FX Strategy Secrets

Taking Profit

Posted by Jed & kirk Norwood on May 18, 2009 · Leave a Comment

There are several approaches to taking profit in forex trading. For example some traders will put on several lots
on a trade then when the market reaches a predetermined level they will close a small portion of
the trade. They leave on the remainder lots so they can continue to be in the market and gain
profits. Then there are the traders that put on a small number of lots, add to the trade when they
get additional entry signals and when the market tells them that the current trend is coming to an
end then they close all of the positions.

If a trader is making money we can’t say the way they take the profit is bad. As long as we are
trying to make money on a trade why not maximize the profits on that trade. We have been thinking,
when the market reaches the point that a trader wants to take some profit and the market is still
moving why not put a stop loss at the predetermined exit point and let all of the lots continue to
run. There are a couple of ways the trade could be ended with a maximum amount of profit and a
minimum amount of loss.

The stop loss could be moved up as the market moves up to protect even larger amounts of profit.
When the market gives a strong exit signal then close all of the lots on the trade. If the market
retraces then continues in the original direction of the trade, at that point the trade can be
reentered and make profits all over again. We know there is no wrong or right way to make money.
Pick the way that fits your emotional ability, and trading style. In any event continue to make
money and have fun trading.

The Number One Reason For Washing Out As A Trader

The time a trader usually blows up his account comes when he has had a series of good forex trades
over the course of a day, week, or month. He starts to be confident and does not put his stop
on. It is late in the week he is a little tired makes one more trade leaves off the stop and
then the whole market turns and goes against him. He loses all he made and more. He did not
take time to use good risk management.

He is feeling low emotionally and his account is a wreck.

He should not dwell on the big mistake but go back to the basics of his trading plan. Review
the risk management and get back to the discipline that made him money the first part of the week.

When you over look risk management you have a greater risk of washing out of trading than any
other single thing. When you pay close attention to risk management you have the greatest
potential to make it as a trader.

A few small losses will not hurt the big wins that come along on a regular basis. This will
cause your account to grow on a steady basis.

TAKING THE NEWS TO SERIOUSLY

Reading the financial news papers, listening to all the financial television stations,
studying the economic reports, and visiting all of the chat rooms can be a big challenge.
You can lose prospective of why you are trading in the first place if you get caught up in
to much news. It is a good forex strategy to know some of the major things that are going on but to be a
good trader you do not need an over dose of news.

You need a combination of fundamental and technical. I lean more to the technicals.
Some of the things that I see happen to the traders that over dose on news are: Trying
to pick which way the market will go. Getting hooked on an opinion of what is going
to happen and lose all objectiveness as to what might happen. The market moves in
trends and the news will cause little bumps in the direction of the trend. When the
news dust settles the market returns to the major trend it was on. You can get spike
fever, chase the market movement and get caught from both directions in the market.
Even with all the news research one will not be the first to know what the market will
do based on the news alone. So by the time the trade comes along you are trading
discounted news that has already been factored into the price of the market. So By
using news to trade forex you are taking a gamble on which way the market will go.

The Market can make a positive move with bad news and a negative move with good news.
It is all tied to the sentiment of the market the way people react to the news not what
the news is.

Set Yourself Low Forex Goals

One of the common misconceptions that I have run across is that people think that if
you’re not hitting big home runs in your trading that you can’t make much money.
Nothing could be further from the truth. If you continually re-invest your money,
and you risk only a small percentage of the total on every trade, huge returns can
be realized. The following examples are only for illustration, and obviously they
are just hypothetical. I simply want you to understand that the returns can be
exponential without exposing yourself to a dangerous level of risk.

Example 1

Starting equity: $10,000
Monthly return: 6%
Compounded return after 1 year: 100%

At this rate of 6% per month, you would have about $1.2 Million after 7 years.

To break it down further, suppose you needed a 25 pip stop loss and you were only
risking 2% of your total equity. That’s $200 on a starting account of size of
$10,000, which means you could trade 8 minis. If you only made 20 pips net all
week that would be $160 per week, or $640/month, which is more than 6%! You see,
you don’t need to trade a lot, just be patient.

Example 2

Starting equity: $10,000
Monthly return: 10%
Compounded return after 1 year: 300%

At this rate of 10% per month, you would have about $1 Million after 4 years

Remember, have a realistic plan and think longer term. This isn’t a race, and as
you can see, the power of compounding can be very effective, so be patient and set
reasonable goals. All you really need to do is be consistent in the execution of
your trades, realize that there will be losses, but stick to the game plan. As
always, controlling risk is of paramount importance! Above all, do not trade with
money that is not truly risk capital. This means that if you lost it, it would not
change your life!

Places To Get a Great Forex Trading System

’s very important that if you’re exploring forex trading or already trading that you have a trading system. One aspect of that trading system are the actual setup rules which usually contain entry and exit techniques. Traders put a lot of time and effort in developing these setup rules too often neglecting other aspects such as position sizing or relative size of your profits compared to losses. Therefore it’s important to find a comprehensive forex trading system.

Where can you find a comprehensive forex trading system? Throughout the last three years, I’ve been through many trading systems obtained mostly from books, forums, or other websites. I’ve found that almost every time, I’ll mold that system into something totally different than the original incarnation, something that fits my personality and style of trading. Many times, the original system will also need to be expanded to include things that were neglected or forgotten. Those of you searching for the perfect system may find this method of modifying existing forex trading systems desirable. There are places where you can find the whole package without any need for modification.

This brings me to the question, "where did you get your forex trading system?" I think there are four main ways of getting a trading system.

1. Buy it. There are tons for sale out there on the net but heed caution. Many were just copied from forums, books, or other websites. Sometimes when you buy forex education, part of the package will include a trading system. For instance, Rob Booker provides his Arizona rules as part of his mentoring program.
2. Get a free one. There are many free systems that can be found in books, forums, or other websites. I guess one can question whether a system found is a book is free since you paid for the book.
3. Create an original system yourself. My main trading system is an original creation. There may be other systems out there that are similar to it since it’s a culmination of years of exposure to other systems and experiences.
4. Modify someone else’s system and make it your own. As I stated above, I have done this many times.

Rich is Trading Forex Again

So after yet another hiatus from trading forex, I just recently had my first trade in months. It was a successful one also. But the question I want to answer is, “Is this blog dead?” The answer is no. I’ve made a living over the past 3 years ducking in and out of here depending on what’s going on in my life. Sometimes I’m just too swamped at my real job, other times I just don’t feel like writing, but I always come back. The great thing is I’ve built up a lot of content over the years so a lot of it applies to the type of forex trader you’re trying to become.

