Principle 1

The trend is your friend - you’ve heard it a million times before and guess what - its true. This method only trades in the direction of the trend. Furthermore it only trades when the trend of both the short and medium term time frames are in the same direction (more on this later). Why? Because we want to pinpoint entries which move quickly in the direction of profitability. Entries in the direction of the trend can be precise. Counter trend trades are often sloppy and very difficult to time.

Principle 2

Time is as important as price - what does this mean? The large proportion of traders absorb themselves in following price action, looking for a set up which matches what they see. While this may work for traders that have learnt phenomenal levels of focus, detachment and self discipline, for the developing trader this way of trading often leads to hallucinations (seeing things that aren’t there), overtrading and getting caught in the chop. When we follow the principle that time is as important as price, we shift the emphasis of our focus. We place our focus on timing a trade setup, watching for the entry to set up using our timing indicators (cycles) and only when we see that the time is right do we look for price confirmation and a precise entry point.

The effect of this is:

1) We stay fresh because we can relax our focus when our timing indicators show that the time is not right.

2) We can avoid getting caught in the chop and all the frustration (and loss!) that doing so entails

3) We focus all our energy and concentration on effectively executing the signals that have the highest probability for success.

Principle 3

Use multiple time frames. In this method we trade on multiple time frames simultaneously. We use a short term chart (3 or 5 minute) and we use a medium term chart (13 or 20 minute). We only enter trades when those two charts are confirming each other (ie. That their trend and cycle direction are the same). We also use a longer term chart (60 or 102 minutes) to keep an eye on the bigger picture and we use a very short term (1minute) to effect our entries.

If the short term trend or cycle is up and the medium term trend or cycle is down, what is going to happen? They will fight each other and this manifests as chop. What happens in chop? It’s very hard to time a precise entry, which is what we are all about.

What happens when the short and medium term trends/cycles are in the same direction? They support each other, they strengthen each other and this leads to decisive price movement.

The key here is to understand this: price moves up and down all day. We are going to let a lot of it pass us by - we don’t care. Why? Because what we are interested is pinpointing precise entries that will immediately move in our direction and give us a profit. You may see price moving strongly in one direction while you are on the sidelines, and you may say “damn, why aren’t I getting a piece of that?”. The question is could you have timed the entry or would you have placed 2 or 3 losing trades trying to get in, exhausting and frustrating yourself in the process? We are looking for ease, stress free entries that have a high probability of success.

Mo Christiensen is one of the editors of the successful tradingadviceblog.com. The site specializes in high quality trading advice and profitable trading systems for new and struggling traders. See the original article in context at http://tradingadviceblog.com/trading_methods/profitable-cycle-trading-method-part-i

These should be seen as a complement to other decision criteria that you use for determining entry and exit based on price.

Multiple Time Frames

Many traders watch the market they are trading in a variety of time frames - each time frame providing different information. For example a short term trader might watch the market with a 3 minute chart, a 13 minute chart, a 30 or 60 minute chart, and use a 1 minute chart for detailed entry.

A useful technique to avoid entering a trade when the market is about to chop is to identify the prevailing trend in each time frame and only enter a trade if the trend is in the same direction on the short and medium term time frames. In this way the trend direction of each time frame is supporting and enhancing the other. When the trends are different (i.e. one long and one short) it indicates that the market is in transition and that chop is likely to ensue.

Here’s how to do it:

Add two exponential moving average lines to each chart. A fast EMA such as 23 (mark the line red) and a slower EMA like a 50 (mark the line blue). When the red line is above the blue the trend is long, and when its below the trend is short.

In the example above of 1,3,13 and 30 minute charts only enter if the 3 and 13 minute trends are in the same direction.

Cycles

My favorite way of determining the best times to enter a trade is using cycles. Walter Bressert has done great work in pioneering, researching and developing indicators that can be used effectively to trade with cycles, and so has Roy Kelly.

I won’t go into lengthy detail about cycles here - you can read more about them at our site - let me just give you the basics and if you are interested you can take it further.

