MLPs (Part I)

By Ahmad Hassam

Investing in commodities may be something that investors thought of boring and dull only a few decades back but not anymore now. If you are interested in investing in companies that are involved in the production, transformation and distribution of commodities, than one of the best ways to do so is through investing in the Master Limited Partnership (MLP).

The shares that an MLP issues are called Units and the investors who own them are known as Unit Holders. MLPs are public entities that trade on public exchanges. An MLP issues shares that trade on an exchange just like a company stocks that trades on an exchange. You can invest in an MLP by buying its shares on an exchange.

Right now there are not many MLPs in the market. You will only find 3-4 dozen MLPs listed in the different stock exchanges. When you invest in an MLP, you are essentially investing in public partnership. There are tax advantages to investing in MLP. Unlike regular corporations, an MLP is only taxed once. Now most of the MLPs trade on the New York Stock Exchange. A few MLPs also trade on the NASDAQ and the AMEX. Tax exemption on MLPs gives them certain benefits that other companies in the same industry lack. There is a tax exemption on MLPs. You must be curious how this tax advantage works out. Because of

There is a tax exemption on MLPs. You must be curious how this tax advantage works out. Because of Congressional Legislation, any MLP that derives 90% or more of its income from the production, distribution and transformation of commodities qualifies for this tax exempt scheme.

This tax advantage gives an MLP competitive advantage as compared to other corporations when competing for assets. This means a huge advantage for an MLP. Now an MLP is run by a General Partner (GP). In most cases, the majority of these GPs in MLPs are other corporate entities setup with the specific purpose of running an MLP.

However, most GPs do a good job of running the MLP as it is in their financial interests. Now you must know as a limited partner in an MLP, you have limited voting rights. This means when you invest in an MLP, you are giving away the keys of ownership to the GP. This means you are out of the decision making in an MLP.

An MLP is obligated to distribute all available cash back to its unit holders on a quarterly basis, so you will be getting a quarterly income from your units. Secondly as the MLP expands and grows overtime, its units may give you capital gain as well. Investing in MLP units can give you quarterly cash flows as well as appreciation of the unit price. However, always do your due diligence when you want to invest in an MLP. - 31987

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The Right Way To Day Trade Forex

By Howard Tyleren

If you would like to day trade forex you are not investing, you are in every sense of the word, trading. Everything is done same calendar day. We are not involved in carrying trades into the next session. We are not holding anything overnight. Otherwise we would be getting into swing trading or investing. We are looking to get in and make a profit within minutes or hours.

These day traders come in one of two varieties. They can either work for a company, trading for multiple investors. Or like myself and most likely you if youre just starting out, they trade from their bedroom for themselves or maybe for a friend.

Working for a trading company does come with its advantages. Not only do they have a team of veterans that work closely together but they have a large pool of money to leverage and super expensive tools. But no need to get discouraged if your working from home. Never before has the home trader had so many tools and resources accessible with the click of a mouse.

Using the web we can take advantage of foreign exchange signals, trading methods, forex software, and even trading platforms that allow us to trade at an instant. For the first time we can start to trade in the same domain as the large firm day trader. The only thing we probably can't compete with is the large bank account. But to be able to leverage that sizable account brings with it large risk, and that's not the place we want to begin.

Let me start out by suggesting that you study everything that you can before you start this voyage. Dont get impatient even if you have cash burning a hole in your pocket. Study every article you can find on the web. I would even take some of my initial trading funds to invest in some foreign exchange courses or methods to really get you going.

Now that your every thought is foreign exchange related and making you woozy it is time to practice trading. A demo trading account is our next move. This lets us go through our trading methods live with simulated currency. Most trading platforms will even give you access to analysis tools, expert charts and much more. Try out your skill and methods first before you move on to trading with real cash.

So now we are ready to trade but we still want to have a solid money management plan in place. Use a tiny percentage of your account for each and every trade. This allows you to manage your risk and still make a profit as the account grows. It doesn't matter how great an approaching trade looks you don't want to lose everything on a gut feeling.

The novice has a large amount of tools out there these days to contend with the veteran day trader. Groundwork is crucial. Patience is your friend. Practice everything you study and test new things on demo accounts. Day trading can be tremendously lucrative but not devoid of it's risks. Let's realize and handle that risk before we even begin. Going off now equipped with information I wish you success on your day trade forex adventure. - 31987

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Trading Crude Oil Futures (Part II)

By Ahmad Hassam

Crude oil trades around the world. Crude oil is one of the most heavily traded commodities in the world. Every day perhaps billions of dollars worth of crude oil gets traded. New York Mercantile Exchange (NYMEX) is considered to be the hub of crude oil trading in the world.

Ever heard of Light Sweet Crude? Light Sweet Crude is the high grade, low sulfur content crude oil that is more easily refined than the thicker oils. Now oil coming out of some of the Venezuelan and Saudi Arabian Oil wells contains high sulfur content and requires special refineries that only process the high grade sulfur crude oil.

Light Sweet Crude is the high grade, low sulfur content crude oil that is more easily refined than the thicker oils. Now crude oil coming out of some of the Venezuelan and Saudi Arabian Oil wells contains high sulfur content and requires special refineries that only process the high grade sulfur crude oil. On the other hand Iraqi oil is close to the ground and has very low sulfur content. Ever heard of Light Sweet Crude? Sulfur content in oil is considered to be very important. Lower the sulfur content in crude oil, the easier and less costly will be its refining. The higher the sulfur content in the crude oil, the more expensive its refining will be.

NYMEX offers you a host of futures as well as options contracts based on crude oil. At NYMEX, you can trade crude oil futures contracts based on Dubai Crude Oil, Brent North Sea Crude Oil, differential between the light sweet crude oil and the four domestic grades of crude oil and a few more. Oil options are also traded on NYMEX. Now Dubai Crude Oil Futures contract is very popular.

A barrel of oil contains 42 US gallons. Crude oil is traded in US dollars per barrel. In other words, the price of crude oil is quoted in US dollars per barrel. Now trading at NYMEX can be open outcry during the regular treading hours as well as electronic web based trading after hours.

A barrel of oil contains 42 US gallons. Crude oil is traded in US dollars per barrel. In other words, the price of crude oil is quoted in US dollars per barrel. Now trading at NYMEX can be through open outcry during the regular treading hours as well as electronic web based trading after hours.

You can visit the website of NYMEX and read a more about the crude oil trading that takes place at that exchange. Now trading crude oil futures contracts require you to be in tune with the market sentiment. Trends in crude oil market don't develop suddenly and they don't reverse suddenly. This is something good for you as a crude oil futures trader.

When a trend in the crude oil market develops, it may last for a few months to a year. It all depends on the global supply and demand situation of the crude oil. If you can spot a trend in the crude oil market in its early stage and ride it till its reversal, you can make a good profit. Now, just keep this in mind that crude oil prices are highly susceptible to global geopolitical situation and react violently to any political global uncertainty. - 31987

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Trading Crude Oil Futures (Part I)

By Ahmad Hassam

Again crude oil prices have started rising. The recent price of crude oil was quoted as $ 80 per barrel. It is being predicted that the price will soon reach the $ 100 per barrel mark. One thing should be clear to you. Energy markets will be a major focal point in the global financial makers and the global economy for many years to come. The key to understanding energy trading is to understand oil, natural gas, gasoline and heating oil futures.

You must be thinking that crude oil trading is being done only between different countries or hedge funds or highly wealthy individuals. For your information, crude oil contracts can also be traded by retail traders like you and me. NYMEX trades futures and options contracts for crude oil, natural gas, heating oil, gasoline, coal, electricity and propane. NYMEX is also home to trading in metals. Trading in energy futures is centralized at the New York Mercantile Exchange (NYMEX), the world's largest physical commodity futures exchange.

