The Forex Trading In Some Hours

Why Forex?

2011-08-21T05:27:00.000-07:00

If you are reading this guide, you have most likely taken some sort of interest in
the Forex market. But what does the Forex market have to offer you?

Accessibility – It’s no wonder that the Forex market has the trading
volume of 3 trillion a day ‐ all anyone needs to take part in the action is a
computer with an internet connection.

24 Hour Market ‐ The Forex market is open 24 hours a day, so that you can
be right there trading whenever you hear a financial scoop. No need to
bite your fingernails waiting for the opening bell.

Narrow Focus – Unlike the stock market, a smaller market with tens of
thousands of stocks to choose from, the Forex market revolves around
more or less eight major currencies. A narrow choice means no rooms for
confusion, so even though the market is huge, it’s quite easy to get a clear
picture of what’s happening.

Liquidity ‐ The foreign exchange market is the largest financial market in
the world with a daily turnover of just over $3 trillion! Now apart from
being a really cool statistic, the sheer massive scope of the Forex market is
also one of its biggest advantages. The enormous volume of daily trades
makes it the most liquid market in the world, which basically means that
under normal market conditions you can buy and sell currency as you
please. You can never be in a jam for currency to buy or stuck with
currency that you can’t unload.

The Market Can’t Be Cornered ‐ The colossal size of the Forex market also
makes sure that no one can corner the market. Even banks don’t have
enough pull to really control the market for a long period of time, which
makes it a great place for the little guy to make a move.

Profitability

It doesn’t take a financial genius to figure out that the biggest attraction of any
market, or any financial venture for that matter, is the opportunity of profit. In the
Forex market, profitability is expressed in a number of ways.
First of all, just to set the record straight, you don’t have to be a millionaire to
trade Forex. Unlike most financial markets, the Forex market allows you to start
trading with relatively low initial capital. At RetailFX, you can start trading Forex
with as little as $25!
Right about now you’re probably asking yourself: “What chance do I have of
profiting with such a low initial investment?” The Forex market doesn’t require
large initial investments because it allows you to use leveraged trading. Leveraged
trading lets you open positions for tens of thousands of dollars while investing
sums as small as $25. This means that Forex trading has the profit (and loss)
potential of tens and even hundreds of percent a day!
What is also unique about the Forex market is that any sort of movement is an
opportunity to trade. Whether a currency is crashing or soaring, there is always
room for speculation, since you always have the option of buying or selling the
currency of your choice. Unlike the stock market, you are not limited to
speculating on rising stocks, and a falling market is just as good for business as a
rising market.
Having said all that, it is important to remember that as profitable as the Forex
market is, it still carries all the risks involved with financial trading. You should
always be aware of the risk, and never risk money that you can’t afford to lose.

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2011-08-16T14:23:00.000-07:00

It doesn’t take a financial genius to figure out that the biggest attraction of any
market, or any financial venture for that matter, is the opportunity of profit. In the
Forex market, profitability is expressed in a number of ways.
First of all, just to set the record straight, you don’t have to be a millionaire to
trade Forex. Unlike most financial markets, the Forex market allows you to start
trading with relatively low initial capital.

Right about now you’re probably asking yourself: “What chance do I have of
profiting with such a low initial investment?” The Forex market doesn’t require
large initial investments because it allows you to use leveraged trading. Leveraged
trading lets you open positions for tens of thousands of dollars while investing
sums as small as $25. This means that Forex trading has the profit (and loss)
potential of tens and even hundreds of percent a day!

What is also unique about the Forex market is that any sort of movement is an
opportunity to trade. Whether a currency is crashing or soaring, there is always
room for speculation, since you always have the option of buying or selling the
currency of your choice. Unlike the stock market, you are not limited to
speculating on rising stocks, and a falling market is just as good for business as a
rising market.
Having said all that, it is important to remember that as profitable as the Forex
market is, it still carries all the risks involved with financial trading. You should
always be aware of the risk, and never risk money that you can’t afford to lose.

