief that the price of the underlying security will go significantly below the striking price before the  expiration date. His risk, his potential of loss, is limited to the premium whereas his potential of benefit is unlimited to the expiration on a descending market.

The threshold of profitability in this operation, is the price of exercise – the price of the premium. On the other hand to emphasize that his delta increases up to-1 as they lower the prices of the underlying assets.

More BEAR are the expectations of the market, the put must buy to itself in the position OTM as deep as possible, that is to say that the lowest price of exercise must be for the buyer of the put. Compared to short selling the stock, it is more convenient to bet against a stock by purchasing put options as the investor does not have to borrow the stock to short. Additionally, the risk is capped to the premium paid for the put options, as opposed to unlimited risk when short selling the underlying stock outright.

Let’s put an example: A Spanish company has come to an agreement with an American company tolling that to pay the Spaniard in 3 months a quantity in dollars. The Spanish company believes that the dollar can re-point opposite to the current levels that the euro shows, for what it does not want to cover this risk (it would win less), so he buys a put to 1,28, which is the current change (1,28 dollars = to 1 euro).