For smaller traders NYMEX offers e-mini contracts for oil and natural gas that also trades on the GLOBEX network of the Chicago Mercantile Exchange (CME). Trading in NYMEX is conducted in two divisions: 1) The NYMEX Division and 2) The COMEX Division. You can trade crude oil futures. If you haven't done futures trading before than before you start trading crude oil futures, you should first educate yourself on how to trade futures contracts. The good thing is that you can paper trade on your demo account with the use of virtual money. Paper trading is something that should not be missed by even professional traders. Practice makes your trading perfect!

One of the most important variables for any economy is the interest rates. Very high interest rates can make the economy come to a screeching halt as most businesses won't be able to afford high interest rate loans. On the other extreme, very low interest rates can make inflation too high in the economy. Now there is a relationship between the oil prices and the interest rates. The relationship between energy and interest rates is very important to understand. This relationship ties together the two most important aspects of the global economy: energy (the fuel for growth) and the interest rates (the catalyst that powers borrowed money to do things). Next to interest rates, energy and especially oil is the center of the universe not only for the industry but also for the financial markets.

High oil prices are considered to be inflationary and tend to slow down the economy. Low oil prices are always considered good for the economy. As a trader, you should know this fact that oil price rise often tends to slow down the economy and lower retail sales as well as consumer confidence with lower traffic on the highways. Sometimes the rise in oil prices leads to the increase in interest rates through the bond market and the actions of central banks and the other times the opposite happens. Rise in oil prices if often inflationary. Now all these effects have a time lag factor built in them. If the crude oil prices increase or jump suddenly like that in'73, it takes time for the increased oil prices to start affecting the other factors in the economy.

Now you need to understand the Peak Oil Concept. Peak oil is the concept that the world oil production has peaked and the production of oil will never be as high again. Oil prices and the interest rates generally move in the same direction when viewed over long periods of time.

Oil production in countries like Venezuela, Iran and Nigeria has peaked and is going down. Non OPEC sources of oil like North Sea and Mexico are also showing sign of declining production. There has been no major oil well discovery for the last few decades. Some people consider the Peak Oil idea as controversial but this concept is increasingly plausible given the state of the global oil industry.

Now you should keep these facts in the background of your mind as a trader. In any case, most of the experts now agree that in the next 10-20 years, the oil production will peak and after that it will start declining. 1) Demand fluctuates but supply of oil is finite. 2) The world runs on oil and any threat to the supply of oil often leads to rising prices. As an oil trader your primary goal is to consider the effects of events on the supply of oil and correlate this effect with your charts. - 31987

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Santa Claus Rally

By Ahmad Hassam

Markets tend to react to the outside events. Markets react to the seasons. Markets react to holidays. Markets react to political crisis. Markets are what the people are thinking. The day before the President's day is the worst day and the day after the Easter is the worst day after. However, you should keep in mind that a lot of other factors also come into play and you have a lot of room for error. The next best holiday bets are the Labor Day and the Memorial Day because they fall before the first day of trading in September and June respectively.

The best time of the year to own stocks is the Santa Claus rally which for all practical purposes is the 17 day stretch from December 21 to January 7. This is the best time of the year. Most of the folks usually feel fairly good about themselves around this time of the year.

FED tends to lower interest rates during holidays in order to go into the New Year with less of a worry if the economy is slowing down. There is a low trading volume which tends to exaggerate the trend if the economy is not doing well and is slowing down. However, when you are dealing with seasonality, you should keep these facts in your mind:

1) More and more people have real time access to information and larger amounts of capital than at any time in the past. The market is not longer static. The seasonal effect may get interrupted by other events.

2) At the end of the year, institutional investors want to make their results look as good as possible to their shareholders and tend to buy the stocks and so on. Institutional investors like mutual funds, hedge funds and insurance companies have become important players in the markets. So in case of an event free environment, seasonal tendencies may hold up fairly well.

3) These are the times for day traders and swing traders. With fewer people willing to hold stocks for longer periods, it is very difficult to predict seasonality. The days of long term investing or what you call buy and hold are dead! Frequent market crashes have taught the investing public that investing for the long term is fairly risky. So there is more short term trading going on.

4) The recent market crash was the result of CMO and Default Swaps bringing down the banks and Insurance companies in ways that had not been anticipated or foreseen by the analysts. Many had assumed that derivate securities are safe. Infact they have highly unpredictable tendencies. Derivates and outside the market trading activities can result in highly unpredictable patterns.

Many things are changing. The world is always changing. There is a change in demographics also taking place. With the aging of the population, the overall trend will be towards more income producing investments. So with everyone talking about the seasonal tendencies in the market, it reliability becomes less diminished. - 31987

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Guerilla Trader (Part II)

By Ahmad Hassam

A scalper is also a seeker of short term profits of the level of 25-50 pips. A scalper might use a 10 minute chart to follow the market, a 1 hour chart to determine the long term trend and the 5 minute chart to time the entries and exits for each trade. Scalper is a workable profile for a small retail trader. However, you should be able to view the overall trend of the market to gauge whether you are trading with or against the prevailing trend.

A Day trader is looking for larger profits something like 50-100 pips. A Day Trader might use a 15 minute chart to follow the market, a 4 hour chart to determine the long term trend and the 5 minute chart for making the entry and exit. Day trader is a good profile for a new trader.

Day trader is a good profile for a new trader. However, sometimes you might not want to close the trade at the end of the day as the trade is in profit and you are expecting more profits if you continue with the trade overnight. There is a rollover cost if you rollover your trades overnight. Be sure if you want to day trade, you know your broker policy on rollovers and the rollover cost for you. A Day trader is looking for larger profits something like 50-100 pips.

A position trader is always for the lookout for big market moves that can get him/her 100-500 pips per trade. He/she might use a 1 hour chart to track the market, the 15 minute chart to time entries and exits and 1 day charts for trend determination.

The longer you hold the position, the more you are at risk of getting the market surprises that no one can predict. A market surprise can be a sharp change in direction or volatility often occurring as the result of a major surprise announcement. A position trader is always for the lookout for big market moves that can get him/her 100-500 pips per trade. He/she might use a 1 hour chart to track the market, the 15 minute chart to time entries and exits and 1 day charts for trend determination.

If you aim for a 1/3 risk/reward ratio, a Guerilla will risk 5-10 pips per trade, a scalper will risk 15-20 pips per trade, a day trader will risk 25-30 pips per trade and a position trader will risk 40-50 pips per trade. Each profile requires different scales of charts and time frames but also indicators and money management parameters.

Always try to maintain a risk/reward ratio of at most 1/3. This means the chances are 3 to 1 that you are going to make a winning trade. In other words, in the long run, you will have 3 winning trades for each losing trade. If you aim for a 1/3 risk/reward ratio, a Guerilla will risk 5-10 pips per trade, a scalper will risk 15-20 pips per trade, a day trader will risk 25-30 pips per trade and a position trader will risk 40-50 pips per trade. Each profile requires different scales of charts and time frames but also indicators and money management parameters.

Do you want to become a good trader or a bad trader? Always keep in mind that in forex trading a 10 pips move up or down can easily occur within seconds or minutes very quickly without any reason or rhyme. No two traders can be exactly alike. - 31987

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Determining The Primary Trend

By Ahmad Hassam

A picture is worth more than a thousand words. Trading would be almost impossible without charts and technical analysis. Trading is all about anticipating and predicating rather than forecasting. Technical analysis is the best tool a trader can have.

Primary trend is the direction of the market that offers the least resistance forward making money. When you follow a primary trend in a bull market you look for strong stocks and in a bear market you look for stocks showing weaknesses. The most important thing that you should in a market is its primary trend. You use the following tools to determine the primary trend! Knowing the primary trend and trading in its direction increases your chances of making money. So how do you find the primary trend and what tools you need to determine the primary trend?

Trendlines: To correctly draw a rising trendline on the chart, start with the lowest low on the chart and connect it to the lowest low preceding the highest high in the chart without bothering about the prices between the two points. Knowing how to draw and use trendlines gives you an excellent start on any trade. Similarly to draw the down trendline, draw a line connecting the highest high on the chart to the highest high preceding the lowest low of the chart without passing through the prices between the two prices. Key support is the area above which the prices have held for sometimes. Key resistance is the area above which the prices have not been able to rise for sometimes. A market breaking above the key resistance or below the key support is a signals a new trend.

