Archive for December, 2009

Currency Trading Basics – A Simple System Anyone Can Use for Big Profits

As you are probably aware, I am constantly on the lookout for excellent information on Swing Trading, knowing that good information is key to learn how to swing trade. Today, I saw a very excellent article that discusses Swing Trading in laymans language. Make sure you look into this article and inform me about what you think. Todays post is about Swing Trading and you will see the complete article provided below for your convenience:

 

I have been a trader for 25 years and have seen all types of market and seen lots of innovations – but my forex trading strategy has NOT changed, it’s still the same as it was 25 years ago and still works. I will share the logic of it with you here.

 

First – we have seen lots of changes in the last 25 years but understand this being clever and trying to make your trading strategy complicated is a mistake. Simple systems work best and always will.

 

Despite all the advances in technology over the last 25 years, the ratio of winners to losers still remains the same 95% lose 5% win, this shows technology has nothing to do with forex success.

 

You need a simple system, because its very robust complicated ones fail because they have too many elements to break.

 

Here is the logic of my system:

 

1. Look for Valid Support and Resistance

 

Yes good old trend lines then, check for a valid level – lots of tests, in lots of time frames. Next I wait for the level to break and new high or low to be made.

 

All the big trends come from breakouts and these are the moves to go for.

 

Most traders like to wait for the pullback but they never get in. By waiting for a better price they miss the move. Losers don’t go with breakouts winners do.

 

2. Confirm the Trading Signal

 

You then need to see if the odds are on your side with the breakout so you check price momentum. There are lots of momentum indicators to help you time your move and get the velocity of price on your side. The ones you choose are a matter of personal preference but I like the ADX, RSI and stochastic. If my momentum calculation adds up I go with the break.

 

3. Stops

 

Stop below the breakout point and then trail the stop up behind random volatility not to get clipped out I like the 40 day MA.

 

That’s it! Simple yes of course but it works for me. The real trick is being patient I only trade 1 – 2 times a month with this method and to take short term draw down trailing the stop.

 

Adapted to Swing Trading

 

If the market is not trending, I adopt the strategy to look for shorter term moves and swing trade i.e using momentum to trade the moves between support and resistance. When doing this there is no trailing stop, just a target.

 

This method was simply one I picked up from a commodity trader in the late seventies and after trying all sorts of methods, it’s the one I settled on in the mid eighties and have used ever since. It works on commodities currencies and stock indexes.

 

Is it perfect? No, does it make money longer term – Yes and good money for the effort of 30 minutes or less a day.

 

I always get amused by people saying you have to keep updating your forex trading strategy and keep a journal of losses and why they occurred etc. To complicated for me! If I lost that’s fine you have to have losses to make gains and if the system isn’t broke don’t fix it.

 

I have the confidence to follow it, as know its logic and therefore have the discipline to follow it.

 

You can do it!

 

The above currency trading basic plan for profit will work for you, if you want it to.

 

You just have to learn the logic, settle on your indicators and you’re all set to lock into the exciting world of global currency trading.

 

If there is one area of life where you can keep it simple its currency trading and the real key is to have the confidence and discipline to follow your plan.

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Unleash the Hidden Power of Your Trading Plan

As you know, I am always on the lookout for excellent information on Swing Trading, recognising that complete information is essential to learn how to swing trade. Recently, I ran across a very good article that discusses Swing Trading in everyday language. Make sure you look over this article and let me know your opinion. Todays piece of content is titled title and you should see the entire article printed below for your convenience:

Deep in your trading plan, you may be missing an element that could be eliminating huge winners.  By merely tweaking a few indicators and steps to your trading plan, you may be able to produce returns you’ve never been able to achieve.

Change your entries and exits

Depending on your trading style, you may be cutting losses too deep and winners too short.  Many traders make the mistake of letting losers run while their winners get cut off after a modest gain.

Changing your exit plan to a trailing stop, or setting the bar just higher, will let the winners run and prove profitable.  Likewise, having extremely tight stops means that the overwhelming majority of trades will be stopped out before they even get the chance to move.  Tinkering with entries and exits will do a lot to work towards consistent profits.