So where do I go from here? I’m in the mood to start trading forex again so that’s what I’m going to do. I’m also going to talk a little about stocks. I’ve had a lot of success, believe it or not, trading the stock market in the last couple of months and I think I’ve learned some things that I could apply to trading forex. So you’ll hear me talk about some of these things also.

Stay tuned….

Online forex trading

FOREX Is Tough But Potential Money-Making Opportunity

Trading foreign currencies is a tough task; however, it is potentially a money-making opportunity for those who are educated and are knowledgeable about their investments.

Nevertheless, prior to choosing to participate in trading in the Forex market, you should:

• Cautiously judge the purpose of investment
• Your familiarity with risk factors

Forex is meant for the money you put aside and are prepared to loose. It might not be a wise idea to Forex trade to pay your regular bills.

Forex (Foreign Exchange market) is an inter-bank market that got a form in 1971; this was the period when the international trade transited from fixed exchange rates to floating rates. This transition paved way for the set of transactions between forex market brokers relating to the exchange of specific sums of money in a currency unit for the currency of some other country at an approved rate for any specified date.

During any trade day, the exchange rate of one currency to another currency is decided basically by supply and demand – to which both parties will be in agreement. The price of a currency is mentioned in terms of one more currency.

The possibility of transactions in the international currency market is frequently increasing, which is due to growth of global trade and eradication of currency limits in many countries.

Online Forex is the one of the most innovative forex trading method of Foreign Exchange trading over the Internet. You can start trading with a basic account. Beware of margin trading because unless you are a careful market watcher trading with borrowed money can be risky.

The online forex trading method gives fast implementation of foreign exchange (Forex) trading through the Internet, with cutting edge software and well-organized trustworthy service guarantying an excellent trading experience.

Mediatory Services in Forex Currency Trading

Foreign exchange market (Forex) is the prime financial market in the globe. The overall funds in trade comprise of nearly trillions of US dollars in trade, which is a lot more than the entire amount of stock options and duties of the United States of America.

Forex is a non-stock exchange market that has no physical place. Forex is a banking network consisting of companies, forex brokers, private investors, integrated by one organization of information exchange.

As the Forex exchange trading does not rely on physical place, they trade internationally, all around the clock, with the exception of weekends for the time zone of the country dealing with it.

Foreign exchange covers up markets of most nations with universal platforms for foreign currency exchange trading functions in London, Tokyo and New York.

Major groups of Forex currency trading are:

Insurers – The major group is exporting and importing companies and some of the companies which consist of the few functions in foreign currency. For these partakers in forex, the main objective is to ensure loss minimization in a way keeping away from risks.

Speculators – Personal traders and corporations who are intended to trade foreign currency making profit from foreign currency exchange rates and short-term functions go to this category.

Arbiters – Investors of online forex trading who trade with big amounts of cash to invest and function on two or more markets at the similar time and generally they tend to make profit on the basis of foreign exchange rates.

Forex broker – These are brokers, banking establishments, currency dealers and companies who provide with electronic access to trading platforms and giving mediatory services in currency exchange deals.

Advantages Of Forex Trading System Software

Discovering trends is not a simple job and just the once going in to a trend nearly all forex trading software will want to get the highest profit from this point. They want to be carried trends booking profits as long as to attain the system aim.

Some forex trading indicators have revealed a winner correctness higher than 65% which is really high for this type of systems. Stop loss placed immediately after entering a trade will bring extra confidence, mostly when you realize that our stop loss level is rarely hit. Swing trading forex trading system software have the advantage that you do not pay extreme spreads or charges as those you should pay when trading every day or intraday signals.

Risk Capital In Trading

Regardless of how best a system seems, how best a system works or how much cash it creates. Just “Risk Capital” or “Risk Funds” should be applied in trading. A person who does not contain “Risk Capital” or “Risk Funds” (funds they can have enough money to lose) should not trade in the Forex market.

System Neutrality

Forex trading system software applies the similar criterion and considerations to make signals each day, there is no prejudiced criterion concerned in the procedure. It is 100% mechanical; you can drive your commands beforehand with their Stop Loss, Profit goal, and no requirement to estimate or get prejudiced choices of where/when to exit foreign trade.

Nearly all system provides signals for 4 main pairs: Pair explanation identified as (EUR/USD) Euro to Dollar “Euro” GBP/USD British Pound / US Dollar “Cable” USD/CHF US Dollar / Swiss Franc “Swissy” GBP/JPY British Pound / Japanese Yen.

Carry Trade Still Popular, but Doubt is Growing

It’s safe to say that the inverse correlation observed between the Dollar (and also the Yen) and global equities is largely a product of the carry trade. “The U.S. stock market bottomed and the U.S. Dollar Index peaked almost simultaneously in March. While U.S. stocks are up more than 50% in that time, the Dollar Index (which measures the greenback’s value against the euro, the yen, the British pound, the Canadian dollar, the Swedish kroner and the Swiss franc) is down nearly 12%,” observed one analyst.

On one level, this represents a return to 2008, prior to the explosion of the credit crisis, when carry trading was THE dominant theme in forex markets. However, there is one important difference. While the Dollar and Yen were the funding currencies then and now (due to their low interest rates), there has been a slight shift in the currencies selected for the opposing/long end of the trade.

Traditionally, the most popular long currencies were those of industrialized countries, rich in commodities and backed by high interest rates and often rich in commodities. To be sure, these currencies have shined in recent months, certainly due in part to speculative (carry) trading. “Strategists at Wells Fargo Bank in New York ‘believe that the gains in the dollar-bloc currencies (Australia, New Zealand, Canada) have run ahead of the gains in commodity prices.’ ” The Bank of Canada also noticed that “At the time of its last statement, oil prices were about $75 a barrel, but now they are in the $60-to-$65 range. That suggests the currency’s appreciation has outpaced the demand for its commodity exports.”

But the run-ups in the Kiwi, Aussie, and Loonie have been overshadowed by even more rapid appreciation in emerging market currencies. This shift is largely a product of changes in interest rate differentials, which are now gapingly large between developed countries and developing countries. Compare the 2.75%+ spread between the US and Australia, with the 8.5% spread between the US and Brazil or 12.75% between the US and Russia. For investors once again becoming complacent about risk, the choice is a no-brainer.