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Tactical usage of Leverage

2011-08-13T06:10:00.000-07:00

If you’ve been at all exposed to the world of Forex you’ve probably heard the
word “Leverage” being tossed around. But what exactly is “Leverage”?
Leverage is a very important part of Forex trading, and it’s critical that you know
exactly how it works and how to use it. It is the term Forex traders use to refer to
the ratio of invested amount related to the trade's actual value.
Forex brokers usually provide their customers with the option to trade on
borrowed capital, so that traders don’t have to invest tens of thousands of dollars
for the chance to make any real profit. When you trade at a leverage of 1:100, or
X100, it means that for every $1 that you invest in the market, the broker invests
$100. As a result, you can control an amount of $10,000 by investing $100.
RetailFX provides traders with the opportunity of trading at up to 1:400 leverage.
It probably won’t surprise you when we say that with greater opportunity for
profit comes greater risk. Just like slight fluctuations in currency rates can make
you significant amounts of money, it can also cause you to lose your money very
quickly. The higher the leverage, the larger the profit that you stand to make and
the quicker you might lose your investment. A leverage of 1:400 can make you
more money than a leverage of 1:100, but it also puts your initial investment at
more risk.
If you trade with a leverage of 1:100 the market would have to move 100 pips
against you for your position to be wiped out. On the other hand, if you trade with
a leverage of 1:400 the market would only have to move 25 points against you for
your position to be wiped out.
We recommend first opening a position with a low 1:100 Leverage, and only once
you see that you’ve hit a strong trend, consider opening one with a 1:400
leverage.
The Ratio between Minimal Lot Size, Trade Size and Leverage
Fundamentally, the minimal lot size for a trade is $10,000, thus the leverage
limitations are set according to the amount you choose to trade:

Trade     Minimal             Lot
Size        Leverage
25             400        10,000
50              200        10,000
100            100            10,000

The advantage of trading with Leverage is that while your profits potential is
virtually infinite, at RetailFX your loss is limited to the amount of your initial

The Trend is Your Friend

2011-08-13T06:06:00.000-07:00

Trend analysis is based on the idea that what has happened in the past gives
traders an idea of what will happen in the future.
Although this may seem pretty basic, being able to identify when a pair is in a
trend and when it isn't will help you to increase your chances to profit
consistently in the Forex market.
When you can identify a trend, you can estimate what direction the rate of a
currency pair is going to go in. You should exploit the direction of the trend you
identify by placing a trade in that direction.
If it’s an uptrend, meaning that the rate is increasing, buying the currency pair will
give you a better probability for profit. If it’s a downtrend, meaning that the rate
is decreasing, selling the currency pair will give you a better chance of making
money.
How do I identify a trend? What are the characteristics of a trend?
The simplest way to identify a trend is through the distinct patterns that the price
forms. These can tell you if the market is moving in an uptrend or downtrend.
Identifying a Forex Trend
When a trend is taking place in a Forex pair, the price movements start to form
peaks and valleys in the chart of that pair, which are easily identified.
In an uptrend, the price movements form a series of higher peaks and higher
valleys.
(Higher Highs and Higher Lows.)
Since a picture’s worth a thousand words, lets look at the following chart:
This chart suggests that the trader should buy the currency pair (and close the
trade by selling at profit after the rate rises).