The market trades in measurable cycles. These cycles often correlate with the ups and downs of price. Cycle highs and lows very often match closely with over bought and oversold levels. By watching the cycles over time, you can see very easily how when a cycle reaches its high point and turns down or reaches its low point and turns up, its a time of high energy in the market. If you combine this information with your knowledge of the direction of the trend, then you have some very tradeable information.

In particular when the trend on the short and medium term charts (for whatever time period you are trading - e.g. 3 and 13 minute for a short term trader) are in the same direction and the cycles for both the short an medium term charts are turning in that direction you can usually count on a safe and profitable trade. Of course it goes without saying that you need to use appropriate money management and choose your precise entry point using basic support and resistance entry techniques.

Harmonics

Here’s another source of timing information for the market - a controversial one! A lot of traders laugh at using astrology as a timing tool for the market. And as far as I’m concerned that’s great! Its so accurate that I’m happy to have the edge!

The markets are influenced by people and their minds. To be extremely simplistic, the market goes up when people are confident and optimistic and down when people are concerned. Astrology measures the effect of the movements of the universe on people- and therefore has the ability to measure the impact of changes in the universe on the markets.

As the various planets move through the universe they come into alignment with each other at different points in time. These points can be translated into both price levels and specific moments in time. For example, a financial astrologer looking at the S&P 500 can tell the exact time that two planets that will affect the market will aspect each other and at what price.

Again, you are very welcome to laugh and say “what a load of old garbage”!! However, if you are even in the slightest bit interested - even if its to disprove it - you may want to check it out further. Try googling “Trading Astrology”.

Armed with this time and price information you can combine it with basic technical trading techniques, to find high probability entry points.

I don’t advocate using any of these techniques in isolation. Having a strong understanding of technical analysis and price movement is essential. Nevertheless, in combination with price movement they provide a very valuable source of information - for entry, for exit - and of great importance to the struggling trader, for knowing when not to trade.

Mo Christiensen is one of the editors of the successful trading blog tradingadviceblog.com. The site specializes in high quality trading advice for new and struggling traders. See the original article in context at http://tradingadviceblog.com/trading_methods/struggling-traders-guide-to-avoiding-chop

I personally trade both the major currency pairs and individual UK shares and in my experience if you’re short-term trading then forex trading is generally the more profitable. There are several reasons for this. One of which is that the movements of the major currencies are generally more predictable because they conform extremely well to technical analysis.

The advantage you have when trading forex is that all the major economic announcements are scheduled and therefore known in advance. This is important because these economic data releases can have a major impact on currency prices and can potentially distort any technical analysis you do. So because you know when these announcements are due you can ensure that you don’t have any positions open when the announcements are made, and can therefore focus entirely on technical analysis without any external influences ruining your analysis.

When you trade shares, however, there is always the possibility that an unexpected news announcement will be made relating to the company you are trading. Most announcements such as trading updates and final results are known in advance but there are always announcements that can come completely out of the blue such as news about a new contract win, a takeover approach, or a profits warning, for example. These can cause the share price to rise or fall dramatically in a matter of seconds or minutes and can render technical analysis completely useless.

So it’s hard to be completely confident about trading shares when there is the possibility that market-moving news could come out at any time. Furthermore another problem you have with individual shares is that they do not always conform that well to technical analysis. Sometimes it’s the case that despite what the charts are telling you about a share, the share price will follow the wider market anyway.

Finally if you’re trading on an intraday basis, you will find that when trading shares there may be days when the share you are trading simply doesn’t move enough in order to make any worthwhile profits from trading. This is never the case with forex trading because if you just stick to the major pairs, you are pretty much guaranteed volatility, with plenty of points movement every single day.

So overall I personally think that forex trading is so much more profitable than share trading when trading on a short-term basis.

James Woolley runs a forex trading blog where you can learn forex trading and read a review of Zulu Trade, the revolutionary forex signals service.