Moving Averages: Support level is the price where the prices stop falling and the buyers step in overcoming the selling pressure. A break in the support level is an indication that more weakness may be ahead. Moving averages are sues to smooth out the market's trend over a given period of time and serve as an important support and resistance levels.

A break above the resistance level is an indication that the market is going strong. Resistance level is the price where prices stop rising and the sellers overcome the buying pressure.

Oscillators: Oscillators are technical tools whose movements up or below a certain level give you an important trading signal. What is more important to know is the fact that oscillators produce useful mathematical data that can help you tell whether the market is overbought or oversold and whether the momentum of the primary trend in the market is still strong or there is a potential change in the primary trend ahead? Two important oscillators that you should be familiar with are RSI and MACD. Oscillators are graphic depictions of points derived from the mathematical formulas that are plotted below the price charts. Knowing these mathematical formulas is not important as a trader. MACD is a highly popular technical indicator and is widely used by the traders in divergence trading.

Bollinger Bands: Bollinger bands are calculated by plotting points one or more standard deviations above and below the 20-day moving average. However, you can calculate Bollinger Bands with any moving average. Bollinger bands are also known as volatility bands or envelopes. Bollinger bands give you visual evidence when the market has travelled too far in any one direction. After you identify the primary trend in the market, you should determine your trading timeframe. These timeframes are a sort of vague and can range from a few weeks to months. Short time frame for market timers is a few days to a few weeks. Long term time frame is something like six months. - 31987

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Day Trading - Is It A Real Opportunity Or Just A Waste Of Time?

By Daniel Waser

There is a well known activity on the stock market that involves the buying and selling of security in a single day that is referred to as day trading. If you are interested to participate actively in this activity, take the time to learn all you can on this particular activity. Anyone who wishes to master the activity of day trading must regard this as a real business-learn the art of the trade, be willing to learn, find the strength to rise from every failure and benefit from the lessons that is present from every temporary setback.

This activity provides liquidity in the stock market and keeps the market active. To be successful in day trading, one needs to have up to date information.

To be successful, one needs to master the psychology of day trading. The results are unforeseen and cannot be forecasted. A potential investor must be equipped with the right tools to be successful in this undertaking.

Day trading is just like any other form of business-there is no absolute guarantee that you will make millions of dollars from this trade. Day trading-is it for everyone? Day trading risk capital and it is something that most would find it affordable to lose.

The rule to remember is, day traders normally hold on to a position for a few minutes. It takes practice and training to build competence. You need to possess the cunningness of a sly fox and the bravery of a lion to make it big in this business. Keep your memories sharp and alert and avoid losing money at all costs.

Never get emotionally involved over one single transaction, and follow the trends of the stock market. A day trader's success is measured by the amount f profit he collects in a single day. Practice careful risk management if you want to be successful in this business.

Make sure you do understand the mechanics of Forex day trading before you participate. One can expect to see a day trader constantly monitoring the stock market through a computer terminal to keep in touch with the happenings of the market. It is imperative that the right information acquired at the right time can help one make an informed decision.

Do not be surprised to hear that day traders find this to be a most exciting activity. Day traders do believe in their own indicatory but they too are that there is no 100% in life that it will work. Make it a habit to sell on good days and buy on bad.

This trading involves the purchase of securities in a single day. Be forewarned that this form of trading comes with a lot of risk. Take time to think carefully and decide if this is right for you.

Day trading involves a lot of risk. So is this endeavor a game of luck rather then skill? Amazingly, a trader can expect to lose money from nine transactional and cover all his losses and make extra profit by succeeding in the tenth. Day trading is lots of fun, but it can be challenging too. - 31987

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Leveraged Short ETFs

By Ahmad Hassam

You can short stocks. You can even short ETFs. Have you ever heard of Short ETFs? The ProShares Short Dow 30 ETF (DOG) will return the inverse of the Dow Jones Industrial Average (DJIA) on daily basis. If the DJIA falls by 2%, DOG rises by 2% and if the DJIA rises by 2%, DOG will fall by 2%. Short ETF returns the inverse of the index it is linked to.

Short ETFs are also known as Inverse ETFs or Bear ETFs. During the past few years, the number of Short ETFs has risen dramatically. Short ETFs not only cover the major stock indices like the S&P 500 or the DJIA but also different sectors like the energy, utilities or technology. You will even find Inverse ETFs on currencies now.

You will even find leverage short ETFs. A leveraged short ETF gives the trader leverage without the use of margins. The ProShares UltraShort Dow 30 ETF (DXD) rises 2% when the DJIA falls by 1%.

Over the years, short ETFs have risen in popularity with the investors and hedge funds. Short ETFs give you an excellent opportunity to profit from the volatility in the market and the major indices.

Before the introduction of short ETFs, a trader had to actually short sell stocks to take advantage of a market drop. Short ETFs are a great product as they have created new opportunities for traders.

ETFs have opened up a whole new way of profiting from the markets. The trader had to go against the trend and buy or else move into cash or fixed income in the past if the market was dropping. Traders are not allowed to sell short stocks or ETFs in their retirement accounts. Short and leveraged ETFs provide traders with new opportunities.

ETFs also provide you with the opportunity to take advantage of the global market swings. China is one example that garners a lot of attention. The Shanghai Index in China rose 100% in 2007. In the first quarter of 2008, the Shanghai Index was down 35%.

The ProShares family of ETFs introduced the Ultrashort FTSE/Xinhua China 25 ETF (FXP). Now if you want to trade the fall of Chinese stocks, you can trade FXP ETF. In the past, traders who wanted to benefit from the fall of Chinese stocks could only short Chinese stocks that were traded in US Stock Exchanges.

As a long term investor you can take advantage of short ETFs to hedge your portfolio position. Assume you have a portfolio of $100,000 composed of 75% stocks and 25% money market fixed income.

The forecast of the market for the next six months is not good. But you are reluctant to sell your stocks due to tax reasons. Suppose the market falls by 10%. Your stock portfolio falls by 7.5% assuming the same ratio between the market and your portfolio. - 31987

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Common Sense Guidelines For Forex Traders

By Ahmad Hassam

In forex trading, you will need a lot of common sense. Everything in forex trading is common sense. If you don't use common sense than you might as well not trade at all. Someone had rightly said a long time ago that common sense is so common that nobody uses it. Well, if you are going to become a successful forex trader than you need a lot of common sense. OK, now a few common sense guidelines for you as a trader:

1) You should always look for a reputable broker. Don't fall into the trap of some unknown broker. Your ability to trade effectively depends on consistent spread and ample liquidity. Anyone can open a position. However, your ability to close a position at a good price is more important.

2) Trading means making consistent steady profits! Learn prudent money management rules. Avoid using excessive leverage that puts your investment capital at risk. Always trade with a stop! Never try to win big in one single trade. This is not trading, it is gambling. Always live to trade another day. If you believe in winning big than quit trading and start gambling! But if you do that you will only ruin yourself.

3) Set a reasonable risk/reward ratio for your trades. Never ever override yours stops for emotional reasons. Don't react to price action, buying just because you think it is cheap or selling because you think the price is high now. Always use technical analysis to make your decisions. Never ever trade emotionally. Stick to your plan and maintain your trading discipline. Always develop and make a trading plan before you take up trading.

4) Always remember you should plan each trade before actually entering it. You are not a punter. Always plan each trade. Don't punt. Punting is trading for the sake of trading without any planning or view.

5) Don't try to trade around round numbers. Don't leave stops at round numbers or obvious levels. If you do that chances are they will be triggered.

6) Don't add to a losing position unless it is part of a plan to scale into a position. In other words, don't double up just in order to recoup your losses. Only do that if it is part of a trading strategy.