Still, some analysts are nervous about this change in dynamic: “While the new carry trade may be less leveraged, it’s an inherently riskier bet. As such, it’s more vulnerable to the kind of swift unraveling of risk appetite observed across all nations and sectors in 2008, but which occurs with far more frequency in emerging markets.” Meanwhile, emerging market stocks have behaved volatilely over the last few weeks (with Chinese stocks even entering bear market territory), and some investors are concerned that they may be temporarily peaking. There are also signs that bubbles may be forming in carry trade currencies, with bullish sentiment at high levels. Accordingly, one strategist suggests waiting out a 5% pullback in the Australian dollar, and a 10% pullback in the New Zealand dollar before going back in.

There is also the outside possibility that the Fed will raise interest rates, which would crimp the viability of the US Dollar as a funding currency. Granted, it seems unlikely that the Fed will tighten within the next six months, but investors with a longer time horizon could begin to adjust their positions now, rather than wait until the 11th hour, at which point everyone will be rushing for the exits.

August 24th 2009

Australian Dollar Rises, Remains Closely Correlated with Stocks

The performance of the Australian Dollar over the last six months has been nothing short of incredible: “Since the end of February, the Australian dollar has risen 29% against the U.S. currency,” and a still-impressive 18% if you backtrack to January, when the Aussie was still in free-fall.

As has been the trend in forex markets of late, the currency’s rise cannot be attributed to an improvement in fundamentals. The economic picture remains nuanced (that is putting a positive spin on it), and definitive proof of recovery has yet to emerge. “We really are trawling pretty deep to try and get any snippet of information that might have some backhanded relevance as far as Australia goes,” said one analyst.

As a result, fundamental analysts have been forced to wait for a “more precise picture about the timing [of] any Reserve Bank of Australia interest rate hike.” On this front, investors are ratcheting down their expectations of a rate hike anytime soon, as “The RBA has signaled that there’s a danger of raising rates too soon.” Futures prices reflect the expectation that rates will rise by only 37 basis points from current levels before 2010, and by 161 basis points 12 months from now.

With such economic uncertainty, investors have turned their attention elsewhere. “Nomura Chief economist Stephen Roberts said in the absence of any clues about the fundamental drivers of the currency, nearly all the cues in foreign exchange markets are being taken from equities.” Some analysts have posited a close relationship with the US stock market: “The correlation between the Aussie dollar and U.S. equity market in particular has been very strong over the past few weeks, with our analysis showing a correlation as high as 95 percent.”

For other analysts, the relationship is with the Chinese stock market. This correlation makes more sense logically, since the Australian economic recovery is largely contingent on continued growth in China and the concomitant purchases of Australian commodities. “Currency markets will be watching the Shanghai share market, which has been a pretty big influence on the Aussie recently,” summarized one analyst. A reporter for the WSJ tried to spell it out even more clearly in an article entitled, “Australian Dollar Up Late, Closely Tied To Chinese Stocks.”

Unfortunately, the correlation with (Chinese) stocks runs both ways. When the Chinese stock market tanks - often for inexplicable reasons - as it has for the last three weeks, the Australian Dollar follows suit. Another analyst is more blunt: “The story for the Australian dollar and other risk- and growth-oriented currencies is similar to the share markets. They’ve had a great run and are probably due a bit of a pullback.”

August 22nd 2009

Dollar Reverts Back to Former Self

Only two weeks ago, analysts were singing about a new day for the Dollar, which had risen on the basis of good news for the first time in months. In hindsight, it looks like such talk was premature, as the Dollar has returned to its old ways. Good news once again causes the Greenback to fall, while bad news causes it to rise.

This development (or lack thereof) suggests that investors may have gotten ahead of themselves, when they sent the Dollar surging after the employment picture brightened slightly. At the time, the news was interpreted as a sign that rate hikes were imminent. On a broader level, it was a sign that investors had dumped the paradigm of risk aversion, in favor of a model based on comparing economic fundamentals. Since then, investors have slowly moved to distance themselves from the notion that the Fed will soon hike rates, and in the process have moved back towards trading based on risk dynamics.

As a result, positive news developments over the last couple weeks have coincided both with a rise in equity prices and a decline in the Dollar. When the Chinese stock market collapsed one day last week, investors responded by dumping high-yield assets, and moving temporarily back into “safe haven” currencies. “Diving Shanghai Helps Dollar” read one headline. “Worries over the continued fragility of the world economy outweighed a firmer tone in overseas equity markets to underpin the U.S. dollar versus major counterparts,” explained another report.

Meanwhile, a divide is forming among fundamental analysts. There is one school of thought which argues that the US will be the first industrialized economy to recover, and hence the first to raise rates. Based on this line of reasoning, then, positive economic news provides a foundation upon which to buy the Dollar. A competing school of thought, meanwhile, has suggested that regardless of if/when a US recovery materializes, it will be overshadowed by out-of-control inflation. In this regard, then, the Dollar is not such an attractive buy.

No less than the venerable Warren Buff has insisted that the Fed’s quantitative easing program and the US economic stimulus plan - while necessary - threaten to create even bigger problems than the ones they purport to solve. “But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself,” he said.

If this true, then the Dollar is damned either way. Damned in the short-term as a result of a pickup in risk appetite, and damned in the long-term due to inflation.

Top 100 Forex Resources

The average daily forex trading volume currently exceeds $1.9 trillion. With so much on the line, we’ve put together a list of our favorite 100 forex resources to help you become a knowledgeable forex trader. The following resources were chosen for the quality of information and training tools offered. Although some of these tools are located on commercial sites, you’ll find value in materials produced by professionals. Other sites were chosen for the resources that they offered for a price (like books), but they’re all geared specifically toward the forex trader. The chosen sites are written in the English language, but some individuals, businesses, and organizations are located in areas other than the United States. All sites are listed in alphabetical order within the following categories:

Beginner’s Paradise

If you’re a forex newbie, the following sites will help you get a grip on the similarities and differences between forex trading and stock exchange trading. Take advantage of free resources before you dedicate any serious cha-ching to training.

