2Bull Forex Blog

A lot is made in forex trading about using a demo account but they won’t help you win when it comes to real time trading even if you have made a profit – Why? The reason is obvious…

No money is at risk therefore emotion is absent.

Trading is an emotional game and it’s emotions that make traders lose – so if there not there when you trade, you don’t know what their impact would be.

A demo account is only good for learning the mechanics of trading.

A new service being offered, helps traders experience emotions, while only risking a small amount of cash and lets them trade even – if they lose and go debit!

This allows them to trade in a set period as much as they want with limited risk then at the end of the period:

The broker takes the losses and the client takes any profits.

The period is normally a couple of weeks.

Traders get a real time trading experience, with lots of trades and the experience of money on the line but they also get – strictly limited risk.

These accounts provide a more authentic experience and a more exciting one, as money is on the line.

These protected accounts are good at giving you the feel of what trading money is actually like and how you cope with your emotions.

Lets face it all traders are impacted by emotion to varying degrees and discipline is the most important variable in forex trading success.

The equation for market success is:

Your Method + Executed with Discipline = Forex Success

If you don’t have discipline to execute your method you won’t win, because you won’t have a method at all, unless your trading signals are executed properly!

A demo account will help you get used to the trading platform – but these protected accounts, will let you feel the emotional side of trading.

Many traders think they can cope with their emotions and then get a nasty shock when they trade for real.

These accounts offer you a step up from a demo account before you trade properly and are a useful exercise for any new trader.

There are a lot of day trading and forex scalping systems on the internet but how do you choose one that’s right for you to help you enjoy currency trading success? Let’s take a look at forex scalping.

When I look at these trading systems, it always amazes me that with millions of traders trading trillions of dollars daily, these systems can predict what this huge mass of people will do and predict what will happen in hourly, 30 minute bars or less.

You obviously can’t but traders still believe they can do it but if you think about it it’s absolutely a ridiculous way to trade and means you are 100% guaranteed to lose.

Don’t believe me?

Then try and find a forex trading system that tries scalping that has a real track record to back up the ridiculous claims they make. You won’t get a real one, you will get a simulated one done in hindsight KNOWING the closing prices – well that’s hard.

Let’s see if I knew tomorrows price today, how much money would I make?

Alas, it’s not as easy as that as we don’t have the luxury of knowing the forex prices in advance.

Of course day traders tell you that you can predict moves within short time frames.

However to anyone who sits down and looks at the facts, it’s pretty obvious that support and resistance levels are useless in daily time frames as all volatility is random and prices can and do, go anywhere. You can’t get the odds in your favour and you will lose over time.

You could flip a coin and get the same success rate.

So why are these systems so popular?

Quite simply these currency trading systems appeal to one emotion – greed.

Traders actually think that with no effort and spending a hundred dollars or so they can make $10,000 a month, scalp 50 pips each day and end up disappointed as the market gives them their reality check.

Day trading is a great story and so are Harry Potter books but I don’t actually believe in wizards.

Today anyone can write an e-book put some clever copy on it and try and sell it on the net and people do. How many of these vendors have actually traded? Very few, -their sold by marketing organisations, that are simply selling a story.

They make money selling the course or system and the trader gets wiped.

The vendor has a guaranteed profit and the trader a guaranteed loss.

Day trading should be left to the dreamers and greedy traders looking for the fast buck with no effort ( which if you find a way of doing this please tell me) and concentrate on perfecting a sensible forex trading strategy one that trades longer term and get the odds in your favour.

If you want to make money and learn forex trading for profit the correct way forget forex scalping and day trading and get the right forex education to win.

Moving averages are a great trading tool to use in any financial market and that includes forex. Being involved in forex education for some years, I would say that most traders simply don’t use this tool correctly – but if you do, they can enhance your forex trading success.

Moving averages (regardless of the time period used) all have the same objective:

They identify trends over specific durations and they smooth out the day-to-day price fluctuations, that are a caused by short term volatility.

This help you see the longer term trend and look for entry points for your trading signal.
The equation for any moving average is:

The closing price is added up and divided by the period the moving average is covers.

Periods

200 Day moving averages are popular for tracking longer term trends and 20, 40 and 60 Day moving averages for tracking the intermediate trend.

Shorter Periods are used and many forex traders will calculate moving averages within a day in hourly or minute time frames.

Moving averages are one of the simplest and most popular used by traders interested in technical analysis. The problem most traders have is using them the right way and they normally one or all, of these common errors.

Buy On Dip to the Moving Average

They see it approach the level and simply buy – well that is not going to help them make money as they are predicting (another word is hoping) the level will hold and of course in many instances it does not.
You have to combine moving averages with moving averages – to prove the level will hold on your forex chart before entering.

To do this use simple momentum oscillators like RSI and stochastic and wait for them to show the level has held and then execute your trading signal.

Moving averages give you areas of value; that’s all and your forex trading system needs to prove these levels hold.

Using Them in Stupid Time Frames

With any indicator you use you have to have valid data and many forex traders trade time periods that are simply to short – stand up all forex day traders.

Moving averages, are of absolutely no use in time frames of under a day.

They don’t really become useful until at least 10 days and we never use anything less than 20 days.

Another Great Use.

For moving averages is as a stop in long term trend following.