7) You should develop trading discipline. When trading against the trend be disciplined in taking profits and don't hold out for the last pip. When trading with a trend always use a trailing stop loss order.

8) Avoid emotional highs or lows on individual trades. Consistency should be your target. Treat trading as a continuum. Don't base your success on one trade.

9) Try to trade multicurrency. This will hedge your risk. Always keep an idea on the crosses.

10) Don't trade just ahead of an economic news release. Always beware of volatility following the economic releases. Be cognizant of what news is coming out each day so that you never get surprised.

11) Beware of central bank intervention in illiquid markets. Stay away from illiquid times like holidays or pre-holidays when liquidity is thin. - 31987

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Guerilla Trader (Part I)

By Ahmad Hassam

Are you a long term trader like a position trader? Your time horizon can range from a very short term to a very long term. Find the time horizon that best suits you and bring all your trade plan considerations in line with it. Forex traders have different profiles. Your trading profile depends on the time frame you trade. Are you a short term trader like a day trader or a swing trader?

What are the trading characteristics that distinguish a good trader from a bad trader? Do good traders share common characteristics? Do bad traders have something in common? Yes, good traders share common characteristics. Bad traders share many things in common. Discovering the bad traits in you early is going to help you get a firm toehold and develop into a good trader in the long haul. So determining your trader profile early on in your trading career is very important for your success as a forex trader.

Too many traders jump from one type of trade and profile to another quickly and often. Forex markets are enormous, complex and deep. Finding your right trading profile is essentially finding your own niche in the market. Once you know your profile, you can dig deeper for improvements.

So how you determine your trading profile? The primary considerations in determining a trading profile are: 1) How much profit you wish to achieve in each trade? 2) How much risk you are willing to take in each trade? 3) How long on average do you expect to hold your positions?

The longer you stay in the trade, the more you are at the risk of a sudden news release or announcement that can be bone jarring for your trade. At the same time, you should know this fact that the longer you hold a position, the more you can benefit from the developing trend.

A Guerilla Forex Trader is looking for very short term profits something like 10-20 pips. Trading costs can become highly significant for a Guerilla Forex Trader as he/she may be in and out of the market frequently. So what are the most probable trader's profiles? The answer to this question will lead you to one of the following profiles: 1) Guerilla, 2) Scalper, 3) Day Trader and 4) Position Trader.

Now read it very carefully, a Guerilla is not a good fit for a new trader. This profile is best left to the professional forex traders with direct access to the interbank market and very low bid/ask spreads. A Guerilla Forex Trader might follow a 5 minute chart to follow the market, the 30 minute chart to determine the long term trend in the market and 1 minute chart to time trade entries and exits.

So if you are a new trader just starting to learn the ropes, you should avoid Guerilla trading profile. You will not be able to cover your trading cost with this profile. You can only be profitable in the long run if your trading cost is less than your profits. - 31987

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Making A Living By Day Trading

By Terry Connor

There have been a ton of examples of people who started out day trading as a side income to becoming a day trader as there career mode. Day trading does have its risk but it can be very lucrative at the same time. Lets look at the Marty Forex scenario to see how a day trader makes not only profit but a living as a professional day trader.

At the start of the work day Marty Forex decides to purchase a 100 shares of Forex-Trading Inc for by watching the trends Marty feels confident that this particular stock is on the rise. Turns out Marty is right as Forex-Trading Inc jumps up a full point before it is even lunch time. Marty decides to sell off his stocks in Forex-Trading before the end of the day and by doing so Marty is successful and makes a profit.

We will assume that Marty Forex made a $100 profit from his trade of Forex-Trade Inc and more than likely Marty would use half of that to apply against capital and the other half to be put towards future investments. Of course, no one in the day trading game is doing any investing with $50; this figure is simply for illustration. If Marty Forex makes five similar trades for the business day, with the same results, he will have made $500 of profit. Keeping with that trend, trading five days a week would net Marty $2500 of profit per week. (Commissions, overhead costs and other business expenses, realistically bringing the amount down to $2000 or less would reduce this figure.) This is still a nice bit of profit, considering that this is only one stock's trade performance. Marty Forex probably handles quite a few more trades than that in a typical day's time.

Now unfortunately not every trade is going to result in a profit so lets look at a scenario where Marty Forex handles ten stock trades per day with the same $100 profit. We will say that Marty is successful on 30% of his trades so out of the ten trades Marty makes $300 profit. Same scenario for a typical week will see Marty bringing home around $1500 before expenses kick in. Hopefully with more education on determining what a stock is going to do next Marty can increase his success percentage which increases his profits.

Day trading does come with a substantial risk but if you use all of the available tools and resources that are available your odds of success increase. Make sure that you understand what you are getting into before you even knock on the door. An untrained day trader is a broke day trader. - 31987

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Trading System Essentials (Part II)

By Ahmad Hassam

In simple terms, it is very difficult to adjust a mechanical trading system to a different market conditions if you are not the author of that system. It is very difficult to develop a trading system that can adjust to different market conditions.

So how do you cater for this fact that markets keep on changing all the time. By developing a trading system that uses different trading strategy under different market conditions. For that, you will need to develop a diversified trading system consisting of a set of trading systems that can be used as a basis for a specific trade tactics at any given moment.

Trading systems based on these principles can be complex and adjustable. Such a diversified trading system can be used according to a trader's free choice and considering the individual situation.

Such a diversified trading system can be optimized for current market condition and the trader's resources at any given moment. This optimization can provide an effective evaluation of market shits and trends at any given time.

The only thing necessary is to find the tools for the probability evaluation for the trading system with maximum accuracy and minimum time. The optimal solution could be a diversified trading system based on the natural market features and regularities. A trading system needs to be evaluated by calculating its win ratio over let's say at least 100 trades.

Developing a mechanical trading system with a set of trading rules that you can apply rigorously in making your trading decisions in any market condition should be your goal. Mechanical trading is good in the sense that it helps you avoid emotions in making your trading decisions. Emotions are your biggest enemy in trading. Fear and greed will always force you to make wrong trading decisions. Have you ever heard about the turtle trading experiment?

Turtle trading experiment was conducted to demonstrate the fact that it's not the trader that matters; it's the trading system that matters. If you have a good trading system, you can become a highly successful trader.

What you need to do is learn from successful traders and try to copy their trading systems. As a young person you must have learned that just by observing good players play their games you could improve your level of playing tennis, golf, badminton, swimming or for that matter any type of game.

The same principle applies in trading. By observing the trading systems of successful traders you can also develop your own highly successful trading system. You need to take a look at these 25 forex trading systems that had emerged on the top of more than 5000 traders who had taken part in a recent forex trading championship. The best forex trading system had an ROI of almost 3000% in one month. - 31987

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Is It Reasonable To Start Trading For A Living In Today's Economical Upheaval?

By Peter Skonctuedt

Is it even possible to consider trading for a living in the unstable world of the economy we have been living in? Is it financial suicide to determine that this is the direction you want to take your life or are you actually smarter by grabbing onto new opportunity? These are interesting questions that should be looked at carefully before you make up your mind one way or the other.

The economy can not at this point really be considered stable. Yet it could also be said that there are many signs that economy is starting to show the necessary signs of coming back around. These signs can be found by looking in certain directions when it comes to trading. The more you study the market the more you are likely to see where strength is developing. While it would be foolhardy to simply dump all of your funds into a single trade at this point, there are many investments that are providing a good economical force to be reckoned with.

There has always been a certain amount of risk when it comes to trading for a living. These risks are just more obvious these days since the market took such a hard fall not that long ago. This simply opened up our eyes to the reality of the risks. It has always been a game of losses, wins, and lateral compensation. The more comfortable you are with that concept the better you will do.

The trading lifestyle is one that comes with responsibility and freedom. You have the freedom to make all of your own choices. You have the freedom to succeed just as you have the freedom not to succeed. Of course, you also have the same concepts when it comes to your responsibility. You are the only who can make your own choices and you are the only one who can take credit for success and failure.