1. Tip’d: Investing and Finance Social Media / News — Get the latest forex, commodities, and market news from the largest investing social media site.
2. Currency College
   — Currency College delivers a variety of course offerings with classes that are held at the student’s convenience. Each class is followed by homework and tests; each course lasts about six weeks; and each class contains about ten students. Emphasis is given to risk management. This is not free education, but if you bring referrals to Currency College you could earn a scholarship toward your tuition. This site has plenty of free resources, however, like a comparative chart for various trading platforms so you can make an educated choice about trading platforms.
3. CyberTrading University — This site offers free forex training through a two-hour video that includes a brief history, PIP spreads, majors and crosses, economic indicators, fundamental analysis, technical analysis, short-term long-term fundamentals, trading rules, leverage and margin, trading psychology, Fibonacci Retracement Levels, moving averages, oscillators, Candlestick Charts, Bollinger Bands, and more.
4. Forex Charting 101 — A brief and basic overview of forex charts from Pip Trader. You’ll discover that the charts are very similar to those that you might use for securities trading. But, some of the charts may seem more complicated if you’re not a seasoned trader.
5. Forex Realm —
   Possibly the most comprehensive and thorough forex education online. Learn about everything from currency codes to exotic trading strategies through articles, graphics, and concise examples.
6. Forex-Training.com
   — Fairly comprehensive training with a free demo account. The highlight to this site is their explanations about various charts.
7. FX Home Trader
   — Focus on the information about technical analysis, where you can learn more about Fibonacci Trading, Pivot Points, and more. Their Forex Facts also contain some valuable information.
8. FX Power Trading Course — Offered by FXCM, this paid course is one step up from free at the current price. Learn how to time the market, recognize trends, and basics in fundamental and technical analysis through this eight-day course.
9. Investopedia on Forex — An extensive 10-part article on forex investing, from an introduction to a recap that covers everything from benefits and risks to technical analysis. If you can’t get enough of Investopedia’s information, head to a list of their Forex articles, where you can learn more and download their free e-Book entitled, "High Probability Trading Setups for the Currency Market."
10. Law of Charts
    — Joe Ross offers advice for traders across the board, but the information contained in his "Law of Charts" offer speaks to forex as well as any other trading strategy. He identifies chart patterns that result from human behaviors and points to entry and exit targets on those charts. You can take advantage of Ross’s other tools as well, including the forum.
11. Learn4X — This is an interesting site simply because it contains several tests that help you determine if you have the ‘guts’ and knowledge to be a trader. They also offer a free online seminar.
12. Market Traders Institute (MTI) — You don’t need to spend a lot of money to train in forex markets. MTI offers many free resources such as videos and lesson plans that will help you get off the ground. If you like what you hear and see, you can invest in materials for the advanced trader down the road.
13. My Forex Trading Tools — A site that contains overviews on everything from fundamentals to options.
14. Online Training Academy — Free basics on FX trading via video, offered by Mike McMahon. You need to register, but you can opt out of contact lists with a click of a box.
15. School of Pipsology
    — A lighthearted forex education from Kindergarten to College so the beginner knows exactly where he stands in an attempt to grasp the forex market.

Blogs & News

The following list provides a variety of news from both professional and single-investor resources.

16. A Forex Loser
    — The name of the blog ought to warn you. This blog contains a different perspective on trading, with an emphasis on trading psychology. Some great trading tips.
17. Currency Secrets
    — Not updated daily, but plenty of resources in historical entries. The focus is on currency, but you can find plenty of reviews and tips here as well.
18. DailyFX — Sponsored by Forex Capital Markets (FXCM), this site offers a free weekly trading lesson, a forum, economic calendar, and free quarterly outlook reports.
19. Forex News — At-a-glance links to news and analyses.
20. Forex Project — A fascinating blog written by a forex beginner who logs his experiences in a journal, through established goals, and with a full trade history. This blogger currently is under pressure from a fulltime job, and he’s considering a transition from day trading to going long on his investments. Should be an interesting read. Be sure to check out this blogger’s list of references, including a nice beta risk calculator.
21. FX Boot Camp — Wayne McDonell offers his boot camp theories for free at his blog on FXStreet (see next).
22. FXStreet — Breaking news, commentary. Sponsored by Global Forex Trading (GFT).
23. Peter Bain Forex Trading Commentary — Peter Bain’s commentary needs to be good, as it’s a tool to push his training course. You can take advantage of his free podcasts as well.
24. Piptopia —
    This is Rob Booker’s blog on forex. He’s a currency trader and trainer and he’s been at this blog for two years, so you’ll find some interesting history here.
25. Grace Cheng’s Forex Blog — "Not long after my graduation, I was introduced to forex trading, and since then, have never looked back." Outside of her blog, Cheng writes for a number of trading and investment magazines.
26. Quantitative Trading — Dr. Ernest Chan’s take on automated, statistical trading strategies.
27. Trader Mike — Michael is a trader, and this blog is a trading journal of sorts. Although he considers himself a swing/position trader, he switched to day trading in 2005. Although this blog doesn’t focus on forex per se, you can learn plenty about trading strategies here.

Charts

You can’t trade without charts, but the chart that you use is a matter of personal preference. The list below provides a nice pool to pick from:

29. DailyFX Chart — You can manipulate this chart by type, time scale, view, and much more. Java based.
30. Free Forex Charts
    — From simple to Premium to System Trading, simply the best choice of charts around.
31. Forex-Market
    — This site offers two free, real-time charting applications, one Web-based and the other a stand-alone Java applet.
32. Live Currency Chart — This chart, offered by FXStreet (see Blogs & News above), is also Java based. A nice feature is the Drag&Drop that allows traders to pull indicators out of the Studies window and up into the Chart window.

Currency & Converters

Currencies can be confusing, especially when you learn that many lots are purchased in pairs. You can learn about specific currencies when you type the names of that currency into a search engine. For instance, you can learn more about the Euro at that currency’s official site. But, if you don’t know what to look for, the information found in the following sites will help you out:

33. ADVFN Forex Symbol Table — Comprehensive list of currencies. When you click on the currency symbol you’ll reach a page where that currency is represented through currency exchange rate tables and historical exchange rate charts.
34. ExchangeRate.com
    — Try out the "hot" and "currency info" links that provide information about everything you’d want to know about worldwide currencies for 170 countries. Includes calculators, fun facts, serious facts, and more.
35. Go Currency — Reliable currency converter and money conversion service.
36. List of Currencies — This is an extensive list provided by Wikipedia that covers everything from ancient coinage to the current Yen. As with most Wikipedia lists, you might run across a link or two that doesn’t contain information. But, you can use that information to search elsewhere if needed.
37. Oanda
    — Excellent set of currency converter tools from historical currency exchange rates for over 164 currencies to traveler’s cheat sheets to customizable products. Visit their detailed currency converter FAQ page if you have questions.
38. X-Rates — More than a currency list or a converter, this site will bring you up-to-date on every bit of information you’d need to know as a forex trader.
39. XE.com — A basic currency converter backed up by other tools on this site, such as current and historic rate tables and a free email currency update service.