Candle charts (also called “Japanese candlesticks”) were originally created in Japan several centuries ago so that rice could be traded. Today, thousands of traders use the same charting “system” to track price movement.

Many people find that candle charts are easier to read than standard bar charts are, and therefore, they have become very popular. In fact, most Forex charts you see are in the format of Japanese candlesticks.

Candle charts are made up from the opening and closing prices, as well as high and low prices.

If a price opens lower than it closes (in other words rises during trading), a hollow candle is drawn on the chart (usually in white or green).

If a price opens higher than it closes (in other words falls during trading) a filled candle is drawn, usually in red or black in color.

Many online brokers today used the red and green color scheme rather than the white and black color scheme. Trends can be easily seen even by newcomers this way, because green candles signify price increases while red candles indicate that price has decreased.

It’s not just designed this way for “newbies”, either. Any trader, regardless of experience or skill, needs to be able to have a clear visual system of evaluating data. It’s essential to his or her decision making process.

However, moving on from the “history” of Japanese Candlesticks and how they relate to Forex trading - let’s evaluate why they’re significant.

It’s simple: The significance is that they represent our ability to bring simplicity to complex transactions without losing accuracy.

Whether the context is trading rice in the 14th century or trading the Euro/USD currency pair in 2008 from your high-speed connection, the fact remains that you don’t have to be an expert to understand and profit from complex markets.

The tools you need to succeed have already been developed. All you have to do is practice using them, and you’ll quickly be able to see how what would normally be complex can - through practice and experience - become as simple as any other basic task.

The only question is this: Are you willing to put in the time until it becomes simple?

Ancient rice traders depended on tools like this for their livelihood.

There’s no reason why you can’t either. And it could end up being a whole lot more valuable than, say, rice.

Ian Armstrong is an avid Forex enthusiast.

He strongly urges beginners to download the free “Forex For Beginners” guide, at Forex Shortcuts

Mental Prep

1. Harness the power of intention

As you become more and more focused as a trader and as you learn to clear your emotions the power of your intention will become stronger and stronger. Begin the day by setting the intention that you will be successful, that you will be profitable, and that you will be safe. If possible visualize it, or feel that it will happen.

If any feelings or thoughts come up contrary to that intention (e.g. I lost yesterday perhaps I’ll lose today) go straight to the next point and clear that thought/feeling.

2. Clear limiting thoughts and emotions

Did anything happen yesterday or on previous trading days that is bothering you? Anything happening in your personal life that may be affecting your state of mind? Any recurring thoughts or feelings that come up during the trading day?

Read my blog post about emotional clearing - learn Core Transformation and clear that crapola out. And for any of you hardcore guys out there that are thinking this might be a bit touchy feely, I suggest you look at this in purely financial terms. Learning these techniques will help you get the success you want. And nobody needs to know!

3. Brain power

Make sure that you have exercised and eaten properly so that your mind is clear and fresh. Have the right snacks at hand so that you can keep your blood sugar balanced, so that you mind stays fresh and optimally focused.

Timing

4. Know when you are going to trade

You may say “How do I know when I am going to trade ahead of time?”. In response I’d say, “if your trading system doesn’t tell you when you are going to be trading ahead of time, then you are missing out on a huge advantage”. As you’ll see from the various blog posts I’ve written on cycle trading, I am convinced that time is as important a factor in determining entries as price. This is why I use a combination of cycles and harmonics in addition to regular technical analysis to determine entries.

Adopting this trading methodology was the single biggest contributing factor for me in becoming a consistently profitable trader, because I can calmly prepare for the times that I am going to trade and I can relax my focus during the times when I know I should be on the sidelines.

Practical Details

5. Are there any economic numbers being released today?

Know exactly what time they are and watch out if you are trading around these times as there may be some dramatic fluctuations in price movement. Unless your strategy specifically includes trading these numbers, many traders prefer to sit on the sidelines until the numbers shake themselves out.

6. Any significant business or world news today that may affect the markets?

Days when companies release earnings or when there are other significant events, make the market jumpy. You need to be forewarned so that you can decide either to sit out, or to be extra vigilant.