If you're going to start trading for a living then you're going to need to get a firm handle on various strategies. Whether you need to start with specific safety measures that prevent catastrophic loss or you need to figure out how to make the most of your daily trading session, it's vital that you study the strategies.

The conceptualization of trading is where most of the education lies. If you can develop a good trading strategy you can ultimately end up with more opportunities than you ever thought possible.

We all know that the economic hits of the last two years have chased many traders and would be traders away from the hope of trading for a living. In today's market there are plenty of diamonds in the rough that are potential fortune makers. All you need to do is learn to recognize a good risk and a bad risk. This might be considered the absolute best time to start trading for a living.

You do need to know that you are going to take some risks when trading for a living. You can be a market analyst and hang onto concepts and principles forever or your can make the move into trading with the very first trade. It is important that you discover everything you can before putting your money into a venue, but you can delay yourself forever with the diligence of analysis. If you start by using tools of the trade without the risk of real money you will end up in a much better position when making your ultimate decision. - 31987

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Automated Forex Trading Software For 2009

By John Adams

What is Forex trading software? commonly this has to do with software that immediately analyzes the currency markets and produces purchase or sell signals Trading on the stock market, you are faced with trading in the shares of hundreds of different companies, each with its own sets of uncertainties. To really commit an intelligent measure on whether to purchase or sell the shares of a certain company, you have to study their financial statements. But that will not mention the whole story. as an example it won't explain you about the new invention by their challengers that will wipe them off the market absolutely.With forex it's different - at least theoretically. The information about reasons influencing the price movements of a certain currency is promptly available to everyone, principally for the drastic currencies. So all you have to do is study that information and make cash, right?

In reality there are hundreds of different currencies. Price movements in one currency will very often result in similar price movements in another currency. To study all the factors involved will still take a lot of time and require that you have access to sophisticated charting and data analysis software. If you are a part-time trader this is not always practical. This is where automated trading software comes in. This type of software will automatically analyze the various technical indicators, like moving averages, and then come forward with a trading signal - advising you to either buy or sell a particular currency.

In reality there are hundreds of different currencies. Price movements in one currency will very often result in similar price movements in another currency. To study all the circumstances involved will still take tons of time and require that you have access to difficult charting and data analysis software. If you are a part-time trader this is not always practical. This is where automated trading software comes in. This sort of software will instantly analyze the a countless technical indicators, like moving averages, and then come forward with a trading signal - advising you to either pay for or sell a particular currency. IvyBot is 100 %automated trading system which is predicted to be the next big thing in the area of Forex trading. This robot has already gained tremendous popularity among the traders and every trader is excited about this genius. Here is a detailed review on IvyBot robot, explaining what makes it so specific and what it means to Forex dealers.

First of all, the robot is named IvyBot for the reason that the program utilized by it internally was developed by a group of Ivy League graduates. Most people aren't bothered about who wrote the software, but how it works. anyhow, it becomes singular in this case for the reason that the software was written by a bunch of very wise people and hence it is supposed to be wise too. Forex market is a always changing background and so you require a robot which changes accordingly. A robot which works on static data is of no use for Forex trading as its end result may not be permanent across different market conditions. Artificial Intelligence is a technology which works on predictions and assumptions as well as risky for an unpredictable market like Forex.

Considering all these difficulties, the people who created IvyBot came up with the optimal solution of updating its data regularly. A group of Forex market experts update IvyBot on a weekly basis who constantly monitor the shifting behavior of the market. They are not all equal though. The expensive ones will also produce a set of charts and the results of the technical analysis to explain to you how it arrived at the recommendation. This way you will get valuable insight into the way decisions should be taken based on technical data. The cheaper software packages will simply produce a recommendation based on the same results without the in-depth analysis. The recommendation might be the same as that of more expensive software, but you will not get the same insight into how it arrived at its decision.

Investors and dealers who base their trading decisions on fundamental analysis will not doubt describe you that the basic principle underlying these trading recommendations is flawed: trading decisions should be produced based on 'fundamental' or 'real' circumstances. ivyBot is not the software which promises updates-free surgical treatment, but one which promises excellent results attributable to the regular updates. Once updated, it works with minimum participation from user, as it is 100 %immediate in nature. It is a very feasible and intelligent trading system for every trader who wants to gain maximum profits in minimum investment.

Traders who firmly believe in technical analysis will in turn argue that all fundamental factors will in the end have to show itself in terms of a movement in some or other technical indicator. Whether it's the price breaking through the moving average, trading volumes changing suddenly or something else - there will be a change in a technical indicator. And the forex trading software will pick up this signal sent by the technical indicator and come forward with a trading signal. In the end your decision as to whether you prefer to do manual trading or make use of one of these software packages will be determined by time constraints and whether you are a supporter of fundamental analysis or technical analysis. - 31987

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LEAP Options

By Ahmad Hassam

British Pound is known to be a stable currency. Great Britain is a strong economy. But, Great Britain was finding it difficult to stay within the tight exchange rate band set by the European Monetary Union (EMU) in the early'90s. One person who made history with options was George Soros who is famously known as the man who broke the Bank of England.

George Soros is a famous name in the world of investing. He is famous for his speculative attacks on currencies that he had the intuition of being intrinsically weak. He had always believed in contrarian investing. Contrarian investing means doing exactly opposite of what the crowd is doing. George Soros had this intuition that the Bank of England could be forced to devalue British Pound. So he bought call options on German Marks and put options on British Pound. He made a bet of $10 Billion by leveraging all the assets in his hedge fund.

Bank of England had made a number of public statements regarding its intention of staying within the EMU. However, within a few days of the speculative attack on the British Pound, Bank of England was brought to its knees as it was unable to sustain the immense selling pressure on the British Pound. Bank of England was forced to devalue British Pound in view of the speculative attack on the British Pound.

When you a strong intuition, you should go for the big kill. George Soros made a cool $1 Billion profit on his bet in a matter of a few days. Can you make such a bet? Maybe not but this one example show the immense power options have if used correctly. Options are risky; there should be no doubt about it.

Most people who trade options lose money, plain and simple. Options give you the right to buy or sell an underlying security like stocks, futures, commodities or currencies at a price before a certain date. This price is known as the Strike Price. This date is known as the Expiry Date. However, in European Style options you can only buy or sell on the expiry date not before that.

Time factor is very important when valuing an option. Further out the options contract is from expiration, you will have to pay a higher premium. As the options contract approaches the expiration date and if it is out of money, it loses its value very fast.

LEAP stands for long term equity anticipation. Have your heard about the LEAP options? So what are LEAP options? It basically means that the option is much like the regular option except that the timeframe to expire is greater than 1 year. LEAP options are basically long term options. Leap options can help you profit over the long haul. You can use LEAP options in options strategies like the covered calls, straddles, spreads and so on.

Moreover, the buyer of the LEAP options has the right to exercise the option prior to expiration should the price of the underlying stock move in the money. LEAP options are risky because the option writer usually demands a hefty premium for taking on the long term risk. However, LEAP options can be incredibly profitable if used correctly.

LEAP options can be a great trading vehicle for swing traders as they mitigate some of the time decay that is inherent in short term options. See, closer the out of money option is to expiration, faster its value drops. What this means is that the buyer of the options loses the premium that was paid for getting the right to buy or sell the underlying security. - 31987

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Trading System Essentials (Part I)

By Ahmad Hassam

Using a mechanical trading system not only helps traders to make decisions and increase profits but it also provides great psychological comfort to the traders. At one point in your trading career that might come soon rather than later, you would want to switch over to a mechanical trading system.

You will realize the necessity of switching over to the systems trade in order to lower the psychological pressure experienced when making every market transaction. You will find most of the trader using a trading system approach to trading. Some of them may use a discrete trading system while others prefer a mechanical trading system.

Once you have a mechanical trading system you can easily develop it into an automated trading system. The mechanical trading system set of rules may be translated into a computer program for automated trading. However, the mechanical trading system lacks fundamental analysis capacity.