The 20 day average we use to spot normal corrections in a trend and buy dips but we exit on the 40 day moving average.

They are great for this.

Sure you miss the top but you get something more ,you stay out of the way of the random volatility and they can help you ride a big trend for months.

If you do this and keep in mind if you get 50% of every major trend you will be very rich!

Use them the right way

It’s a fact that short term price spikes that move to far away from the longer term moving average will return to it, as they are the product of human emotion.

They are therefore a great tool for spotting value areas in the market on your forex charts.

Use them with simple trend lines to isolate value areas and then use momentum oscillators to prove the level has held – then execute your trading signal.

Moving averages are a simple tool – but don’t under estimate how powerful they can be in helping you enjoy currency trading success just remember – use them the right way.

Here I am going to look at forex fads and by this I mean systems methods and indicators that are popular but do they make money? So lets look at the most popular ones.

I have been a trader for the last years and the ones below have all seemed to have risen in popularity with the internet. Let’s look at them.

1. Day Trading

People have always day traded but it’s exploded with the internet and is very popular but it doesn’t work. All short term volatility is random in a day so it doesn’t matter what tools you use your going to lose.

This is a great story and day trading is an adrenalin rush but doesn’t make money.

2. Candlestick Charting

I used to use these back in the eighties I loved all the names hammers hanging men etc but are they really any help in trading? Not really, let’s face it you don’t need to see a candle shape, to know that when you have a new high and close near a new low, it’s bearish.

They have a colourful history though and if you want to know more get Steve Nisons excellent books on the subject.

3. Fibonacci Numbers

These have appeared all over the net in recent years and in loads of forex trading systems. These are like candlesticks a good story and I find it quite amusing that a theory based upon the copulation of rabbits from the 12th century is taken so seriously by traders.

Loved by the far out traders and totally useless in trading.

4. Elliot Wave

Another theory that is all over the place.

The scientific theory of market movement it boldly claims and what is it?

A totally subjective theory of peaks and troughs in any period you like. Elliot died a pauper so if he couldn’t make money with it, what chance have the rest of us got?

Again the far out crowd love it – but are so stoned, they don’t stop to think that if their was a scientific theory of market movement – we would all know the price in advance and their would be no market!

5. News Sources For Profit

In the old days before the internet the news was slow and out of date for most people as they got it from papers. Today though news is available in the click of a mouse and there is tons of it and very well written it is to.

The news is better but the same problems remain – its discounted instantly, you don’t know how the participants will view it and much of it simply reflects the majority opinion and they lose.

6. Consult a Guru

With the internet anyone (even with no trading experience) can write an e-book and sell it and make outlandish claims and if you read some of the material presented you are going to become a millionaire for a few hundred bucks.

Some are honest and great value but most are junk relying on clever marketing appealing to greed.

People as always want an easy route to riches and the internet provides them with it but making money has never been easy and never will be.

In the days before the internet you used to rely on proper experts from the local bookstore and the good news is you can get great books cheaper than ever at Amazon.

The internet is opened up trading to more people than ever, it’s cheaper, all the tools you need are free and it allows anyone to be a trader.

However just because the tools are all there does not mean more traders win – they don’t.

It’s still the same ratio but if you can ignore the fads and use the power the internet gives you wisely, you can pile up huge trading profits and change your financial future forever.

The wide popularity of stock investing has also attracted scammers, who are well armored with their frauds and ready to take your money away. Thus, you have to be well aware of their fraudulent actions and take the necessary actions not to become their victim.

The Internet has given scammers an additional field for action. They have managed to design such schemes that make you think that you are being part of a legal insider deal that will bring you a lot of money. However, most of the times you end up losing your money and with a lot of headaches.

Stock scams come in a variety of forms from very crude ones that are easy to be noticed to more sophisticated, that can need a lot of time to be revealed. They manage to give such legitimacy to the stock deals that will be undertaken that it is easy to fall their victim.

It is difficult to list you all of the stock scams that are already available. And even if we manage to do so, we cannot be sure that during this time a new fraud has not been designed.

However, certain events should serve you as a red flag that there is a scam behind the particular action. For example, if someone you don’t know calls you and offers you a stock deal that is provided only to insiders, you should ask yourself why this person wants to do it, especially if you are not one of the major stock players. Additionally, if the deal is really so good, why the caller does not keep it for himself/herself, but wants to make you rich.

Other scammers have tried to address the naivety of some people that truly believe that there is such a system that guarantees 100% sure profit. No one can guarantee you this with stocks. If this could be done anyway, be sure that the profit will be really negligible and not worth the effort. Some scammers have gone a step further by offering such clients secret codes or passwords, which when used give you access to immense possibilities. Again ask yourself even if such a thing really exists, which is almost impossible, why will they give this information to you?

These are the crude scams that you can easily identify. However, some scammers have decided to make more efforts for the money they want to steal from their victims. Thus, they attempt at the purchase of stocks of almost unknown to anyone company. After this they start to spread rumors over the Internet usually that this is the next hot company. This results in the soaring of its price to the desired level. You are also attracted by this price increase to later find out that the scammers have waited for this price levels to sell their shares. And you end up with a losing company and money losses.

To sum up, apply the necessary caution the next time you are offered a stock deal in order not to lose your hard earned money.