Change your timeframes

Most day trading strategies are more profitable when adapted to the long term. Swing trading and investing strategies perform better because the infrequent trades save hundreds in commission fees and take less off the bottom line.  Expensive spreads might make the difference of a few percentage points of profitable trades, which is sometimes enough to double your results.  If you can successfully trade the 1 minute charts, it will be an easy switch to the hourly or even daily charts.  The longer the timeframe, the easier the investing and the less you’ll pay for trading.

Being able to adapt

Experienced professional traders have seen it all and have likely tried every strategy around.  What is hot on the market for the next decade might soon fall behind when a new trading science takes over.  The secrets of profitable traders is that they’re able to adapt and able to make money in every situation. It doesn’t take an investing genius to be able to adapt what they’ve learned to a new trading environment.  In just the past 50 years, so much has changed in the stock market, and it’s probable that trend is unlikely to stop now.

Participate in a trading seminar

Trading seminars are a great way to bounce ideas off other traders, along with rationale behind different types of techniques.  With a trading seminar, you may even walk away with strong trading secrets otherwise unavailable to you.  Regardless of your skill level, you can always improve your strategy through a trading seminar, and they are a good way to tap into the intellect of the traders you’re competing with.  Skill-building activities and the step-by-step instructions available in an online home trading seminar will build your foundation for pulling consistent profits.

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5 Guidelines for Evaluating Your Trading as a Business

You might be aware that, I am constantly on the lookout for topnotch articles on Swing Trading, knowing that effective information is vital to learn how to swing trade. Recently, I came across a very excellent piece of content that discusses Swing Trading in easy to understand language. Make sure you look over this piece of content and inform me about what you think. Todays information is titled title and you can read the entire piece of content printed below for your convenience:

 

Trading is just as much of a business as any other industry. Treating what you do as a business will help you improve your trading, allowing you to trade with less emotion. Constantly set trading goals to work towards, just as you would create goals for any business. Here are a few tips to improve your trading as a business, helping you reach your trading goals.

 

1. Your Trading Plan is Your Business Plan – Your complete trading plan is much like a business plan. Included in your trading plan planner should be a concrete statement on how to generate profits and your specific strategies. Much like your own business, you should have a plan in place to reach your trading goals. Setting swing or day trading goals is critical to producing consistent profits and staying “in business.”

 

2. Profit Loss Sheets – Bookkeeping may come second to technical analysis and e-mini futures, but it is just as important as day and swing trading itself. You should prepare a profit or loss statement every month and track where you’ve made money and lost money. If you’re finding yourself losing money in the 10 am – 2 pm period of the trading day, you might consider closing up shop during that time.

 

3. Have a Routine – If you were going to the office every day, you wouldn’t go in sweatpants and a t-shirt. You should be dressing the way you want to perform. Getting up early and getting ready just like you would for any other occupation will keep your mind in the game and bring in consistent earnings. You need to treat yourself the same as you would with a business. Set a trading goal for each day and strive to reach it with profitable trading strategies.

 

4. Use Profits to Grow – Businesses need more capital to expand and make more money and so does your portfolio. Spending a few extra dollars on advanced trading techniques, tools, and strategies will help you be a better trader. Mark each expenditure against the value of your trading portfolio as you would against the bank account of your business. Each investment is an investment in yourself, and it is also tax-deductible, just like any other business expense.

 

5. You’re Buying and Selling a Product – Shares of stocks are products just like an article of clothing or a pound of carrots. Trading is buying and selling a stock for a profit, much like owning a business is buying and selling a product for a profit. Think of each stock like a product; you might have to have “sales” to get rid of extra holdings or to cut losses, but it is all a part of running a business.

 

Organizing your trading life like your business increases your probability of market success. When you take time to manage your business, invest in your business, and treat yourself professionally, these are the tools to make consistent profits.

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How to Enjoy Your Trading Success

As you know, I am incessantly on the lookout for excellent articles on Swing Trading, recognising that good information is crucial to learn how to swing trade. Today, I discovered a really excellent piece of content that talks about Swing Trading in everyday language. Make sure you look into this and let me know what you think. Todays article is titled title and you can see the entire piece of content published below for your convenience:

 

Trading discipline is a fast track to trading success. Disciplined, working strategies will statistically win in the long run. But how should you celebrate your trading success and make the most of your wins?