The trading system then generates trading signals that can be used by traders having access to the trading system. The creator of such a mechanical trading system then becomes just another user of the trading system monitoring the computer generated signals.

These trading systems may be taken as grey and black boxes. Their prices might vary from a few hundred dollars to hundred of thousands of dollars. Many traders over their trading careers develop their own trading systems. Besides the traders using their own trading systems, there are now many actively developed trading systems for sale as computer programs.

The most significant thing about these programs is that the traders should be able to accomplish transactions in accordance with the signals generated by the trading system. Sometimes theses trading systems are developed for big banks and corporations.

However, it is very difficult for a mechanical trading system to cope with different market conditions. Majority of the successful individual traders use self developed mechanical trading systems.

For example, many trading systems that are satisfactory in trending conditions become highly ineffective in nontrending environment. Change of market behavior leads to negative results from a previously effective trading system which obviously would require replacement.

These automated trading systems require thorough testing under different market conditions before they can be used in actual trading. One of the ways is to backtest them with the historical market data. Backtesting is now an integral part of any mechanical trading system's performance evaluation. However, there is no substitute for live performance test. The most common disadvantage of these trading systems is the negative balance between he profitable and unprofitable trades. Many trading systems now depend on complex mathematical formula which is not understandable by the trader if the trader is not the author of the trading system.

Obviously the trading system can only be profitable in the long run if the ratio of the profitable trades is higher than the non-profitable trades. In other words the average profit of each profitable transaction is greater than the average loss of each unprofitable transaction.

Making correction in any mechanical trading system in the process of the trade is almost impossible. The trader must accurately and unconditionally follow the trading system without making any attempt to adjust it to the market conditions. - 31987

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Learn The Facts About Trading For A Living

By Peter Skonctuedt

The amount of assets needed to enter the trading business is $100, 000. For individuals with assets less than that amount, the profits from year to year will have to be sizable enough to support you. Starting a business with few assets may tempt you to take high risks that will be a big mistake. Look at the annual cost of running your business, if you profits are not more than 20 percent or 20 percent cannot be lived off of, then hold off until you increase your assets. It is not going to be cheap trading for a living.

Trading small does not matter if you can prove consistent returns from trading and good money management. This gives you something to present to a trading firm if you want a position within the company. With this proof, the company will provide you with the capital that you need to get started. For those with no record or proof, doors will start to close on you. Love and motivation for training are not a substitute for skills and experience.

Gain knowledge from trading in unreliable market environment and market phases prior to quitting your job. Would you want an individual in charge of trades for your account, which has little knowledge of the market? No, you would not want that. Create encouraging portfolio of earnings and risk management prior to approaching this as a full-time job. During the practice, you can learn from your mistakes.

Most businesses struggle during the first year. Your business will be no different. An adequate amount of your return will be spent primarily on equipment, commission and software alone. To be on the safe side, have funding available to live off of for an entire year. A spouse's income is going to be very helpful. Having this cushion available allows you to concentrate on your business and not on bills.

You are going to be an entrepreneur when you first start out in the business. The same rules that apply to businesses will apply to you. Know your market. Have a solid plan. Make sure you are well capitalized. Approaching your venture with a good work ethic, good mindset and creativity you have a chance of making it.

Here is some advice to keep in mind when entering the trading arena.

Take on classmates, friends or family to start up your business. This is a team sport. The superiority of your team and bond with teammates will play a big role in your businesses success. Because of connections and funding, at some point, a venture capitalist may go in with you. Be sure to network with others to develop new ideas, share information and for support. Most of this is provided by professional firms in the form of experienced traders and risk managers. The support of your spouse will be needed.

Long working hours is part of the business. Motivation and love of the market will drive you to put these hours in and get your product out there. You will fail if you try to set work hours. In this business, your job is never finished.

Falling short on funding and hitting a wall are all part of business. Be tough and you will make it through like others have.

Flourishing in the face of adversity, being passionate, hard-working, creative, and collaborative and a visionary are several of the traits that a successful entrepreneur exhibits.

When you think you are ready to move to the next level of venture capitalist, ask yourself some questions first. Would you provide funding to you? Can you develop a creative strategy in the market and make it happen regardless of the obstacles you may encounter? Are you simply trying to leave the 9 to 5 or do you really have the traits listed above? - 31987

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Stocks Short Selling

By Ahmad Hassam

You must be thinking that short selling is counter intuitive. It's not! Short selling is a way to profit from a falling market. In nutshell in short selling stocks, an investor who is short selling is borrowing stocks from the brokers and selling them to another buyer. At some point, the investor has to buy back the stock ideally at a lower price to make profit and return it to the broker. The sale money goes to the account of the investor.

Suppose you are using the RSI technical indicator that is giving a crossover sell signal. All signs are pointing towards to at least a small pullback. You feel that the stock ABC is overvalued at $60 and at some point in the near future the market will make a correction.

You decide to short 1000 shares of stock ABC. So 1000 shares of stock ABC are sold by your broker at $60 and $60,000 is placed in your account. You had placed an order with your broker to short 1000 shares of ABC stock at $60. Over the next week, but now you are jittery as the stock ABC instead of going down climbs to $65.

However, you have catered for this eventuality by placing a stop loss at 10% of your account. This comes out to be $6,000. So the stop loss is not triggered and you are still in the market hoping for the price to stop going up.

Before entering a trade, you must always decide a loss level that you are comfortable with if the trade goes against you. You are prepared to lose $6,000 in anticipation of a stock price tumble as your technical indicators are giving you the sell signals. If the price goes up to $66, your stop loss will be triggered and you will be out of the market.

Suddenly on the release of a disappointing earnings report, the stock price tumbles 20% in one day. Now most earnings mishaps last a few days. So you wait and don't cover your short position for the next few days.

You decide to cover your short position, stock ABC price falls to $45. You need to buy back the 100 shares of ABC that were sold short earlier at the market price of $45 in order to close your position.

Now should be able to understand short selling as easy as long buying. With this simple example, you should be able to understand the mechanics of short selling stocks. You pay $45,000 to buy back 1000 shares of stock ABC and return them to your broker. So your net profit in this case is $60,000-$45,000= $15,000.

Short selling and long buying are the exact opposites of each other. Assume that you had bought the stocks for $45 per share and sold them at $60 per share, the same profit would have been made. In reality, you paid $45 per share to buy ABC stocks and sold them at $60 per share giving you a profit of $15 per share.

The goal is to sell it at a higher price but in the case of short selling stocks, selling takes place first instead of buying when you short a stock. The goal of buying a stock is to sell it at a higher price in the future. Do you want to try short selling now? - 31987

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Trading For A Living - Daydreaming Or Realistic Objective?

By Peter Skonctuedt

Trading for a living is a dream of many. If you are a part-time trader, you no doubt dream of this every morning you have to get up early and face the endless traffic before getting to the office. You dream of becoming a full-time trader every long hour you sit at the office doing work you hate. You dream of it every time you have to look at your boss's angry face.

It doesn't have to stay a dream forever. There are a couple of things you need to keep in mind before you will ever be a successful full-time trader though.

The first prerequisite for a full-time trader is that you have to realize something: you are not actually trading against other traders, or against the market. You are trading against yourself. If you are unable to overcome your inherent weaknesses as a trader, you will never be able to trade successfully over a long period of time.

What exactly does that mean? It means that you can study all the rules, you can intellectually know the right thing to do in every possible set of circumstances. But if you have a tendency to hang on to losing trades in the hope that they will turn around, you will lose money time and again.

Likewise, if you don't have the discipline to leave a winning trade alone and "let it ride", if you sell it the moment it becomes profitable, this weakness will eventually destroy your trading career. If you do this every single time: hang on to a losing trade and sell a winning trade before it matures, you will end up with a string of large losses and a couple of small wins. And you will make a net loss - guaranteed.

