2Bull Forex Blog

Forex trading looks easy yet few succeed, the ratio of losers still remains around 95% with only 5% achieving long term currency trading success.

Anyone can learn to trade currencies successfully, but most novice traders simply do the following and lose all their equity quickly:

They try and buy forex advice from an expert and get their forex education by paying for it.

Now consulting an expert in many fields is a worthwhile exercise. If you want to drive you need a driving instructor and if you want to fix your gas boiler, you need an engineer.

So why not consult a forex mentor guru or vendor and gain from their experience?

Well the answer lies in this question:

Would you take driving lessons from an instructor who had never learned to drive or passed his test?

Of course you wouldn’t!

However that’s what the vast bulk of novice forex traders do.

They pay a few hundred dollars for a system; problem is the vast huge majority of these forex trading systems don’t work and have never worked and have never been traded.

The way to prove this is simply ask the vendor two questions:

1. Are you a trader?
2. Can I see your real time track record of profits?

Of course in the overwhelming majority of cases you won’t get one, so why should you trust your money on a system the vendor hasn’t got the confidence to trade himself?

Many novice traders however fall for the hypothetical track record, which shows huge gains all for $100!

The track record is hypothetical so it’s done KNOWING the closing prices and simply made up to show a profit, they have not been traded.

Now we could all make money if we knew what tomorrow’s closing price is today, but forex trading is not that easy.

The fact is you need to ignore the advice that people try and sell you and do the following:

All the basics of trading are available free on the net and you learn all the essential trading information as well as get some great strategies all free, if you care to look.

If you really want to buy some advice simply go to Amazon and buy the books by the great traders.

These guys have walked the walk and don’t just talk the talk – like most of the vendors on the net and good news it will be cheaper to.

If you pay for advice from a forex system vendor you have little chance of winning, as it doesn’t normally work and of course if it did, they wouldn’t sell it to you they would be to busy making money to hassle you for £100 or so.

Don’t make the mistake of thinking that currency trading success can be bought easily it cant – so don’t fall into this trap.

If you are a novice trader perhaps the easiest forex trading strategy to use is a swing trading strategy as it overcomes two problems that most novice traders face but cant overcome.

By using a swing trading strategy not only can you overcome these problems, you can give yourself a great chance of currency trading success.

Let’s look at this forex trading strategy in more detail

1. Patience

Most novice traders lack patience and they think the more they trade the better.

Most go for forex day trading which is probably the best way to lose money you can get – day trading simply does and cannot work, due to the fact all short term volatility is random.

You can never get the odds in your favor and you can never win – PERIOD.

Other traders however lack patience when long term forex trend following – they simply cannot accept the profits it wants to give them!

We all want profits – but when you sit on a long term trade and see open equity dips of thousands of dollars the temptation to take it is huge and most novice traders bank profits far to soon.

If you are forex trend following you need to take a bit more risk and that means hanging on for longer term gains.

Most traders simply don’t have the patience and discipline to do this and it’s hard even for pro traders.

Swing trading when incorporated in a forex trading strategy overcomes the problem.

You are looking at making profits in periods of 3 days to a few weeks, so you are never holding a position for long periods, and there are plenty of opportunities to keep the trader interested and finally, stop loss protection can be tight keeping risk low.

Forex swing trading is easier than long term trend following as you don’t have to be so patient, it’s easy to maintain discipline, which is the key to big forex gains.

2. Swing Trading is simple

Swing trading tends to be quite simple to learn.

All you need to do is look at support and resistance and use some momentum indicators to time your trades.

One or two timing indicators are all you need to judge price momentum as it moves into test support and resistance and your all set to swing trade.

Being simple to understand is a big advantage, because from understanding comes confidence and from confidence, flows discipline – the key to successful trading is having the disipline to foloow your plan through periods of losses and is a trait all succesful traders have.

So if you want to trade currencies then try swing trading its simple, easy on the mind and can be very profitable.

Consider it as part of your forex trading strategy and let it help lead you to the currency trading success you desire.

In Currency trading if you learn the above as a novice you can increase your chances of financial success and if you are trading already it can make your existing forex strategy more popular.

Lets look at how to apply the 80 – 20 rule in currency trading and make triple digit annual gains.

Definition

The 80/20 rule was developed by Italian economist Vilfredo Pareto to describe the unequal wealth in his country. He noted that 20 percent of the people owned 80 percent of the wealth. The 80 / 20 rule has been applied in other areas and is very applicable to profitability.

Lets look at its significance in general business terms and then apply it to financial currency trading. Often 80% of a company’s sales will come from only 20% of their key clients. The point of the Pareto principle is to suggest that you focus your energy on the 20 percent that really matters and if you think about it makes total sense – you focus on where the profit potential is best

The 80 / 20 Rule applied to Currency trading

One of the reasons most novice traders lose is they trade to much – they think that if their not trading their missing an opportunity, this is typical of forex day traders, who think they can win trading frequently, they can’t and never do. Other traders trade on emotion and news and again get hammered.