7. What happened in the markets overnight?

Same idea as point 4.

Discipline

8. Review your discipline committments

If you are someone that has problem over-trading or pulling the trigger, or if you have challenges following your system, make a list of discipline committments. List out those things that you commit to in terms trading discipline. e.g. I will only take trades on signals that my system gives me. Go through them before the trading day begins and refresh your resolution.

I had a lot of trouble with over trading in the early days. As I got absorbed in the market action it was like becoming hypnotized, my discipline went out the window. I actually had to set an alarm clock to go off and every 30 mins I would re-read my discipline committments to force myself to snap out of it, and refocus on following my trading rules.

9. Review you trades from yesterday and your trading journal

Reviewing you trades from yesterday is a great way to refine your skills and learn more about your strengths and weaknesses. If you had a day where you were able to execute your trades flawlessly based on your system (whether or not they ended up being profitable) you can consolidate the confidence that brings. If you had a day that left an emotional mark because of losses or mistakes you can go back to point 2 and clear them.

If you found that you were unable to execute your trades effectively its another opportunity to revisit your trading rules, your discipline committments, and refresh your intention that today you will trade your system.

Opening

10. Give thanks

Give thanks to your self, and to whatever power of the universe that you respect for the opportunity to trade - which is nothing more than an opportunity to master yourself.

The state of gratitude is a great inner state to approach the day. It buoys your optimism and invites to you the circumstances for success.

As the French say “Bon courage” - and have a safe and profitable day!

Mo Christiensen is one of the editors of the successful tradingadviceblog.com. The site specializes in high quality trading advice and profitable trading systems for new and struggling traders. Read the article in context at http://tradingadviceblog.com/intro/10-tips-for-preparing-for-a-profitable-trading-day/

The surprising truth about fear and greed:

The pros and cons of simulated trading and the essentials of money management will both be discussed due to these aspects being related to the emotions of fear and greed in trading. Basically the aim of this article is to shed some light on emotions in trading and how they can be handled by traders.

Many people know that ‘fear and greed’ cause movements in market prices but it’s wrong to think that these are always negative emotions.

Let’s look at greed first. Greed is good! Well a certain amount of greed is good because it’s needed to make speculators want to trade in the first place. A downside to greed is when it causes traders to ‘chase the market,’ for example by buying after a large sudden move higher when the market is overbought (i.e. overvalued).

You also need to avoid being too greedy when exiting your trades i.e. you should take profits where your proven trading method says you should.

Fear can be a positive and negative emotion too. Fear is a very good thing when it causes you to close out any losers with discipline where your system tells you to. But not too early or too late.

On the other hand, too much fear can stop you from even entering a trade the moment your system tells you to. To overcome this fear it’s best to paper trade or make simulated trades for a while before dipping your toes in the water.

Paper trading is something that most traders don’t like doing before they first start to trade for real because they want to get out there in the markets pulling in money. But it’s important to test your trading methods first by paper trading as this will help you ‘pull the trigger’ and commit more easily to trades when the time comes to trade for real.

The main problem with paper trading though is that you don’t get as exposed to the emotions of trading as you do when trading for real. Therefore, it can only prepare you to a limited extent.

Using safe money management techniques also helps you to overcome the fear of entering trades. The exact money management rules you use will depend on your trading system. Generally speaking a good rule is to use no more than a tenth of your initial trading capital per trade. Then only increase the amount you are risking per trade once you’ve doubled your initial trading capital.

To sum up, yes you can make big money from trading but it’s a marathon not a sprint. You’ll need to have realistic expectations and not give in to too much greed. Some greed is good in this walk of life or you would never enter a trade! But not being too greedy means you should take profits where your proven method tells you to and of course, taking the occasional loss really isn’t a problem, just don’t let them run.

Gradually increasing the size of your trades as described is one of the keys to success. Finally, using a proven trading system will also reduce any fear when entering trades.