Day Trading Mentality

 

Day traders who make a quick profit are the first to celebrate trading success. The small intraday movements in price are enough to keep day traders happy with their positions. The most important thing to remember is even with a comprehensive trading plan, losses are inevitable. Statistically, a win only brings more losses, but the biggest trading secret is that a few wins can easily strike out many small losses.

 

For day trading with a small account, trading success should send the trader to increase his or her stake. Your trading capital must grow over time to cover your own cost of living, as well as provide a “pay raise” over time. To obtain financial freedom, a day trader must have sufficient capital to both weather losses and collect big gains.

The Biggest Fallacy in Celebration

 

After a big win, the greatest fallacy a trader enacts is changing his or her trading structure. Too many times, an over-confident day trader makes trades based on “gut” feelings, rather than basic trading fundamentals. However, in this scenario, the trader eliminates strategy, instead entering the gray zone characteristic of gambling. Remember, the difference between gambling and day trading is proper money management. Proven techniques and strategies are profitable in the long run because they have set criteria for each trade, rather than just a stab in the dark based upon “gut” feelings.

The Greatest Gift of Success is Education

 

Learn from your successes. Indeed, the greatest gift of trading success is the education it presents you. Chances are that you placed the trade because of your own trading system and analysis; review the details surrounding your trade (ideally in the trade journal you keep) to develop a core of strategies that will produce winning trades.

Give Yourself a Brokerage “Present”

 

Boost your own trading profits by topping your account. Day trading with a small account is very limiting. After a big win, add some of your own personal funds to your account to keep your success. Undercapitalized accounts are the first to falter when the market turns. Investing in yourself can be the difference between profitability or simply getting by.

 

For large wins, you might even consider quitting your day job. Many people have found financial freedom through day trading. If the time is right and you have bankrolled a significant balance, making day trading or swing trading a career can be both profitable and rewarding. Quitting the 9-5 is the ultimate way to celebrate long-term trading success.

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Stock Market Trading Styles Defined

As you are probably aware, I am always on the lookout for excellent articles on Swing Trading, knowing that complete information is essential to learn how to swing trade. Now, I came across a really excellent article that talks about Swing Trading in everyday language. Make sure you check out this article and let me know your opinion. Today’s post is titled title and you will see the entire article written below for your convenience:

Have you ever heard of the terms Scalping, Swing Trading, Trend Trading and Momentum Trading? Wonder if you are any of them? Wondering what suits you? Here’s a quick definition.

The different forms of trading are actually better differentiated by time frame more than the techniques that are involved. Because of the difference in time frame, different techniques must be used in order to reap profits from the capital markets.

From the shortest holding period to the longest, we have Scalping, Momentum Trading, Swing Trading and lastly, Trend Trading.

Scalping is a term used for a method where trades are opened and closed within a very short time scale, perhaps anything from a second or two to a few minutes. This is a day trading method where Scalpers make several, perhaps hundreds of trades a day, accruing small profits intraday for an overall daily return.

Momentum trading is another day trading method where the trader sees an acceleration in a stock’s price, earnings, or revenues and takes a long or short position in the stock with the hope that its momentum will continue in either an upwards or downwards direction. Once momentum slows down or falls, the trade is exited. The holding period is commonly from a few hours up to a whole day.

Swing Trading is a style of trading that attempts to capture gains in a stock within one to four days. This is mainly used by private, at home traders. The individual trader is able to exploit the short-term stock movements without the competition of major traders. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren’t interested in the fundamental or intrinsic value of stocks but rather in their price trends and patterns.

Trend Trading is a trading strategy where traders commonly hold their positions for up to a month. It is a trading strategy that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).

All in all, Swing Trading and Trend Trading seems like the way to go for most private traders who has a day job or who cannot afford to day trade the market.

I too am a Swing Trader and have enjoyed tremendous success for the past few years using what I call the Star Trading System. Read about it here at http://www.mastersoequity.com

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