Directories & Portals

The following resources offer choices beyond the ones listed here. Since forex is a booming individual trader industry, expect to find new sites popping up weekly.

40. Forex Central
    — You want it? They have most of it (blogs are missing). Resources aren’t rated.
41. Forex Directory
    — This site is a little difficult to slug through, but worth it for the resources provided.
42. Pip Trader — This site contains a forum, live quotes and charts, news, reports, and a "mini-game" that has nothing to do with forex, but that might help you lighten up a bit.
43. Top 100 Forex Sites
    — Although these sites are rated by popularity and, therefore, subject to rating scams, you can learn much from the sites that are listed simply from the variety of information that’s offered here. Many sites are brokerage firms, but as I mentioned previously you can find free information on many of these sites such as news, calculators, techniques, and more.

Economic Calendars & Indicators

Economic calendars and indicators are vital tools for fundamental research. The sites below will give you simple and detailed options.

46. Economic Indicators
    — A government site brought to you by the Economics and Statistics Administration at the US Department of Commerce. Their mission is to provide timely access to the daily releases of key economic indicators from the Bureau of Economic Analysis and the US Census Bureau.
47. Forex Economic Calendar
    — What better place to find an excellent economic calendar than a site that focuses on this tool?
48. Global Forex Trading (GFT) — A detailed look into the next month’s international monetary future based on GMT.
49. InfoForex
    — Brief overviews on various sectors from Auto and Truck Sales to a Monthly Wholesale Trade report based upon the US Census.

Fibonacci & Candlesticks

Fibonacci and Japanese Candlestick charts may seem difficult, but with the right training you can master both technical strategies.

50. Fibonacci
    — This is the home page for Dr. Ron Knott’s multimedia Web site on the Fibonacci numbers, the Golden section and the Golden string hosted by the Mathematics
    Department of the University of Surrey, UK. Simple to use, easy to understand, and filled with illustrations to help you learn why some numbers are so important
    to nature. These numbers are also of vast interest to many forex investors.
51. Fibonacci Forex Indicators — Forex Planet will begin to show you how to apply Fibs to forex in this easy-to-understand lesson. But, the lesson is short, so you might try the next resource as well.
52. Fibonacci Method in Forex charts — This lesson also applies to forex, and it offers a short tutorial on applications along with a downloadable Fib calculator.
53. Japanese Candlesticks — FX Words offers a simple and succinct explanation for candlesticks, including bullish and bearish patterns.
54. Japanese Candlesticks (Elliott Gann) — A comprehensive tutorial that covers all the basic terminology and explains each term with appropriate graphics, offered by the ElliottGann site.
55. Japanese Candlestick Trading Forum — It costs to become a member, but you can access all the candlestick basics for free on this site.

Forecasts and Signals

The following resources use a mix of fundamental and technical analyses to formulate their prognoses:

56. AceTrader
    — True 24 hours real-time analysis for up-to-the-minute recommendations and analysis.
57. e-Forex — Free trading signals. Dig into their historical records to understand their precision.
58. Forex Predictions
    — Currently free daily and weekly high-low signals through the Web site and by email. This site is a division of RDC Bancorp, Inc., a foreign exchange services company.
59. Forex Signals — FinoTek provides signals and trends with charts. Check out their archived signals to determine credibility.
60. Investica Ltd.
    — Online information and free e-newsletters filled with signals and forecasts.
61. Open Forex — Daily forecasts in real trade and analytical articles on forex basic currency pairs.

Forums and Communities

62. Forex Factory
    — You’ll find a Forex Beginner Q&A section as well as topics that focus on specific strategies and techniques.
63. Forex TSD — Go ahead and lurk in this forum until you feel comfortable. Then register for free to access the forum and a calendar. The paid "elite" subscription offers detailed statements of currently more than 20 trading systems.
64. Global View Forums
    — Another free forum that’s been around since 1996.
65. MoneyTec — With over 33,000 members, this traders’ forum offers a format to discuss trading ideas, share, learn, and build new trading techniques and strategies.

Fundamental Research

The following list contains comprehensive information about economic fundamentals for your research:

66. Bureau of Economic Analysis
    (BEA) — Get the straight stuff from the US Department of Commerce like the pros. Everyone from the White House staff to US Trade Commission employees to trade policy officials who want to negotiate international trade agreements use the measurements contained on the BEA Web site.
67. Consumer Price Index
    (CPI) — The US Department of Labor offers a ton of information just on this page alone through their links.
68. Forex Daily Fundamentals — XpressTrade offers a daily focus on forex fundamentals.
69. The Bank for International Settlements (BIS) - An international organization which fosters international monetary and financial cooperation and serves as a bank for central banks. As such, this organization offers valuable information through their publications and research as well as through many other resources offered on this site. They also maintain a list of Central Bank Web sites.
70. The Fundamentals of Forex — Forex TV brings you the lowdown on what type of news would affect forex from a fundamental standpoint. You can use the information on this list to conduct further research.

Glossaries

71. Forex Glossary
    — The only drawback to this glossary is that the "A-Z" tab doesn’t include a total listing of all the terms under the single-letter tabs. Comprehensive.
72. Forex.com Glossary
    — An at-a-glance glossary contained on one page.
73. Glossary of Forex Terms [PDF] — This printable file, offered by FX International Group, contains all the basics.

Government Regulation

74. Australian Securities and Investments Commission (ASIC) — The ASIC’s regulatory coverage includes the forex market. Use their search box to learn more about their reach and responsibility.
75. Commodities Futures Trading Commission
    (CFTC) — The CFTC operates along the same lines as the SEC
    (Securities and Exchange Commission), except this government organization focuses on protecting market users and the public from fraud in the futures and option markets. So keep this site handy to stay on top of any forex scams through their Consumer Advisory on Forex Fraud. You can learn quickly what to avoid in your learning curve through a detailed forex advisory that offers information about other resources as well.
76. Financial Services Authority
    (FSA) — An independent non-governmental body located in the UK, given statutory powers by the Financial Services and Markets Act 2000. Use their search box to locate information about the UK forex market and regulations.
77. National Futures Association
    (NFA) — The NFA is "the premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets," which basically means that this organization regulates any market that depends upon future cash flows. The "investor information" section contains materials about how to find a broker and basic lessons in forex trading. Plus, they publish forex warnings, news, and they offer a place for investor disputes and complaints.