Philip passed the SFA Futures exams and has been trading for over a decade, first in London and now from home. Just Click Here to get your free brandable viral trading eBook Killer Patterns. Plus you’re getting the free WizardTrader.com course when you send a blank email Here

First, you must realize that your success falls only on you. You need to accept responsibility for your own success and each trade. Only you can make yourself successful! This means that you have to take the necessary steps to develop your own trading strategy. The good news for you is that everything you need to know about forex can be found online for free, or very cheap.

Second, you need to focus on learn how to find the right information and increase your knowledge the right way. To be successful in the forex market, you need to learn the right things. This is important because many traders think that knowing more is better. This is simply not true!

You see, in the forex market, you get rewarded heavily for your results and the accuracy for your trades, not the effort you make in your trades. You should also make sure that the forex trading system that you chose to use integrate into your trading strategy is simple and easy to use. Simple systems are much easier to use for a long period of time and work much better than the complicated ones. This will give you confidence and an advantage over those who choose to use complicated systems.

Third, you need to decide right now if you feel comfortable taking a risk and if you have good money management skills. If you don’t like taking risks, you probably shouldn’t trade forex. Most traders don’t realize how big the actual risk is so they enter the market and lose a lot of money and get out quick. Then there are those who are so frightened by risk, that they end up being too conservative in their trades and lose a lot of money. If you want to make a ton of money in the forex money, you need to take risks that are calculated, I mean risk at the right times.

Last, you need to be realistic in your expectations. Sure, some people get into the forex market and get rich super fast. However, this isn’t the norm for most traders. If you take your time easing into the market and immediately begin developing a forex trading strategy that is strong and sustainable, you will find success.

Bart Icles is an expert Forex trader. He has developed a strong Forex trading strategy that he uses to successfully trade the forex market on a regular basis. Visit our blog to learn about a great Forex trading course and check out this Forex trading strategy hub page for more information.

Exchange traded funds are like mutual funds that are traded on the market. Currency exchange traded funds are dependent upon the values of the currencies. Currency ETFs include the dollar, euro, pound, yen, and franc, to name a few. Before ETFs were introduced for currencies, only the very wealthy were able to invest in them. Exchange traded funds have made currency trading available to the average Joe investor. But does Joe want to invest?

Experts are warning that currency ETFs are risky due to their volatility. They are difficult even for the most seasoned investors to predict. Based on the trend over the past decade, currency trading is not likely to offer a huge gain, not even currency ETFs. Experts tell us that even though average Joe can now afford to invest in currencies via exchange traded funds, he might be better off to leave them alone.

Most commodity ETFs rise and fall because of the supply to demand ratio. Currency ETFs, on the other hand, are dependent on the economic outlook of the country of origin of the currency. This outlook can be affected by many things, including the price of oil, the trade balance and inflation rate, their political leadership, war, and economic status as a whole. All of these things must be thought of when considering investing in currency exchange traded funds.

With currency ETFs it is possible to throw a mix of different currencies into the basket. Some investors are giving this a try in the hopes that the good ones will cancel out the bad ones, and then some, and be able to make a bit of profit from them. Then, if they are lucky, they will have more good than bad and be able to do quite well on them. These investors should not be surprised to find, however, that the world’s economy as a whole seems sketchy at best right now.

Some commodity ETF analysts are advising that the investor be aggressive when trading currency exchange traded funds. Buy them with the understanding that they are going to be short term investments for quick trade. When the time is right, dump them and make your profit, then move that profit into more reliable commodity exchange traded funds. If this worked well for you, take your initial investment and try it again.

If you decide that you want to give currency exchange traded funds a try, do some research and know exactly what you are getting into. Currency ETFs might not be for you, at least if you want to listen to the experts. If you’re the kind of investor who likes to try new things, then go ahead and give currency commodity ETFs a try.

Ryan helps you understand commodity ETFs and shows you how to profit from currency ETFs.