You second important step will be to decide what type of trader you want to be. A day trader, a swing trader or a longer term trader. Day-trading is extremely alluring. You can start with little money, and you can sometimes make a lot of profit in one day. Statistically it is however much more difficult to predict the market movement for a share or a currency during the next 8 hours than to predict it for the next year.

You will also have to decide which market instruments you will be trading in: commodities, shares or currencies. Each one of them will require a different skill set and different tools. They also require a slightly different approach to trading. With share trading you must get intimate with the financial statements of the companies you want to trade in. You have to know the market for their products or services. With currency trading and commodities you have to study the underlying factors causing price movements in these instruments. Things like droughts, surpluses, inflation and interest rates.

The right tools are of course very important as well. To start off with you need knowledge. You need to get familiar with reading financial statements and analysing charts. You need to understand technical indicators, how to use them and how to interpret movements in these indicators

Furthermore you need to register with a company that will provide you with the latest prices for the instruments you want to trade in. Many free services provide delayed prices - which is good enough if you trade in a longer time frame. If you want to get involved in day trading, you absolutely have to make sure you get live prices though.

Trading for a living therefore does not have to remain a dream forever. Start with yourself. Get the necessary training, then learn to control yourself. Finally get the right tools and you are all set to become a successful full-time trader. - 31987

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Do You Have An Idea About The Secrets To Trading For A Living

By Peter Skonctuedt

If you are one of the many people that are thinking of trading for a living you must learn that it does not pay to aim to make major gains and instead it will be better to remain focused on making small but consistent gains that will all add up to become a considerable sum of money over a period of time.

So, before you get an answer to the question as to how you can succeed in trading for a living it is necessary to identify the amount of money you have available and also how much you wish to earn. What's more, there are some traders that are ready to risk all of their money to earn the same amount while other people would risk less money and expect to earn less.

It is also not possible to make accurate and consistent predictions about what these large numbers of traders will do at any time and so trading to earn a living is not the best course of action. In fact, volatility in the short term is also quite random and the prices too will be fluctuating up and down in short periods of time which means that it is meaningless to think in terms of following support levels. This actually means that when trading in stocks you are going to be pitted against the odds and so will probably end up losing money more often than you make money.

All you need to do is place a trade and type in a stop-loss order and then spend some time doing what you like. As long as the trade moves in a desirable direction you will always succeed in making money from your trade. Another benefit to trading in stocks for a living is that you can put in a one-time effort that will then help you earn money over and over again.

The trouble is that most people do not have the required discipline to remain focused on their objective for a time span of five or ten or even twenty years and so will give up if things do not work out right for them. To succeed you need to behave like a person trying to win an Olympic gold medal or become a world renowned surgeon or even a Kirov ballerina.

Before getting involved in trading for a living you must first get rid of all your personal debts, have enough capital, be in possession of a trading system that is proven and systematic and logical and finally you must also follow all the rules of good money management.

Trading for a living also means enjoying flexible hours and you can in fact trade whenever you want to and you can also always take a day or two whenever you want to. This means that you will always have plenty of time and you can also earn as much as you want to make. There are in fact no limits to how much money a person can make in this manner.

This is how the smart people make money. They know that when people don't know enough about making money from trading it allows a smart and knowledgeable person to sell knowledge to others and in this way without risking their money earn a decent living. - 31987

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Forex Trading Software - Easy Money Or Wasting Your Time?

By John Adams

When we talk about Forex Trading Software we mostly refer to software that can automate the forex trading process.

When you trade on the stock market, you ideally have to study the financial statements of the companies involved. You have to know how much profit they made during the last year and how much profit they are expected to make during the next year. You should also be aware of little known 'inside' information that can have a dramatic effect on the share price of a particular company.

With forex it's different - at least theoretically. The information about factors influencing the price movements of a particular currency is readily available to everyone, especially for the major currencies. So all you have to do is study that information and make money, right?

In real life, however, there are a lot of factors influencing currency movements. There are hundreds of currencies each having an effect on each other. To make an informed trading decision, you have to study all these factors and then try to determine which way the market is going to move for a particular currency. Unless you are a full-time trader with access to sophisticated data tracking software, this is a difficult task.

In comes automated trading software - software that will study all the different technical indicators for a particular currency and then come up with a trading signal - telling you whether you should buy or sell that currency.

The good ones will also explain to you how it came to that decision. That way you can learn how to pick up market trends yourself and therefore get valuable trading experience. The cheaper packages simply produce a recommendation, without explaining how it arrived there. An example of the first category is Trading Solutions and of the second category Lazy Trading.

Sworn supporters of fundamental analysis will no doubt tell you that, although the software packages might technically be working fine, they are flawed in a very basic way. That movements in the value of a currency can not be predicted by studying things like moving averages - they don't predict the price, they follow it. These traders will argue that currency movements are caused by fundamental factors: the balance of trade, interest rates and inflation.

Traders who firmly believe in technical analysis will in turn argue that all fundamental factors will in the end have to show itself in terms of a movement in some or other technical indicator. Whether it's the price breaking through the moving average, trading volumes changing suddenly or something else - there will be a change in a technical indicator. And the forex trading software will pick up this signal sent by the technical indicator and come forward with a trading signal. In the end your decision as to whether you prefer to do manual trading or make use of one of these software packages will be determined by time constraints and whether you are a supporter of fundamental analysis or technical analysis. - 31987

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Using Automated FOREX Trading Software

By John Adams

Automated FOREX trading can be a great way to go about FOREX trading as there are many different programs and software available. This software can be a great tool for those that do not have a lot of experience as this software not only can make your FOREX trades but it can also provide market analysis information which can help you identify market trends.

Some of the features that can be found in automated software include stop or limit orders, account equity management, technical analysis indicators, discretionary market orders and automatic trailing stops. These features make it possible to do your FOREX trades immediately and at anytime of the day.

There are many indicators that you can use to create your system include a weighted moving average, mounted limits and stops, exponential moving average, mass index, quick moving average, tailing stops, variable moving average, standard deviation, triangular moving average, vertical horizontal filter, times series moving average and wilder's average true vary.

Automated FOREX trading is so successful because in just a few seconds you can successful make a FOREX trade. The older traditional method this trade would take several hours instead of seconds. This is the most significant benefit of using automated FOREX software.

You also have the ability to have greater diversity with an automated system. You can trade in your own FOREX market as well as international FOREX markets. You can also look at short term data in order to predict trends and make decisions with how to create your automated FOREX trades. This makes it possible to predict FOREX trends in under an hour.

By using an automated system you will be able to make more trades in one day then you would with a manual system. This is because the FOREX market is updated in real time so you have the possibility of making at least eight trades in an hour. You also may be able to make more trades after regular trading hours as well.

Also with developing technology it is possible that in the future you may be able to even more trades within an hour. Automated trading also saves you time as you can go about your regular life without having to constantly sit at your computer to make a trade, the program will take care of it for you. You also do not need to be an expert in the FOREX market but can use the many features and tools found in automated FOREX trading software. - 31987

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Can Automated Forex Trading System Make Successful Trades In Credit Crunch

By John Adams

The year 2010 is unique for forex trading investors. Are you seeking for finding more ways for cultivating your forex trading profits in 2010? If yes then you should seek for the most remunerative forex automated software. Read as well to know why it is needed for you to get the most respected and specific forex robot for currency exchange trading. The main reasons which you should take into account while trading: You should consider some reasons before trading by best automatic forex trading system. There were lots of issues in the year 2009 which currency exchange market have not experienced in the past. a couple of of them are:

There had been numerous requests for bailing out by different companies locally and globally. In such situations these requests definitely affected the market. There have been repeated negative news for numerous manufacturers and the automotive sector wasn't that much remunerative. These reasons also impacted the market definitely. The inflation rate and recession drastically hit the market movements. The economic conditions of numerous countries from Europe, North America, South America and Asia was notably delicate in the recession period. This also impacted the forex market which resulted in radical ups and downs in currency pair rates.