Market Reports

78. KBC
    [PDF] — A Comprehensive "Morning Report" from this Belgian foreign exchange bank (in English).
79. Mellon
    — FX Daily report from Mellon Financial Corporation, with links to American and European editions and past issues.
80. SaxoBank
    — Daily market update from this foreign exchange service in London.
81. Scotia Capital [PDF] — Daily report with corresponding links for further reading from this Canadian foreign exchange bank.
82. UBS
    — Daily summary for forex markets sponsored by this Swiss foreign exchange bank.

Back to index

Nonprofit Associations

83. Australian Technical Analysts Association (ATAA) — A non-profit association of both professional technical analysts and anyone who uses technical analysis for private investing, trading or advising.
84. International Compliance Association
    (ICA) — The ICA is a professional organization dedicated to the furtherance of best compliance and anti money laundering practice in the financial services sector.
85. The Financial Markets Association (ACI) — ACI has the largest membership of any of the international associations in the wholesale financial markets. The Head Office is based in Pari

Practice

Some of the best demonstration tools are owned by forex brokerages. The following were chosen for their reliability and popularity. Be aware that some brokerages will request your permission to be contacted by mail, phone, or email. In some cases you might want this contact, as they will provide support for your training. In all cases you can walk away if their training and trading platforms don’t turn you on.

86. CMS Forex — Customize your practice with unlimited funds on CMS Forex’s VT Trader 1.8.5.1, a program that includes an API so that you can customize your solution. This software offers a point-and-click open and close positions directly on the chart. Access over 100 indicators, Reuters Forex related news and market analytics, and an "autopilot" feature. You can reach their customer support team by phone, live chat, or e-mail.
87. Forex Trading USA — Free 30-day demo with a Mini ($2,000 virtual cash, 200:1 leverage, 10k lot size) or Standard ($25,000 virtual cash, 100:1 leverage, 100k lot size). Their free education is a nice plus.
88. FXSolutions
    — Use $10,000 in practice funds with full access to FXSol’s new charting solution, FX AccuCharts. Backed by 24/7 customer service.
89. Global Forex Trading
    — Download their DealBook 360 to practice forex trading with live, dealable prices, real-time data, and free real-time breaking world and financial news. The software features forex charts, more than 85 technical indicators (for standard size GFT trading accounts) and the ability to build your own indicators. You have a choice about the amount of beginning funds, from $2,500 to $50,000.

Back to index

Real-Time Quotes

90. ACM
    — Pick pairs and watch the quotes. ACM includes a manual [PDF] that explains in detail how to manipulate the chart to your liking. Must have Java plugin.
91. Forex Trading Charts
    — Real-time forex quotes. This site also contains real-time forex charting tools with editable indicators.
92. FXQuote
    — Scroll down the page, as the real-time quotes are located at bottom left. Based upon ET.
93. Live Forex Quotes — You might recognize the GFT logo behind the rates, but don’t let that distract you from the constantly changing figures. If you’re addicted to live feeds, you’ll be mesmerized by the constantly changing currency rates on this chart.
94. SaxoBank
    — Scroll down the page a bit, as the quotes are located at the bottom left on this page, based upon GMT.

Back to index

Technical Indicators

The following three resources offer the most succinct information about technical overlays and indicators. You can find many more resources at some of the sites previously listed under the Beginner’s section, under many of the Blogs & News resources, and at various brokerages.

95. Forex-Business Technical Indicators — Where the other two sites offer great technical indicator explanations, this site offers 10 charts that illustrate some of those terms.
96. IQ Chart
    — This company offers a list of technical overlays and indicators with short and easy-to-understand explanations. Take a look at their chart patterns while at this site, as this company is a provider of stock charting software to individual investors and technical analysts.
97. Technical Indicators — Definitions provided by MetaQuotes Software.

X-Tras

98. IFXTAG — The International Forex Traders Affinity Group provides individual investors access to products and services that are evaluated by top professionals and their members. IFXTAG is committed to harnessing the potential to make electronic trading work for their global community of subscribers. Membership is free, but the resources are not. Members, however, do receive free trials and discounts to various services.
99. Traders Press, Inc.
    — An online bookstore specifically for traders.

Information About Margin In Forex Trade

Several forex traders are doubtful while applying the margin. But after that, they have small option and the majority of them have to employ the margin to do foreign trade.

One single lot includes 100,000 units of a currency in a normal account. One lot in Mini account may possibly include 10,000 units of a particular currency. This, as most of you would optimistically have the same opinion, is important cash to keep in an account. As well, the majority of people have been look to trade above one lot at a time.

And nearly all Forex trading firms need traders to have admission to margin funds. All in all there is just no options which will aid us turn clear of applying the margin in currency trading.

Significant aspect for a forex trader to bear in mind is that there are reasonable ways to employ the margin gainfully in addition to sensibly.

Margin is customizable: Margin is bendable and can be applied till the level at which the trader is comfy and thinks the requirement to exercise it. If the trader desires to play it protected, 5% to 10% of margin is measured comfy. For a trader who is start to taking a few risks, 40% to 50% percent of margin is measured standard or strong.

Therefore, the margin sum for every trade can be customized opening from zero to 100 percent. A person has to think every trade independently and has to create it a division of his long term forex currency trading strategy and create a well-versed verdict about how lot the margin is most appropriate for him.

Do Forex Trading Robots Work?

With forex robots many people have go it wrong. First you must ask, "What is it I want from trading forex?"

Do you want to take big risks in order to possibly make big gains? What is your risk? Are you willing to gamble the lot in the small hope of hitting lucky? Are you willing to risk half of your money before you call it a day? OR, is losing money your major concern? Because this is where you must start.

Only when you know this can you then go and start looking at possible forex trading systems that fit YOUR criteria, not the other way around. Got it?

And remember this a forex robot is simply a forex trading system coded. It's nothing magical or mysterious. Ignore the hype about "space ago technology." The best systems are very simple. I always recall a professional forex system tester said the very best systems were always the very simple ones. The more complicated the system, the more rules it had, the worse it performed. You have to ignore the hype some vendors will use to try and "trick you into buying" Simplicity really is the key to success.

Every forex system will go through winning, losing and flat periods. Only by looking at the past twelve months history can you get some kind of idea of how the system has performed. I see very little point in going back further than this. The markets change over time and because a system worked five years ago means nothing today. And even then that is no guarantee the past will play out the same in the future. But it's a good start. A trading system is a system not an "edge". NO ONE would ever sell or give away an edge and they are usually only profitable for very short periods.