Forex is also called “FX,” and both are short for “foreign exchange.” Foreign exchange doesn’t get a lot of press like options, stocks and commodities. However, foreign exchange is in fact the biggest market in the world and it can offer investors a huge opportunity for profit, done right.

When you trade in foreign exchange, you don’t trade in bonds or stocks. Instead, you trade in currency. Simply, you buy one currency and sell another. As exchange rates go up and down, you either make or lose money, depending on what you’ve traded.

With foreign exchange trading, you aren’t investing in a single company or group of companies, as you might with mutual funds, for example. Instead, you’re investing in a nation’s economy. You are betting that the overall economic health of one nation will get better as compared to that of the second nation in your “currency pair,” or the pair of currencies you are utilizing to trade.

As an example, let’s say that you are dealing with the Japanese yen and the US dollar. Your research seems to tell you that the US dollar is undervalued and will increase in price, and at the same time, the Japanese yen is going to lose value. With this scenario, you would execute a trade so that you buy US dollars and sell Japanese yen. If you are right and the exchange rate rises, you make a profit. If you’re wrong and the exchange rate falls, you’ll lose money.

It sounds easy, but it’s really not. Currency prices can be very difficult to forecast, because so many factors contribute to a shift in exchange rates. You also have to remember that you always trade in pairs when you do currency trading. In effect, you sell one currency while simultaneously buying another. Therefore, you can’t just look at one nation’s economy; you have to look at the economies of both nations you are working with.

Finally, you don’t have to limit yourself to just one pair of currencies, such as the US dollar and the Japanese yen. In fact, there are many currency pairs you can work with. If you’re just starting out, though, stick to the seven major currencies listed below:

AUD - Australian Dollar
CAD - Canadian Dollar
JPY - Japanese Yen
GBP - British Pound
CHF - Swiss Franc
USD - US Dollar
EUR - the Euro

In fact, if you are a small investor, you’re likely just going to concentrate on these currencies; save the other currencies for more experienced and/or larger investors.

Ian Armstrong is an avid Forex enthusiast.

Ian strongly recommends reading the free beginner’s guide available at Forex Beginner’s Blueprint - it’s a must for anyone who wants to try Forex without losing their shirt!

If you understand exactly who you are as a trader, you will learn to trade to your strength. Trading to your strengths will only increase your effectiveness if you have a strategy to help you. There are thousands of trading strategies out there today. Just look in any search engine for a Forex trading strategy and you will find countless sites about this topic.

There are two basic forex trading strategies; trend-following and range-bound. Any trading strategy that you come across will use indicators and combinations, moving averages, chart patterns, candlesticks, pivot points, Elliot wave analysis, and the list can go on and on. Each of these indicators are simply to help you measure the trends in the Forex market.

If you can answer the following questions about yourself, you will be able to pick the strategy that is right for you and your trading. The first thing you need to understand or find out is who you are as a trader. Are you in to make quick money, or are you in for the long term? Pay attention to your trades and what the market is telling you. It is important to keep a journal of your trades and their outcomes. This will help you figure out the first question.

Second, I would imagine that you are using someone else’s strategy, aren’t you? Don’t worry, because, most of us are too! It is much easier to use a successful trader’s strategy than come up with our own. You must be very careful if you decide to change part of the strategy. I would recommend that before you change the strategy to your liking, you completely understand all aspects of the strategy through actual trading experience.

Third and most important, don’t jump from strategy to strategy. You should also stay far away from combining two or three different strategies. A lot of traders find themselves doing this and having no success. If you take the time and effort to truly understand the Forex trading strategy that you chose, you will be able to master the strategy and be a powerful trader.

So, at this point, you might be asking, which strategy is right for me? There is a very simple answer to that and it is, use the one that works! It really doesn’t matter if it is simple, or very complex. Pick a strategy that works and roll with it!

Bart Icles is an expert Forex trader. He has developed strong Forex trading strategies that he uses to successfully trade the forex market on a regular basis. Visit our blog to learn about a great Forex trading course and check out this Forex trading strategy hub page for more information.