Can Forex robots surely work in these markedly volatile market conditions? The answer is directly yes. The factor is the form of complex algorithm and early indication system used in the newest forex robots. automatic trading systems like IvyBot are surely helping investors to ease their stress of trading into risky market conditions. But most okay option is Automated forex software that can do better job then a human can ever do. Some basic guidelines to help you make an enormous amount of money on forex trading why trade forex? Can we make an enormous amount of money from forex trading?

When you trade forex you know pretty well when all the market moving news announcements and economic data releases are scheduled, . Irrespective of whether you are a beginner or an old hand in the forex trade, forex software system trading can help you maximize your profits. The robot was doing okay and lots of people used to trade forex using forex auto pilot until at some point this software impressed a group of forex

Traders can learn to trade forex quicker than others, this is because a couple of people have more dedication and focus than others, or it is a case. If you are one of those wholesalers who wish to think outside the box and trade forex without indicators, then i wish to applaud you. if what you wish is to trade forex without leaving your home and win you can but before you embark you require to know a couple of key facts which are Here to stay away from. Forex correlation code is a forex trading kit which is based on a course and a singular software which permits you to trade forex in a. if what you wish is to trade forex effectively you have two probable ways of achieving this: find out how to do it yourself or have someone do it

The absolute thing is majority of the activities are commonly automated in these kinds of trading systems. They also include system trackers to track down the newest market occurrences and provide early estimations of market changes. This helps a lot in taking remunerative investment choices. - 31987

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Shorting Stocks

By Ahmad Hassam

Most people know that you buy stocks and wait for a price appreciation to take place in order to make a capital gain. Can you make a capital gain when there is price depreciation in your stocks? Many beginning investors get confused when they realize that it is possible to make money when the stock falls in price. In practice, shorting a stock is as easy as buying stocks once you get hang of it. When the market is falling, investors sell short a stock with the goal of profiting from the fall in the price of that stock.

Short selling is confusing for new traders. It shouldn't be. It is simple. The difference between the selling price and the buying price in case the price goes down is your profit. You borrow a stock from your broker and sell it with the intention of buying it back at a lower price in the near term future and returning it to your broker when you short a stock.

When the price of a stock goes down, you make profit. You are anticipating further fall in the price of the stock when you short a stock. However, if the price of the stock instead of going down starts to go up, you get a loss.

Theoretically a stock price can go up and up making your loss as big as infinity. So shorting a stock without proper risk and money management is not wise. However, before that happens most probably you will receive a margin call from your broker that leads to a forced sale before your losses reach unmanageable proportions.

Short selling can play havoc with companies. If there is a short selling attack on a company's stock by speculators, the company can easily go bankrupt. This is precisely what happened in 2008. Short sellers were responsible for bringing many blue chip companies down. In the stock market crash of 2008, many financial companies went bankrupt due to the short selling of their shares by the speculators. Some people are against the strategy of shorting stocks. A temporary ban was put on shorting for sometime during that period.

In swing trading, we are simply looking to profit from the ups and downs of stock prices. When the price of a stock goes down, short selling is the best swing trading strategy. However, the goal of short selling is not to drive the price of a stock to zero and put the company out of business.

Stock prices are highly susceptible to negative news. Negative news like poor earning, credit rating downgrade or a poor product launch can bring down a stock price in a matter of minutes and wipe out the steady gains made in months. One reason why swing traders love short selling is due to the velocity of the moves! Stock prices plunge when negative news is released.

Short selling is an integral part of options writing. Short selling is also used in portfolio risk management. Shot selling can be a good hedging strategy for long term investors too. So if you a long term investor, you can lessen the impact of the sharp price drop on your portfolio by using a short selling hedging strategy. Swing traders always look for big winners and this brings them to the short side of the market. When the price of a stock starts to fall, chances are it will fall more before the market stabilizes and the price starts to rise again. - 31987

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Forex Tutorial Of Secrets

By Anthony McDonald

Finding a forex tutorial with good information today is hard to find. Looking at the free ones across the internet there was one thing they had in common. Most of the information in the free guides seemed to be information that could be easily looked up in a search engine. As a new trader, turning to these guides is not the best idea.

When looking for a Forex tutorial and what it has to offer, there are many things you should take into consideration. Is it congruent with its information? Does it have proper grammar throughout? Does it seem like it was thrown together in a hurry? Are they asking far too much for the professionalism that is presented to you? These are many things you should asses the guide by.

When it comes to a free forex tutorial, I have found that they make claims that it is all you will need to succeed. This is far from the truth, in order to succeed you need tips that aren't even found in free guides. These free guides are just a gimmick to get traffic to a site, they offer little to nothing for even the beginner trader. You just can not get good information out of free tutorials or guides.

Coming to a forex tutorial that you would pay for, it seems like many of them were far to high in price for the way they were presented. After going through many paid guides to see what the result was, there were a few that did have good tips inside. Not many of them had the structure you need in order to succeed. Then I found something that was different than the rest.

The forex tutorial that I found was totally different than all the rest. It did cost money, but it was minimal compared to the rest and the product was worth five times the price. The fact is you just can not beat this method that made every other look like a joke. In the first month of using this one method my trading account doubled! There just is no other method like this one that can turn money like a machine! - 31987

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Piggyback Trading Strategy

By Ahmad Hassam

You have to do a lot of research while selecting yours stocks. Here is a very simple strategy that you can use to choose the hottest stocks best for swing trading. When a large financial firm builds an ETF, the first step is always to choose an index of stocks that is expected to outperform the market. The premise of the piggyback strategy is to use the large dollar research of the major financial firms to come up with new and fresh swing trading ideas.

ETFs are doing a roaring business these days. There are thousands of ETFs in the market now. New ETFs also get introduced in the market. ETFs have caught the imagination of the investing public. No doubt ETF investment is better than investing in a single stock. Large financial firms spend millions to choose the index on which they will base their ETF. The ETF is then based on this index of stocks. The price of the ETF then changes as the basket of stocks within the index moves. Why not piggyback on that research and save yourself a few millions? Cool, huh!

How do you implement this ETF piggyback strategy? Your first step should be to analyze ETFs. You need to make a list of ETFs that have outperformed in the last 3 to 6 months. This will give you an idea where the big money is flowing and which ETFs have buying momentum behind them.

After making your list of top 20, narrow it down to the five top performers and choose a few areas worth trading. Choose the best performing ETF in your opinion to begin with. Now you need to analyze the top ten holdings of that ETF.

Etfconnect.com is a great resource for information on ETFs and closed end funds. What makes this trading strategy great is that it often generates fresh ideas for swing traders. With thousands of potential stocks to choose from, the piggyback trading strategy allows you as a swing trader to choose stocks that have a buying momentum behind them.

Now another advantage of this piggyback strategy is that it can identify stocks that may not be household names to the average trader. ETFs can be utilized to find stocks for swing trading ideas that are based outside the US.

You will have a lot of option in choosing the right ETF for your investment. There are thousands of ETFs in the market now. Some are country specific, some are industry specific and some are market specific. The way to do that is to use the ETF piggyback strategy with either single country ETFs or regional ETFs. The single country ETFs invests 100% of their assets in one country. A good example can be the iShares MSCI Mexico ETF (EWW), an ETF that invests only in companies headquartered in Mexico.

You can choose industry specific as well as market specific ETFs as well. Country specific ETFs and region specific ETFs have been just used as an example to illustrate how to hedge your risk. Hedging your risk is what a good investment strategy is all about. Instead of putting all your eggs in one basket, you should try to diversify your investment. A regional ETF covers several countries concentrated in a region. The iShares S&P Latin America 40 ETF (ILF) invests in Brazil, Mexico and Chile. So if you want to find international stocks for your swing trading strategy than you should begin by picking the region or the specific country.

You must be thinking why you need to think outside of US Stocks. The traders who refuse to consider international stocks only hurt themselves because with the US in the mature business cycle, the real growth and volatility that you need as a swing trader can only come from international stocks. - 31987

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