A good system does the basics of forex trading well. It wins over the long term. Loses a little when going through a bad phase. Apply common sense when looking at forex robots. What history does it have? Are the returns simply too high? Is there too much hype? Who is behind the product?

Forex Scalping System Day Trading system

Forex Trading Robot - Vital Tool for Forex Trading by Randy Tyler

Perhaps you have heard enough that Forex trading robots deliver excellent performance by predicting upcoming situations in the trading market from top to bottom. Is it not possible to succeed without the use of any additional trading robot? Of course, you can succeed in Forex trading staying glued day and night with Forex charts, whereas utilization of a high grade Forex trading robot will make you a million annually with you seating idle.

But what kept you away from the actual trading robot was the unawareness of how it works. Many are trapped with Forex trading robots scams as they just have sky-rocketing claims, mingled with failures when actually used.

Typically, all Forex trading robots designed up till now, are based on only one Forex Market situation in mind, which leads to their failures as the market in realty is volatile. All Forex traders are aware of the fact that how frequently and unexpectedly the trade market changes. So, what if we have a Forex trading robot which can decipher any complex market conditions and even 3-4 hours earlier before it's about to occur? That's the dream of any Forex trader to possess a robot which is built-in with such intelligence that it embraces the market changes. Forex MegaDroid can fill colors to their black-white dreams, as the Forex trading robot is developed utilizing a unique algorithm. This aims to adapt the complex trading situation in the present market.

Reviews say that this Forex trading robot has successfully performed with 95.82% accuracy, and persistently drawing in money with its nature. For inexperienced traders there is nothing more delightful than making profits twice than the old and experienced Forex traders.

Forex Trading Robots Review

For folks who are involved in foreign-exchange market trading or are interested in it, something that might be very beneficial to read is a Forex trading robots review. These will give individuals an opportunity to learn about what products are out there that might help them to be successful and make more profits. There are also many unbiased and good reviews written by Forex commentators and veterans such as this article you are reading.

There are many different types of signaling and robotic software packages online. Some require that the user does very little while others require users to be a little more involved in the process. Because many of these systems are very similar, individuals will have to take a good look at their personal situation, goals and experience.

For people who are just starting out and have not been involved in this type of trading for long, then you might want to go with a product that handles and automates just about everything for you. Some of these will let their user know when a trade is a good one and potentially profitable. They may require that the user makes the trade manually, while others will make it for the user automatically. Depending on how involved or hands-on an investor wants to be and how well they know the market, a system that does just about everything for them may be exactly what they need.

On the other hand, if you have been involved in these types of investments in the past and are good at making money from it, then you will likely want a little more control. It would not necessarily be the best for these types of people to use software that will make the trades for them. Instead, having the final say will likely be very important. Therefore, these folks may be looking for something that does provide a certain degree of automation but not entirely.

Ultimately, what one should get out of a Forex trading robots review is how much each particular system costs, whether buyers will get a money back guarantee and what features it includes. You should be able to see proof that it actually works. It would be a bonus if they provide a link to a live demo that can be downloaded and used. This will give you the opportunity to determine if it's easy enough to use and if you are comfortable with it.

Also, take a close look at exactly what is being offered. Some will have many sophisticated features while others will be more bare-bones. It is likely that the latter will be less expensive. However, if you think that you have found something that will make a lot of money, it may be worth spending a little more especially if you can get your investment back if it does not work out.

Now that you know what to look for out when reading a forex trading robots review, it is time to go out and start looking at your options. If you make a good choice, it should be highly likely that your investment is recouped really fast.

Day Trading Forex Futures with Pivot Points

Currency trading is increasing in popularity among individual investors, especially those in the United States. Just a few short years ago, it was relatively difficult and costly to access the spot Forex market. But barriers have been broken down, competition has increased, and costs have fallen. As a result, more and more retail traders are entering the realm of spot Forex trading.

But there's another way to enter the world of currency trading, and it's through the Chicago Mercantile Exchange (CME). The CME first offered Foreign Exchange (FX) futures in 1972. Today, the exchange offers futures on 41 currency pairs, options on 31 futures contracts, and over $60 billion in liquidity. Currency futures trade on the CME's renowned Globex platform, alongside other popular futures contracts such as the e-mini equity indices.

Spot vs. Futures

To be sure, there are a some big differences between the contracts that trade in the spot Forex market and the FX futures. Perhaps the biggest -- and arguably most important -- difference is that spot Forex contracts trade over the counter at no particular central location, while FX futures clear at the CME. The central clearing and guarantee of counterparty credit by the CME are huge benefits of FX futures over spot Forex contracts.

The dealing details differ dramatically between the two instruments. The table below details some of the biggest differences:

Over-the-counter (Spot, Forex) Foreign Exchange Futures

$2+ trillion daily turnover $60 billion in liquidity
Commission free Commissions
Guaranteed stops No guarantees
Fixed pip spread Bid/Ask spread
24 hour trading 23 hour trading
100:1 up to 400:1 leverage 20:1 to 50:1 leverage
Varying quote currencies All rates quoted in dollars
Plain vanilla & Exotic options Plain vanilla options
Mini accounts Mini contracts (limited)
Interest debits & credits Carrying costs
Automatic rollover 3 month expiration cycle

Personal Preference

Whether you trade spot contracts or futures on currencies will depend upon your own risk tolerance, equity, and other needs. I've traded spot, through several different dealers, and the futures for many years. I continue to use both instruments in varying situations, alternating my selection to fit different strategies.

I like to use the spot contracts when executing very short-term strategies, such as a straddle surrounding a high profile economic announcement or central bank meeting. For example, I would use the EUR/USD spot contract to execute a trade during a Federal Reserve announcement or Non-farm payrolls release. Or I would use the USD/JPY spot contract to trade a Bank of Japan meeting. The guaranteed stops that some spot Forex dealers offer are very useful when trading around a volatile announcement like a central bank meeting.

Additionally, I favor the spot contracts when trading cross rates -- the exchange rates that exclude the U.S. dollar; for example: EUR/JPY, GBP/CHF, AUD/NZD, and GBP/HUF. Cross rates can be an excellent tool to take advantage of varying degrees of relative strength in individual currencies. And they are a great way to trade the currency market when the majors are at an equilibrium (read: trading range). You can find tremendous trends in the cross rates, and you can find hundreds of cross rates at many spot Forex dealers. On the other hand, futures on cross rates are comparatively illiquid and limited.

But for the most part, I trade the currency futures. That's because the cost of trading futures is, in most cases, lower than trading spot Forex. I've found futures cost about $20, or less, per round turn, while the spot Forex contracts cost between $30 to $50, and up, per round turn. The lower cost of trading currency futures is why I use the instrument in all of my day trading strategies, including the pivot point methodology.