In a down trend, the price movements form a series of lower peaks and lower
valleys:

(Lower Highs and Lower Lows)
This chart suggests that the trader should sell the currency pair (and close the
trade by buying at profit after the rate declines)
It’s important to note that during some trading days the trend is hard to
spot, some trading days show no trend (the price movements form a
Range), and of course you’re bound to run into the occasional reversal, so
this is not a perfectly accurate or 100% reliable indicator for trading.
Here is what a trading Range looks like:

It is easier to make predictions with a trend than with a trading range. While you
can still profit in trading ranges, you have to be more nimble on your feet, and
ready to jump in and out of the markets at all times. Needless to say, this makes
the trader’s life a lot tougher and the risk for loss greater.
Trading ranges can be really messy and unpredictable, which is why you should
always look for trading trends. It’s a good idea to stay out all together during a
range, and get back in only when the markets start to trend again.
As a general strategy, it is best to trade with the trend rather than against it,
meaning that if the general trend of the market is headed up, you should be very
cautious about taking any positions that rely on the trend going in the opposite
direction.
The trend spotting strategy assumes that the present direction of the price rate
will continue into the future. It can be used in three main time‐frames: short,
intermediate and long‐term, with the trends being different for each.
For example, here’s a possible scenario in the Forex market:
Over the last 12 months the trend for the EUR/USD is an uptrend, over the last 30
days the trend is a downtrend, and over the last 24 Hours (intra‐day) trend is an
uptrend.
Regardless of the chosen time frame, traders will remain in their position until
they believe the trend has reversed.
So the goal is to spot a trend that you believe in and trade according to it.
Needless to say, you will need to monitor the trade, in case you were mistaken
and the trend vanishes or reverses. Then it's time to cut your losses by closing the
losing trade or by reversing ‐ closing the trade and opening a following, opposite
trade.
Warning: Speculating on Forex rates involves great amount of risk. Be advised that
even the most sophisticated traders can't always predict market movements'
directions.

STOP LOSS

2011-08-09T07:42:00.000-07:00

Let’s examine stop losses. First, there is really no such order as a “stop loss.” We’ve called it that because stop orders are most commonly used in this protective manner, but they are still simply “stop” orders. There
are three types of stop losses we will want to use at different stages of a trade. They are all going to be stop orders, but the thinking behind each stop (stop loss) order placement will be different. The initial stop we place when entering a trade is known most often as the protective stop loss.

This stop loss represents the potential for loss. It’s a risk-based stop, and it’s placed where the trade would no longer be valid. The risk-based stop is the opposite of the entry. If an entry is the reason to get in, then the point of validity/risk-based stop is the reason to get out.

The risk-based stop is the one we all hope we will have the discipline to place and not have to use. Transitioning from a risk-based stop to a breakeven stop is done only when the trade moves in our favor and to the first stop loss. It should become clear right about now that using support and resistance to place stop loss and profit targets is important because a market moves from level to level seeking support and resistance.

The way you place your profit target, the thinking behind their location, is what will set your risk management in motion. This is lost on far too many traders.
This is how far too many traders let a winner turn into a loser. How do we define a winner? It’s a trade that has reached the first of hopefully two to four more profit targets. How do you manage two to four profit targets?
That is done with multiple lots.
Once prices reach the first profit target, the trade is officially a “winner” and should be protected from a reversal that could happen when prices reach the support or resistance that was the profit target. This is a possible scenario when prices reach any kind of support or resistance, and since just about any order you place will be because of the support or resistance it has, then there is the possibility of either a continuation through this level or a reversal.

The psychological trade many traders fall into here is trailing their stop too aggressively. This is usually because they have experienced so many losers during the early part of their trading and learning curve that the
slightest profit triggers a fear reaction: I have to take this profit now! Many times the traps that most of us have to navigate through can be avoided with order entry that lets us observe the market rather than being involved
with it too hands on once the trade goes live. There is too much temptation, fear, and greed, and the only way we can avoid and manage these emotions is with order entry.

First of all, the only way a trade should and can be extended past the first profit target is to have multiple lots. One lot equals one profit target.
A breakeven stop allows for enough wiggles (the typical amount of volatility) that a position must be given in order to compensate for corrections along the way to the next profit target. Trailing stops are most often and
incorrectly done by using some sort of fixed pip or percentage. I’ve already explained why stop losses should not be placed with this type of thinking, and the same thing applies to every kind of stop. Trailing a stop is done as a trade moves in the direction we expected it to and reaches profit targets, which then in turn trigger the transition from risk-based to breakeven to finally trailing stop.