There is absolutely no correlation between how often you trade and your forex profits, in fact the LESS you trade can lead you to currency trading success.

How To easily make triple digit gains

Look at any currency chart and how often do you see a really big move – that’s one that is a strong sustained trend, with very few or small retracements?

About half a dozen times a year across the majors. If you took the 80 / 20 rule and applied it to currency trading you would come to the conclusion that these are the trades that make the most money and are the ONLY ones you need to hit to make spectacular gains.

So you trade less but you make a lot more.

Sounds simple?

It is – yet very few currency traders are able to apply the rule and never adapt their forex strategy to take advantage of it.

If you do, you can make more profits with less risk and spend less time executing your trading signals.

Focus on hitting the really big trends and a clue to finding them is, they normally take place from new market highs.

Look for valid resistance that is strong and been tested numerous times, is considered significant and then trade the breakouts that occur.

Risk as much as you can only on these trades.

Do it and adapt your forex trading system to do this, you will achieve currency trading success and triple digit regular annual forex gains will be a realistic objective.

The more we live the more we find out that we are dependent on many things besides our wits. Smartness will only get us so far, but unless we make use of systems set up for our convenience we are apt to fail. This is so with the Forex market. The way how the market works means we have to work through a broker or a market maker to get our trades started and completed. You can find Forex brokers in every part of the world just as you will find currencies traded in almost every corner of the globe. However, you should consider a few points when you go out shopping for the right broker to help you with your trades.

1. Qualifications. Probably the most important thing of all is ensuring the Forex broker you use has the correct qualifications. Therefore, choose a broker registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM). This means that you have legal protection against any abusive trading practices and scams that may arise.

2. Is the broker regulated? This means that when you sign up to use their services you will have protection and insurance against any internal fraud. Also, your funds will remain separate from the broker’s operating funds.

3. What business model does the broker use? Some brokers are market makers while others are ECN brokers, providing a dealing desks for many traders.

4. Look at the types of spreads they offer. The spread is the difference between the bid and ask prices of the currencies you trade. Brokers do not make a commission on your trade, instead they take the spread as compensation. Your broker may also offer fixed or variable spreads, and they can be different for large accounts and miniaccounts.

5. Slippage. Can they provide you with details of just what slippage they would expect to occur during normal and fast moving markets?

6. Margin requirements. What is their margin requirement. That is, what percentage of the investment in your trades do they expect you to pay to open a trade. You also want to know about their margin calls, and the time you need to respond to such calls.

7. What is their Rollover Policy? Do they have any minimum margin requirements which they use to earn interest on any overnight positions? Plus, do they have any other requirements or conditions about you earning interest on any rollovers.

Once you have done your research and have selected one or more Forex brokers, then it is time to set up your trading account. When your funds clear you can begin trading. Remember to read
carefully the trading instructions to know how the broker can help you manage your trades. If you overlook some relevant details, you can lose money on your first trade. So take the time to read the details and ask the brokers or their support staff any questions you may have before you open your first trade.

As the Internet grows in popularity, more and more individuals are learning about the benefits of trading currencies on the Forex market. In recent years, Forex trading has become known as a great way of investing money. But if you do decide that you want part of the action, you should do some quick research on the Forex software packages on the market. They can help you trade easily and from the comfort of your home and office.

One great benefit about Forex software is that it can perform many tasks for you, and keep you up-to-date on the values of the currencies you are trading. If you had to do these tasks manually, you would have to spend many hours fiddling with newspaper reports, charts and graphs. But with the push of a button, you can know how and when to trade. With a general knowledge of where the currency is heading, you can allow your trades to run, or stop them as your position reverses.

But not only does Forex trading software allow you to manage your funds, it also provides you with the opportunity to withdraw or deposit money into your Forex account when you need to. This means you can leave your money in an interest bearing account until you are ready to trade. This way, you earn interest on your money and avoid having extra money sitting idly in your trading account.

Also if you want you can set up the Forex software so when the currency drops to a certain level or has reached a specified value, then it will automatically sell it for you. By doing this you are not only minimizing your risks, but it also means that you do not need to keep a constant watch and control over your profits.

However the best way of ensuring the software you are buying is right for your needs is to test it before you start investing your hard earn money. A good Forex software package will allow you to practice with the software using play money while you learn. Then once you are comfortable with trading, you can deposit some of your money into a trading account and start trading. It is best if you practice as much as possible before. This way you will be ready for any losses that may occur in the beginning. From the start it is best if you only invest small amounts of money when trading until you feel more confident with the software.

Forex software comes either as a desktop or Internet based package. The Internet software systems have several advantages over the desktop versions. One of these advantages is that you
do not need to deal with maintenance issues. The software seller often looks after these technical goings-on. Security is another issue you don’t have to concern yourself with.

The seller will already have in place more security measures than you can afford on a desktop version. The systems offer data encryption on a secure server and will therefore protect you for hackers and thieves. Plus, Internet based systems offer you more convenience than a desktop model. You can check your account no matter where you are in the world. All you need to do is key in your login and password information. You can then view your currency trading account in a secured environment.