(But please know that you can apply spot Forex contracts to the methodology that I'm about to show you.)

Pivot Points

Pivot points are a popular tool used by futures traders in all sorts of markets, ranging from equity indices to crude oil. And, sure enough, pivot points are readily applied to trading currency futures.

Pivot points are support and resistance levels derived from the previous period's high, low, and closing values. There are a variety of pivot values with which to trade, including monthly, weekly, and daily values. You could even calculate hourly values. When determining which period to trade with, you've got to consider your time frame as an individual and your particular style. I'll use daily pivot points for the purpose of this article since the focus is day trading.

Daily pivot points give a structure to each new trading day in the currency market. With these values you can use traditional support and resistance techniques to enter and exit trades. But before I get to the strategy, I'll show you how to calculate pivot values.

Pivot Point (PP) = (High + Low + Close) / 3
Resistance 1 (R1) = (2 x Pivot Point) - Low
Support 1 (S1) = (2 x Pivot Point) - High
Resistance 2 (R2) = Pivot Point + (Resistance 1 - Support 1)
Support 2 (S2) = Pivot Point - (Resistance 1 - Support 1)

(Pivot values for several different currency pairs are posted on the TradingMarkets web site every day.)

The pivot values are plotted as horizontal levels which, in turn, serve as support and resistance. The pivot point itself can be thought of as the day's mid-point, or fulcrum. It's where the buyers and sellers meet to determine the day's trend in a currency pair. The support and resistance levels that are plotted around the pivot point are just that: potential support and resistance.

A daily pivot point (in green), S2, S1, R1, and R2 values are plotted on the chart below of the EUR/USD FX future. The chart is a 5-minute interval. Notice how the Euro broke above the pivot point early in the day, and then proceeded to trade up to R1, where it met resistance and gyrated for the rest of the day.


Source: Quote.com

Follow The Intraday Trend

The power of pivot points is unleashed when you follow an unfolding trend during the day, and use the pivot values to measure the magnitude of trend. Additionally, the pivot points can be used to determine entry points into a trade. Applying simple breakout and breakdown entries around pivot points is a powerful way of using the tool.

An example of following the trend of the day as it unfolds, and entering trades on the break of pivot values, is illustrated on the 5-minute chart below of the JPY/USD contract. In this example, the Yen began the day near its pivot value, rolled over from R1, and proceeded to breakdown below the pivot point, S1, and S2. The pair dropped by about 60 ticks, providing ample opportunity for a day trader to make money on each breakdown below support. These types of intraday trends unfold a few times throughout the trading week, and they are relatively easy to exploit by following the futures contract through its pivot values.


Source: Quote.com

A second way of leveraging the power of pivots in the currency futures market is by adding a technical indicator that can pinpoint buy and sell signals. You will still want to use traditional support and resistance techniques around the pivot values. The purpose of adding to the indicator is to help in the timing of an entry into a trade. Above all else, though, you want to trade in the direction of the unfolding trend.

The MACD (12,26,9) is added to the 5-minute Euro chart below. The MACD generates simple buy and sell signals with the crossing of the fast and slow lines. Quite simply, it's time to buy when the fast line crosses above the slow. Conversely, it's time to sell when the fast line crosses below the slow line. Only the buy signals are highlighted on the chart below because the Euro was in an upward trend during the day. The sell signals are ignored due to the upward trend in the contract.

The Euro began the day at 1.2640 and ended near 1.2740 for a move of roughly 100 ticks. That's a lot of potential profit, part of which could have been captured by simply following the trend of the day and taking the buy signals coming from the MACD.


Source: Quote.com

Pivot Point Tips And Tricks

Trading with pivot points is not a big secret. Floor traders and dealing desks have been applying the methodology for decades in the currency market. But what separates the profitable traders from the losers is the simple act of following the trend of the day, cutting losses short, and letting profits run to the next pivot value. In addition, there are a few observations I've made over the years that I can add to the simple truth of following the trend.

The first tip I want to share is that the best trend days usually unfold when the currency begins the trading day near its pivot point. You might have already made this observation in the two above examples of the Euro and Yen. If you didn't, then take a second and jump back to the above charts, and note how the Euro and Yen began the day at or very near their pivot points. There are usually two or three days out of the week during which the majors such as the Euro, Yen, Pound, and Franc begin trading at their daily pivot. These are the days to look for a big trend to unfold.

If the currency that you're trading begins the day far away from the pivot, either below S2 or above R2, then it's probably a day that you want to walk away from. When a currency opens the day at one of the daily pivot extremes, it usually spends the rest of the session gyrating around that level. Avoid trying to trade a reversal of the overnight trend. Occasionally it might occur, but more often than not a big overnight trend will stall out at R2 or S2. The temptation is there to try to squeeze out a small profit, or bet on a reversal of the overnight trend. But the reality is that these are the days that can destroy a trader's equity.

You will find two examples below of strong overnight trends leading to massive gaps at the open of New York trading in the futures market. The first is an example of a gap up in the Euro. The pair opened at R2, where it spent the rest of the session. The second example is of a gap down in the Pound. The contract opened below S2, and spent the rest of the day gyrating in a tight range.


Source: Quote.com


Source: Quote.com

These days are best left to the floor traders. In the long run, you'll be better off not even trying to trade during days when the currency futures stage a substantial gap, either high or lower. You'll be better of by waiting for those days when the currency futures open near their pivot points.

Profit With Pivots

Day trading with pivot points can be applied to the spot Forex market just as they are in the currency futures market. Support and resistance, and the techniques that accompany these price levels, are consistent across all markets. In fact, pivot points have been used across dealing desks for decades in the spot Forex market. To the individual investor, however, it makes more sense to use currency futures when day trading simply because of the lower costs associated with trading futures.

The most important point to remember when applying pivot points to day trading currency futures is to follow the trend of the day, and simply look to enter into an unfolding trend as a pair makes its way through pivot values. Pay special attention to those days when the currency opens at or very near its pivot point. And avoid trading when a contract opens far away from its pivot point, at or beyond S2 and R2 values.

Good luck!

Eric Utley is a full-time trader with over a decade of experience in equities, equity options, futures, and currencies. He specializes in trading currencies, using a combination of quantitative, technical, and fundamental analysis. He is the lead contributor to INVESToolsCT.com, manages a currency trading blog, produces educational programs, and hosts a weekly online seminar.