A breakeven stop, as the name implies, is where the trade would be stopped out and yield no loss or gain. It’s placed either just below the entry price if the entry is a buy or just above the entry price in a short. The
breakeven should be just beyond the entry as to be able to get maximum use out of the support or resistance that triggered the entry. As a trade progresses, if it progresses, the trailing stop is next.

Trailing stops are what we all love because they mean that no matter what, the exit is still a profitable one. But they should not be placed with fixed levels that trail current prices. The same levels that were once profit
targets are now going to be valuable levels of support and resistance that the trailing stops will be placed at. Here’s how it works. On the chart there are multiple levels that the trade could travel to as it moves in the profitable direction and these levels are resistance in a buy and support in a short.

Remember that what was once support becomes resistance and vice versa, so that now we are looking at a set of levels that can support prices in an uptrend and be a ceiling in a downtrend. This is exactly what we need for trailing stops.

The stop order itself should not be placed at the profit target level exactly but just beyond. So that means that in a buy, the resistance levels that were once profit targets are now support and trailing stop levels. Place the stop order just below the support level. In a short it’s the support of profit targets that have become resistance so the stop order will be placed just above that level. How much above?

Three to five pips to account for the spread will do.

ORDER ENTRY

2011-08-09T07:36:00.000-07:00

I think there is too much and not enough discussion of order entry. I can and have talked about the mechanics of entering a buy or sell order with limits, stops, or at the market. Mechanics and definitions don’t do the art
of order entry enough justice because they make it seem flat and lifeless.

In reality order entry is dynamic.

I have seen over the years that most traders use market orders. This is the “get me in” or “get me out” now order. A market order in the wrong hands and if overused is not unlike the lever on the slot machine in Las
Vegas. It’s the impulse buy while checking out at the grocery store. The psychology behind the most common use of market orders is little planning and even less trade and risk management. Now I am not saying that all
market orders are somehow misguided, but it’s usually only very skilled and disciplined traders that should use this order type with any frequency.

If a trade is planned ahead of time, before price triggers an entry, then it should be logical that if the trade is preconfirmed a few orders can be “parked” in the market. When I say “parked,” I am referring to pending
orders such as limits and stops. These orders can be placed well ahead of time and handle the trade entry, risk-based stop loss, and initial profit target.

I don’t think at this point we need another discussion of what stop, limit, and market orders are. I think the main issue is why and how we place these orders. In fact, it’s really more about the job each one of these
orders has. We only have three order types, but which we use has more to do with how we want to communicate our wishes to the market.

THE BEST TIME TO TRADE

2011-08-07T05:51:00.000-07:00

The three major trading ‘sessions’ are as follows (all in Eastern Standard Time):
1. New York open 7:00 AM to 4:00 PM
2. Japanese/Australian open 7:00 PM to 3:00 AM
3. London open 3:00 AM to 11:00 AM

**Often, the best times to trade is at the beginning 3-5 hours of the above mentioned opening times, because the major currency pairs tend to move the most in a particular direction. Especially when there are economic news releases.

THE ABSOLUTE BEST TIME TO TRADE IS FROM 3 AM TO 11 AM EST.

The New York and London trading sessions overlap between 7 and 11 am EST.

The volatility is much higher and trading opportunities are much more frequent with bigger moves, especially in these four hours.

The currency pair that moves the most during these hours are the Usd/Chf (#1), then the Gbp/Usd, then the Eur/Usd, then the Usd/Jpy.

This is when you can make 30-100 pips trading in just a few minutes or hours, using any of our strategies in any time frame, especially around news releases.

If you need help in converting EST time zone to your time zone, please use this world time zone converter:

http://www.worldtimezone.com OR http://timeanddate.com/worldclock

Welcome

2011-07-31T04:55:00.000-07:00

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